Robert Palmer QC succeeds in Court of Appeal case defining limits of the common law duty to consult

Judgment has been handed down in R (MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634, an important case in which the Court of Appeal has provided significant guidance on: (i) the scope of a common law duty of consultation based on fairness, (ii) the legal test for establishing a legally enforceable procedural legitimate expectation, and (iii) the law on procedural rights of consultation based on a public body’s past practice.

The Court of Appeal’s judgment upholds certain changes to system of charging ‘overseas visitors’ (those not ordinarily resident in the UK) for use of NHS services brought about by the National Health Service (Charges to Overseas Visitors) Amendment Regulations 2017 (“the 2017 Regulations”).

The appeal related to provisions of the 2017 Regulations, which had the effect of: (i) mandating upfront charging of overseas visitors for treatment that is not “urgent or immediately necessary”; and (ii) requiring NHS trusts to flag on their record whether an overseas visitors is chargeable.

The Appellant challenged the relevant provisions of the 2017 Regulations on the grounds that the Secretary of State had breached a legal obligation to consult before introducing the provisions.
The Court of Appeal did not accept that the Secretary of State was obliged to consult on either the ‘upfront charging requirement’ or the ‘status recording requirement’. While the Secretary of State had chosen to consult on other changes to the charging regime (e.g. the extension of charging to additional services), the two changes forming the subject matter of the challenge were properly to be analysed as “discrete, self-contained issues”, in respect of which no legal duty of consultation arose. The fact that those proposals were published in the same consultation response document as other reforms upon which the Secretary of State had consulted did not change this analysis.

The Court of Appeal also held that following an analysis of the Secretary of State’s practice in respect of changes to the charging regime for overseas visitors since 1982 that past practice was not sufficient to generate a legally enforceable procedural legitimate expectation of consultation.

The judgment is available here.

Robert Palmer QC appeared for the Secretary of State for Health and Social Care, instructed by the Government Legal Department.

Kassie Smith QC and Fiona Banks act for successful Claimants in resisting Visa application to refer MIF counterfactual to the European Court of Justice

Visa’s application for a preliminary reference to the CJEU on the question of the relevant counterfactual for assessing the anti-competitive effects of its default multilateral interchange fee (MIF) has been dismissed by the Competition Appeal Tribunal (CAT).

The first wave of MIF claims culminated in the Supreme Court handing down judgment in Sainsburys v Mastercard and others in June of this year following a hearing in January. Shortly before the Supreme Court handed down judgment, the CJEU gave judgment in the case of Budapest Bank on a reference from the Hungarian court on various issues arising from an agreement (the MIF Agreement) which had been entered into by Visa, Mastercard and 22 Hungarian banks to fix a common MIF to be paid by issuing banks to acquiring banks in Hungary. One of the issues before the CJEU in Budapest Bank was whether the MIF Agreement could be held to be an agreement which had the object of restricting competition. In assessing this argument, the CJEU considered the relevant factors to be taken into account in determining whether an agreement could be said to be of its very nature harmful to competition (so as to have the object of restricting competition) including indications that the MIF Agreement might in fact have had the effect of preventing the level of MIFs charged from increasing. The CJEU held that this was one of a range of relevant factors that the national court should take into account in considering the potential anti-competitive object of an agreement. Visa and Mastercard were given permission to make submissions on the relevance of the CJEU’s judgment in Budapest Bank to its appeal before the Supreme Court, and they did so.

Visa’s application for a reference was made in second-wave proceedings brought, among others, by Dune Group, Coral Racing, Odeon Cinemas, Nando’s Chickenland, JD Wetherspoon and Co-operative Group Food (the Dune Claimants). Those proceedings were transferred to the CAT in May this year.

Visa applied to the CAT for a preliminary reference to the CJEU to answer the question of whether, in order to assess whether its scheme rules imposing default MIFs have the effect of restricting competition in breach of Art 101(1) TFEU, in a situation where Visa and MasterCard operate independently setting the level of MIFs, each card scheme’s MIF should be judged against a counterfactual in which the other scheme is restrained to set zero MIFs, or against a counterfactual in which the other scheme remains free to compete by setting its own MIF independently, at higher positive rates.

The Dune Claimants argued that this question had been definitively answered by the Court of Appeal and the Supreme Court in Sainsburys v Mastercard and others (following the CJEU judgment in Mastercard) which held that the relevant counterfactual for assessing the effects of the scheme rules imposing default MIFs was a no MIF counterfactual with settlement at par. Further, they argued that the judgment in Budapest Bank addressed fundamentally different issues and did not undermine the judgments in Sainsburys v Mastercard and others. The Dune Claimants also argued that, if Visa had wished to argue that the Budapest Bank judgment affected the question of the relevant counterfactual for assessing the effects of the scheme rules imposing default MIFs, it could and should have made those arguments to the Supreme Court in Sainsburys v Mastercard and others.

The CAT dismissed Visa’s application at the end of a remote hearing on Tuesday 1 December. It indicated that it would give reasons for its judgment in due course.

The Dune Claimants were represented by Kassie Smith QC and Fiona Banks, instructed by Humphries Kerstetter.

Sportradar v. Football DataCo and Betgenius: approach to applications to transfer cases from the CAT to the High Court when private law counterclaims are raised

The Competition Appeal Tribunal handed down a Judgment today which clarifies the approach to applications to transfer cases from the CAT to the High Court when the defendants wish to bring counterclaims that are outside the CAT’s jurisdiction.

Sportradar brought a claim in the CAT alleging breach of Chapters I and II of the Competition Act 1998 and Arts. 101 and 102 TFEU arising from the grant by Football DataCo to Betgenius of a long term exclusive right to collect and collate data from football stadia for supply to bookmakers who offer live or “in-play” betting (e.g. which team or player will score next).

The defendants dispute the competition claims and also wish to bring counterclaims alleging (in particular) breach of confidence and unlawful means conspiracy against Sportradar and some of the individuals Sportradar uses to gather data from within stadiums. The defendants were not able to bring those counterclaims in the CAT because they are outside the scope of the CAT’s jurisdiction.

Sportradar prepared indicative defences to the counterclaims relying (in particular) on the competition law claim.

The defendants applied to transfer the case from the CAT to the High Court so that their counterclaims could be determined with the competition case.

The CAT (Roth P.) rejected the application. He viewed the proceedings as a whole, including the potential counterclaims and identified the principles to be applied at [46] in the light of the CA judgment in Sainsbury’s v. Mastercard [2018] EWCA Civ 1536 at [358] and [359].

At [55] Roth P. found that the indicative defences to the counterclaims raise the same competition issue as is raised in the CAT proceedings, and that is a distinct issue from the other private law issues raised in the counterclaims. He ruled that absent special circumstances (which were not present here) the claim directly raising the competition issue should remain in the CAT and therefore refused the application. He indicated that the counterclaims could proceed as private law claims in the High Court.

Ronit Kreisberger QC, Alistair Lindsay and Ciar McAndrew acted for Sportradar

Kassie Smith QC and Thomas Sebastian acted for Football DataCo

Click here for the full judgment. You can also read here the detailed case note by Will Perry.

Supreme Court rules that “Non-Negs” are not part of the “banker’s profits” for the purposes of gaming duty

Commissioners for Her Majesty’s Revenue and Customs (Appellant) v London Clubs Management Ltd (Respondent) [2020] UKSC 49 On appeal from: [2018] EWCA Civ 2210

This case, which is of significant interest to the gaming and casino sector, centres on the treatment of “non-negotiable gaming chips” and “free bet vouchers” (collectively referred to as “Non-Negs” for the purposes of this appeal) when it comes to calculating an operator’s gaming duty.

From October 2008 until September 2012, London Clubs Management (“LCM”) included the face value of all the Non-Negs played by gamblers and retained by its casinos in the calculation of its banker’s profits for the purposes of computing its liability for gaming duty. It subsequently considered that this approach was incorrect and claimed that it had overpaid gaming duty by over £1.97 million.

HMRC rejected LCM’s claim for repayment of the alleged overpayment and LCM appealed that decision. The First-tier Tribunal dismissed LCM’s appeal. The Upper Tribunal allowed LCM’s appeal. The Court of Appeal then dismissed HMRC’s further appeal. HMRC appealed to the Supreme Court but this appeal has now been dismissed, although the members of the Supreme Court disagreed on the reasons for dismissal, with two members adopting a different analysis from that of the majority.

George Peretz QC represented HMRC. Read full judgment here.

Children’s rights: Khatija Hafesji succeeds in landmark appeal finding Coronavirus Regulations unlawful

Article 39 v Secretary of State for Education [2020] EWCA Civ 1577

In a landmark ruling for children’s rights, the Court of Appeal has today declared the Adoption and Children (Coronavirus) (Amendment) Regulations 2020, which suspended a large number of significant safeguarding duties owed to children in care, to be unlawful because of a failure to consult with the Children’s Commissioner and other organisations representing the interests of children. The appeal was brought by Article 39, a charity representing the interests of children in institutions.

The Regulations were introduced in April 2020 and suspended a number of key procedural safeguards, in the form of legal obligations, owed by local authorities to children in their care. The Secretary of State for Education had introduced the Regulations after consultation with (predominantly) local authorities and other children’s social care providers. The Secretary of State had failed to consult with either the Children’s Commissioner, whose statutory function it is to promote and protect children’s rights, or other organisations representing the views and interests of children in care.

Although the High Court had ruled against the Appellant, it had made two significant factual findings. The first was that the amendments were not “some minor burdens” (as had been described by the Secretary of State), but changes which significantly undermined the safeguards for children in care. The second was that, contrary to the Secretary of State’s submissions, there had been sufficient time to consult representatives of children in care.
The Court of Appeal held that such a ‘one-sided’ consultation was a breach of the Secretary of State’s statutory and common law consultation duties. Besides significantly strengthening the voices of children in care and those of their representatives, this important judgment is the first successful challenge to legislation made in response to the Covid-19 pandemic, and is one of the few consultation challenges to succeed on the common law ground of ‘conspicuous unfairness’.

Khatija Hafesji represented Article 39. The Judgment can be found here. A detailed case note by David Gregory is here

Press coverage of the judgment can be found on the BBC and Guardian.

Court of Appeal rules on abuse of process in competition damages claim

The Court of Appeal has dismissed appeals by the Defendants in a series of competition damages claims arising from the European Commission’s 2016 infringement decision relating to trucks. The claims are currently before the Competition Appeal Tribunal which, in March 2020, ruled on a preliminary issue concerning the binding nature of the Commission’s decision. The Tribunal held that:

(1) a number of the Commission’s findings were binding as a matter of EU law; and
(2) in relation to the remainder, it would be an abuse of process for the Defendants to contest findings that the decision recorded them as having accepted in the settlement procedure, unless there was some justification for doing so.

The Tribunal’s conclusion on abuse of process reflected the fact that the Commission’s decision followed a settlement procedure in which the Defendants accepted the infringement.

The Defendants appealed the Tribunal’s decision on abuse of process to the Court of Appeal. The Court dismissed the appeals at the end of the hearing and has today issued its judgment, a copy of which is here. The judgment upholds the Tribunal’s conclusion on abuse of process and in doing so addresses the interaction between EU law and the domestic law of abuse of process. It also explains the Court’s decision not to make a preliminary reference to the EU Court of Justice.

Mark Brealey QC, Tim Ward QC, Ben Lask and Anneliese Blackwood acted for a number of the Claimants before the Court of Appeal. Daniel Beard QC, Paul Harris QC, Ben Rayment, Michael Armitage, David Gregory and Alexandra Littlewood acted for a number of the Defendants.

Binding findings in General Court judgment: Monckton success for health authorities in Supreme Court

The Supreme Court today confirmed the scope of the res iudicata principle in EU law, holding that findings of fact made in an EU General Court judgment in the course of a judgment annulling a finding of breach of Article 102 TFEU were not binding on a UK Court assessing the damages payable for a breach of Article 101 TFEU.

Servier, a French pharmaceutical company, was found by the European Commission to have infringed competition law in relation to the supply of Perindopril, a blood pressure drug. The Commission found that Servier had breached Article 101 TFEU by entering into ‘pay for delay’ agreements, under which generic companies agreed not to enter the market for supplying Perindopril. The Commission also found that Servier had breached Article 102 TFEU both by entering into those agreements, and by acquiring certain technology for the production of Perindopril. On appeal in Europe, the General Court upheld the Commission decision in relation to Article 101 TFEU, but annulled it in respect of Article 102 TFEU on the basis that the Commission had erred in defining the relevant market, and therefore in its assessment that Servier was in a dominant position. Both the Commission and Servier have appealed against the General Court judgment and those appeals remain pending before the CJEU.

In a damages action brought before the English High Court, in which the respective health authorities of England, Wales, Scotland and Northern Ireland are seeking to recover compensation for Servier’s anti-competitive behaviour, Servier have pleaded that the health authorities have failed to mitigate their loss, or have negligently contributed to their loss in that they failed to encourage prescribers to prescribe alternative substitutable blood pressure drugs instead of perindopril. In that context, Servier sought to rely on findings made by the General Court about how substitutable other drugs were with perindopril. Servier contended that those findings were binding as a matter of EU law and that it was an abuse of process for the health authorities to dispute them. The High Court rejected both arguments, but granted permission to appeal on the EU law point. The Court of Appeal likewise rejected the EU law argument, but Servier obtained permission from the Supreme Court to argue that a reference should be made to the CJEU.

Today the Supreme Court found as a matter of procedure that a reference could not be made while the General Court judgment remained subject to appeal. Further, as a matter of substance, the General Court’s findings were not binding in the context in which Servier sought to rely on them. The Supreme Court held that Servier was seeking to borrow findings of fact from an annulling judgment made in the context of abuse of dominance under Article 102 TFEU and to deploy them in the entirely different context of mitigation of loss, which had nothing to do with Article 102 or with the consequences of the annulling judgment. The EU law principle of res iudicata does not bite in those circumstances.

The full judgment is here. A detailed case note by Khatija Hafesji is here.

Jon Turner QC and Philip Woolfe acted for the English health authorities;
Daniel Beard QC, Julian Gregory and Alexandra Littlewood acted for the Scottish and Northern Irish health authorities;
Laura Elizabeth John acted for the Welsh health authorities.

In the proceedings below, Robert Palmer QC also acted for the English, Welsh, Scottish and Northern Ireland health authorities in the Court of Appeal, and Josh Holmes QC acted for the Welsh health authorities at first instance.

Biggest ever penalty for GDPR breach – Gerry Facenna QC, Julianne Kerr Morrison and Khatija Hafesji advise regulator

On 16 October 2020 the Information Commissioner’s Office announced that it had imposed on British Airways the biggest ever penalty in the UK for breach of data protection law.

The penalty is the culmination of a two-year investigation by the ICO into a cyber-attack on British Airways’ systems in 2018, which affected the personal data of over 400,000 of its customers. The ICO’s investigation identified a number of weaknesses in BA’s cyber-security measures, which were found to have allowed the attack to take place. The ICO also found that BA failed to detect the attack for several weeks, until it was alerted to the exfiltration of personal data from its systems by a third party. The ICO concluded that BA’s failures cumulatively amounted to a serious breach of the requirement to take appropriate measures against unauthorised or unlawful processing, contrary to Articles 5(1)(f) and 32 of the GDPR.

The final penalty, of £20m, was calculated from a starting point of £30m, with downward adjustments to take into account mitigating factors including BA’s prompt reporting of the breach and cooperation with the ICO, and a further discount of £4m having regard to the economic consequences of the Covid-19 pandemic.

The ICO was acting as “lead supervisory authority” on behalf of other EU regulators, meaning that the decision had to be submitted for approval by all other EU data protection authorities, in accordance with Article 60 GDPR.

The ICO’s decision has been widely reported on, including by the BBC, Financial Times, The Times, The Telegraph and The Guardian, as well as the Register and other specialist tech and data publications. A copy of the penalty notice and decision is available here.

Gerry Facenna QC, Julianne Kerr Morrison and Khatija Hafesji advised the Information Commissioner’s Office throughout the investigation, Article 60 process, and the final penalty decision.

Melanie Hall QC and Harry Gillow secure a victory for local authorities – the provision of sports and leisure facilities in Northern Ireland falls outside the scope of VAT

In a decision released today in a test case concerning the provision of sports and leisure facilities by all local authorities in Northern Ireland, the First-tier Tax Tribunal has ruled in Mid Ulster District Council (formerly Magherafelt District Council) v Comrs. for Her Majesty’s Revenue and Customs TC/2011/687& TC/2012/9253 that the provision of those facilities is not subject to VAT. The case was the designated lead case for Northern Ireland. Chelmsford City Council v HMRC TC/2011/7844 was the lead case for England & Wales and Midlothian Council v HMRC TC/2011/7816 for Scotland.

The decision for Northern Ireland will potentially have far-reaching implications for all UK local authorities providing services pursuant to any statutory duties and powers which can be classified as a special legal regime. The Tribunal found on the evidence that local authorities in Northern Ireland were not in competition with private providers of sports and leisure services. The appeal was therefore allowed.  The question whether the same is true for the rest of the UK will be determined on the evidence at a further hearing if the parties so request.

Melanie Hall QC and Harry Gillow acted for Mid Ulster (formerly Magherafelt) District Council, the successful Appellant. Raymond Hill acted for HMRC. The decision can be read here. The decisions for England, Wales and Scotland can be read here and here.

The case has been covered in the media: The Irish News and Newtownabbey Times

Court of Appeal Rules on Abuse of Process in Competition Damages Claim

The Court of Appeal has dismissed appeals by the Defendants in a series of competition damages claims arising from the European Commission’s 2016 infringement decision relating to trucks. The claims are currently before the Competition Appeal Tribunal which, in March 2020, ruled on a preliminary issue concerning the binding nature of the Commission’s decision. The Tribunal held that:

(1) a number of the Commission’s findings were binding as a matter of EU law; and
(2) in relation to the remainder, it would be an abuse of process for the Defendants to contest findings that the decision recorded them as having accepted in the settlement procedure, unless there was some justification for doing so.

The Tribunal’s conclusion on abuse of process reflected the fact that the Commission’s decision followed a settlement procedure in which the Defendants accepted the infringement.

The Defendants appealed the Tribunal’s decision on abuse of process to the Court of Appeal and on 7 October 2020, following a remote two-day hearing, the Court dismissed the appeals with reasons to follow.

Mark Brealey QC, Tim Ward QC, Ben Lask and Anneliese Blackwood acted for a number of the Claimants before the Court of Appeal. Daniel Beard QC, Paul Harris QC, Ben Rayment, Michael Armitage, David Gregory and Alexandra Littlewood acted for a number of the Defendants.