Wednesday, August 31, 2016

The closure of BHS - Pensions

After 88 years of trading, British Home Stores (BHS) finally closed - ITV News 28th August and Express 28th August.   The Express reports that - "The stores were originally due to be closed on August 22, but the shut down was pushed back so that joint administrators Duff and Phelps and FRP Advisory could sell as much stock as possible to maximise returns for creditors."

In March 2015, Retail Acquisitions Ltd purchased BHS from Arcadia Group Ltd for the sum of £1 - BBC News 12th March 2015.   On 11th March 2015, Sir Philip Green ceased to be a Director of BHS.  Sir Philip was a Director of Arcadia Group from 16th October 2002 until 15th December 2015.  Arcadia Group is in a chain of businesses with a Jersey registered private company called Taveta Ltd at the pinnacle.  Sir Philip Green's wife has control of Taveta Ltd.

BHS went into administration in 2016 - BBC News 27th April 2016 - with serious concerns over the deficit in the pension funds.  The concerns are likely to require the Pension Protection Fund (PPF) to step in to ensure that former employees receive at least some pension.  The Board of the PPF was created by Part 2 of the Pensions Act 2004.  An investigation by the Pensions Regulator - created by the Pensions Act 2004 Part 1 - is on-going.

Parliament is also involved:
In their report on BHS, the Work and Pensions and Business, Innovations and Skills Committees conclude that Sir Philip chose to rush through the offloading of a beleaguered high street institution, losing money and encumbered with a massive pension fund deficit, to a buyer who he was clearly aware was "manifestly unsuitable", with Sir Philip forced to finance the sale himself.
The Committee is considering:
  • The adequacy of defined benefit pension scheme regulation and regulatory powers, in general and specifically in relation to the pension schemes of complex and multi-national companies
  • Use of these powers by The Pensions Regulator in recent cases, including BHS
  • Resourcing and prioritisation of TPR supervisory work
  • Implications of the regulatory approach for company behaviour, including whether it mitigates or incentivises moral hazard
  • The sustainability of the Pension Protection Fund
  • The fairness of the PPF levy system and its impact on businesses and scheme members

    One power of the Pensions Regulator:

    The Pensions Regulator has certain legal powers under the Pensions Act 2004.  These include contribution notices. The provisions are rather complex and are not analysed further here. 

    The chain of companies:

    As at 1st June 2016, Taveta Investments (No 2) Ltd held 210204416 Ordinary Shares in Arcadia Group and they were the only recorded shareholder - Annual Return 1st June 2016.  Taveta Investments (No 2) Ltd has a single shareholder - Taveta Investments Ltd - holding 10000001 Ordinary Shares.   Sir Philip Green is one of the Directors of Taveta Investments Ltd and was appointed on 4th September 2002 - Annual Return Taveta Investments Ltd.   One of the shareholders in Taveta Investments Ltd is a private company known as Taveta Ltd which is registered offshore in Jersey.  It seems that Sir Philip Green's wife has control of Taveta Ltd.

    Brexit and the UK as a Union - an interesting contribution from Aberdeen

    Let us suppose that the courts decide that Article 50 (Treaty on European Union) may be "triggered" by Ministers using royal prerogative powers relating to treaties.  According to Mr Scott Styles (Senior Lecturer at the University of Aberdeen School of Law) an interesting possibility then arises - Aberdeenunilaw - Scott Styles - Article 50, the Articles of Union and using the Royal Prerogative to end the union between Scotland and England

    Mr Styles' article commences:

    "The use of the prerogative power to invoke Article 50 of the TEU has been much discussed since the Brexit vote on 23 June 2016 (including this initial post on the matter and a follow-up post). The present author believes that only an Act of Parliament can be used to invoke Article 50 but if I am mistaken then a very interesting route to Scottish independence potentially opens up.

    If the UK government were to persist in arguing that the Prerogative can be used to trigger Article 50 and that submission were to be upheld by the courts then that will logically lead to a conclusion that Westminster will not welcome: that the Prerogative can be used to dissolve the Union between Scotland and England."

    If correct in law, this would be a startling consequence.  

    At the present time, legal action has been commenced in London and in Belfast on the  question of whether prerogative may be used.  I am not aware of any similar case in the Scottish courts.

    In common with Mr Styles and several other commentators, I think that an Act of Parliament ought to be used to permit Ministers to trigger Article 50 but I readily acknowledge that there is a strong case to the contrary.  My earlier post is here.  Whatever the outcome of the litigation, the legal accuracy of the Aberdeen article must be doubtful.  Here are my reasons.

    The argument:

    I will refer to the article as "the Styles argument" or "the argument."

    1.  The argument notes that the Union between England and Scotland was preceded, in 1706, by Articles of Union.  This is a matter of historical record and the process of negotiating the Articles is helpfully set out by the UK Parliament.  The Articles amount to a Treaty between what were then two separate nations although they shared a single monarch from 1603.  A Treaty alone could not alter the law in either Scotland or England.  Acts of what were then the separate Parliaments of Scotland and England were needed to to do that.

    2.  The separate Parliaments of Scotland and England each enacted legislation in accordance with their own procedures - the Union with England Act 1707 and the Union with Scotland Act 1706    It was this legislation which created a new nation being the UNION known as Great Britain and there has never been any question over the validity of the legislation.

    3.  Points 1 and 2 are supported in an article by David M Walker (Regius Professor of Law, University of Glasgow 1958-90) - Journalonline - The Union and the law - 18th June 2007

    4.  The Styles argument next asserts that - "If it is correct that the mere use of the Royal Prerogative is sufficient legal authority to trigger Article 50 of the TEU and so revoke and repeal the European Communities Act 1972 then it would seem to follow by analogy that the Royal Prerogative could be used in the context of Scotland leaving the UK ...."

    What is the true effect of Article 50?  Triggering Art 50 will NOT revoke and repeal the European Communities Act 1972. though, in fairness, it will commence a process that could, ultimately, require Parliament to enact legislation to repeal the 1972 Act.  All that Art 50 will do is to commence the process of negotiation leading to Brexit.

    5.   The argument then claims that Article 50 is part of domestic law - " ... Article 50 which is not an international treaty but part of the domestic law."

    Article 50 of the TEU binds the United Kingdom in international law but it is going too far to say that it is part of domestic law.  The European Communities Act 1972 ensures that certain directly applicable EU legislation takes effect in domestic law without further domestic enactment - section 2(1).  Section 2(2) of the Act enables the making of legislation to give effect in domestic law to other EU obligations such as those in EU Directives.  The Act also requires judicial notice to be taken of the Treaties (section 3) and, in any legal proceedings, the meaning of any of the Treaties is a question of law.  Furthermore, under the law as developed by the Court of Justice of the EU, certain Treaty articles are capable of having direct effect in national law provided that certain conditions are met.  That is, I think, as far as the ECA 1972 goes and it therefore stops short of a lock, stock and barrel incorporation of the Treaties into domestic law.

    6.   It is well established law in the jurisprudence of both England and Scotland that prerogative powers are subject to statute law.  Prerogative powers may be abolished or replaced by Acts of Parliament.  In other instances, Parliament has enacted statutory powers but left the prerogative power intact.   Where there is overlap, Ministers must use the statutory power - see Attorney-General v De Keysers Royal Hotel [1920] AC 508.  See also R v Home Secretary ex parte Fire Brigades Union [1995] 2 AC 513.

    7.  The Crown (i.e. the monarchy) of both England and Scotland has been vested in the same person since 1603 (King James VI of Scotland and James I of England) - see Union of the Crowns.

    Since 1707 when the Union was formed, there is a single Crown for the whole of Great Britain.  (Interestingly, the symbolic Honours of Scotland are used on certain ceremonial occasions in Scotland).

    8.  The Acts of Union created a single nation (Great Britain) and a single national Parliament.  There is an argument that the Articles of Union (i.e. the Treaty) cannot be legally discontinued.  Professor Walker wrote this (see the link in 3 above) - "There appears to be neither authority nor precedent for Parliament interfering with an international treaty, particularly where under the treaty the consenting states had ceased to be independent states and had merged their personalities in a new state by an incorporating union."

    For my part, I think this is a case where, if the UK parliament wished to alter matters then political reality will trump any contrary legal theory!  If Professor Walker is correct then it is difficult to see how Scottish Independence could be achieved!  Whenever Scottish Independence is mentioned there never seems to be any doubt that, legally-speaking, it can be achieved.  Whether it is politically desirable is a matter on which opinion differs markedly but that is altogether another issue.

    9.   The Styles argument proceeds to say that it could be possible for the Scottish First Minister to use prerogative power to revoke the Articles of Union and thence by implied repeal revoke the Act of Union.

    Styles notes that the Union of the Kingdoms of Scotland and England is a reserved matter (Scotland Act 1998 Schedule 5 Part I) but Her Majesty's prerogative is not reserved.  The argument thus concludes that there seems nothing in law to prevent the Scottish Government exercising their Prerogative powers to revoke the Articles of Union and hence the Act of Union.

    Two observations on this:

    a)   It cannot be the case that the Scottish government could revoke the Articles of Union using prerogative because the provision that Her Majesty's prerogative is not reserved has to be read in the context of Schedule 5 also stating very clearly that the Union is a reserved matter.   The Union is not within the legislative competence of the Scottish Parliament.  Therefore, it cannot have been the intention of the UK Parliament, when enacting the Scotland Act 1998, to have made it possible for Scottish Ministers to simply achieve by prerogative powers what they are not permitted to achieve by legislation.

    b)   The Articles were negotiated on behalf of two nations which gave up their independent existence to form the Union.  It is therefore inconceivable that, over 300 years later, either Scotland or England could simply revoke the Articles of Union using prerogative power though it would be possible for the UK Parliament to enact legislation rendering the Articles ineffective for the future.

    The Styles argument is interesting but, with the greatest of respect, for the above reasons I do not think it is correct.

    As ever, comment is welcome.

    Wednesday, August 24, 2016

    Brexit ~ the European Communities Act 1972

    The EU Referendum vote in favour of Brexit will eventually require the dismantling of the complex relationship between the domestic law of the UK and the law of the EU.  This will not be a straightforward task and the difficulties should not be underestimated.  It is far from being a matter of simply repealing the European Communities Act 1972.

    The European Communities Act 1972:

    Here is the European Communities Act 1972 (as amended up to 11th August 2016).  It is - "An Act to make provision in connection with the enlargement of the European Communities to include the United Kingdom, together with (for certain purposes) the Channel Islands, the Isle of Man and Gibraltar."

    The ECA as originally enacted has been amended as necessary over the years and the modern European Union has developed - Timeline of the EU.  

    Events leading to the ECA 1972

    The UK applied to join the European Economic Communities in 1967 and negotiations eventually began in October 1970.   The question of whether Britain should sign the Treaty of Accession was debated in the House of Commons in October 1971.  Domestic opinion was strongly against membership and there was considerable concern over whether the terms negotiated were good enough for Britain.  Doubts over many issues affecting Britain's future were aired in a debate that lasted six days.  Hansard for 28th October 1971 records that the House of Commons approved the following motion by 356 votes to 244.

    "That this House approves Her Majesty's Government's decision of principle to join the European Communities on the basis of the arrangements which have been negotiated."

    Prime Minister Edward Heath signed the Treaty of Rome on 22nd January 1972 - Parliament Treaty of Rome.

    The signing of the Treaty of Rome did not have any immediate effect in the domestic legal systems of the UK because the UK has a dualist system with respect to Treaties.  This system requires Parliament to enact legislation in order to give legal effect in domestic law to a treaty.  A Bill, consisting of just 12 clauses, was introduced into Parliament.  Some 300 hours of debate followed before it became law as the European Communities Act 1972.  There was no referendum even though it was known that public opinion was, generally, either hostile or uncertain.  See BBC - A short history of UK referendums.

    Note: Following the "LEAVE" vote in the 2016 European Union Referendum, there has not (as yet) been any extensive debate in Parliament let alone approval of any decision to leave.*

    The EU Treaties:

    The Treaties constitute the fundamental law of the EU. 
    The importance of the European Communities Act 1972:

    The general implementation of the EU Treaties is the purpose of section 2 of the European Communities Act 1972.  (The phrase EU Treaties is defined in the ECA 1972 section 1 - as amended).

    The Treaties empower the EU to make REGULATIONS.  A Regulation has general application and is binding in its entirety and directly applicable in all Member States.  The words "directly applicable" mean that a regulation has legal effect in Member States without any further need for national legislation.  The ECA 1972 section 2(1) provides for such directly applicable EU law.


    A further form of EU legislation is the DIRECTIVE.  A directive is binding, as to the result to be achieved, upon each Member State to which it is addressed, but it is left to national authorities to choose the form and method of implementation.  The ECA 1972 section 2(2) contains a power for the making of national legislation or the purpose of implementing any EU obligation of the United Kingdom etc.



    Implemented in national law by statutory instrument 2012 No. 3113

    (The word "Regulations" here refers to a UK form of Statutory Instrument and not to a Regulation of the EU).

    The central importance of the ECA 1972 is clear since, without this Act, neither the EU Treaties nor other EU legislation would have effect in the domestic legal systems of the United Kingdom.

    Brexit - A complex problem:

    In the 43 years and 8 months since 1st January 1973, the ECA 1972 has enabled a mass of EU-related legislation to take effect in domestic law.  One consequence of Brexit is that ALL of this legislation will eventually need to be identified but, with appropriate resources, that ought not to be beyond the wit of government lawyers though there can be no doubting the difficulty!

    Having identified the legislation it will be necessary to decide, for each item of this legislation, whether it can be abandoned or whether it offers something of value to the UK that ought to be retained in domestic law.  Some of those decisions will depend on whatever the on-going UK-EU relationship is to be and that will not be fully known until the conclusion of the negotiations which will commence in earnest when the UK gives notice (under Article 50) of a decision to leave.

    As to what may be retained, the political climate at Westminster is also likely to play a significant part. Some decisions will be politically controversial such as whether workplace rights will be retained where such rights have their origins in EU law.  On this see University of Bristol - Worker's Rights- Opinion of Michael Ford QC.

    All of this points to a lengthy and difficult process eventually leading to Brexit.  The difficulties - both legal and political - should not be underestimated.  There is a mountain to climb before the ECA 1972 can be repealed.

    * The Independent - 28th August - Theresa May 'acting like Tudor monarch' over plans to deny parliament Brexit vote

    Friday, August 19, 2016

    Beyond Brexit - WTO?

    It is almost 60 days since the EU referendum of 23rd June 2016.  Following the resignation of Prime Minister David Cameron, a new government was formed under the leadership of Prime Minister Theresa May who stated during the brief party leadership campaign that "Brexit means Brexit" and she reorganised aspects of the government accordingly.  Detail of the reorganisation is at Parliament Written Statement 18th July.  There is a new Department for Exiting the European Union and also a Department for International Trade.

    A the moment, there are many questions as to what the future might hold.  For example, what kind of relationship will emerge between the EU and also with non-EU countries.  Although it was intended to inform the referendum, this Referendum Document gives indications as to what forms of relationship might be possible.

    The possibility
    cannot be ruled out that UK will find itself trading under World Trade Organization terms - discussed at pages 35 to 42  of the Referendum document.  It would be the most definitive break possible from the EU.  There would be no access to the EU single market and no wider co-operation on crime and terrorism (unless separately negotiated).  Privileged access to some 53 markets outside the EU would end because those deals were set up by the EU on behalf of member states.  The timescale to renegotiate such deals separately cannot be stated with any certainty but it is generally thought that it could extend to several years.

    The World Trade Organization came into being on 1st January 1995 replacing earlier arrangements.  On 29th July 2016, WTO had a membership of 164 countries.  The EU is a member in its own right.  More information about the WTO is available via their website - What is the WTO?

    See also The United Kingdom and the WTO

    An interesting discussion of the situation now facing the UK and the EU is available at Businessresearcher 15th August 2016.  It is well worth reading.

    The European Economic Area (EEA) and the European Free Trade Area (EFTA) were the subjects of an earlier post 26th July - Beyond Brexit - EFTA and EEA?

    European Economic Area

    European Free Trade Area

    World Trade Organization

    about the European Economic Area (EEA

    European Free Trade Association (EFTA)

    EFTA today maintains the management of the EFTA Convention (intra-EFTA trade), the European Economic Area (EEA) Agreement (EFTA-EU relations), and the EFTA Free Trade Agreements (third country relations). The EFTA Convention and EFTA free trade agreements are managed by the Geneva office, and the EEA Agreement by the Brussels office.

     Ministers in the British government at August 2016.

    Barbaric and planned murder in Lancashire

    Crown Court at Preston
    The murder of Sadie Hartley (age 60) was "a crime of obsession, of arrogance, of barbarity ..." - Mr Justice Turner.  Sarah Williams (35) and Katrina Walsh (56) were found guilty of the murder at the Crown Court at Preston before Turner J and a jury.

    Media reports include Lancashire Telegraph and BBC News 

    The Sentencing Remarks of Turner J are available -Sentencing Remarks - and offer a clear example of how, in practice, the Criminal Justice Act 2003 Schedule 21 is applied.  The principal offender was Sarah Williams and a minimum term of imprisonment of 30 years was set in her case.  Katrina Walsh was "a fellow spirit and enthusiastic participant" who had engaged in several preparatory acts and also assisted in trying to cover up the offence.  Also convicted of the murder, Walsh received a minimum term of 25 years.

    Schedule 21 paragraph 5 deals with cases of "particularly high seriousness" and para. 5(2) sets out some cases which would normally be regarded in that way.  The list in para 5(2) is in no sense an exhaustive list and so it does not prevent other cases being regarded as being of "particularly high seriousness" - see, for example, Griffiths and others v The Queen [2012] EWCA Crim 2822 (Hughes LJ and Ramsey and Irwin JJ).

    Tuesday, August 16, 2016

    Roundup - Items of Interest

    Updated 18th August:

    Here is a round up of some of the prominent topics at the present time.  In no particular order ....

    The future of the civil courts -  see the Interim Report by Lord Justice Briggs and also his final report.  The Martin Partington blog has taken a look at it.

    Independent Inquiry into Child Sexual abuse - the appointment of a non-lawyer as the inquiry chairman (previous post) has attracted some comment - see Rightsinfo and also Barrister blogger.

    President of the Family Division Viewpoint - see the 14th View from the President's Chambers
    and see Family Drug and Alcohol Court (FDAC) and PAUSE.  Lancaster University - Family Court recycles one in three young mums.

    Imprisonment for Public Protection (IPP) - this "mess" rumbles along and the government is urged to find a solution - see  Solicitors Journal

    Independent Reviewer of Terrorism Legislation - the search is on for a new Reviewer

    Administrative Court and Judicial Review - take a look at the latest material

    Brexit - Professor A C Grayling's view that Parliament has a duty to keep us in the EU

    Case management - here is a newsletter - the author has calculated that the Shard (at 307 metres) is high enough to be a stack of 3.07 million sheets of paper and that the justice system could get rid of 2.7 shards per month!

    Solicitor Phil Shiner of Public Interest Lawyers - this Guardian article will be of interest

    New legislation on "Zombie Knives"

    Having article with blade or point in public place:

    On 9th May 2014, this blog looked at sentencing for possession of bladed or pointed articles.  The offence is governed by the Criminal Justice Act 1988 section 139.  In that post it was noted how the maximum sentencing powers for possession of such articles had been increased by Parliament but there was some concern that actual sentencing did not reflect those increases.

    Sentencing Guidance for Magistrates is now available online and this shows that where the offence is committed in dangerous circumstances but the weapon was not used to threaten or cause fear then 6 weeks custody could be appropriate with a sentencing range of High level community order to committal to Crown Court for sentence - see guidance here.  Where the weapon is used to threaten or cause fear and the offence is committed in dangerous circumstances then the guidance is that Magistrates should commit the offence to the Crown Court for sentencing.

    There has been growing concern that so-called Zombie Knives have become a weapon of choice for those with criminal intentions.  The government has secured new legislation on such articles.

    Offensive Weapons - Manufacture, selling etc:

    Section 141 of the Criminal Justice Act 1988  states

    Any person who manufactures, sells or hires or offers for sale or hire, exposes or has in his possession for the purpose of sale or hire, or lends or gives to any other person, a weapon to which this section applies shall be guilty of an offence and liable

    (a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or to both;

    (b) on conviction on indictment, to imprisonment for a term not exceeding 4 years, or to a fine, or to both.

    The Criminal Justice Act 1988 (Offensive Weapons) Order 1988 (the “1988 Order”) specifies descriptions of weapons to which section 141 applies.

    The 1988 Order has now be amended so that the weapon known as a zombie knife, zombie killer knife or zombie slayer knife is included in the list of specified weapons.  The amending statutory instrument is the Criminal Justice Act 1988 (Offensive Weapons)(Amendment) Order 2016.

    2.—(1) The Schedule to the Criminal Justice Act 1988 (Offensive Weapons) Order 1988 (which specifies offensive weapons for the purposes of section 141 of the Criminal Justice Act 1988) is amended as follows.

    (2) In paragraph 1, after sub-paragraph (r) insert -

    (s) the weapon sometimes known as a “zombie knife”, “zombie killer knife” or “zombie slayer knife”, being a blade with -
    (i) a cutting edge;
    (ii) a serrated edge; and
    (iii) images or words (whether on the blade or handle) that suggest that it is to be used for the purpose of violence.

    See the Explanatory Notes to the amending legislation.  The amendment is in force from 18th August 2016.


    I did a Google search against "Zombie knife" and it revealed a vast array of potentially highly dangerous articles.  Quite which of them would actually fall within the definition in the new legislation is debatable and, at this time, I am not going to speculate. 

    The new legislation apart, those in possession of such items may find themselves charged with the offence under section 139 or possibly an offence under other legislation including the Prevention of Crime Act 1953 (Offensive Weapons) - see CPS Guidance Offensive Weapons, Knives, Bladed and Pointed Articles