Wilson and others v. Secretary of State for Trade and Industry (Appellant)
35. The distinction between the substantive content of a right and an unacceptable procedural bar to its enforcement by a court can give rise to difficulty in distinguishing the one from the other in a particular case. As a matter of drafting, a restriction on the scope of a right may be framed in several different ways. But the drafting technique chosen by the draftsman cannot be determinative of this issue. Human Rights conventions are concerned with substance, not form, with practicalities and realities, not linguistic niceties. The crucial question in the present context is whether, as a matter of substance, the relevant provision of national law has the effect of preventing an issue which ought to be decided by a court from being so decided. The touchstone in this regard is the proper role of courts in a democratic society. A right of access to a court is one of the checks on the danger of arbitrary power. In Matthews v Ministry of Defence  UKHL 4,  3 WLR 435, 477, para 142, Lord Walker of Gestingthorpe noted that article 6 is in principle concerned with the procedural fairness and integrity of a state's judicial system. Lord Hoffmann observed, at p. 447, para 29, that it should not matter how the law is framed, provided one holds onto the underlying principle, which is to maintain the rule of law and the separation of powers.
36. In the present case the essence of the complaint is that section 127(3) of the Consumer Credit Act has the effect that a regulated agreement is not enforceable unless a document containing all the prescribed terms is signed by the debtor. In my view, thus framed, the complaint does not bring article 6(1) into play. In terms of labels, that is a restriction on the scope of the rights a creditor acquires under a regulated agreement. It does not bar access to court to decide whether the case is caught by the restriction. It does bar a court from exercising any discretion over whether to make an enforcement order. But in taking that power away from a court the legislature was not encroaching on territory which ought properly to be the province of the courts in a democratic society.
37. In reaching the opposite conclusion the Court of Appeal focused on the exclusion of any meaningful consideration by the court of the creditor's rights under the agreement in a case where the document signed by the debtor does not include all the prescribed terms. The court held that the exclusion of any judicial remedy in such a case engages article 6(1):  QB 74, 92-93, paras 31, 32. I am unable to agree. The inability of the court to make an enforcement order in such a case, whatever the circumstances, is a limitation on the substantive scope of a creditor's rights. It no more offends the rule of law and the separation of powers than would be the case if Parliament had said that such an agreement is void.
38. In contrast to article 6(1), article 1 of the First Protocol is concerned with the content of substantive national law. Article 1 provides:
39. On its face article 1 is engaged in this case, most obviously with regard to the BMW car delivered by Mrs Wilson to First County Trust as security. On delivery First County Trust as pawnee acquired a proprietary interest in the car. That was in January 1999. The company's proprietary interest ceased eight months later, in September 1999, when the court refused to make an enforcement order. In addition, both parties acquired contractual rights under the agreement. 'Possessions' in article 1 is apt to embrace contractual rights as much as personal rights. Contractual rights may be more valuable and enduring than proprietary rights. But, by virtue of the statute, the contractual rights acquired by First County Trust were enforceable only with the consent of the borrower pursuant to section 173(3).
40. The response of the Secretary of State and others is that all the rights acquired by First County Trust under the agreement were from their inception subject to the limitations prescribed by the Consumer Credit Act. A restriction on the scope of the rights acquired by a lender under a transaction is not within article 1 of the First Protocol. A person who acquires property subject to limitations under national law which subsequently bite according to their tenor cannot complain that his rights under article 1 of the First Protocol have been infringed.
41. I do not agree. This proposition is stated too widely and too loosely to be acceptable. Clearly, the expiry of a limited interest such as a licence in accordance with its terms does not engage article 1. That is not this case. Here the transaction between the parties provided for repayment of the loan and for the car to be held as security. What is in issue is the 'lawfulness' of overriding legislation. The proposition advanced by the Secretary of State would mean that however arbitrary or discriminatory such legislation might be, if it was in existence when the transaction took place a court enforcing human rights values would be impotent. A Convention right guaranteeing a right of property would have nothing to say. That is not an attractive conclusion.
42. There are of course many circumstances where statutes empower the executive or the courts to make orders depriving a person of some of his possessions. Compulsory acquisition, and property adjustment orders on divorce, are instances. The exercise of powers such as these prima facie engages article 1. This is so irrespective of whether the enabling statute was enacted before or after the property affected by the order was acquired. Hakansson v Sweden (1990) 13 EHRR 1 is an example where the law was in place before the property in question was acquired. The law providing for the compulsory resale of the applicants' land within two years existed when they bought the land. Thus a provision in the Consumer Credit Act empowering a court to refuse to enforce a regulated agreement may engage article 1 even though the Act was in force before the agreement was entered into.
43. In the present case the relevant statutory provisions are framed differently. They do not empower the court to refuse to enforce the agreement now in question. They go further. The court is compelled to refuse to make an enforcement order. Is this difference material? I think not. It would be passing strange if article 1 were engaged in the former case but not the latter. A law regulating the effect of a transaction between the parties in the public interest does not always escape review under article 1 of the First Protocol. Such a law may infringe article 1 if it creates an 'imbalance' between the parties which would result in one party being arbitrarily or unjustly deprived of his possessions for the benefit of the other: see Bramelid v Sweden (1983) 5 EHRR 249, 256.
44. Thus the question in the present case is one of characterisation of the nature and effect of the relevant provisions of the Consumer Credit Act, considered as a matter of substance rather than form. In my view, consistently with the underlying objective of article 1 of the First Protocol, the relevant provisions in the Consumer Credit Act are more readily and appropriately characterised as a statutory deprivation of the lender's rights of property in the broadest sense of that expression than as a mere delimitation of the extent of the rights granted by a transaction. The rigid ban on enforcement of security and contractual rights prescribed by section 127(3) alone and in conjunction with sections 106 and 113 engages article 1 of the First Protocol. The lender's rights were extinguished in favour of the borrower by legislation for which the state is responsible. This was a deprivation of possessions within the meaning of article 1: see James v United Kingdom (1986) 8 EHRR 123,140, para 38. Whether this statutory interference with First County Trust's peaceful enjoyment of its possessions was justified, and therefore not a breach of article 1, is a separate issue.
45. I do not think there is any inconsistency between this conclusion and the conclusion stated above regarding article 6 (1). A statutory provision may be characterised at one and the same time as a limitation on the scope of a creditor's rights for the purposes of article 6 (1) and as a law depriving a person of his possessions for the (different) purposes of article 1 of the First Protocol.
46. Before considering whether section 127(3) is compatible with article 1 of the First Protocol I must digress to deal with two preliminary matters. The first concerns the legal consequences of section 127(3). When a regulated agreement is rendered irredeemably unenforceable by section 127(3), the lender is unable to enforce the agreement. But does he, quite apart from his (unenforceable) rights under the agreement, have a restitutionary claim against the borrower in respect of the money lent? The parties to the agreement intended the money would be repayable in accordance with the terms of the agreement. Inability to enforce the terms of the agreement does not inevitably carry with it the consequence that the borrower may simply keep the money. Retention of the money, it is said, would be unjust enrichment, for which the appropriate remedy would be an order that the borrower repay what was never intended to be other than a loan. Reliance was placed, by way of analogy, on the decision of the Court of Appeal in Westdeutsche Landesbank Girozentrale v Islington London Borough Council  1 WLR 938. There a bank paid money to a local authority under an interest rate swap agreement, which was held later to be outside the local authority's powers. The local authority had been unjustly enriched and the bank was entitled to a restitutionary remedy.
47. A secondary question also arises: if the lender does have a restitutionary claim, is that a matter to be taken into account when considering whether section 127(3) is compatible with article 1 of the First Protocol?
48. I can deal with these two questions quite shortly, starting with the latter. I am in no doubt that a lender's restitutionary remedy, if he has one, is a matter to be taken into account when considering whether section 127(3) is compatible with article 1 of the First Protocol. The adverse consequences of an alleged infringement of a Convention right cannot sensibly be assessed other than in the round. The real position of the claimant is what matters. If in practice a lender can ameliorate the immediate and directly adverse consequence of section 127(3) by resort to some other right or remedy readily available to him, that is a matter to which the court must have regard. I cannot accept the contrary arguments addressed to the House.
49. I consider, however, that there is no relevant restitutionary remedy generally available to a lender in the circumstances now under consideration. The message to be gleaned from sections 65, 106, 113 and 127 of the Consumer Credit Act is that where a court dismisses an application for an enforcement order under section 65 the lender is intended by Parliament to be left without recourse against the borrower in respect of the loan. That being the consequence intended by Parliament, the lender cannot assert at common law that the borrower has been unjustly enriched. That would be inconsistent with the parliamentary intention in rendering the entire agreement unenforceable. True, the Consumer Credit Act does not expressly negative any other remedy available to the lender, nor does it render an improperly executed agreement unlawful. But when legislation renders the entire agreement inoperative, to use a neutral word, for failure to comply with prescribed formalities the legislation itself is the primary source of guidance on what are the legal consequences. Here the intention of Parliament is clear.
50. This interpretation of the Consumer Credit Act accords with the approach adopted by the House in Orakpo v Manson Investments Ltd  AC 95, regarding section 6 of the Moneylenders Act 1927 and, more recently, in Dimond v Lovell  1 AC 384, another case where section 127(3) precluded the making of an enforcement order. In Dimond's case the restitutionary remedy sought was payment of the hire charge for a replacement car used by Mrs Dimond. The House rejected a claim advanced on the basis of unjust enrichment. Lord Hoffmann observed that Parliament contemplated that a debtor might be enriched consequential upon non-enforcement of an agreement pursuant to the statutory provisions. It was not open to the court to say this consequence is unjust and should be reversed by a remedy at common law:  1 AC 384, 397-398.
Use of Hansard in compatibility cases
51. The second preliminary matter concerns the Court of Appeal's use of Hansard in the present case. When considering whether this was a case where the courts should be ready to defer to the considered opinion of elected representatives, the Court of Appeal, at  QB 74, 93-94, para 33, pointed to the need for the court to identify the social policy issue which the legislature or the executive thought it necessary to address and 'the thinking which led to that issue being dealt with in the way that it was':
52. In this connection the Court of Appeal considered the 'lengthy gestation' of the Consumer Credit Act. The court referred to parliamentary debates on the Bill, not as an aid to interpretation, but on the reason which led Parliament to enact section 127(3). The Court of Appeal concluded that the debates provide no answer to this issue: such references as there are 'tend to confuse rather than to illuminate' (para 36). The court added, in para 37:
53. Although the references to Hansard in the present case were inconclusive, Mr Sumption QC expressed to your Lordships' House the concern of the Speaker of the House of Commons and of the Clerk of the Parliaments at the 'wider significance' of the exercise undertaken by the Court of Appeal. This exercise, he submitted, involved measuring against standards derived from the Convention the acceptability of Parliament's reasons for legislating in a particular way, and doing so by reference to the 'thinking' apparent from the record of debates. Further, it involved treating the absence of expressed reasons, acceptable or otherwise, as a factor making it more difficult to justify the enactment in Convention terms. The courts should not treat speeches made in Parliament, whether by ministers or others, as evidence of the policy considerations which led to legislation taking a particular form. The exercise on which the Court of Appeal engaged is not an appropriate exercise for a court. There are no circumstances in which it is appropriate for a court to refer to the record of parliamentary debates in order to decide whether an enactment is compatible with the Convention. The policy and objects of a statute must by determined by interpreting its language, which alone represents Parliament's intention. Reference to debates for the purpose of determining whether the policy considerations put forward by those participating in debates in either House were justifiable in Convention terms and proportionate to the remedy proposed would involve 'questioning' what is said in Parliament contrary to article 9 of the Bill of Rights 1689. That is a different exercise from the one undertaken in Pepper v Hart  AC 593, and it is an exercise essentially adverse to Parliament's intention, not supportive of it.
54. These submissions raise a point of constitutional importance. This House sitting in its judicial capacity is keenly aware, as indeed are all courts, of the importance of the legislature and the judiciary discharging their own constitutional roles and not trespassing inadvertently into the other's province. Thus, in resolving any question which may arise on the practical application of this principle in a particular case, the courts welcome the participation of the Speaker of the House of Commons and the Clerk of the Parliaments in the proceedings. The House has been much assisted by the submissions made on their behalf by Mr Sumption. The present case is in fact the first time the authorities of Parliament have sought to be heard on the use of Hansard by the courts.
55. The starting point for any consideration of the matters raised by these submissions is, indeed, the respective roles of Parliament and the courts. Parliament enacts legislation, the courts interpret and apply it. The enactment of legislation, and the process by which legislation is enacted, are matters for Parliament, not the courts. Thus, article 9 of the Bill of Rights 1689 provides, in modern spelling, that 'the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.' This provision is part of the wider principle that the courts and Parliament are both astute to recognise their constitutional roles: Lord Browne-Wilkinson in Prebble v Television New Zealand Ltd  1 AC 321, 332. These distinct roles reflect one aspect of the separation of powers under this country's constitution.
56. The decision in Pepper v Hart  AC 593 removed from the law an irrational exception. When a court is carrying out its constitutional task of interpreting legislation it is seeking to identify the intention of Parliament expressed in the language used. This is an objective concept. In this context the intention of Parliament is the intention the court reasonably imputes to Parliament in respect of the language used. In seeking this intention the courts have recourse to recognised principles of interpretation and also a variety of aids, some internal, found within the statute itself, some external, found outside the statute. External aids include the background to the legislation, because no legislation is enacted in a vacuum. It has long been established that the courts may look outside a statute in order to identify the 'mischief' Parliament was seeking to remedy. Lord Simon of Glaisdale noted it is 'rare indeed' that a statute can be properly interpreted without knowing the legislative object: Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG  AC 591, 647. Reports of the Law Commission or advisory committees, and government white papers, are everyday examples of background material which may assist in understanding the purpose and scope of legislation.
57. Before the decision in Pepper v Hart a self-imposed judicial rule excluded use of parliamentary materials as an external aid. The courts drew a veil around everything said in Parliament. This had the consequence that a statement made in a government white paper, issued by the relevant government department before legislation was introduced, could be used as an external aid. But if the same statement were made by a minister of the department in Parliament when promoting the Bill in one or other House, the courts were strictly unable to take cognisance of the minister's statement.
58. In relaxing this self-imposed rule the House enunciated some practical safeguards in Pepper v Hart. These were intended to keep references to Hansard within reasonable bounds. One of these safeguards is that the parliamentary statement must be made by the minister or other promoter of the Bill. In imposing this cautionary limitation the House was not, I believe, intending to attribute to ministerial statements some special status, thereby encroaching upon the court's constitutional task of determining objectively what was the intention of Parliament in using the language in question. A clear and unambiguous ministerial statement is part of the background to the legislation. In the words of Lord Browne-Wilkinson in Pepper v Hart  AC 593, 635, such statements 'are as much background to the enactment of legislation as white papers and Parliamentary reports'. But they are no more than part of the background. As I emphasised in R v Secretary of State for the Environment, Transport and the Regions, Ex parte Spath Holme Ltd  2 AC 349, 399, however such statements are made and however explicit they may be, they cannot control the meaning of an Act of Parliament.
59. Suggestions have been made that unequivocal ministerial statements made in Parliament regarding an ambiguous provision in a Bill may have a more exalted role. In his influential article 'Pepper v Hart; A Re-examination' (2001) 21 OJLS 59, Lord Steyn noted it may be unobjectionable for a judge to use Hansard to identify the mischief at which a statute is aimed. But he rightly drew attention to the conceptual and constitutional difficulties in treating the intentions of the government revealed in debates as reflecting the will of Parliament, as distinct from the possibility that they may give rise to an estoppel or the like against the government.
60. In the present case Mr Sumption did not submit that Pepper v Hart was wrongly decided. Nor is it necessary to decide whether Pepper v Hart does more than permit courts, when ascertaining the intention of Parliament, to have regard to ministerial statements made in Parliament in the same way as they may have regard to ministerial statements made outside Parliament. What is important is to recognise there are occasions when courts may properly have regard to ministerial and other statements made in Parliament without in any way 'questioning' what has been said in Parliament, without giving rise to difficulties inherent in treating such statements as indicative of the will of Parliament, and without in any other way encroaching upon parliamentary privilege by interfering in matters properly for consideration and regulation by Parliament alone. The use by courts of ministerial and other promoters' statements as part of the background of legislation, pursuant to Pepper v Hart, is one instance. Another instance is the established practice by which courts, when adjudicating upon an application for judicial review of a ministerial decision, may have regard to a ministerial statement made in Parliament. The decision of your Lordships' House in R v Secretary of State for the Home Department, Ex p Brind  1 AC 696 is an example of this. I now turn to consider whether a challenge to the compatibility of legislation with Convention rights may be a further instance of the innocuous use by courts of statements made in Parliament.
61. The Human Rights Act 1998 requires the court to exercise a new role in respect of primary legislation. This new role is fundamentally different from interpreting and applying legislation. The courts are now required to evaluate the effect of primary legislation in terms of Convention rights and, where appropriate, make a formal declaration of incompatibility. In carrying out this evaluation the court has to compare the effect of the legislation with the Convention right. If the legislation impinges upon a Convention right the court must then compare the policy objective of the legislation with the policy objective which under the Convention may justify a prima facie infringement of the Convention right. When making these two comparisons the court will look primarily at the legislation, but not exclusively so. Convention rights are concerned with practicalities. When identifying the practical effect of an impugned statutory provision the court may need to look outside the statute in order to see the complete picture, as already instanced in the present case regarding the possible availability of a restitutionary remedy. As to the objective of the statute, at one level this will be coincident with its effect. At this level, the object of section 127(3) is to prevent an enforcement order being made when the circumstances specified in that provision apply. But that is not the relevant level for Convention purposes. What is relevant is the underlying social purpose sought to be achieved by the statutory provision. Frequently that purpose will be self-evident, but this will not always be so.
62. The legislation must not only have a legitimate policy objective. It must also satisfy a 'proportionality' test. The court must decide whether the means employed by the statute to achieve the policy objective is appropriate and not disproportionate in its adverse effect. This involves a 'value judgment' by the court, made by reference to the circumstances prevailing when the issue has to be decided. It is the current effect and impact of the legislation which matter, not the position when the legislation was enacted or came into force. (I interpose that in the present case no suggestion was made that there has been any relevant change of circumstances since the Consumer Credit Act was enacted.)
63. When a court makes this value judgment the facts will often speak for themselves. But sometimes the court may need additional background information tending to show, for instance, the likely practical impact of the statutory measure and why the course adopted by the legislature is or is not appropriate. Moreover, as when interpreting a statute, so when identifying the policy objective of a statutory provision or assessing the 'proportionality' of a statutory provision, the court may need enlightenment on the nature and extent of the social problem (the 'mischief') at which the legislation is aimed. This may throw light on the rationale underlying the legislation.
64. This additional background material may be found in published documents, such as a government white paper. If relevant information is provided by a minister or, indeed, any other member of either House in the course of a debate on a Bill, the courts must also be able to take this into account. The courts, similarly, must be able to have regard to information contained in explanatory notes prepared by the relevant government department and published with a Bill. The courts would be failing in the due discharge of the new role assigned to them by Parliament if they were to exclude from consideration relevant background information whose only source was a ministerial statement in Parliament or an explanatory note prepared by his department while the Bill was proceeding through Parliament. By having regard to such material the court would not be 'questioning' proceedings in Parliament or intruding improperly into the legislative process or ascribing to Parliament the views expressed by a minister. The court would merely be placing itself in a better position to understand the legislation.