Wilson and others v. Secretary of State for Trade and Industry (Appellant)
123. In my opinion the same result must follow in this case. I would be reluctant to say that the enrichment of Mrs Wilson was an unjustified enrichment. There is no doubt that she has received a benefit which cannot be justified on legal grounds at the expense of the creditor. But section 127(3) of the 1974 Act too, like sections 6 and 13(1) of the 1927 Act, was designed to protect unsophisticated borrowers. There is no doubt that they would be exposed to the risk of harassment by unscrupulous creditors if creditors could override the statute by appealing to the common law. I would prefer to say that it would be inconsistent with the statute to provide FCT with a common law remedy to redress the enrichment which Mrs Wilson has received at its expense.
124. I would allow the appeal and set aside the declaration of incompatibility.
LORD HOBHOUSE OF WOODBOROUGH
125. This exceptional appeal raises important questions under two distinct heads, the first relating to the proper construction of the Human Rights Act 1998 and the second regarding the use of parliamentary materials, specifically Hansard, in relation to questions arising under the provisions contained in Schedule 1 to the Act defining the Convention rights. The facts which gave rise to the original litigation have been set out in the Opinion of my noble and learned friend Lord Nicholls of Birkenhead as have the relevant dates and the unusual procedural history leading to this appeal which has been argued not by either of the original parties but by other interests. The House has also had the valuable assistance of counsel acting as amici curi'.
The Human Rights Act 1988:
126. Although the main question of construction is to decide to what extent (if at all) the Act has retrospective effect, the first task is to examine the structure of the Act. The Act does not simply say, as do some comparable Acts (eg s.1(2) of the Carriage of Goods by Sea Act 1971), that the provisions of the European Convention "shall have the force of law". Its approach is more subtle. It has a limited definition of 'Convention rights': s.1. It requires courts in determining a question in connection with a Convention right to "take into account" judgments of the European Court of Human Rights and other cognate material: s.2. It thus, at the outset, draws a distinction between the international obligations of the United Kingdom under the Convention and what are to be the municipal law obligations of the three organs of the state, the Executive, the Legislature and the Judiciary. So far as the Convention is concerned such distinctions are in principle irrelevant. If the provisions of the Convention have been broken, the relevant state is in breach and no further analysis is required. The Act, on the other hand, follows a scheme which recognises that the role of the Judiciary is to apply and enforce the 'Convention rights' municipally, treats the executive branch of government, in the form of any public authority, as being civilly liable for any breach of the 'Convention rights' on its part and makes their offending conduct unlawful, and recognises that laws passed by the Legislature may be incompatible with a 'Convention right'. Each of the three aspects of government are treated differently in the Act (though not in the Convention). But there is one complicating factor to which I must return later - the inclusion of courts in the definition of "public authority": s.6(3)(a).127.
The Legislature, s.4: In order to preserve the traditional supremacy of Parliament in the constitution of the United Kingdom, legislation cannot be invalidated by the Act even if it is incompatible with the Convention. This involves a recognition that the United Kingdom can, by reason of legislation on the statute book, be in breach of the Convention if Parliament should so choose and it is the statute which must be upheld and applied by the Judiciary. This situation is further confirmed by s.4(6) and s.6(2). A declaration of incompatibility under s.4 is thus unique. It has no effect in law except to provide a minister with the opportunity, by way of delegated legislation, to use the powers conferred by s.10 and Schedule 2. Section 4 is different in character from any of the other provisions of the Act. It does not have as its subject matter the rights or obligations of any person in municipal law. It does not even affect the rights of the parties before the court at the time: s.4(6). It merely contains a provision enabling - the word used is "may" - the court, should it think fit, to make a declaration about the current state of the statute law of this country. The declaration applies only to the present: s.4(2) and s.4(4). If the legislation in question has been amended or repealed no question of a declaration under s.4 can arise. Section 4 involves no retrospectivity and there is therefore always jurisdiction to make a declaration. But it is unlikely that a court will make a declaration when it would be wholly gratuitous and, in such a case, the point probably would not have been argued and s.4(1) probably would not be satisfied. The course adopted by the Court of Appeal in the present case, raising the question of incompatibility of its own motion when the parties had not, was in my view a work of supererogation and improper.128.
The Legislature, s.3: Section 3 has a different character although it again deals with legislation. It does change the law. It does change the parties' rights and obligations. Before the 1998 Act came into force, legislation had to be construed applying the ordinary canons of construction: the legislation would therefore have the legal effect 'x'. After the 1998 Act came into force, the same legislation may, because of the requirement that "so far as it is possible" the legislation "must be read and given effect in a way which is compatible with the Convention rights", have legal effect 'y'. Conduct that was lawful before may become unlawful and unlawful conduct may become lawful. A right or liberty that someone did not have before may be granted to them by the operation of s.3(1) when it came into force. Section 3 therefore has raised a question of retrospectivity answered in R v Lambert  UKHL 62,  AC 545 and R v Kansal (No.2)  UKHL 62,  AC 69, per Lord Hope at p.112.
129. But confusion has been created by the dual relevance of s.3. As well as the effect which I have explained in the preceding paragraph, it has a relevance to s.4. Sections 3 and 4 are both sections which came into effect on the same day, appointed under s.22(3). Therefore no question of incompatibility can arise under s.4 without the relevant legislation being construed in accordance with s.3. If s.3 provides the answer there is no incompatibility. But this is not to give a retrospective effect to s.3 any more than it is to give a retrospective effect to s.4.130.
The Executive, sections 6 and 7: Subject to certain qualifications, s.6(1) makes it unlawful for the Executive to act in a way that is incompatible with a 'Convention right' and s.7(1) empowers any victim of such unlawful conduct (or the threat of it) to take civil proceedings against the relevant authority or rely upon the 'Convention right' in legal proceedings. This, as regards the emanations of the Executive, ie public authorities, creates legal liabilities and, for the citizen, legal rights. These provisions therefore do raise a potential question of retrospectivity. S.22(4) makes express provision answering this question: as regards the victim defending himself against the authority in proceedings brought by the authority, the victim can rely upon his 'Convention rights' whenever the act in question took place, but otherwise s.7(1) only applies to acts occurring after s.7 came into force. Two consequences flow from this express provision. First it expressly provides a limited retrospective effect to part of s.7(1). Secondly, it carries with it the clear implication that the Act in general does not have retrospective effect. Thus, far from permitting a view that the Act should in general be construed so as to have a retrospective effect, the conclusion is confirmed that the Act should not (save for the limited exception in s.22(4)) be construed so as to have any retrospective effect.131.
The Judiciary, the basic principle: The Judiciary is the part of Government which has the responsibility for applying the law. The Convention and the decisions of the European Court of Human Rights recognise this, affirming the principles of certainty and 'legality'. There is nothing in the Convention which requires the Judiciary to do anything else. But, if, in complying with and applying the municipal law, the Judiciary do not provide an outcome which is compliant with the rights of victims under the Convention, for example, by failing to recognise a right or grant an adequate remedy, the State is in breach of its Convention obligations and should change its municipal law. For a court, its duty in the determination of any dispute is to determine it in accordance with the municipal law applicable to the issue. This may include the duty to consider whether a particular statute or statutory provision has retrospective effect or not. If it does have retrospective effect, then that effect must be recognised but, if it does not, it must not be treated as determinative of the legality or legal result of earlier events or conduct, earlier, that is, than the date upon which the relevant change in the law came into effect. The duty I have described is the same for both the original trial court and any appeal court. Just as in a case with a foreign element, it may be necessary to apply the choice of laws rules of private international law, so, in another case when there has been a change in the municipal law between the time of the relevant events or conduct and the time of trial, it may be necessary to decide whether that change had retrospective effect or not. If the answer is that it did not then the change is irrelevant to the rights and liabilities of the parties (save possibly as relevant factual evidence on, say, a question of assessment of damages or causation of loss) and the position in an appellate court is the same. Article 7.1 of the Convention provides an illustration of the need to apply the municipal law as it stood at the time of the relevant conduct and the objection to later making illegal conduct which was legal at the time.132.
The Judiciary, Article 6: Most of the other Articles are substantive and, in so far as they affect remedies or procedures, are dependent upon the engagement of the substantive provision. But Article 6 comes into a different category: it provides a right to a fair trial. This is a freestanding right and applies directly to the legal process and therefore (inter alia) directly to the conduct of the Judiciary. But the Article is drafted so as expressly to require that the proceedings be conducted in accordance with the law, that is to say the municipal law, in force at the relevant time - "an independent and impartial tribunal established by law" - "innocent until proved guilty according to law". These phrases correspond to those used in other Articles - "prescribed by law" - "in accordance with the law". Thus, once the Human Rights Act had been brought into effect, the litigant could call upon the tribunal before whom he is appearing to grant him the rights stated in Article 6. But it does not follow from this that he can claim a right under the Act in respect of earlier events or conduct or hearings. It is a question of the construction of the Act and whether it is to be given a retrospective effect. It certainly does not follow that merely because he is before a court on a later occasion, he can claim Article 6 rights in respect of some earlier hearing which took place before the Act came into force or require that the court apply s.3 of the Act in relation to something which occurred before it came into effect. In any event, in the present case there has been no denial to either party of their 'Convention rights' under Article 6.133.
The Judiciary, sections 6 to 8: The inclusion of provisions relating to the Executive and to the Judiciary all under the heading 'Public authorities' and the unqualified inclusion of courts in the definition of the term 'public authority' do not assist the reader in making the necessary distinction between the Executive and the Judiciary and their different constitutional functions. However, for present purposes and the consideration of what substantive rights were available to the original parties under the Act, the position is tolerably clear. The retrospective effect of sections 6 and 7 are dictated by s.22(4): no retrospective effect is available in the present case. Section 8 makes provision governing the remedies that a court may grant for a breach of a 'Convention right'. One can conceive of exceptional circumstances where Article 6 might apply and might therefore give rise to a liability without more under s.8 such as the summary committal of a person for contempt in the face of the court without a fair hearing. But, where a 'judicial act' is concerned, s.9 provides that the remedy is to be by way of appeal. In other words any substantive breach or any failure to provide a fair hearing or to provide an adequate remedy within the confines of s.8, must be challenged by appealing the decision complained about. On the appeal, the substantive question will remain as it was in the lower court applying, in accordance with the basic principle I have identified earlier, the municipal law in force at the time of the events or conduct complained of or to be applied to it by reason of some later statutory provision having retrospective effect. The time at which the appeal is heard is irrelevant; equally irrelevant is which of the parties it is that has appealed.
134. On this point as well the Court of Appeal was mistaken. The fact that the appeal was being heard after the Act had come into force did not alter what they had to decide or the municipal law which governed the dispute between the parties.
135. Under these circumstances I will take the remaining points argued on the appeal relatively shortly.
136. The relevant Article is Article 1 of the First Protocol. The complaint of those arguing for incompatibility is that the provisions of the Consumer Credit Act 1974 denied the lender its 'Convention rights' under this Article. I agree with your Lordships that they did not but my reasoning is not wholly the same. The evidence of what really happened in the material transaction is exiguous and I recognise that the Article may have been engaged. The transaction purported to be a transaction of pledge, that is to say, a transaction where the possession of a chattel of the borrower is given to and retained by the lender as security for the repayment of the money lent together with agreed interest. So long as the loan has not been repaid the pledgee has a special title in the chattel which is in his possession, by virtue of that possession. At common law the pledgee can thus sue if his possession is wrongfully interfered with, even by the owner. Dishonestly to deprive the pledgee of the possession of the chattel is theft (formerly larceny). Therefore, s.65 of the 1974 Act has the potential to deprive the pledgee of his special property in the pledged chattel. It follows that s.65 may deprive the pledgee of one of its possessions.
137. Whether or not this is what actually occurred in the instant case is, for me at least, still not clear but I will proceed on the assumption that there was a true pledge involving a transfer of the possession of the motor car from the borrower to the lenders. The documentation purported to evidence a contract of pledge. On this basis, the lenders were seeking to exercise the rights of a person in possession of a chattel and were being prevented from doing so by s.65 so as, in effect, to deprive them of their possession of the motor car and there would be the basis for an Article 1 complaint. If, on the other hand, she actually remained in possession of the motor car throughout, the complaint of the lenders would be that they should have been allowed to seize the motor car from her after she defaulted and sell it to reduce or discharge her indebtedness to them. This would have been merely the purported enforcement of a claimed contractual right which the lenders had never in truth validly acquired, Article 1 would never have been engaged and that would be the short answer to the complaint.
138. On the basis that Article 1 was engaged, does the Consumer Credit Act 1974 go beyond what is justifiable under that Article? For the reasons already given by your Lordships, I consider that it did not. The relevant provisions of the Act are a legitimate exercise in consumer protection. Borrowers are vulnerable and not on an equal footing with lenders. The Act legitimately regulates the transparency and recording of the terms of the loan transaction and makes provision for the clear obtaining of the borrower's informed consent to those terms. Any such Act would have to provide effective sanctions against the lender for any failure to comply with the requirements of the Act otherwise they will be liable to be flouted, as occurred in the instant case. The values to which the legislative provisions were applied were appropriate to consumer legislation, indeed arguably low, and the rates of interest chargeable, so far as your Lordships were told, unlimited. (In the instant case - a secured loan of some £5,000 - the rate of interest claimed worked out at 99.66% pa.) The Act, as a matter of policy, places a strong emphasis on the clarity and transparency of the actual transaction and, although in respect of other infringements a degree of latitude is allowed and the sanctions are discretionary, for the infringement involved in the instant case the sanction is automatic, as the statute makes plain. It is argued that the legislature could have made the sanction discretionary. Maybe. But it does not follow that the view that the sanction should here be automatic was not a permissible view. There was no breach of Article 1. The Court of Appeal was wrong to hold the contrary.
The 'Hansard' Point:
139. In Pepper v Hart  AC 593, the House of Lords permitted the reference to Parliamentary material, specifically Hansard, as an aid to the construction of an ambiguous, obscure or absurd statutory provision, if it would provide an authoritative and clear guide to the intended meaning. Even the majority accepted that the liberty so permitted needed to be specifically confined and recognised the potential adverse consequences if it were not strictly limited. Lord Mackay of Clashfern in his dissent was primarily influenced by the practical considerations (pp.614-5) and the cost and waste of resources that the proposed liberty would entail. In this he followed the view adopted 25 years earlier by Lord Reid in Beswick v Beswick  AC at p.74. But, as is recognised by the passages quoted by Lord Browne-Wilkinson in Pepper v Hart at p.632, there are further objections to the liberty. One is that the constitutional means by which laws are made is by the entry of a statute in the statute book. The source of the new law is the document itself not what anyone may have said about it or some earlier form of it. Still less is it what the Executive says about it or some individual member of a House of Parliament may have said about it in the course of its passage through Parliament. As Mr Sumption QC pointed out in his submissions, it is a fundamental error of principle to confuse what a minister or a parliamentarian may have said (or said he intended) with the will and intention of Parliament itself. Likewise, it is another fundamental principle that the verbal expression of the law be certain, whatever difficulties in interpretation the words used may cause. Once one departs from the text of the statute construed as a whole and looks for expressions of intention to be found elsewhere, one is not looking for the intention of the Legislature but that of some other source with no constitutional power to make law. The process of statutory construction/interpretation is objective not subjective. These points are clearly made in the citations made by Lord-Browne-Wilkinson (vs) from Lord Wilberforce, Lord Diplock and Lord Scarman. The principles are also fully familiar (mutatis mutandis) to commercial lawyers in deciding what was the bargain struck between two commercial parties by a written agreement: see, for example, Lord Wilberforce in Reardon Smith v Hansen-Tangen  1 WLR 789.
140. Mr Sumption did not seek to challenge the authority of the Pepper v Hart decision nor did he found upon any argument of breach of Parliamentary privilege. He founded upon two criticisms of the Court of Appeal's approach to the Parliamentary material and the use they made of it. He criticised the confusion of the intention of individual members of Parliament with the intention of Parliament. He was quite right to do so and I need add nothing to what I have already said. He also criticised what he submitted was an extension of the application of the Pepper v Hart decision from a narrowly defined matter of statutory construction to an investigation of the justification for the inclusion of a particular provision in an Act. He submitted that Pepper v Hart should be confined to its actual subject matter, a taxation statute where, as he put it, the Executive had made statements about what use they would make of the relevant provisions and so gave rise to a quasi-estoppel (sic) by which they would be bound. Perhaps a better way of making the point would be to say that the executive had created a legitimate expectation which they must honour. Insofar as Mr Sumption argues against making any extension to the Pepper v Hart decision or relaxing the strict observation of the safeguards which it included, I need no persuasion. Judicial experience has taught me, particularly since I was appointed a member of this House, that the attempt by advocates to use Parliamentary material from Hansard as an aid to statutory construction has not proved helpful and the fears of those pessimists who saw it as simply a cause of additional expense in the conduct of litigation have been proved correct.
141. But on the directly pertinent question of what material it is proper for a Court to be referred to when it has to decide a question of proportionality or justification in relation the 'Convention rights' scheduled to the Human Rights Act 1998, it is necessary to consider what his argument really amounts to. On this I agree wholly with your Lordships and will take the point more shortly than would otherwise be the case. Whether a particular statutory provision offends against any of the 'Convention rights' is an objective question to be answered having regard to all relevant evidence. It is a task which Parliament itself has by the 1998 Act required the courts to perform. It involves no breach of Parliamentary privilege or protocol even if it leads to a declaration that the legislation is incompatible under s.4. The argument that the courts when they apply and give effect to the 1998 Act are frustrating the will of Parliament is a travesty of the true position: they are giving effect to the will of Parliament expressed in the 1998 Act.
142. The questions of justification and proportionality involve a sociological assessment - an assessment of what are the needs of society. This in part involves a legal examination of the content and legal effect of the relevant provision. But it also involves consideration of what is the mischief, social evil, danger etc which it is designed to deal with. Often these matters may already be within the knowledge of the court. But equally there will almost always be other evidentially valuable material which can be placed before the court which is relevant, such as reports that have been made, statistics that have been collected, and so on. Oral witnesses may have important evidence to give. To exclude such evidential material from the case merely because it is to be found in some statement made in Parliament is clearly wrong, particularly if ministerial statements made outside Parliament were already being relied on. This has nothing to do with investigating or questioning the will of Parliament. Parliament has spoken by passing the relevant Act. The evidence is admitted because it relates to making the required sociological assessment. It has long been the case that ministerial statements made in the House may be referred to when they are relevant to a question to be determined by a court. An example which immediately comes to mind is the ministerial statements concerning immigration policy which used to be made at the time when immigration law was largely extra-statutory. So the broader submission of Mr Sumption which would exclude access to any such material must be rejected.
143. But it is easy to understand why it was that Mr Sumption's clients thought it necessary to intervene. The Court of Appeal, having decided that they must consider s.4 and that Article 1 was engaged, then entered upon a process of scrutinising what had been said in Parliament as reported in Hansard to see whether it disclosed any justification they were prepare to accept for the relevant provisions of the 1974 Act at the time they were enacted. This was an unacceptable approach and likely to give rise to abuse. It is not part of the duty of any member of Parliament to provide or state definitively in Parliament the justification for legislation which the Legislature is content to pass. Still less was it the duty of anyone in 1974 to anticipate the passing of the 1998 Act twenty four years later. I agree that that use of Hansard for that purpose has been rightly objected to.
144. There is a further important error in the Court of Appeal's approach which may be of greater significance in other cases. The question of justification and proportionality has to be answered by reference to the time the events took place to which the statutory provision is being applied. The person claiming to be a victim has to show how he has been affected by the provision he complains about. Those who are seeking to justify the use of the statutory provision have to do so as at the time of that use. If they cannot justify it at that time, their use of it is a breach of the victim's 'Convention rights'. That is how the European Court would decide the question and it is also how the municipal court is required to look at it. In most cases the difference will probably be academic and it no doubt was so regarded in the present case. But as circumstances change so the justification or the absence of it may change. Merely to examine the situation at the time the Act in question was passed and treat that as decisive is wrong in principle. The same point can be seen equally clearly in relation to a question of compatibility arising under s.4. As I have explained earlier, the decision under s.4 has to be made as at the time of the decision; just as the current state of the legislation at that time is what has to be the subject matter of the decision so also the circumstances and social needs existing at that time are what is relevant, not those existing at some earlier or different time. To look for justification only in the Parliamentary debates at the time the statute was originally passed invites error.