By nominating Dr Liam Fox as the next Director General of the WTO has Boris Johnson handed him a poisoned chalice?

As Liz Truss warns in the leaked letter below, under Boris Johnson’s ‘political’ plan for post-Brexit Britain, we are heading for a head-on diplomatic car crash with members of the WTO.

If that happens, it will have severe consequences for British businesses and the economy.

Therefore, the likelihood of Dr Liam Fox being elected is almost zero.

From 23.00 GMT on 31 December 2020 will the UK be in a cleft stick:

·       negotiating tariff schedules with WTO members in order to regularise its status as an independent member of the WTO (and it only takes one member to block agreement); and

·       be in breach of WTO rules, because Boris Johnson’s Brexit border plans for Northern Ireland have violated WTO rules – which experts conclude they will (see below).

In the parallel universe of Brexit negotiations with the EU, if no deal is agreed prior to 23.00 GMT on 31 December 2020, then simultaneously, will Britain be left between a rock and a hard place, because:

·       our status within the WTO will not have been regularised before the end of the transition period; and

·       there will have to be a hard border between Northern Ireland and the Republic of Ireland, because Britain will have become a third country, and in spite of hours of rhetoric by Conservative Brexiteer MP’s in the House of Commons, no solution has been developed that is capable of practical implementation before 23.00 GMT on 31 December 2020 – i.e. because it is impossible to square that circle.

THE UNITED KINGDOM’S WITHDRAWAL FROM THE EUROPEAN UNION COMMUNICATION FROM THE UNITED KINGDOM, dated 1 February 2020 STATES,

‘The transition period will end at 23.00 GMT on31 December 2020, and the United Kingdom has made clear that it will not seek an extension. The transition period provides continuity in the trading relationship between the United Kingdom and the European Union, and with other WTO Members, with the United Kingdom remaining part of the European Union’s customs union and single market during that time. The Withdrawal Agreement also provides that, for the duration of the transition period, the United Kingdom is treated as a Member State of the European Union for the purpose of international agreements entered into by the European Union.1,2 The United Kingdom will continue to apply the European Union’s Generalised Scheme of Preferences for the duration of the transition period and the provisions of the European Union’s regional trade agreements will continue to apply to trade with the United Kingdom during this time.

 The United Kingdom was a founding party to the GATT 1947, and is an original Member of the WTO, in its own right. However, as a Member State of the European Union, the United Kingdom’s concessions and commitments on goods and concessions and specific commitments in services were contained within the schedule of concessions and commitments for goods and schedule of concessions and specific commitments in services of the European Union.

On 24 July 2018 the United Kingdom’s draft schedule of concessions and commitments for goods, draft Schedule XIX – United Kingdom, was circulated for certification in document G/MA/TAR/RS/570 under the Procedures for Modification and Rectification of Schedules of Tariff Concessions.3 The United Kingdom is continuing productive discussions with certain Members about aspects of that schedule. As part of that process, the United Kingdom has initiated a process under Article XXVIII GATT with respect to tariff rate quotas and the United Kingdom is currently taking forward negotiations and consultations with relevant Members.

On 3 December 2018 the United Kingdom’s schedule of concessions and specific commitments in services and the United Kingdom’s list of Article II GATS (MFN) exemptions was circulated for certification in document S/C/W/380 and S/C/W/381 under the relevant procedures.4 The period for objections to the certification of that schedule and list of Article II GATS (MFN) exemptions expired on 17 January 2019. The United Kingdom continues to consult with one Member under these procedures.

During the transition period, the United Kingdom will continue to be covered by the schedule of concessions and commitments on goods and the schedule of concessions and specific commitments in services of the European Union. The United Kingdom’s Article II GATS exemptions will continue to be listed in the Article II (MFN) exemptions of the European Communities and their Member States (GATS/EL/31).’ United Kingdom and the WTO: https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm

‘The UK government’s strategy for the Irish border if there’s a no deal Brexit will mean no tariffs on Irish goods going to Northern Ireland, but some Irish food products entering Great Britain will face high tariffs.

Under the plan, the UK also won’t impose any physical checks or controls on the border, but is it legal? ….

Senior counsel at law firm Linklaters, Lorand Bartels, said the plan raised the question of whether the UK could apply different tariffs at different borders.

If the answer to that is negative then the UK would need to justify its differential tariffs, he added.

It’s understood the government has looked at what is known as the ‘public morals’ exemption.

Dr Bartels is sceptical about that: “It is hard to see how this could be justified on the basis of public morals, but other exceptions might work.

Former WTO negotiator Dmitry Grozoubinski argued that while the proposal was “probably not” compliant with WTO rules, the organisation could not force the UK to change its policy.

There were two subsequent issues with this, he said.

Even if other WTO members believe they are being disadvantaged by the rules and complain to the WTO, the lengthy disputes process means it would take “many years” before it could allow other members to impose reciprocal tariffs on UK exports.

If a complaint was made, the UK would then be “obliged” to consult with the other country over a 60-day period to try to resolve their differences.

He added that only after that 60-day period could they even begin the process of launching what’s called a “WTO dispute”, which takes a year to come to a conclusion.

He argued that if the UK has decided it is comfortable being in breach of the rules, or willing to deal with the consequences, little would change in the immediate aftermath.’

Brexit: Does NI tariffs plan violate WTO law?: https://www.bbc.co.uk/news/uk-northern-ireland-47559880

‘UK Prime Minister Boris Johnson’s Brexit border plans could break international trading rules, risk the UK’s international credibility, and lead to smuggling from the European Union, a senior member of his government warned in an explosive leaked letter seen by Business Insider.

Though Britain is set to leave EU trading and customs rules at the end of the year, the government announced last month that full border controls would not be applied on goods until July 2021.

Business Insider reported last week that the plan raised serious concerns among business groups, who said it could be a “disaster” for firms trading with the EU.

On Wednesday, Liz Truss, the international trade secretary, wrote in a letter to Rishi Sunak, the chancellor of the exchequer, and Michael Gove, the chancellor of the Duchy of Lancaster, expressing four “key areas of concerns” about the government’s plans to leave EU trading and custom rules at the end of 2020.

Truss told Sunak and Gove that a failure to make sure all ports are ready to carry out the full range of checks on incoming goods by January could lead to smuggling into the UK.

“I would like assurances that we are able to deliver full control at these ports by July 2021 and that plans are in place from January to mitigate the risk of goods being circumvented from ports implementing full controls,” she wrote.

Truss also said she was worried that the legality of the UK’s plan for a phased approach to checks on goods coming from the EU from January to July could be challenged at the WTO.

She said the UK would “be vulnerable to WTO challenge” because of its border policy. This is because the UK plans to temporarily give the EU preferential treatment, which could be a breach of WTO rules if there is no UK-EU free-trade agreement in place.

Truss also suggested that as of January 1, all goods going to Northern Ireland from elsewhere in the world could have the EU tariff applied by default, as the system for applying both UK and EU tariffs is not expected to be ready on time.

“I understand that the digital delivery of the dual tariff system (both EU and UK tariff) in Northern Ireland is a high risk and that HMRC are planning to apply the EU tariff as a default to all imports in NI on 1 January 2021,” she wrote.

Truss said she was worried that it would anger unionists in the province, telling Gove and Sunak that “this is very concerning as this may call into question NI’s place in the UK customs territory.”

This section of the letter is likely to fuel concerns in Northern Ireland that businesses in the province will face significant new costs as of next year. Business Insider reported last month that businesses were considering leaving the province in anticipation of trade with Great Britain becoming more expensive.

Responding to the leaked letter, the Northern Ireland Retail Consortium’s Aodhan Connolly said: “If true, a plan to implement EU tariffs as a default provides unprecedented problems to retailers who trade in Northern Ireland.”

He told Business Insider: “Retail accounts for 70% of the value of trade that crosses GB-NI and even if we were able to reclaim the tariffs the implications for cash flow while waiting for refunds makes the premise untenable.”

He added: “I am glad the International Trade Secretary shares our concerns about a workable system being in place by January 2021. That’s why we want to see tried and tested off the peg solutions such as a trusted trader or green channel scheme that will remove friction and allow the majority of goods to flow freely.”

In her letter, Truss also appeared to confirm that a UK government plan to waive customs declarations on exports to the EU had been dropped.

“I am pleased to hear that following the XO [EU Exit Operations] meeting last Friday, it was decided that the temporary waving of export declarations will not be included in the publication,” she said.

Truss signed off by telling her colleagues: “We need to ensure that the UK border is effective and compliant with international rules, maintaining our credibility with trading partners, the WTO and with business.”

The UK trade department needs a “clear view of operational plans, timescales and risks going forward,” Truss wrote.

Johnson’s government is set to publish its full plans for how the borders will work from January 1 on Monday.

The opposition Labour Party said the letter showed that the government was “making things up as they go” on Brexit.

“This email confirms fears that several ministers have been making things up as they go with a lack of awareness of the real world consequences of border policies they’ve had four years to develop,” said Rachel Reeves, the shadow chancellor of the Duchy of Lancaster and shadow Cabinet Office minister.

“At the general election people were promised an ‘oven-ready’ deal to be implemented by the end of this year, not chaos, confusion and a further risk to jobs.”

A government representative said: “We do not comment on leaks.”

Truss’ letter, which was also shared with Home Secretary Priti Patel, echoed concerns voiced by business groups in recent weeks over the UK’s readiness for leaving the European single market and customs union in 2021.

Groups last week told Business Insider that Johnson’s government had failed to guarantee that the new IT system for processing customs checks on exports — the Goods Vehicle Movement Service — would be ready on time.

Alistair Carmichael, the Liberal Democrats’ spokesman for Brexit and foreign affairs, called on Johnson’s government to explain the letter to Parliament, telling Business Insider: “At a time when the UK is already facing the COVID-19 crisis, we cannot afford to crash out of the EU without a deal in place or to accept bad deal.

“Time and again this Government has brushed off concerns about the damaging consequences of Brexit for trade and the border on the island of Ireland. This explosive email clearly reveals the panic in the dark corridors of Whitehall.

“It is essential the Government publishes detailed impact assessments immediately and come before Parliament and be honest with the public.”

Naomi Smith, the CEO of Best For Britain, a group campaigning for a comprehensive UK trade deal with the EU, said: “The government ignored concerns that we wouldn’t be ready to end the transition period on 31st December, despite numerous warnings from business and trade bodies.”

Smith added: “This email proves that those concerns were valid, and the senior Cabinet minister trusted with Britain’s future trade shares them.”

The campaign group has also called on Truss to publish the letter — as well as Gove and Sunak’s response — in full.’

Leaked Liz Truss letter warns that Boris Johnson’s Brexit border plans risk smuggling, legal challenge, and global reputational damage: https://www.businessinsider.com/leaked-liz-truss-letter-boris-johnson-brexit-border-plans-concerns-risks-2020-7?r=US&IR=TSee also:

·       ‘Negotiating the UK’s post­Brexit trade arrangements’: http://sro.sussex.ac.uk/id/eprint/65554/1/__smbhome.uscs.susx.ac.uk_qlfd7_Desktop_NIER%20submitted%20final.pdf

·   UK nominates Liam Fox as next Director General of the WTO: https://www.gov.uk/government/news/uk-nominates-liam-fox-as-next-director-general-of-the-wto

·  Candidates for DG selection process 2020: https://www.wto.org/english/thewto_e/dg_e/dgsel20_e/dgsel20_e.htm

By institutionally linking trade negotiations to aid, has Boris Johnson jeopardised the cohesion and strength of NATO by wheeling a trojan horse into the central plaza of the Foreign Office?

The trade and defence implications of the Government’s new Foreign Policy strategy include:

·       Regional loss of credibility, because while it is perfectly legitimate for the UK to hope that its security policies will generate goodwill, if they imply that the UK is defending e.g. Eastern Europe, in order to engineer a better trade agreement, rather than because the Government cares about democracy and deterring bullying by Russia, the UK will rapidly lose credibility in that region. The same applies to China and Britain’s standing in Asia.

·       Creating an opportunity for Russia and China to fill the political vacuum left behind in the Middle East and Africa by the United States and now the UK.

·       Rendering the UK’s status within the WTO a hostage to fortune, because at the end of the transition period (which is not being extended), in order to regularise its WTO schedules, the UK will have to negotiate with: the EU itself; the US; China; Russia; India; Brazil, and any trading nation or group of nations that matters, large or small, rich or poor, and it only takes one objection to hold up the talks because the WTO operates by consensus, not voting, which is one reason why WTO negotiations take so long.

‘The European Union and the United Kingdom have agreed a Withdrawal Agreement pursuant to Article 50 of the Treaty on European Union, which provides for a time-limited transition period during which European Union law, with limited exceptions as provided for in the Withdrawal Agreement, will apply to and in the United Kingdom (the “transition period”).

The communication from the United Kingdom (WT/GC/206), dated 1 February 2020, sets out more detail on the implications in the WTO of the United Kingdom’s departure from the European Union. Further information is also provided in the note verbale from the European Union (WT/LET/1462), dated 27 January 2020. The United Kingdom has communicated that the goods schedule of the European Union will continue to apply to the United Kingdom during the transition period afforded under the Withdrawal Agreement.’ https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm

What happens when the transition period ends?

‘Brexiteers argue that, out of the EU’s clutches, Britain will be the WTO’s star pupil, striking trade deals across the world…However, there is a snag. Britain is already a member of the WTO, but operates through the EU. To become a fully independent member, Britain needs to have its own “schedules”, WTO- speak for the list of tariffs and quotas that it would apply to other countries’ products… The most simple course… [is] for Britain to keep its schedules as they are under the EU, including the “common external tariff” applied uniformly by EU members to imports from third countries. The government has recently hinted as much. This avoids diplomatic wrangling. But simply to readopt EU-approved commitments hardly looks like “taking back control”. It would also lead to other problems… If Britain kept the common external tariff in place then it might also apply to a company moving components between the EU and Britain. Such a firm could incur tariff charges each time a border is crossed. A WTO member might kick up a fuss if, say, one of its car companies with production facilities in both Britain and the EU suddenly found it more expensive to assemble a model. A related problem concerns the WTO’s “tariff-rate quotas” (TRQ’s). These allow a certain amount of a good to enter at a cheaper tariff rate. The EU has almost 100 of them…this is likely to become the most contentious issue in Britain’s re-establishment of its status as an independent WTO member… Some of these problems are surmountable…countries that stay in others’ good books find things easier. But so far, British politicians are also struggling on that front. Boris Johnson, the foreign secretary, has irritated his counterparts with clownish comments… When the reality of Brexit dawns, Mr Johnson and his fellow Brexiteers will find no trade deal to be especially appetising.’ The “WTO option” for Brexit is far from straightforward (The Economist 07.01.2017). 

‘To be more than an optimistic slogan, Global Britainneeds to rest on a clear, evidence based strategy. And once we have the strategy, we will need a consistent plan to deliver it…

[Our] strategy should not be opportunistic or reactive, but based in principles. Brexit makes it even more important for the UK to have an international trade system with rules ensuring non-discrimination, fair competition and enforcement. Alone, we will be less equipped to cope in a trade environment driven by the bilateral and power based instincts of the new US administration and China, or indeed the sheer trading weight of the future EU. That is why we should remain a strong supporter of the WTO, and resist any temptation to short-circuit rules to score quick successes…

The Government has decided to prioritise other goals over our economic relations with the EU. This is fine, provided either people are prepared to pay the price in more expensive goods, less inward investment and lower growth, or we can quite rapidly find compensating alternative markets. There is also a risk, if the Article 50 exit negotiation does not go smoothly, that our future trade relationship will be negotiated not from the starting point of the status quo–integrated membership of a common market and regulatory space – but from outside, almost like any other third country. We should do our utmost to minimise this risk by avoiding gratuitous political friction and prioritising a smooth transition to new arrangements.’ The Tacitus Lecture 2017 – ‘The World is Our Oyster? Britain’s Future Trade Relationships’ delivered by Sir Simon Fraser.

If the Government’s strategy undermines the strength and cohesion of NATO, then linking aid to trade is likely to result in the UK losing influence not only around the world, but critically within Europe, and across the Atlantic if Joe Biden defeats Donald Trump. The decision to merge DfID and the Foreign Office therefore appears to be short-sighted and opportunistic, rather than principled.

See:

·       ‘Political vandalism’: DfID and Foreign Office merger met with anger by UK charities: https://www.theguardian.com/global-development/2020/jun/16/political-vandalism-dfid-and-foreign-office-merger-met-with-anger-by-uk-charities

·       Three ex-PMs attack plan to merge DfID with Foreign Office: https://www.theguardian.com/politics/2020/jun/16/foreign-office-and-department-for-international-development-to-merge

·        Tory Andrew Mitchell says Boris Johnson has made an ‘extraordinary mistake’ by abolishing aid department: https://www.birminghammail.co.uk/news/midlands-news/tory-andrew-mitchell-says-boris-18431116

·       Rory Stewart on Twitter: “Don’t merge @foreignoffice and Dfid:

Don’t merge @foreignoffice and @DFID_UK The problem is not our hugely respected development agency, but the lack of a confident coordinated UK strategy. Merging is bad diplomacy and worse development. Define a strategy + priorities, rather than move deckchairs in Whitehall.

— Rory Stewart (@RoryStewartUK) June 16, 2020

·        Rory Stewart: DFID may come under greater FCO control (Devex) (27 June 2019):

·https://www.cgdev.org/article/rory-stewart-dfid-may-come-under-greater-fco-control-devex

 ·        What would happen if DfID and the FCO merged? Experts and insiders share their views: https://www.civilserviceworld.com/articles/feature/exclusive-what-would-happen-if-dfid-and-fco-merged-experts-and-insiders-share-their

·        Foreign Office boss Sir Simon McDonald to step down early after department merger plan:https://news.sky.com/story/foreign-office-boss-sir-simon-mcdonald-to-step-down-early-after-department-merger-plan-12010313

British cultural heritage diplomacy post-BREXIT

A strategic consequence of BREXT which appears to have been almost entirely overlooked, is that post-BREXT, Britain will cease to have any influence in shaping European cultural heritage diplomacy. Since ‘soft’ power is a strategic tool in international relations and British Foreign Policy, then post Brexit, as the UK makes its own way in the World, what is our policy?

Without a coherent and practical plan Britain is likely to fall behind the rest of Europe because the EU have recently placed cultural relations at the heart of international relations, and are evolving a unified strategic policy.

What are we doing?

EU international relations policy

On 8 June 2016, the EU High Representative and Vice-President Frederica Mogherini and Commissioner Navracsics put forward a proposal to develop an EU strategy to support international cultural relations. The aim was to put cultural cooperation at the centre of the EU’s diplomatic relations with countries around the world.

In February 2017, the ministers’ deputies adopted the Recommendation CM/Rec(2017)1 to member States on the ‘European Cultural Heritage Strategy for the 21st Century’, which was officially launched in Limassol, Cyprus in April 2017. 

‘On 6 April 2017 the Council of Europe (CoE) launched their “European Cultural Heritage Strategy for the 21st century” at a high-level conference in Limassol (Cyprus) in the presence of senior policy makers and stakeholders from CoE member states. The Strategy 21 pursues an inclusive approach and involves not only local, regional, national and European public authorities, but also all heritage stakeholders including professionals, (I)NGOs, the voluntary sector and civil society. The Strategy is a state of the art document inspired by the efforts the Council of Europe in shaping the heritage policies of many European countries and repositioning them.’ https://www.europanostra.org/european-cultural-heritage-strategy-21st-century-launched-limassol/

See also:

·       ‘Cultural heritage in EU policies: ‘https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621876/EPRS_BRI%282018%29621876_EN.pdf

·       ‘European Heritage Strategy for the 21st Century’ : https://www.coe.int/en/web/culture-and-heritage/strategy-21

·       ‘Toward an EU strategy for international cultural relations’’: https://ec.europa.eu/culture/policies/strategic-framework/strategy-international-cultural-relations_en

·       ‘A new strategy to put culture at the heart of EU international relations’: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_16_2075

·       ’Recommendation of the Committee of Ministers to member States on the European Cultural Heritage Strategy for the 21st century’: https://rm.coe.int/16806f6a03

·       ‘Cultural heritage in EU discourse and in the Horizon 2020 programme’: https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/642803/EPRS_BRI(2019)642803_EN.pdf

In May 2019 the Berlin Policy Journal observed,

‘The EU’s principal values of democracy, human rights, and the rule of law are being challenged both internationally and within Europe itself, by populist governments. Faced with such threats to its cultural identity, the EU needs to respond, including by cultural diplomacy.

The international system is undergoing rapid change. Power is shifting from Western states to rising powers; Russia and China are working to discredit civil and political rights; populists are eroding democracy by stealth; and America appears to be losing interest in upholding the liberal international order. The European Union, whose principal purpose is to protect human dignity by means of democracy, human rights, and the rule of law, finds itself increasingly challenged in the realm of ideas.

Faced with threats to its cultural identity, Europe needs to mount a cultural response. EU member states have long practiced cultural diplomacy as a form of “soft power,” and EU ministers have stated that culture must also be an integral part of the EU’s international relations. Under EU law, cultural policy is primarily a national competence, but the EU may support it, including in foreign affairs.

For many years the European Commission has subsidized mostly short-term cultural development projects in various regions of the world. However, it has set neither geographical nor thematic priorities, and current spending patterns do not amount to an integrated strategy. In practice, the EU operates not one, but three foreign cultural approaches that reflect the geographical and budgetary logic of the relevant Commission Directorates General, with one responsible for culture, another for development, and a third for relations with the EU’s Eastern and Southern neighbors.

Links with the EU’s foreign policy priorities are tenuous. The European External Action Service, the EU’s diplomatic and foreign service, is short of cultural expertise and largely depends on the commission to fund external actions. Fragmented, under-resourced, and lacking a sense of direction, EU cultural diplomacy is in need of reform. Foreign cultural policy should be integrated with other policy domains, including human rights, development, and citizenship.’

The UK faces the same geopolitical reality and challenges as the EU. However, as we diverge from the EU will we co-operate or compete in applying soft power through cultural heritage diplomacy?

While counter-intuitive, realpolitik requires co-operation in order to compete, e.g. to enjoy equal market access. That is a paradox of BREXIT, because in the real world before e.g. China, India, and the United States can conclude, ratify and implement an FTA with the UK, they must know the extent to which the UK remains integrated with the EU. Otherwise, how can they evaluate preferential access and agree terms? Therefore, the UK must first conclude a trade deal with the EU. Since trade negotiations are linked to existential issues that are the raison d’etre for the EU as a community, the question we need to ask ourselves is not ‘who are we?’ (i.e. what is our tribe), but ‘what is our community?’ (i.e. who are our strategic partners). The answer to the second question is the natural policy imperative that will shape our future relationship with Europe and the rest of the World. Therefore, our cultural heritage policy can be a foundation stone in building a bridge between post-BREXIT Britain, the EU, and the rest of the World, or it can cast us adrift from continental Europe, and suffocate the negotiation of trade deals.

What is the UK’s Cultural Heritage Policy in the event of a no-deal BREXIT? Is there a strategy?

See also:

· ‘BREXIT & Heritage’ – Report ESRC Funded Workshop (July 2017): https://eprints.ncl.ac.uk/file_store/production/239847/36F25C4A-7098-49A8-BC0B-5BC900655031.pdf

· ‘UK to end creative Europe participation post-BREXIT’ (March 2020): https://heritagetribune.eu/unitedkingdom/uk-to-end-creative-europe-participation-post-brexit/ 

No-deal BREXIT

A no deal BREXIT is almost certain unless the UK agrees to an extension (which the EU have offered and the Government have rejected).

‘If negotiators fail to reach a deal, the UK faces the prospect of trading with the EU under the basic rules set by the World Trade Organization (WTO).

If the UK had to trade under WTO rules, tariffs would be applied to most goods which UK businesses send to the EU. This would make UK goods more expensive and harder to sell in Europe.

Having WTO terms would also mean full border checks for goods, which could cause traffic bottlenecks at ports.

And the UK service industry would lose its guaranteed access. Qualifications would no longer be recognised and it would be much harder for workers to travel to the EU.

This would affect everyone from bankers and lawyers, to musicians and chefs.’

Brexit: What trade deals has the UK done so far?: https://www.bbc.co.uk/news/uk-47213842

The political calculation the Government is making is comparable to spinning the wheel in a game of roulette.

‘To Sanjay Raja, an economist at Deutsche Bank AG, a no-deal Brexit would halve the pace of growth next year to 1.5%. The U.K. in a Changing Europe, a research group, estimates gross domestic product could be crimped by 8% over 10 years as trade barriers and a reduction in productivity hit output.

“It may be less politically costly for the U.K. to do no deal in the midst of a pandemic, but economically I’m not sure about that at all,” said Jonathan Springford, deputy director of the Centre for European Reform. “It might be that they’re able to get away with it — but I don’t think it changes the view that no deal would impose quite sizable economic costs.”

Intergroup Inc. says the size of the shock could even force the Bank of England to take the controversial move of cutting interest rates below zero because fiscal policy and other tools may not be enough.

The additional debt firms are carrying will make adjusting to Brexit more difficult, according to Alan Winters, director of the U.K. Trade Policy Observatory at the University of Sussex.’

https://www.bloomberg.com/news/articles/2020-06-02/-no-deal-brexit-threat-looms-over-pandemic-ravaged-u-k-economy

Judicial ENE

I am writing a new article for publication by Trusts & Trustees (Oxford University Press): https://academic.oup.com/tandt in September, which is provisionally entitled,

‘When is it appropriate for the court to order Judicial ENE in a contested application?’

The basic structure of the article is: 

• It is not a question of whether the court can order Judicial ENE in a contested civil application, but of when – Lomax v Lomax. [2019] EWCA Civ 1467;
• Jurisdiction – i.e. the power to order;
• Logistics and timing – the application procedure;
• Is the candle worth the flame? – carrying out a preliminary costs and other litigation risks analysis;
• Merits – factors to be taken into account by the court; and
• Conclusions.

I recently calculated that Judicial ENE can (depending upon mediator fees and the length of the mediation) cost 91.7% less than mediation. The power of the court to order Judicial ENE (without consent) is not limited to contentious probate and trust disputes. Because a Judicial ENE hearing/appointment can be dealt with partly on paper, and partly as a virtual hearing, given the restrictions placed upon travel globally by COVID-19, the power of the court to order Judicial ENE in an appropriate case could result in the early settlement of cases involving parties locked-down in different jurisdictions. I am appearing for the Claimant in an application for Judicial ENE that has been listed to be heard in mid-July (although this may now be re-listed). The Defendants have opposed the application. So the question of when it is appropriate to order Judicial-ENE will be before a court of first instance once again quite soon.

Based upon the method of dispute resolution called ‘Guided Settlement’, discussed in paragraph 10.8 of my book the ‘Contentious Probate Handbook’, published by the Law Society, I am also developing and will set out at the end of my article, a new method of ADR, which I call ‘Judicial Guided Settlement’. This is a hybrid of Judicial ENE and evaluative mediation.

For more about evaluative mediation, see also the recent article by Anthony Trace QC published in the Lawyer monthly in April, ‘The Difficulties Posed in Mediating Cases Relating to Fraud and How to Overcome Them’: www.lawyer-monthly.com/2020/04/the-difficulties-posed-in-mediating-cases-relating-to-fraud-and-how-to-overcome-them/

A new guide has been signed off by the Chancellor, and been issued. The County Court at Central London (“CCCL”) is the venue for the Business and Property work done in London and the South East outside the High Court. It does not have the force of law and is not a substitute for the Civil Procedure Rules (“CPR”) and Practice Directions (“PDs”). The Guide is accompanied by 3 annexes. For a Precedent Draft Directions please visit the Central London County Court page at www.ihtbar.com

The Guide states (amongst other things):

‘Scope of Business & Property work

4.    The Business & Property work undertaken at CCCL includes the following:

4.1  Work of the type within the Property, Trusts and Probate List of the High Court such as:

Real property

Landlord & tenant (both residential and commercial). The most complex/valuable business tenancy renewal cases will proceed as Business & Property work

Trusts

Contentious probate claims

4.2  Work of the type within the Business List of the High Court such as:

Contractual disputes

Claims for specific performance, rectification and other equitable remedies 

Professional negligence (for example, claims against solicitors and surveyors).

4.3  Insolvency and Companies work. This includes personal insolvency cases, company insolvency work transferred from the High Court or other County Court hearing centres, disqualification of directors, and company cases (for example, unfair prejudice petitions, claims to restore companies to the register, to rectify the register, and to extend time for the registration of charges).

5.    That list is not exhaustive. A full definition of Business & Property work in the County Court can be found in para. 4.2 of CPR PD 57AA – Business and Property Courts. 

Case management

11.  Cases are usually transferred to CCCL by the High Court at an early stage. They are listed for a costs and case management conference (Part 7 claims) or for directions or disposal (Part 8 claims). These first hearings are short, usually between 30 minutes and an hour, and are not a trial. They are used to move the case towards trial where there is any substantial dispute. 

12.  All cases, whether transferred to CCCL or issued here, will normally be retained by the judge dealing with the case at the first hearing. That judge will, if at all possible, hear the trial and any pre-trial review.

13.  Unless otherwise ordered, there should be sent to the Court by email 3 days before the first hearing the following documents (agreed if possible): a brief case summary (of not more than 500 words), a list of issues, and proposed directions (using our template – see the next paragraph).

14.  Case management directions in Part 7 claims will normally be given by adapting the draft directions template attached at Annex A to the particular case. Parties should therefore use such template when agreeing and submitting proposed directions. Part 8 claims are typically decided without cross examination or disclosure.

16.  The subject heading of the email must start with the claim number. Business & Property cases are given a case number taking the form G10CLxxxx, where the initial letter indicates the year (F having been used for 2019, and G being used for 2020), 10 designates the case as Business & Property work, CL refers to CCCL, and there is then a unique 3 or 4 digit number.

17.   The directions will normally provide for the listing of the trial and will do so by (a) setting a 3-month trial window, and (b) directing a telephone listing appointment. That appointment will usually be around 3 weeks after the case management hearing. The standard order for the telephone listing appointment forms part of the template at Annex A.

Interim applications

Normal business

18.  An interim application may be issued by (a) sending an Application Notice in form N244 by email to enquiries.centrallondon.countycourt@justice.gov.uk if the legal representative has a fee account or payment is to be made by card, (b) leaving the application in the dropbox located by the first floor counter, or (c) sending the application by post to the court at County Court at Central London, Royal Courts of Justice, Thomas More Building, Royal Courts of Justice, Strand, London WC2A 2LL, or by DX to DX 44453 Strand.

19.  The Court staff aim to put applications in Business & Property cases before a judge within 5 to 10 working days of receipt. But if the case has been assigned to a particular Circuit Judge at the first hearing, the parties are encouraged to email a copy of the issued application to the judge’s clerk in order to bring it to the judge’s early attention.

20.  The Circuit Judges generally hear Business & Property applications each Friday. An application will normally be listed on the first convenient Friday after two weeks. Applications to be heard by District Judges will be listed for a convenient date.

Urgent business

21.  There is, however, a process for applications that cannot wait. It is to be used only for applications that are genuinely urgent. An example is an application affecting a trial that is less than four weeks away.

22.  The urgent Application Notice should be submitted by email to centrallondonurgentbandp@justice.gov.uk . The body of the email should contain a succinct statement of reasons as to why the application is urgent and cannot wait to be heard in due turn. The email and attachment will be shown to either HHJ Dight CBE or HHJ Johns QC as soon as possible so that arrangements can be made for the application to be heard.

23.  If the application has yet to be issued, an urgent appointment for issue at the first floor counter in the Thomas More Building should be made using the appointments telephone number 0207 947 7502.

24.  There is no out of hours service. Any parties requiring such a service should use the Royal Courts of Justice emergency telephone number, 020 7947 6000/6260, and request the Duty Chancery Judge’s clerk.

Trials

28.  In order to avoid disruption to other litigants and to ensure that each case does not take more than its proper share of court resources, parties will be required to complete each trial in the time allotted save in exceptional circumstances.

29.  It is therefore important that time estimates for trial are realistic. Such estimates need not include time for preparation of judgment (as this will be added by the judge as appropriate) but should include time for judicial pre-reading. For guidance, parties will often be required to attend only from 11 am in a 3 day case, from 12 noon in a 4 day case and from 2 pm in a case of 5 days or more.

30.  Skeleton arguments should, unless otherwise ordered, be sent to the Court at least 2 days before the trial to centrallondoncjskel@justice.gov.uk (to reach a Circuit Judge) or centrallondondjskel@justice.gov.uk (to reach a District Judge).

31.  An indexed and paginated bundle of documents for the trial should, unless otherwise ordered, be delivered to Court at least 3 days before the trial. Parties should arrange delivery of the trial bundles directly with the judge’s clerk if possible. Otherwise, they can be lodged at the first floor counter in the Thomas More Building between 9 and 10 am.

32.  If settlement or some other development means that a trial listing can be vacated or shortened, the parties must inform the Court immediately (by emailing the trial judge’s clerk if possible) so that the time saved can be used for the benefit of other litigants.

33.  Robes will be worn for trials, appeals, applications for committal, and directors’ disqualification hearings. Robes are not otherwise worn.

Orders

34.  If a draft order is requested by the Court following a hearing such will normally be required within 2 working days and should be sent by email (to the Circuit Judge’s clerk if the case has been heard by a Circuit Judge) and be in Word format. Like other documents in the case, orders should be marked “Business & Property Work”.

Mediation

39.  CCCL has an independent mediation service administered by CEDR available to all parties to help them resolve their disputes. Each mediation takes place in the court buildings after court hours, is confidential, without prejudice and is conducted by an accredited mediator. The total cost to the parties is £900 plus VAT, usually shared equally. A party in receipt of legal aid may recover his/her share of the cost as a permitted disbursement. Further details of the mediation service and an application form are available at https://www.cedr.com/solve/clcc/’

I am delighted to announce that my new, and seventh book, the ‘Contentious Trusts Handbook’ has been accepted for publication by the Law Society in 2020.
The book currently runs to 146,610 words, and the Preface and List of Contents are set out below.

I would like to thank:
• Toby Graham, Head of Farrer & Co’s contentious trusts and estates group, who is writing the Foreword;
• Pandora Mather-Lees, who is a distinguished Art Historian: https://www.artonsuperyachts.com/;
• Hector Robinson QC, who is a partner in the international offshore law firm Mourant, and is Head of the Cayman Islands Practice Group for International Trust and Private Client Litigation. www.mourant.com; and
• Anthony Trace QC, 4 Pump Court, Temple, England, who won ‘Mediator of the Year’ in the Innovation & Excellence Awards 2019.
for their expert contributions.

Preface
Trust litigation takes place within a sophisticated theoretical and policy framework in which the legal principles governing: (i) the exercise of powers; (ii) the performance of duties; (iii) the rights of beneficiaries; and (iv) the equitable remedies and defences available on a specific set of facts, have been formulated, applied, and developed by courts of equity in England and throughout the common law world, for centuries. Consequently, the building blocks of equity are almost monolithic. The Contentious Trusts Handbook aims to provide a clear practical and comprehensive exposition of the English law principles that apply in commonly encountered trust disputes, and of the practice and procedure governing trust litigation in the English courts. The book also discusses mediation and arbitration in trust disputes, and is accompanied by a suite of precedents.
My aim throughout, has been to write a practical, accessible and authoritative handbook for the busy practitioner, which is a portable reference that covers all aspects of the law and practice governing trust disputes in the English courts. The book contains a comprehensive bibliography of current research sources, and practitioners should note that the new 34th edition of Snell’s Equity has just been published, and the 20th edition of Lewin on Trusts is due to be published in January 2020.

Many of the principles discussed in this book also apply to commercial disputes involving allegations of breach of fiduciary duty/trust. This has recently been illustrated by:
(i) Faichney & Anor v. Aquila Advisory Ltd & Ors [2018] EWHC 565 (Ch), a breach of fiduciary duty/constructive trust claim in which the judge applied the law of illegality and the doctrine of ex turpi causa to breach of fiduciary duty claims following the recent Supreme Court cases of Bilta v Nazir [2016] AC 1 and Patel v Mirza [2017] AC 417;
(ii) Credit Agricole Corporation and Investment Bank v. Papadimitriou (Gibraltar) [2015] UKPC 13, in which the proceeds of an antique collection worth $15 million was misapplied in breach of trust, and the claimant pursued a proprietary claim against the bank which received the money; and
(iii) Stobart Group Ltd v. Tinkler [2019] EWHC 258 (Comm), in which Judge Russen QC found that the former Chief Executive of the infrastructure group Stobart, had acted in breach of his fiduciary duties in: speaking to Stobart’s investors; criticising management; and agitating for the removal of the company’s chairman.
(See also, ‘Breach of Fiduciary Duty Claims and the Quiet Fiduciary Thesis’, by Carl Islam, Trusts & Trustees, Volume 25, Issue 2, March 2019, pp 237–265).
As Lord Briggs of Westbourne said in the 2018 Denning Society Annual Lecture, ‘Equity in Business’, delivered in the Old Hall at Lincoln’s Inn, ‘There can be no general principle which ring-fences all commercial dealings from equitable intervention. Nor is it right that there is less need for the intervention of equity in business rather than personal or family relationships. Business people can be just as abusive, unconscionable and plain beastly to each other as members of a family.’
Company and commercial disputes (including joint-venture and shareholder disputes) that hinge upon proof of breach of fiduciary duty, are on the increase. The bridge that fuses the traditional technical skill-set of company and commercial lawyers with that of trust lawyers (who in solicitors firms used to live in separate boxes), is however, a relatively recent phenomenon outside of the Chancery Bar. I therefore hope, that this book will also be of value to Solicitors who need to apply first principles when confronted with complex and novel facts that engage the ‘super-highway’ of equitable remedies and principles, when proceedings are issued in any of the lists and courts that constitute the Business and Property Courts of England and Wales. That is how equity evolves. Furthermore, for fiduciary disputes, the Rolls Building in London, is used by litigants as the venue to determine high value disputes, worldwide.
Carl Islam
1 Essex Court
Middle Temple, London
Michaelmas Term 2019

Contents

Foreword
Acknowledgments
Preface
CHAPTER 1 – INTRODUCTION
1.1 Aim
1.2 Introduction
1.3 Classification of trust claims
1.4 Trusteeship
15 Trusts and powers
1.6 Terms of the trust
1.7 Irreducible core of the trust
1.8 Duties
1.9 Decision making
1.10 Breach
1.11 Rights to information
1.12 Equitable jurisdiction
1.13 Remedies
1.14 Liability of trustees
1.15 Standing
1.16 Case preparation
1.17 Letter before claim
1.18 Proof
1.19 Disclosure
1.20 ADR
CHAPTER 2 – SUPERVISORY JURISDICTION OF THE COURT
2.1 Introduction
2.2 Supervisory jurisdiction
2.3 Limits
CHAPTER 3 – POWERS OF TRUSTEES
3.1 Introduction
3.2 Administrative or managerial powers
3.3 Dispositive powers
3.4 Powers of appointment
3.5 Simple general powers
3.6 Special powers
3.7 Duties of donees
3.8 Delegation
3.9 Failure to exercise a power
3.10 Fraud on a power
3.11 Rule in Hastings-Bass
CHAPTER 4 – DUTIES OF TRUSTEES
4.1 Introduction
4.2 Fiduciary duties
4.3 Fiduciary relationships

4.4 Scope and content
4.5 Self-dealing rule
4.6 Fair dealing rule
4.7 Statutory duty of care
4.8 Investment

CHAPTER 5 – BREACH
5.1 Introduction
5.2 Breach of trust
5.3 Breach of fiduciary duty
5.4 Quiet fiduciary thesis
5.5 Wrongful distribution
CHAPTER 6 – THIRD PARTY LIABILITY
6.1 Introduction
6.2 Trustee de son tort
6.3 Unconscionable receipt
6.4 Accessorial liability
6.5 Summary
CHAPTER 7 – CLAIMS
7.1 Introduction
7.2 Personal and proprietary claims for breach
7.3 Construction
7.4 Directions
7.5 Benjamin order
7.6 Removal of a trustee
7.7 Declaration of a beneficial interest in property
7.8 Sham trusts
7.9 Illusory trusts
7.10 Capacity
7.11 Undue influence
CHAPTER 8 – EQUITABLE REMEDIES
8.1 Introduction
8.2 Personal and proprietary remedies
8.3 Election
8.4 Rescission
8.5 Equitable compensation
8.6 Account in common form
8.7 Account of profits
8.8 Tracing
8.9 Injunctions
CHAPTER 9 – DEFENCES
9.1 Introduction
9.2 Limitation
9.3 Laches
9.4 Exemption clauses
9.5 Section 61 TA 1925
9.6 Consent
9.7 Set-off
CHAPTER 10 – LITIGATION
10.1 Introduction
10.2 CPR
10.3 Chancery Division
10.4 County Court
10.5 Transfer
10.6 Claim
10.7 Defence
10.8 Case management
10.9 CPR compliance and sanctions
10.10 Disclosure
10.11 Pre-action disclosure
10.12 Non-party disclosure orders
10.13 Norwich Pharmacal Orders
10.14 Bankers Trust Orders
10.15 Privilege
10.16 Part 18 Requests
10.17 Presumptions
10.18 Inferences
10.19 Trial
10.20 Adducing evidence at trial

CHAPTER 11 – COSTS
11.1 Introduction
11.2 Beddoe Orders
11.3 Non-party costs orders
11.4 Security for costs against a non-party
11.5 Part 36 Offers
11.6 Calderbank Offers

CHAPTER 12 – ADR & SETTLEMENT
12.1 Introduction
12.2 Methodology
12.3 Communication
12.4 Mediation
12.5 Arbitration

APPENDICES
A Precedents
A1 Beddoe Application – Details of Claim
A2 Benjamin Order
A3 Calderbank Offer (Equitable compensation)
A4 Calderbank Offer (Rescission)
A5 Confidential Note for Mediator
A6 Draft CMC Directions Order
A7 Draft Order (Interim application)
A8 Initial Disclosure List
A9 Mediation Position Statement & Offer
A10 Norwich Pharmacal Order
A11 Particulars of Claim (Breach of Fiduciary Duty/Accessory Liability/Powers of Investment/Information)
A12 Particulars of Claim (Breach of trust)
A13 Particulars of Claim (Liability to account)
A14 Particulars of Claim (Tracing)
A15 Part 36 Offer (Equitable compensation)
A16 Part 36 Offer (Rescission)
A17 Request For Further Information (‘RFI’) – Letter
A18 Skeleton Argument
A19 Tomlin Order and Tomlin Schedule
A20 Trusts of Land and Appointment of Trustees Act 1996, section 14 Application

B Notes
B1 Art & Heritage Assets – Duties of Trustees, by Pandora Mather-Lees
B2 Trust Litigation In The Cayman Islands, by Hector Robinson QC
B3 A Mediator’s View by Anthony Trace QC, 4 Pump Court, Temple, England

C Bibliography

When margin is thin, overheads high, product over-priced in a competitive global market, and loss inevitable because of:

(a)  delay in completion/delivery; and

(b)  increased costs of:

      (i)   materials/manufacture;

(ii)  regulatory compliance (because our regime is not aligned with that of our biggest market); and

      (iii) increased tariffs,

the cumulative effect = RSV.

It is a rule of the jungle that you are going to go out of business unless you can preserve and increase SV by relocating to a jurisdiction where you can earn a profit because in that environment the business will not suffer any RSV effect.

RSV ultimately means redundancy (‘R‘).

Redundancy reduces the potential for growth.

That reduces the prospect of future investment.

B may cease to be economically viable as a going concern.

Therefore, unless another B exists or can be created to fill the gap, this means poverty for entire communities whose wealth and standard of living depends upon strategic industries who place SV before politics (and as a fiduciary it is the legal duty of a company director to maximise shareholder value). That is because the existence of a business does not depend upon ‘sovereignty’ and ‘democracy’, it depends upon SV.

Government cannot fill the gap with infrastructure spending. All that does is to increase the structural deficit = a higher burden of interest payments.

There used to be a surplus. Now there is a mountain of debt.

What needs to be done to reduce this debt is to increase productivity.

How can you do that if you cannot sell your product because you are uncompetitive?

This spiral leads to a shrinking economy in which operating costs are higher, interest rates for borrowing will become higher, and to salvage what they can or to plug the hemorrhage, uncompetitive businesses will cease trading.

For those owners whose failing businesses have inadvertently become sitting ducks for take-over (e.g. because they possess a brand name, IPR, and know-how which can be exploited, e.g. by: firing the workforce; keeping on and relocating key talent e.g. designers; selling the land and buildings to developers; and then manufacturing in a more profitable environment) – Britain will not be made great again. It will become a hunting ground for vulture-capitalists and hedge fund managers whose only loyalty is to SV. If you think the predators will be British examine who owns some of the best known brands on the high street and premier league football clubs. Ask yourself who is going to make money out of Brexit: Hedge Fund Managers (and their global clients); Property Developers; or the surviving owners of family owned and run small businesses – which are the backbone of the British economy? Is Brexit about the opportunities that will exist to acquire, break-up, re-structure and sell-on British businesses, or is it all about you?

Donald Tusk confirmed by tweet on Saturday night that.

‘The extension request has just arrived. I will now start consulting EU leaders on how to react’.

There has been no ‘casting back’ by the EU, i.e. by return to sender of the actual document itself.

Therefore, in conformity with diplomatic law and practice, the communication requesting an extension has been both sent and received.

Where a communication is sent between heads of government (i.e. Prime Minister to President) by email and delivered by hand by either the ambassador, or by a member of the sender’s private office, together with an accompanying covering letter, that letter might for example say, ‘I have been asked by my Prime Minister to convey to you the enclosed message. I am of course available to convey any response or to attempt to clarify any points in the message.’

The covering letter sent by Sir Tim Barrow reads,

‘Dear Secretary-General,

As the United Kingdom Permanent Representative to the European Union, I invite your attention to the following matter.

Attached is a letter sent as required by the terms of the European Union (Withdrawal) (No.2) Act 2019.

‘In terms of the next steps for parliamentary process, Her Majesty’s Government will introduce the necessary legislation next week in order to proceed with ratification of the Withdrawal Agreement.

I would be grateful for your acknowledgement of receipt of this letter.

Sir Tim Barrow’

Therefore:

1.  the unsigned letter of request is not a draft;

2.  the unsigned letter of request has been sent; and

3.  the covering letter further notifies that ‘necessary legislation next week [will be introduced] in order to proceed with ratification of the Withdrawal Agreement’ (the ‘WAB’).

The covering letter neither qualifies nor withdraws the request contained in the communication. What is does is to notify the fact that legislation will be introduced in order to proceed with ratification of the WAB. While that may impact upon the calculus of each EU state in deciding whether or not to grant a further extension it does not affect the legal status of the request itself.

The personal letter sent by Boris Johnson to Donald Tusk states,

‘It is, of course, for the European Council to decide when to consider the request and whether to grant it. In view of the unique circumstances, while I regret causing my fellow leaders to devote more of their time and energy to a question I had hoped we had resolved last week, I recognise that you may need to convene a European Council.

If it would be helpful to you, I would of course be happy to attend the start of any A50 Council so that I could answer properly any question on the position of HM Government and progress in the ratification process at that time.

Meanwhile, although I would have preferred a different result today, the Government will press ahead with ratification and introduce the necessary legislation early next week. I remain confident that we will complete that process by 31 October.

Indeed, many of those who voted against the Government today have indicated their support for the new deal and for ratifying it without delay. I know that I can count on your support and that of our fellow leaders to move the deal forward, and I very much hope therefore that on the EU side also, the process can be completed to allow the agreement to enter into force, as the European Council Conclusions mandated.

While it is open to the European Council to accede to the request mandated by Parliament or to offer an alternative extension period, I have made clear since becoming Prime Minister, and made clear to Parliament again today, my view, and the Government’s position, that a further extension would damage the interests of the UK and our EU partners, and the relationship between us.

We must bring this process to a conclusion so that we can move to the next phase and build our new relationship on the foundations of our long history as neighbours and friends in this continent our peoples share. I am passionately committed to that endeavour.

I am copying this letter to Presidents Juncker and Sassoli, and to members of the European Council.’

While the dominant purpose of the letter appears to be tactical, i.e. to influence the decision made by EU leaders about granting an extension, it does not expressly revoke the request contained in the official communication (i.e. the unsigned letter taken together with the covering letter). Since it is a ‘personal’ letter it is arguably nothing more than a statement of intent by Boris Johnson which is not capable of impliedly revoking the official communication.

Therefore, the request has been made, and it is now up to the EU to decide. In other words, the UK Government cannot unilaterally prevent the EU from granting an extension.

A ‘planning obligation’ may be made with a local planning authority (‘LPA’) or offered as a unilateral undertaking by a developer as an incident to the grant of planning permission, Town and County Planning Act 1990, s.106.

Any ‘planning obligation’ must be for a ‘planning purpose’, and can be challenged at a public enquiry. A public inspector can then determine whether or not any restriction or regulation of the development or use of land is ‘Wednesbury unreasonable’, e.g. because it is ‘nebulous’.

Each planning obligation contained in a s.106 agreement must serve a specific purpose related to the site and cannot be used for an ulterior purpose, such as to build more schools in order to accommodate the consequential increase in population arising from the development because that would be unlawful.

Therefore, prior to execution of any s.106 agreement, an adjoining owner of land has the standing to invite the LPA to provide:

·      a copy of the terms of each planning obligation contained in the proposed agreement; and

·       a record of the reasons for each contemplated planning obligation.

In Miller, R (on the application of) v The Prime Minister [2019] UKSC 41 (24 September 2019), Lady Hale and Lord Reed giving the unanimous judgment of the Supreme Court stated at paragraph 61,

‘It is impossible for us to conclude, on the evidence which has been put before us, that there was any reason – let alone a good reason – to advise Her Majesty to prorogue Parliament for five weeks, from 9th or 12th September until 14th October. We cannot speculate, in the absence of further evidence, upon what such reasons might have been. It follows that the decision was unlawful.’

In default of disclosure, it may therefore be argued that each and every planning obligation contained in a s.106 planning agreement executed before adequate reasons have been provided, is prima facie unlawful and void.

Furthermore, unless the LPA confirm that any social landlord will be a signatory (i.e. in order to comply with the Law Of Property (Miscellaneous Provisions) Act 1989, s.2), then any s.106 agreement that contains an obligation to transfer land to a social landlord, e.g. a housing association, is technically invalid, and thus unlawful and void.

I refer to the legal principles decided in the following cases:

·      Good Energy Ltd v Secretary of State [2018] EWHC Civ 2102;

·      Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Co Ltd [2017] UKSC 66;

·      R (Thakenham Village Action Ltd) v Horsham District Council [2014] JPL 772;

·      R (Derwent Holdings Ltd) v Trafford Borough Council [2011] All ER (D) 216;

·      R (Sainsbury’s Supermarkets Ltd) v Wolverhampton City Council [2010] UKSC 20; and

·      Jelson Ltd v Derby City Council [2000] JPL 2013; and

·      Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (the ‘governing principles’).

Applying the governing principles, unless the LPA also provide a statement (which may be relied upon as evidence at a public enquiry) specifying:

·      why it is not possible to address any unacceptable impact through a planning ‘condition’ instead of an ‘obligation’ (NPPF, paragraph 203);

·      why each obligation is necessary to make the application acceptable in planning terms (see Jelson);

·      how each obligation is directly related to the development (see Derwent Holdings); and

·      how each obligation is ‘fairly’ and ‘reasonably’ related in ‘scale’ and ‘kind’ to the development,

then it is axiomatic that no clear and adequate reasons have been provided to demonstrate fulfilment of each of the four legal tests enumerated above (the ‘legal tests’).

Therefore, because the legal tests have not been satisfied, any s.106 agreement that is signed before clear and adequate ‘reasons’ are provided is null and void. That is because in a vacuum, no planning obligation can constitute a valid reason for granting planning permission.

Hence, if the LPA elect to be silent, then the public inspector, as a matter of public law, may draw adverse and negative inferences from the failure of the LPA to provide clear and adequate reasons. On that basis alone, it is submitted that the inspector may conclude that in breach of statutory duty, planning permission was unlawful. Paragraph 7-115 of De Smith’s Judicial Review, Eighth Edition, (2018) states that ‘[u]sually, the remedy given in a case of breach of duty to give reasons or adequate reasons is an order quashing the unreasoned decision.’ (Flannery v Halifax Estate Agencies Ltd (T/A Colley’s Professional Services) [2000] 1 WLR 377).

Consequently, following the decision of the Supreme Court in Miller, any vendor of agricultural land, such as a registered Charity, who refuses to provide information about the reasons relied upon in support of a s.106 agreement, and any LPA, who acts in concert in withholding any reasons from local tax-payers, is likely to face a test case in the Supreme Court if they challenge either:

(i)     the jurisdiction of a public inspector to make a finding about whether planning permission for a development linked to a s.106 agreement was lawful; or

(ii)    any finding that it was unlawful, which results in judicial review, and an appeal to the Supreme Court.

It is submitted that following Miller there is a clear evidentiary presumption that where a vendor and/or the LPA remain silent, and refuse to disclose ‘reasons’ either ‘adequately’, or ‘at all’, that the decision about planning permission is prima facie void, unless and until the LPA demonstrate otherwise by satisfying the legal tests set out above, which is impossible if a s.106 agreement has been signed before adequate reasons have been stated.

This is likely to result in a boom in judicial review applications if the Government has made an irrational decision about whether or not the underlying economic rationale for a planning obligation, i.e. based upon need is lawful where it is based upon a demonstrable statistical error. For example where a LPA rely upon a projection about population growth that indicates growth when accurate and up to date data demonstrates that growth is falling (which is a matter of expert evidence and opinion).

Therefore any: (i) vendor (including e.g. a UK registered charity), (ii) purchaser/developer, and (iii) LPA, who does not provide ‘reasons’, is likely to face litigation if they are involved in a land transaction that is contingent or dependent upon any planning obligation contained in a s.106 agreement being lawful.

Because trustees are fiduciaries this may also result in civil litigation in the Chancery Division in parallel with proceedings brought in the administrative court, brought by litigants who have the standing to allege breach of fiduciary duty. That will engage disclosure remedies that are not available in the administrative court, including ‘train of enquiry’ applications under PD 51 U Disclosure Model E and imaginative applications for a Norwich Pharmacal order, which the author has been researching since May in connection with his forthcoming book about trust litigation.

The following is a comment I provided to a journalist at Channel 4 News who called to enquire about examples of the Police entering diplomatic and consular premises to save life in the aftermath of an incident which took place at the Bahrain Embassy in London. The incident was unprecedented on UK soil. Unlike the Libyan embassy incident which resulted in the death of PC Yvonne Fletcher, (see, http://newsite.diplomaticlawguide.com/ [articles page]) the Police were able to enter and intervene before murder was committed. Staff in the embassy were apparently and allegedly about to throw a protestor off the roof when the police forced entry into the embassy. The entry was made without the prior consent of the head of the mission.

See: https://www.channel4.com/news/police-break-down-door-of-bahrain-embassy-in-uk-after-roof-protester-threatened

(Link to the story provided 09.08.2019 by ITV News)

Further to your enquiry, Article 22 of the Vienna Conventions states, 

‘1.    The premises of the mission shall be inviolable. The agents of the receiving State may not enter them, except with the consent of the head of the mission.

2.     The receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity.

3.     The premises of the mission, their furnishings and other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.’ 

An embassy is therefore prima facie immune from entry by the Police under any circumstances, unless the Head of the Mission has granted his consent, or the status of the premises has been removed, see paragraph 8.11 of Satow’s Diplomatic Practice (6th ed) by Sir Ivor Roberts (attached). 

However, under paragraph 2 of Article 22 of the Vienna Convention, the receiving state is under a duty to ‘take all appropriate steps to protect the premises of the mission against any … impairment of its dignity.’ Therefore, in my opinion, if the Police judge that by throwing a protester off the roof (and possibly to his death), the dignity of the Bahrain embassy will be impaired, they may enter in order to prevent that act by removing the protester from the premises (i.e. to save life as violence by embassy staff would otherwise impair the dignity of the premises). The same principle presumptively applies to the death of Jamal Khashoggi in the consulate of Saudi Arabia in Ankarra, i.e. had the authorities been able to prevent the murder of this journalist.