Law reports

Law reports

Conflict of lawsCriminalDamagesDiscriminationImmigrationInsolvencyJudicial reviewLandlord and tenantNegligenceNuisancePolicePracticeTaxation

CONFLICT OF LAWS

Claimant injured in road accident in France subsequently moving to England - French court awarding damages and giving leave to seek further award on deterioration - English court having no jurisdiction to entertain further claim on basis that deterioration had occurred exclusively in England

Henderson v Jaouen and another: CA (Lords Justice Peter Gibson and Mantell and Mr Justice Wall): 1 February 2002

In 1978 the claimant was injured in a road accident in France He successfully sued the other driver and his insurers in France and was granted the right to seek a further award in the event of subsequent deterioration in his condition.

In 1995 he issued fresh proceedings in France claiming 'aggravation'.

In 1996 a provisional payment was made.

He did not pursue the proceedings before the French tribunal but in May 2000 issued a claim in the Queen's Bench Division, asserting that it had jurisdiction because his deterioration, which founded his cas d'aggravation but had occurred exclusively in England where he had lived since 1983, was the requisite 'harmful event' identified in article 5(3) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.

The senior master refused to strike out the claim for want of jurisdiction.

The defendants appealed.

Adrian Brunner QC and Patrick Green (instructed by Pierre Thomas & Partners) for the defendants.

Michael Brooke QC and Hugh Mercer (instructed by Teacher Stern Selby) for the claimant.

Held, allowing the appeal, that a road traffic accident was an event occurring only in one jurisdiction at a particular time and the 'harmful event' was the negligence in causing the injury to the claimant; that that act had no extraterritorial effect and gave the claimant no cause of action in England; that the deterioration was not a fresh 'harmful event' but a consequence flowing from the original tort; and that, accordingly, no 'harmful event' within the meaning of article 5(3) had occurred in England and, therefore, the English court had no jurisdiction to entertain the proceedings.

CRIMINAL

Evidence - secret tape recording of suspects in police cells - admissible in evidence

R v Mason; R v Wood; R v McClelland; R v Tierney: CA (Lord Woolf CJ, Mr Justice Mitchell and Mr Justice Keith): 13 February 2002

The defendants, who were suspected of involvement in a series of armed robberies, were lawfully arrested for individual offences and put together in cells which, with the authorisation of the chief constable, had been bugged.

The conversations recorded linked the defendants to other armed robberies with which they were then charged.

At their trial in January 2000, the judge considered section 78 of the Police and Criminal Evidence Act 1984 and articles 5, 6 and 8 of the European Convention on Human Rights and concluded that the tape recordings could be used in evidence.

The defendants were convicted.

They appealed.

Paul Williams (assigned by the Registrar of Criminal Appeals) for Mason.

Nigel Shepherd (assigned by the Registrar of Criminal Appeals) for McClelland.

Robin Pearse Wheatley (assigned by the Registrar of Criminal Appeals) for Wood and Tierney.

Nicholas Webb (instructed by Crown Prosecution Service, Coventry) for the Crown.

Held, dismissing the appeals, that covert recording of what was said in police cells was not contrary to the spirit of the 1984 Act or the codes of practice thereunder, although if such a practice were to continue it was highly desirable that a statutory code for such surveillance should be established; that the covert recording infringed the defendants' right to privacy under article 8(1) of the convention and the prosecution could not rely on article 8(2) to justify what had taken place because the surveillance had not been conducted 'according to law', in that there was no legal structure to which the public had access authorising the infringement; that the government had to provide a remedy for the violation of article 8, but that did not require the evidence to be excluded; a finding that there had been a breach of article 8 or an award of compensation was sufficient; that the infringement was a matter which the trial judge was required to take into account when exercising his discretion under section 78 of the 1984 Act; that there had been no breach of articles 5 and 6; and that the judge had been entitled to exercise his discretion under section 78 as he had.

(WLR)

DAMAGES

Severely disabled mother - healthy child born following negligently-performed sterilisation - additional costs of caring for child uniquely referable to mother's disability recoverable

Rees v Darlington Memorial Hospital NHS Trust: CA (Lords Justice Robert Walker, Waller and Hale): 14 February 2002

The claimant, who was severely visually handicapped, did not want children, fearing that her poor sight would prevent her from bringing them up.

She underwent a sterilisation operation which was negligently performed, and subsequently gave birth to a healthy child.

She claimed damages against the defendant NHS trust.

On a preliminary issue the judge, applying House of Lords authority, held that none of the costs of bringing up a healthy child were recoverable and dismissed the action.

The claimant appealed.

Robin de Wilde QC and Joseph P O'Brien (instructed by Blackett Hart & Pratt, Durham) for the claimant.

Jeremy Stuart-Smith QC (instructed by Eversheds, Newcastle-upon-Tyne) for the defendant.

Held, allowing the appeal (Lord Justice Waller dissenting) that a disabled parent, unlike an able-bodied one, needed help in discharging the ordinary tasks involved in parental responsibility; and that, just as the extra costs of bringing up a disabled child were recoverable, the claimant was entitled to recover the extra costs of bringing up her child which were uniquely referable to her disability.

(WLR)

DISCRIMINATION

Equal pay - pension benefits on early retirement - disparity in benefits for male and female nurses lawful

Quirk v Burton Hospitals NHS Trust and Another: CA (Lord Woolf CJ, Lords Justice Mummery and Buxton): 12 February 2002

The applicant, a male nurse employed by an NHS Trust, was a member of a pension scheme run by an agency on behalf of the Secretary of State for Health.

Originally, under the scheme, female nurses could retire at 55 and take an immediate pension but if a male nurse retired at 55, he had to wait until he was 60 before he could draw his pension.

The scheme was amended by the National Health Service Pension Scheme Regulations 1995 to allow all members to retire and claim pension benefits at 55.

However, under regulation R2(4) the amount payable on retirement before 60 in the case of a male nurse was calculated only by reference to pensionable service on or after 17 May 1990.

The applicant sought a declaration that he was entitled to retire at 55 with the same pension benefits as female nurses retiring at the same age.

An employment tribunal dismissed his claim.

That decision was upheld by the Employment Appeal Tribunal [2001] ICR 415.

The applicant appealed.

Jacques Algazy (instructed by Legal Adviser, Equal Opportunities Commission, Manchester) for the applicant.

Eleanor Sharpston QC and Kieron Beal (instructed by Solicitor, Department of Health) for the secretary of state.

Held, dismissing the appeal, that the disparity between the benefits payable to male nurses and those payable to female nurses on retirement at 55, which was the essence of the applicant's complaint, was the consequence of the temporal limitation embodied in protocol no 2 concerning article 119 of the EU Treaty, sanctioned by the decision of the Court of Justice of the European Communities in Barber v Guardian Royal Exchange Assurance Group (Case C-262/88) [1990] ICR 616; that, therefore, the disparity in the level of benefits was permissible, being the result of age differentials between men and women lawfully applied in the period prior to 17 May 1990; and that, accordingly, that disparity did not amount to unlawful sex discrimination under article 119.

IMMIGRATION

Refusal of leave to remain indefinitely - adjudicator allowing appeal but failing to follow it with directions - secretary of state bound by adjudicator's decision

R (Boafo) v Secretary of State for the Home Department: CA (Lords Justice Auld, Ward and Robert Walker): 4 February 2002

The applicant, a foreign national, married a British citizen in March 1995 and in September 1996 applied for indefinite leave to remain in the UK on the ground of her marriage.

In April 1997, her application was refused on the basis of inaccurate information received from the Department of Social Security that she and her husband had been living at different addresses.

In September 1998 the applicant's husband filed a divorce petition stating that they had lived in the same house, but for the past two and half years they had lived separate lives.

In January 1999 an adjudicator allowed the applicant's appeal on the ground that she had satisfied rule 287 of the Immigration Rules (HC 395), by living together with her husband for 12 months after the marriage, without following the order with directions.

The secretary of state, without appealing against the adjudicator's order, reconsidered the application and refused it, stating that he was not satisfied that the applicant was living together with her husband.

Mr Justice Stanley Burnton refused her claim for judicial review.

The applicant appealed.

Noah Weinegar (instructed by Corbin & Hassan) for the applicant.

Rhodri Thompson (instructed by Treasury Solicitor) for the secretary of state.

Held, allowing the appeal, that where an appeal against the secretary of state's decision was allowed by the adjudicator it was a judicial decision binding on the applicant and the secretary of state, even if the order was not followed by the adjudicator's directions as a matter of procedure; and that, therefore, since he had not appealed the adjudicator's decision under section 20 of the Immigration Act 1971, it was not open to the secretary of state to disregard the order by his executive decision.

(WLR)

INSOLVENCY

Expenses incurred in winding up - company liable to corporation tax on unpaid interest deemed to have been received after winding up - liability 'necessary disbursement' of winding up

In re Toshoku Finance UK PLC: HL (Lord Hoffmann, Lord Woolf CJ, Lord Hutton, Lord Hobhouse of Woodborough and Lord Rodger of Earlsferry): 20 February 2002

The principal asset of a company which went into creditors' voluntary liquidation was a debt owed to it from another company in the same group.

The liquidators accepted a lesser sum in full and final settlement of the debt, but nothing was paid in respect of interest which had accrued after the liquidation date.

The company was liable to corporation tax on the interest payable on the debt, although interest had not been paid and probably never would be.

On the liquidators' application for directions Mr Justice Evans-Lombe ruled that corporation tax on the interest after the commencement of the winding up was not a liability which the liquidators were required to discharge out of the company's assets as an expense of the winding up.

The Court of Appeal [2000] Gazette, 14 April, 39; [2000] 1 WLR 2478 allowed an appeal by the Crown.

The liquidators appealed.

Mark Phillips QC and Felicity Toube (instructed by Linklaters) for the liquidators.

Michael Briggs QC and Philip Jones (instructed by the Solicitor of Inland Revenue) for the Crown.

Held, dismissing the appeal, that rule 4.218(1) of the Insolvency Rules 1986 was (subject to certain qualifications contained in the rules themselves) a definitive statement of what counted as an expense of the liquidation; that the only power expressly reserved to the court by rule 4.220(1) was a discretion to rearrange the priorities of the listed expenses inter se, conferred by section 156 of the Insolvency Act 1986; that, therefore, the heads of expenses listed in rule 4.218(1) were not subject to any implied qualification; that whether expenses fell within the rule was a matter of construction and no more; and that, since it was expressly enacted that a company was chargeable to corporation tax on profits or gains arising in the winding up, the tax was a post-liquidation liability which the liquidator was bound to discharge and was therefore a 'necessary disbursement' within the meaning of the rules.

(WLR)

JUDICIAL REVIEW

Human Fertilisation and Embryology Authority - challenge to decision of authority - court having no power to consider merits of decision

R (Assisted Reproduction and Gynaecology Centre and another) v Human Fertilisation and Embryology Authority: CA (Lord Justice Clarke and Mr Justice Wall) 31 January 2002

A woman, aged 47, undergoing infertility treatment by the first applicant, sought judicial review of the authority's decision not to consent to the use of more than three embryos in one cycle of treatment.

The authority thought that treatment was likely to fail but that, if it succeeded, there would be a higher risk of multiple pregnancy if five embryos were transplanted rather than three.

They considered that the possible marginal improvement in the chances of becoming pregnant was outweighed by the albeit small risk of multiple pregnancy.

Permission to apply for judicial review of the decision was refused by the High Court and Lord Justice Sedley.

The applicants appealed.

Mohamed Taranassi, director of the first applicant, in person.

Belinda Schwer, solicitor-advocate (Mayer Brown Rowe & Maw) for the second applicant.

Dinah Rose (instructed by Morgan Cole) for the authority.

Held, dismissing the appeal, that any future litigant wishing to challenge advice given or decisions taken by the authority should be aware that the authority was open to challenge by way of judicial review, like any public authority, only if it exceeded or abused its powers or responsibilities, or if its decision was irrational; that it was not the function of the court to enter into scientific debate or to adjudicate on the merits of the authority's decisions; and that, although there might be disagreement among scientists, it was impossible to describe the present decision as irrational.

LANDLORD AND TENANT

Covenant to keep in proper working order - pipes ceasing to supply water to flats - scope of landlord's obligation

O'Connor and others v Old Etonians Housing Association Ltd: CA (Lord Phillips of Worth Matravers MR, Lords Justice Waller and Buxton): 20 February 2002

Tenants claimed against the landlord damages for breach of his covenant, implied by section 11(1)(b) of the Landlord and Tenant Act 1985, to keep in proper working order installations for the supply of water to their flats.

The following facts were assumed for the purpose of a preliminary issue: before the tenancies commenced the landlord had replaced the existing pipework with narrower bore pipework, which carried water successfully to the flats for some years; from summer 1992 onwards the smaller pipes did not do so, the water pressure having fallen; the previous pipes would have carried water to the flats successfully; and water had reached the flats since the construction of a new pumping station in 1998.

The district judge held that the landlord could not be liable merely because the pipes were of one inch rather than one and a quarter inches in diameter and/or because no booster pump was installed.

Mr Justice Blackburne allowed the tenants' appeal, holding that the covenant required the landlord to ensure that the pipes were physically or mechanically capable of supplying water to the flats and that he could have so ensured but had not.

The landlord appealed.

Ranjit Bhose (instructed by Prince Evans) for the landlord.

Paul Staddon (instructed by Wilson Howard) for the tenants.

Held, allowing the appeal and remitting the matter to the district judge, that an installation for the supply of water, gas and electricity could not be said to be in proper working order if, through a construction or design defect, it was incapable of working properly; that an installation would be in proper working order if it were able to function under conditions of supply which it could be reasonably anticipated would prevail; that whether variations in supply should be reasonably anticipated and provided for depended on the particular facts; that in appropriate circumstances the obligation to keep installations in proper working order might require a landlord to modify an installation to accommodate changes in supply which were not reasonably anticipated; but that the inadequacy of the assumed facts prevented the court from determining how the test of proper working order was to be applied.

(WLR)

NEGLIGENCE

Employees claiming damages for psychiatric illness caused by work-related stress - ordinary employer's liability principles applying - guidance as to practical application of principles

Hatton v Sutherland; Barber v Somerset County Council; Jones v Sandwell Metropolitan Borough Council; Bishop v Baker Refractories Ltd: CA (Lords Justice Brooke, Hale and Kay): 5 February 2001

In each case an employee successfully claimed damages against his or her employer in respect of a psychiatric illness caused by stress at work.

Two of the claimants were teachers, the third was an administrative assistant and the fourth was a raw materials operative.

The employers appealed.

Peter Atherton (instructed by Silverbeck Rymer, Liverpool) for Hatton.

Andrew Collender QC and Stephen Archer (instructed by Rollingsons) for Sutherland.

Robert Glancy QC and Christopher Goddard (instructed by Graham Clayton, Exeter) for Barber.

Andrew Hogarth (instructed by Veitch Penny, Exeter) for Somerset County Council.

Mark Anderson (instructed by Martineau Johnson, Birmingham) for Jones.

Ralph Lewis QC (instructed by Simpson & Co, Birmingham) for Sandwell Metropolitan Borough Council.

Howard Elgot (instructed by Morrish & Co, Leeds) for Bishop.

Robert F Owen QC (instructed by Whitfield Hallam Goodall, Batley) for Baker Refractories.

Held, dismissing the appeal in the third case but allowing the appeals in the others, that there were no special control mechanisms applying to claims for psychiatric (or physical) injury or illness arising from the stress of doing the work which an employee was required to do; that the ordinary principles of employer's liability applied; that the threshold question was whether this kind of harm to this particular employee was reasonably foreseeable where there was an injury to health (as distinct from emotional stress) which was attributable to stress at work rather than from other factors; that foreseeablility depended upon what the employer knew or ought reasonably to have known about the individual employee; and that there were no occupations which should be regarded as intrinsically dangerous to mental health.

NUISANCE

Failure to abate nuisance - no steps taken by sewerage undertaker to remedy flooding of garden by sewage - sewerage undertaker liable in nuisance

Marcic v Thames Water Utilities Ltd: CA (Lord Phillips of Worth Matravers MR, Lords Justice Aldous and Ward): 7 February 2002

From 1992, the claimant's garden was periodically flooded by sewage after heavy rain because third parties had connected to the sewerage system, thereby increasing the sewage discharged into the system which became overloaded.

The defendant, the sewerage undertaker, had taken no steps to remedy the problem, the claimant being insufficiently high on their priorities.

The claimant failed in his claim for damages in, among other things, nuisance, but the judge awarded him damages to be assessed from 2 October 2000 for breach of his rights under article 8 of the European Convention on Human Rights and article 1 of protocol 1 to the convention.

The defendant appealed; the claimant cross-appealed.

Stephen Hockman QC and Peter Harrison (instructed by South & Co) for the claimant.

David Pannick QC and Michael Daiches (instructed by Legal Director, Thames Water Legal Services) for the defendant.

Held, dismissing the defendant's appeal and allowing the claimant's cross-appeal, that the defendant owed the claimant a duty to take such steps as, in all the circumstances, were reasonable to prevent the discharge of sewage on to his property; that the reasonableness of the defendant's conduct had to be judged having regard to all the steps which it was open to them to take to abate the nuisance, whether or not under statutory powers; that it was doubtful whether a body with the defendant's resources could rely on lack of resources to justify taking no steps at all to abate such a nuisance, but in any event their system of priorities was not fair; and that the defendant was liable in nuisance at common law for failing to take steps to remedy the discharge of sewage onto the claimant's land, as well as for breach of his convention rights.

(WLR).

POLICE

Breach of peace - power to detain - officer to have real apprehension of further breach - decision to detain to be based on honest and reasonable belief

McGrogan v Chief Constable of Cleveland Police: CA (Lord Justice Mantell and Mr Justice Wall): 12 February 2002

The claimant was arrested and detained on suspicion of assault occasioning actual bodily harm at 14.56 on Saturday, 4 April 1998.

He brought a claim for wrongful arrest and false imprisonment against the defendant.

The judge concluded that the claimant's continued detention after 13.50 on Sunday, 5 April 1998, until he could be brought before the justices on 6 April 1998, was not justified and awarded 1,500 damages.

The defendant appealed.

James Guthrie QC and Simon Davenport (instructed by Andrew Dobson, Middlesbrough) for the defendant; Hugh Tomlinson (instructed by Watson Woodhouse, Middlesbrough) for the claimant.

Held, allowing the appeal, that the circumstances in which an arrest for an actual or anticipated breach of the peace could take place were clear (see R v Howell [1982] QB 416, 426); that the test for detaining a person so arrested was whether there was a real apprehension that if released he would commit or renew his breach of the peace within a short time; that the officer deciding to continue detention must have an honest belief that further detention was necessary to prevent a breach of the peace and there must, objectively, be reasonable grounds for that belief; that the police practice of treating any person so detained as if the Police and Criminal Evidence Act 1984 applied to the detention was plainly correct; that the need regularly to review the detention to ascertain if it remained justified was also plainly correct; that the need to bring a lawfully detained person before the magistrates' court at the earliest opportunity was in accordance with article 5(1)(c) of the European Convention on Human Rights and was well established; that in those circumstances no further general guidance was required; and that, accordingly, the judge had formulated the correct test but had wrongly applied it.

PRACTICE

Court of Appeal (Civil Division) - jurisdiction - power to reopen concluded appeal to remedy significant injustice

Taylor and Another v Lawrence and Another: CA (Lord Woolf CJ, Lord Phillips of Worth Matravers MR, Lords Justice Ward, Brooke and Chadwick): 4 February 2002

The claimants were granted judgment against the defendants in the county court in relation to a boundary dispute.

The defendants appealed on the ground, among other things, of the judge's apparent bias.

The Court of Appeal dismissed the appeal but, after the judgment had been drawn up, the defendants obtained new evidence relating to the allegation of bias.

The defendants applied to the Court of Appeal for permission to reopen the appeal.

Bernard Eder QC and David Scorey (instructed by Bar Pro Bono Unit) for the defendants.

Tim Cowen (instructed by Matthew Arnold & Baldwin, Watford) for the claimants.

Timothy Corner and Sarah-Jane Davies (instructed by Treasury Solicitor) as advocates to the court.

Held, granting the application but dismissing the appeal, that the Court of Appeal, having been established to correct wrong decisions and to ensure public confidence in the administration of justice, had an implicit jurisdiction to do that which was necessary to achieve those dual objectives; that the Court of Appeal could take the exceptional course of reopening proceedings which it had already heard and determined if it were clearly established that a significant injustice had probably occurred and that there was no alternative effective remedy; that, before exercising such a power, the court would consider the effect of reopening the appeal on others and the extent to which the complaining party was the author of his own misfortune; that where an appeal lay to the House of Lords, the Court of Appeal would only give permission to reopen an appeal if satisfied that leave to appeal to the House of Lords would not be given; that the court should exercise strong control over any such application so as to protect those who were entitled reasonably to believe that the litigation was already at an end; and that in the present case no case of apparent bias in the judge had been made out.

(WLR)

Appeals - Home Office filing appellant's notice seeking permission to appeal 11 weeks out of time - extension of time refused

R (Harris) v Secretary of State for Home Department: CA (Lord Justice May, Sir Anthony Evans and Sir Denis Henry): 14 February 2002

The applicant, born in Jamaica, had lived in England since 1966 and by section 1(2) of the Immigration Act 1971 acquired the right to settle here with indefinite leave to remain.

He had several criminal convictions but was protected against deportation by sections 4(5) and 7 of the Act.

In 1998 he visited his dying father in Jamaica and on returning was refused leave to enter by an immigration officer because of his criminal record.

In judicial review proceedings the judge, on 13 March 2001, held that decision to be perverse, granting the applicant leave to enter and refusing the secretary of state permission to appeal.

On 12 June, the secretary of state department filed an appellant's notice seeking from the Court of Appeal an extension of time and permission to appeal.

Robin Tam and Tim Eicke (instructed by Treasury Solicitor) for the secretary of state.

Alper Riza QC (instructed by Hackmans) for the applicant.

Held, refusing an extension, that by the Civil Procedure Rules, rule 52.4, permission to appeal had to be requested in an appellant's notice filed within 14 days of the lower court's decision; that a successful litigant was entitled to know at the earliest time whether the judgment he had obtained was to be challenged; that the secretary of state had a clear interest in the early despatch of immigration appeals and, having no good reason for an 11-week delay, should not be granted an extension; but that in any event the judge's decision on the substantive issue had been correct.

Discovery - claimant obtaining order for disclosure of information by innocent defendants - defendants to be released from proceedings after complying with orders

Australia & New Zealand Banking Group Ltd v National Westminster Bank plc and others: ChD (Mr John Jarvis QC, sitting as deputy judge): 6 February 2002

The claimant bank obtained orders for discovery of information, pursuant to the rule in Norwich Pharmacal Co v Customs and Excise Comrs [1974] AC 133, against a number of banks, including the third defendant, which held accounts for customers who had allegedly received the proceeds of a fraud perpetrated on the claimant.

After the third defendant had complied with all the discovery orders made against it, it asked to be released from the proceedings.

The claimant refused to release the third defendant because it was concerned that further information might be required of it in the future, and that it might be precluded from commencing fresh discovery proceedings.

The third defendant applied to the court for an order that it be released from the proceedings

Robert Hunter, (solicitor-advocate of Allen & Overy) for the claimant.

Andrew Ayres (instructed by Thomas Cooper & Stibbard) for the third defendant.

Held, granting the relief sought, that an innocent defendant who had complied with any discovery orders made against him pursuant to the Norwich Pharmacal principles should be released from the proceedings where there was no longer any reason for him to remain; that it was wrong in principle to keep a party in the proceedings in the mere hope or expectation of seeking further disclosure from him in the future; and that, if necessary, the claimant could join the party again, if and when fresh circumstances required further disclosure.

TAXATION

Tax avoidance - exempt approved pension scheme - revenue empowered to counteract advantage from tax credits on share 'buy-backs'

Inland Revenue Commissioners v Sema Group Pension Scheme Trustees: ChD (Mr Justice Lightman): 7 February 2002

The trustees of an exempt approved pension scheme bought on the open market 120,000 50p ordinary shares in P plc at 5.35 a share.

Following an offer by P plc in 1996 to 'buy-back' shares, the trustees sold 95,000 shares to P plc at some 5 per share.

Under section 209(2) of the Income and Corporation Taxes Act 1988 the price received by the trustees from P plc in excess of the paid capital of 50p per share constituted a distribution entitling the trustees to a tax credit under section 231(1) of the Act.

The trustees received payment of 96,912 from the revenue in respect of those credits but thereafter, exercising its powers under part XVII of the 1988 Act, the Inland Revenue issued a notice and schedule F assessment on the trustees to counteract tax advantages thus obtained.

Special commissioners upheld the trustees' appeal, cancelling the notice and assessment.

The Inland Revenue appealed.

Launcelot Henderson QC and Christopher Tidmarsh (instructed by Solicitor of Inland Revenue) for the Inland Revenue.

John Gardiner QC (instructed by Lovells) for the trustees.

Held, allowing the appeal, that the distribution received by the trustees was, within the meaning of section 704A of the 1988 Act, an 'abnormal amount by way of dividend'; that the conditions for the operation of the anti-avoidance provisions in part XVII for the cancellation of tax advantages from transactions in securities were therefore satisfied; and that, accordingly, the Inland Revenue was entitled to take steps to counteract the tax advantage obtained by the trustees of the sale back of the shares.