Actis SA, R (on the application of) v The Secretary of State for Communities and Local Government [2007] EWHC 2417 (Admin)

[2007] EWHC 2417 (Admin)

Case No CO/9218/2006

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 2/11/2007

Before

THE HONOURABLE Mr JUSTICE CHARLES

Between

The Queen on the application ofClaimant

ACTIS S.A.Claimant

ACTIS INSULATION LIMITEDClaimant

- and –

Between

THE SECRETARY OF STATE FORDefendant

COMMUNITIES AND LOCAL GOVERNMENTDefendant

(Transcript of the Handed Down Judgment of

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T. de la Mare and M. Vinall (instructed by Ashurst LLP) for Claimants

J. Simor (instructed by the Treasury Solicitor) for Defendant

Hearing Hearing dates: 19,20 & 23 July 2007

Judgement

Charles J :

[1]The Claimants sell “multi-foil” thermal insulation products. The Defendant is responsible for the Building Regulations, as well as the Approved Documents, which provide practical guidance on the requirements of the Building Regulations.

[2]At the relevant time the matter was dealt with by a predecessor department, (the Office of the Deputy Prime Minister - ODPM) and I shall refer to the Defendant as the Department.

[3]In March 2006, certain amendments were made to the Building Regulations, the Approved Documents and other documents to which they refer. They came into effect in April 2006.

[4]The parts of those amendments at the heart of this claim relate to the measurement of the thermal performance of thermal insulation products (expressed as “U-values”). U-values measure the rate of heat transfer through elements and are therefore measures of the thermal transmittance of elements; the greater the U-value, the easier it is for heat to pass through an element. Conversely, the lower the U-value, the greater the resistance of the element to the passage of heat through it, i.e. the better the insulant. Thermal resistance is the converse of thermal transmittance and is measured in ‘R-values’. The higher the thermal resistance the better the insulator.

[5]The new version of a document known as BR443 was introduced at the same time as the new Approved Documents in 2006 which state that U-values shall be calculated using the methods and conventions set out in the new BR 443. Unlike its predecessor it made specific reference to multi-foil products in the opening phrase of paragraph 3.10.2 which states that:

“The U-value of constructions that include multi-foil insulation --------------- ”

. It goes on to apply a hot-box test. (I cite this paragraph in Schedule A).

[6]The hot-box test is a standard test which has International and European-wide scientific approval. It has been referred to, and stipulated in, Approved Documents since at least 2002. Its construction and use is prescribed under the provisions of British Standard number BS EN ISO 8990 and international standard number ISO 8990.

[7]The Claimants seek relief for two independent reasons:(a) firstly on the basis that there has been a failure to notify parts of the 2006 changes (and in particular the reference to and incorporation of the new BR 443) to the Commission of the European Communities (“the Commission”) in accordance with Article 8(1) of Directive 98/34/EC (“the Technical Standards Directive”), and

(b) secondly on the basis of legitimate expectation and further or alternatively conspicuous unfairness.

[8]The allegations underlying the claim based on legitimate expectation and conspicuous unfairness raise serious and potentially wide reaching allegations, concerning the conduct of the Department in respect of both the matters leading to these proceedings and the conduct of these proceedings.

[9]An application for cross examination of a Mr Nawaz, the Head of Standards Policy Branch, Buildings Division of the Department was made in the light of differences between accounts given by the Department in its response to the letter before action and Mr Nawaz’s first statement. That application was refused. As will appear later Mr Nawaz played a central role in the relevant events.

[10]It was made clear that in these proceedings the Claimants were not asserting bad faith or dishonesty against Mr Nawaz, or any other representative of the Department. Rather what they were alleging was that there had been a high level of incompetence shown by such representatives.

[11]The seriousness of these arguments, and my view on reading the statements of Mr Nawaz that they contained matters that might merit severe criticism, caused me to offer the Department an opportunity, if it wished to do so, to put in further statements or to call witnesses to address the criticisms made of its conduct. In this context it put in two further short witness statements which to my great surprise were handed to me by counsel for the Department without them first having been shown to the Claimants and without any indication that this was the case. Initially the Department declined the invitation for Mr Nawaz, or any other representative of the Department, to give oral evidence. Very late in the proceedings it was indicated that, if I wanted her to do so, the present head of the relevant division would give oral evidence addressing the approach of the Department and how concerns I had raised in strong terms in the course of argument had been dealt with. It seemed to me that it was then too late to introduce such evidence from someone who was, as I understood it, not involved at the time of the events giving rise to this litigation. I indicated that at that stage I did not want her to give oral evidence.

[12]The case was therefore dealt with on the written evidence and on the bases that(a) no allegation of bad faith or dishonesty was being made, but

(b) it was being alleged as part of the arguments of legitimate expectation and conspicuous unfairness that the representatives of the Department had demonstrated high levels of incompetence both in respect of the events leading to the litigation and in its conduct.

[13]As appears later, in my judgment those allegations are made out and there are aspects of the conduct and approach of the Department that fall a long way short of the standards that those dealing with a Government Department are entitled to expect and which therefore merit severe criticism. In reaching those conclusions I have not forgotten that hindsight is a wonderful thing and that the decision makers at the time did not have the benefit of the time, or of the focused argument and thinking, given to me by this litigation.

[14]I deal with the issues that arise under headings and in Schedules. I have used schedules because in my view this is a convenient course to take and I hope that this will assist the reader in making cross references.

Industry participants and other relevant bodies

[15]The Thermal Insulation Manufacturers and Suppliers Association (“TIMSA”). This association has existed for some time and for present purposes represents traditional manufacturers and thus the competitors to the multi-foil manufacturers.

[16]The Confederation of Multi-foil Manufacturers (“the CMM”). It was formed in February 2006 and as its name indicates, is an association of multi-foil manufacturers.

[17]The Construction Products Association (“the CPA”). As will be seen later in this judgment, a representative of the CPA (Mr Tebbit) took an active part in relevant meetings and exchanges. The CPA funded, with a contribution from the Department of £3,000 (being about 15% of the total cost of £22,000), the revision of BR 443. Very late in the hearing a dispute arose as to the membership of the CPA and its participation (and the effect of that participation) in the revision of BR 443. The Department disputed the content of a letter that the Claimants proposed handing in. The upshot was that I did not read that letter during the hearing and the Department has put in a further statement and there has been some further correspondence. Some dispute remains but, as will appear, it does not seem to me that its resolution is necessary for the purposes of this judgment.

[18]Building Research Establishment Ltd (BRE). This is a consultancy business that undertakes research and consultancy related to building and construction. It was commissioned in respect of the revision of BR 443. A consultant scientist employed by BRE (Mr Anderson) was principally responsible for this work aided, as he says in his witness statement, by a steering committee put together by the CPA. He also took an active part in relevant meetings and discussions.

[19]Local Building Control Bodies (“BCBs”). A local authority or an approved inspector who have the task of enforcing the Building Regulations. Many of the local authorities cooperate under the auspices of Local Authority Building Control (“LABC”).

The background scientific / technical / commercial dispute

[20]There is, and was, a background dispute within the relevant industry, scientific community and technical experts as to whether the hot-box methodology for measuring U values is, or is not, an appropriate or accurate way of measuring the thermal performance of multi-foil products.

[21]It is common ground that I should not decide this underlying and background dispute. Indeed I am not in a position to do so. This dispute and its general ambit comprise an important element of the background and were well known to all the participants in the events leading to these proceedings.

[22]Additionally, the common stance of the parties before me is that the dispute is a bona fide one and that each side of the argument can, and has prayed in aid, the views of relevant members of the relevant scientific and technical community. To my mind, that recognition is also relevant and important when considering the arguments on notification, legitimate expectation (and thus what was agreed and promised) and conspicuous unfairness.

[23]In very broad terms: (a) It is argued by the multi-foil manufacturers, including the Claimants, that: i) the hot-box method primarily measures thermal transmission by conduction and such method is inappropriate for multi-foil products, which work primarily by inhibiting heat transfer by radiation rather than conduction, ii) comparative testing (known as comparative (in-situ) testing) which compares the performance of their product (multi-foil) in real-world conditions with those of traditional products with known U-values, provides a valid and fair alternative, and thus that iii) independent certificates based on comparative (in-situ) testing provide a valid and fair approach to the satisfaction of the relevant Building Regulations. b) The contrary is argued by competitors who manufacture and supply other types of insulating products. They argue that: i) hot-box testing is appropriate for multi-foil products as well as their own, ii) comparative (in-situ) testing does not provide reliable and fair results for multi-foil products, and iii) in particular it has been argued by competitors of the Claimants that the comparative (in-situ) testing used as the basis for the certificates of an independent body used and relied on by the Claimants in respect of one of its products give an inaccurate and misleadingly good result for the multi-foil products produced and sold by the Claimants. In support of the argument mentioned in sub-paragraph (b)(iii) reliance is (and in the discussions leading to these proceedings was) placed on a report which as I understand it (and as the Department assert in its evidence) was published in 2005 by the BRE. That report provides such support, but as I read its conclusion it also accepts that a comparison between some comparative (in-situ) testing and hot box testing showed that they gave similar results.

[24]So at the heart of the background dispute are the points whether reliable and fair results for multi-foil products are given by:(a) the hot-box test (which is based on an internationally accepted standard and (as is common ground) does provide such results for competing products), and

(b) comparative (in-situ) testing (and in particular that used by the Claimants). The Claimants’ answer is “no” to (a), and “yes” to (b), and their competitors’ answer (and the view of the Department expressed in the relevant discussions in 2006) is “yes” to (a) and “no” to (b).

[25]To my mind, and considered generally (and thus without reference to the exchanges between the relevant parties to the discussions leading to this litigation) it is obvious that the first part of this dispute (i.e. the suitability of hot-box testing to multi-foil products) means that any document that expressly applies, or links, the hot-box test to multi-foil products clearly favours and supports the arguments and position of the Claimants’ competitors and damages those of the Claimants. This is because such a document would demonstrate that, contrary to the Claimants’ argument (and whether or not comparative (in–situ) testing provides fair and reliable results), the proponents of that document support the view that the internationally accepted standard hot-box test does provide reliable and fair results for multi-foil products (whether or not such results can also be provided by comparative (in-situ) or testing methods).

[26]This obvious point is an important one in this case because as I have mentioned already, and as appears later, the new version of BR443 that was introduced at the same time as the new Approved Documents in 2006 does just that.

[27]Again, looked at generally, it seems to me that it is obvious that the change to make that express reference to or linkage of multi-foil products to the hot-box test must have had a purpose. To my mind this purpose is shown by the practical effects of the change.

Commercial realities flowing from that bona fide dispute

[28]The Claimants have been marketing multi-foil products, obtaining approval for them under the Building Regulations and building their market share on the basis of certificates from independent bodies as to the thermal performance of those products based on comparative (in-situ) testing and their arguments as to the suitability of hot-box and comparative (in-situ) testing for their multi-foil products.

[29]Their competitors, or at least some of them, have been and remain of the view that the results contained in those certificates are misleading, that hot-box testing is a fair and reliable test for the Claimants’ multi-foil products and that on an application of that test the thermal efficiency of the Claimants’ multi-foil products would be shown to be significantly lower, making them less attractive and possibly resulting in them failing to gain approval under the Building Regulations.

[30]The thermal conductivity or transmittance of the products of those competitors is measured using the hot-box test and they assert that if a comparison was made with the Claimants’ products using the same test the multi-foil products of the Claimants would be shown to be less efficient than their products.

[31]It is therefore in my view self evident that a change in BR 443 to expressly apply or link the hot-box test to multi-foil products would have considerable commercial advantages to the Claimants’ competitors and considerable commercial disadvantages to the Claimants. The main reason why this is self evident is that that application or linkage is very damaging to the Claimants’ arguments that the hot-box test is not a fair and reliable test for their multi-foil products. This clearly has the “knock on” effect of making it much more difficult for the Claimants to persuade BCBs and consumers that they should give Building Regulation approval and use multi-foil products on the basis of the results of comparative (in-situ) testing.

[32]By reference to their knowledge of the underlying bona fide dispute and the industry, this must have been known to those who suggested, approved and introduced those changes. But if it was not appreciated by any of them in my view such a failure would be based on incompetence.

[33]This point does not mean that the revision and change to so expressly apply the hot-box test to multi-foil products (put forward by BRE and approved and introduced by the Department) was made to produce those commercial advantages and disadvantages. Indeed, I hasten to acknowledge and accept that this was not the case and that their motivation was based on their views as to the merits of the rival technical arguments and regulatory concerns.

[34]Also, I hasten to point out that part of the common ground that the dispute is a bona fide one, is that the competitors of the Claimants who were members of the steering committee who took a part in the discussions leading to the change in BR 443 believe in the strength of their argument (just as the Claimants do). So, although those competitors would be fully aware of the commercial advantages to them of the change, their arguments for it would be based on the technical and scientific arguments that underlie the bona fide dispute as to methods of testing. The statutory scheme and relevant developments and changes under it General

The statutory scheme and relevant developments and changes under it

[35]Under s. 1 of the Building Act 1984, the Secretary of State is empowered to make regulations with respect to (amongst other things) the design and construction of buildings, for the purpose (amongst others) of furthering the conservation of fuel and power (s. 1(1)(b)).

[36]Under section 6 of the Act, the Secretary of State can approve documents for the purpose of providing practical guidance. The effect of those approved documents is set out in s. 7 as follows:

“ (1) A failure on the part of a person to comply with an approved document does not of itself render him liable to any civil or criminal proceedings; but, if in any proceedings whether civil or criminal, it is alleged that a person has at any time contravened a provision of building regulations: (a) a failure to comply with a document that at that time was approved for the purposes of that provision may be relied upon as tending to establish liability, and (b) proof of compliance with such a document may be relied on as tending to negative liability. ” (a) a failure to comply with a document that at that time was approved for the purposes of that provision may be relied upon as tending to establish liability, and (b) proof of compliance with such a document may be relied on as tending to negative liability. ”

[37]The practical guidance is provided to, amongst others, the industry and Building Inspectors.

[38]So by virtue of s. 7 the Approved Documents have a defined statutory effect which is focused on, and limited to, civil or criminal proceedings.

[39]As will appear, the Technical Standards Directive refers to a presumption and largely for this reason and convenience the effect of s. 7 has been said to be that it creates presumptions. To my mind, this is a helpful and fair description because in practice it provides a presumption in respect of decisions as to whether there is compliance or non compliance with the Building Regulations, or a clear steer to those charged with making (and others who have to make) such decisions. I shall refer to the presumption of compliance as the statutory presumption to link it to its source. As appears later, Building Regulations are for present purposes expressed in general terms.

[40]So the statutory presumption has considerable practical impact in day to day decision making by BCBs, suppliers and customers concerning the application of the Building Regulations.

Other guidance

[41]As one would expect, the Secretary of State from time to time also issues less formal guidance (such as circulars) to, for example, the BCBs. These are not within s. 7 of the Act and do not carry any statutory presumption. As part of its general management function the Department provides assistance to the industry, and BCBs, in determining whether the Building Regulations have been complied with and thus whether notwithstanding the absence of the statutory presumption provided by the combination of s. 7 and relevant Approved Documents, a reasonable provision as required by the Building Regulations for a defined purpose has been provided.

The general effect of the scheme

[42]The Act gives a power to make Building Regulations which are expressed in general terms. In turn, Approved Documents provide guidance and an underlying statutory presumption concerning the application of, and compliance with, the Building Regulations.

[43]The BCBs are important decision makers within the scheme who exercise their judgment pursuant to a range of guidance, some of which carries an underlying statutory presumption based on s. 7 and Approved Documents.

[44]In giving certificates of compliance, BCBs will naturally have regard to the Approved Documents and to any other relevant guidance from the Department and others (including for example papers from BRE). Also, in buying products including insulation, those who have to comply with the Building Regulations will naturally have regard to practice and published material as to the issue of certificates of compliance concerning that product.

The positions prior to and after April 2006 under the Building Regulations

[45]I set this out in Part 1 of Schedule A to this judgment.

The Technical Standards Directive and notifications under it

[46]I set out relevant provisions of this Directive and refer to the notifications made under it in Part 2 of Schedule A to this judgment.

Was there a failure to notify?

[47]In my view the introduction by the new Approved Documents in mandatory terms of the 2006 version of BR443 (and thus the introduction of the provision contained in paragraph 3.10.2 of the 2006 BR443 as to the establishment of product performance of constructions that include multi-foil insulation) constitute a “technical regulation” for the purpose of the Directive. This is because together (and indeed just the terms of that paragraph) they create a presumption of conformity within the definition of a de facto technical regulation in Article 11. Indeed, I did not understand the Department to be arguing the contrary but if it was I do not agree.

The Department’s argument

[48]The argument of the Department focuses, and is founded, on the point that under both the 2002 and 2006 regimes the only basis for the creation of the relevant statutory presumption is the hot-box test, so it is said:(a) the creation and express incorporation of the 2006 revision of BR443 in the New Approved Documents after the drafts were notified in 2004 (and thus those changes to those notified documents) did not have to be notified pursuant to Article 8(1) because the only presumption created by it is the same as that which existed under the 2002 regime, and was notified in that context. That presumption is one based on the hot-box test, and

(b) the drafts notified in 2004 did not have to include any reference to the hot-box test for the same reason.

[49]I was not taken to any evidence to the effect that this argument was the basis of an informed decision by the Department in either 2004 or 2006 that there was no need to notify. However if the argument is correct this does not matter.

[50]I mention this lack of evidence because, as appears later in this judgment, in his evidence Mr Nawaz asserts that in 2006 he had an intention and understanding which, as I understand his evidence, do not fit with the argument now advanced to support the view that notification was not necessary. In his first witness statement Mr Nawaz says that he has held his present position since 2002. If, in 2005/6 and 2004 Mr Nawaz had been a participant in an active consideration of the question whether notification of the revised BR 443 and its introduction in mandatory terms by the new Approved Documents was required, and a decision that it was not, on the grounds now advanced by the Department, it is difficult to see how he could have held the views set out in his evidence. I was told by Counsel for the Department that in 2006 he had only recently taken up his post, I accept that this may mean that he had only recently as a part of his duties in the position (held since 2002) taken responsibility for, or a day to day role in, this aspect of the work of the Department and one of the exhibited emails indicates that until recently before February 2006 another civil servant had been primarily responsible for this work.

[51]In any event, I accept the argument that under the 2002 regime and the 2006 regime an independent certification could not give rise to the statutory presumption based on s. 7 and the Approved Documents.

[52]In my view the references in both regimes to reliance being placed on independent certification is a recognition of the point that the Building Regulations can be satisfied by means other than that specified in the Approved Document which founds the statutory presumption. If this is the basis of a certificate, or claim, that the Building Regulations have been complied with, then if a challenge to that assertion is made in proceedings reliance cannot be placed on the statutory presumption (of compliance), indeed the fact that an available route to that presumption was not taken “may be relied on as tending to establish liability”.

[53]So I accept the proposition advanced by the Department that as a matter of English law the only presumption that has existed under both the 2002 and 2006 regimes has been based on the hot-box.

[54]As this is the case, it seems to me that the point that the 2006 version of BR 443 is applied in mandatory terms and a comparison with the introduction of the U-values under the earlier (2002) provisions takes one nowhere as a free standing point because, both lead to the application of the statutory presumption under s. 7, and under both regimes the only way in which multi-foil products (and competing products) could take advantage of that statutory presumption was by an application of the hot-box test.

[55]This argument of the Department is not that the revision of BR 443 makes no effective change but that it makes no effective change to the application of the statutory presumption.

[56]Indeed it would be remarkable if the Department was asserting that the introduction of the revised BR 443 made no effective change because if this was the case there would seem to have been no need for the revision.

The Claimants’ arguments

[57]The main arguments rely on the effects of the change and I shall turn to that in a moment.

[58]The Claimants, as I understood it, also advance a general argument that the Department cannot rely on the earlier notification of the text referring to the hot-box test to satisfy the requirement to notify under the Directive, because it is a part of a changed regime and there is therefore a need to notify all parts of it to ensure that the requirements of transparency are satisfied. It is not therefore possible (they say) to cherry pick parts of an earlier notification, or not to notify the complete package of changes. I do not accept that general argument because it applies without an identification of what has not been notified and the effect of those provisions, and therefore could extend to insignificant matters notification of which would be pointless.

[59]Also, it seems to me that this argument could be said to require a notification to fill a gap in what was notified in 2004 by simply repeating what was in the 2002 regime as to the statutory presumption and the hot-box test. To my mind that would be a surprising result because again it would seem to be pointless. (As to this I add that I was not told, and do not know, whether what was notified in 2004 contained the old provisions concerning the statutory presumption. I mention this because, if it did not, I do not presently understand the Department’s argument that if there has been a failure to notify the revised provisions the old one would continue to apply and, in any event, I do not presently follow how that would come about domestically without an amendment to the 2006 provisions. However to my mind these points lead nowhere on the question of notification because what matters is the effect of the changes brought about by the introduction of the 2006 revision of BR443 in the new regime).

[60]So in my judgment the issue is whether the effects of the revision and introduction of the revised BR 443 triggers a requirement to notify under the Directive. Those effects have to be considered in the context of the new regime and thus the changes that(i) it applies to renovations, and

(ii) it has the effect that if a person wishes to renovate a thermal element in an existing building the work must ensure that the whole element complies with requirement L1(a)(i). This greatly widens the scope of the regime and I accept that it has an impact on the producers of multi-foil products because they can often be more convenient for renovation than competing products.

The effects of the revision of BR 443 and its introduction into the new regime

[61]I have already discussed this under the main heading “the background scientific / technical / commercial dispute”.

[62]As appears from that discussion prior to and in early 2006 (and thus before the changes) the certificates given for multi-foil products and buildings containing them were not based on the application of a method or test set out in an Approved Document that founded the statutory presumption (i.e. the hot-box method). Rather, in many cases they were based on an alternative route which involved independent certification based on comparative (in-situ) testing.

[63]The force and effect of that independent certification and testing, and thus its impact on decision makers in determining whether “reasonable provision” for the conservation of fuel and power by limiting heat loss was reached against a background where:(a) no particular product was mentioned in and thereby expressly linked to the hot-box method in the relevant Approved Documents,

(b) the dispute I have referred to earlier as to the appropriate method of testing was developing, and was well known, and

(c) the product of many of the competitors of the suppliers of multi-foil products used the hot-box test and maintained that the comparative (in-situ) testing used by suppliers of multi-foil was not an appropriate test or one that gave fair and accurate results.

[64]In my view, for regulatory and scientific / technical reasons (and thus such views on the applicability and suitability if the hot-box test) the express linkage of multi-foil products to the hot-box test must have been deliberate and designed to alter the perception and/or approach of BCBs, purchasers, users and suppliers of multi-foil and competing products. If this was not the case; surely it would not have been made.

[65]As appears earlier in my view this conclusion can be reached without reference to the exchanges founding the other parts of this litigation, and at this stage I have ignored those views.

[66]I however draw attention to the LABC Guidance Note of August 2006 under the heading “Do things change as a result of the 2006 changes to part L?”. LABC’s conclusion is that “the 2006 changes made to Part L… are sufficient to warrant a re-evaluation of the acceptability of multi-foil insulation products.”In my view that is plainly right and the practical effect of the change was to move the goal posts so far as multi-foil products and their suppliers were concerned, both in respect of the kinds of work covered by the old regime but also in the renovation work newly covered by the new regime.

[67]I repeat that this is because, in my view, the inevitable result of the change to expressly mention and therefore link multi-foil products with the hot-box test is to add power to the elbow of the argument that the hot-box method is an appropriate and fair method to assess multi-foil products. Before 2006 that express linkage did not exist and therefore the background of the general application of the hot-box test to all insulation products by the Approved Documents rendered the argument that it was not an appropriate test for multi-foil products one that was easier and more persuasive.

[68]I therefore agree with the Claimants:(a) that it is obvious that it is one thing to seek to persuade a BCB to accept a multi-foil product based on comparative (in-situ) testing data when the Approved Documents do not deal with the issue, or the specific type of product. But it is quite another to do so when the Approved Document (via the 2006 BR443 to which it refers in mandatory terms) expressly states that the hot-box method should be used for measuring the U-values of multi-foil products, and

(b) that this is because when the Approved Documents expressly link multi-foil products to the hot-box test it is much more difficult to argue that it is not an appropriate test than it is when multi-foil products are one of a wide range of materials none of which are expressly linked in the Approved Documents to the hot-box test.

The construction and application of the Directive

[69]This has to be determined by reference to both its terms and its underlying purpose and on that basis the question arises whether the practical reality of the effects of the changes introducing the new 2006 BR 443 trigger an obligation to notify.

[70]I agree that it would not be right to have regard to mistaken views in English law as to what gives rise to the statutory presumption under s. 7 before, and after, the changes because this would entail notification being triggered by reference to subjective and incorrect views of the legal position. So the question has to be considered on the basis that, as asserted by the Department, both before and after the changes in regime:(a) the statutory presumption arising from the Approved Documents and s. 7 could, and can, only be founded on the hot-box test, and

(b) the Building Regulations can be satisfied by other routes including independent certification.

[71]But that does not mean that under such a statutory scheme (namely one which provides that relevant decision makers as to compliance with Building Regulations can base their decisions on the statutory presumption or other grounds) changes in the way in which that statutory presumption is introduced into a changed scheme, and is worded, cannot have an impact for the purposes of the Directive.

[72]In my view, on its true application in determining whether a provision has to be notified under the Directive, its de facto (or practical) effects in the relevant regulatory regime and market have to be considered and that in this case this is relevant in the following two ways:(a) in determining whether the observance of the relevant provision is de facto compulsory and thus within the definition of “technical regulation”, and

(b) in determining whether changes in the effect of a de facto regulation (within the inclusive definition of “de facto technical regulations” because it confers a presumption of conformity) warrant the notification of those changes. Point (a) flows directly from the definition of “technical regulation”.

[73]In my view point (b) and the relevance of such practical effects in determining whether compliance with a technical regulation is compulsory flow from:(i) the underlying purposes of the Directive as shown by its recitals, and

(ii) the reference in the third paragraph of Article 8(1) to the effect of significantly altering the scope of a draft technical regulation (which includes a de facto technical regulation). In my view in its context the reference to scope is not limited to the legal effect of a provision but extends to cover its practical effects and thus the way it will operate practically in the regulatory scheme and market.

[74]The most relevant recitals are set out in Schedule A. They show that underlying purposes of the Directive include:(a) a purpose to have regard to the practical effects of relevant provisions in the market place to promote the free movement of goods, the smooth functioning of the market, competition and the development of the market (see recitals 2, 3, 7 and 9), and in my view this shows that the practical effects of provisions in all of those contexts are a relevant consideration to whether that provision should be notified,

(b) a purpose to promote openness and transparency for identified purposes and generally as regards national initiatives and in national intentions (see for example recitals 3, 9 and 24), and

(c) a purpose to consider the potential effects of proposed regulations or provisions on the market (see recitals 9 and 12 where, albeit in a different context, reference is expressly made to the way in which a public authority refers to and encourages the observance of technical specifications or other requirements).

[75]It follows in my view that the Department’s argument, which is based on a consideration of the point that the statutory presumption under English law before and after the change has to be based on an application of the hot-box test, is too narrow and the practical effects of the change in the market have also to be considered.

[76]In my judgment it has to be considered whether the introduction by the new Approved Documents in mandatory terms of the 2006 version of BR 443 does have to be notified either:(a) because its practical effect is to make the application of the hot-box test compulsory, and further or alternatively

(b) because its practical effects significantly alter the impact and application of the statutory presumption in the market place.

[77]I shall deal with argument (b) first because in my view it does found the conclusion that the introduction of the new BR 443 by the Approved Documents should be notified.

[78]The relevant provisions are a de facto technical regulation. In my view the changes to them by the introduction of the new BR 443 have the significant and far reaching practical effects I have mentioned, which clearly affect the scope and application of, and make significant changes to, the de facto regulation that was in existence prior to the change.

[79]Those effects:(a) have an impact on all of the free movement of goods, on the smooth functioning of the market, on competition and on the development of the market,

(b) have a significant impact on the competition between multi-foil and other producers and thus in my view on the scope of the de facto technical regulation before and after the change,

(c) are brought about by the way in which the changes are introduced, and worded, and the encouragement that this gives to BCBs and others to reject tests other than the hot-box test after the change has been introduced, and

(d) are of such a nature and magnitude that the concepts of openness and transparency in this field of regulation strongly support the view that the changes should be notified so that other national bodies can consider their impact on the matters referred to in (a) and (b) above.

[80]Accordingly I find that the introduction by the new Approved Documents of the 2006 version of BR 443 and thus that revision of BR 443 should have been notified under the Directive.

[81]As to argument (a), in my view a theoretical possibility of another course being taken would not mean that a stated specification was not compulsory for the purposes of Article 8 of the Directive and the Directive does not require absolute practical compulsion.

[82]It seems to me that for the reasons I have given, the potential practical reality of the change and its purpose was to encourage BCBs, and others, to reject comparative (in-situ) testing and thereby to effectively preclude, or severely restrict, its further use, and to require the Claimants and other multi-foil manufacturers to use the hot-box test and thus the test that founds the statutory presumption. In my view that founds a strong argument that in practice the changes made compliance with the technical regulation compulsory. At the times that the changes were proposed and implemented no ETA had been obtained or was being sought and so far as I am aware, apart from comparative (in-situ) testing, no other basis or methodology has been advanced or suggested as an available alternative. But the evidence indicates that the Claimants have been able to continue to trade (although they assert at lower levels of turnover and profitability than would have been the case if the changes had not been made) and therefore it is also strongly arguable that the practical reality does not found the “compulsion argument”. I did not hear argument specifically directed to this point based on up to date evidence and I have concluded that given my decision on argument (b) I should not decide it.

The effect of the failure to notify

[83]The Department argues that such failure does not result in that technical regulation (i.e. the introduction by the new Approved Documents of the 2006 version of BR 443 and thus that revision of BR 443) being inapplicable and unenforceable because it is based on European-wide Standards and its provisions do not restrict imports or trade in a way equivalent to the restriction in

Case C-303/04

Lidl Italia

[2005] ECR I-7865

, on which the Claimants rely, together with

Case C-194/94

CIA Security [1996] ECR 1-2201, for the undisputed proposition that a failure to notify renders the relevant regulation inapplicable and therefore unenforceable against an individual. In large measure, as those cases show, this is based on the proposition that the Directive is designed to protect, by means of preventive monitoring, the free movement of goods and that technical regulations may constitute obstacles to trade between Member States.

[84]I do not agree with the Department’s argument. The point that the underlying standard is European-wide does not address the reason for, or avoid the need for, notification in this case. Although I accept that the practical effects of the change do not restrict imports and trade in the same way as arose in the Lidl case, the change does have those effects, and those effects are part of the reason why notification is required. Therefore in my view the Claimants are right in their submission that the:

“The case-law of the Court of Justice clearly establishes that, where a Member State adopts a technical regulation without first notifying a draft of it to the Commission, the technical regulation is inapplicable and unenforceable: see e.g. most recently Case C-303/04 Lidl Italia[2005] ECR I-7865”

Legitimate expectation and conspicuous unfairness

[85]This was advanced as an alternative ground by the Claimants who asserted that if they were successful on the Directive point, it is not necessary to go further, since the provisions of which they complain will be unenforceable.

[86]However, in my judgment I should deal with this alternative.

[87]By it the Claimants complain that the conduct of the Department’s civil servants in 2006 created, and then unlawfully frustrated, a legitimate expectation. Alternatively, the conduct of the Defendant was so conspicuously unfair as to be unlawful.

The approach in law

[88]There was effective common ground and I refer to this and thus my approach in law in Schedule B to this judgment.

Background

[89]This includes the scientific / technical / commercial dispute referred to above and its effects, also referred to above.

[90]Timing is important but at this stage I simply record that the changes did not come into effect until 6th April 2006 and that date therefore provides a watershed.

A sequence of relevant events

[91]I set this out in Schedule C to this judgment with some comments and findings.

The evidence of and explanations provided by the Department

[92]I set this out in Schedule D to this judgment with some comments and findings.

Further general introduction to these arguments by reference in particular to Schedules C and D

[93]Both schedules should be read with this judgment. There is some overlap and repetition but the schedules also contain relevant points that I have taken into account.

[94]I have already discussed and reached conclusions on the underlying scientific / technical / commercial dispute and the effects of the revision of BR 443 and its introduction into the new regime. In doing so I have focused on the underlying bona fide dispute and the documents, and have put on one side the sequence of events and exchanges set out and referred to in Schedules C and D. I have done this because in my view the issues on notification under the Directive, by reference to the effects of the revision of BR 443 and its introduction into the new scheme, should be assessed on that basis.

[95]However, the arguments on legitimate expectation and conspicuous unfairness fall to be assessed in the circumstances of the sequence of events and the exchanges set out and referred to in Schedules C and D.

[96]As appears from those schedules whether (through membership of the CPA or otherwise) multi-foil manufacturers were given an opportunity to participate through the steering committee, or otherwise, in the revision of BR 443 none of them did so. Also BRE had published a report used by the Department and competitors of the Claimants to support the argument that the hot-box test was an appropriate test for multi-foil products.

[97]It follows that the revision of BR 443 was the work and product of an organisation that had published such a document together with a steering committee made up of representatives of competitors to the multi-foil industry.

[98]So, it was at least arguable that the revision of BR 443 was proposed without any direct or appropriate consultation or discussion with the proponents of one side of the underlying bona fide argument.

[99]Further, certainly by the time of the meeting on 8th February 2006 the Department in reliance, at least in part on the 2005 report from BRE, had formed the view that hot-box testing was appropriate for multi-foil products and that comparative (in-situ) testing was not.

[100]In those circumstances, and by reference to the contemporaneous documents cited in Schedule C and my comments and findings in that Schedule:(a) I conclude that it is obvious that a purpose of those drafting the proposed revision of BR443 was to try to bring multi-foil products “into the fold” of testing exclusively according to the hot-box method, in circumstances where they had been obtaining their market share on the basis of other testing including comparative (in situ) testing,

(b) those who put forward and supported the proposed changes (i.e. BRE and the steering committee) based their arguments and desired result on bona fide technical and scientific arguments. But they must have known that those changes would have (and have intended them to have) the practical and commercial effects I have concluded they obviously have. In my view the exchanges at the time strongly support this conclusion,

(c) as I have already pointed out it is obvious that those effects clearly have the potential for causing significant damage to the commercial interests of the Claimants and other multi-foil manufacturers, and significant advantages to their competitors,

(d) the effect of bringing multi-foil products “into the fold” by making it much more difficult (if not practically impossible) for multi-foil manufacturers to rely on comparative (in situ) testing accords with the view of the Department on the underlying bona fide dispute, and in my view the representatives of the Department either knew that the proposed changes would have the practical and commercial effects I have described, or a failure by any of those persons to appreciate that they would have those effects would have been incompetent, and

(e) if, as Mr Nawaz asserts, the Department felt no embarrassment or concern as to the process by which the proposed revision of BR 443 had been carried out without any actual participation by the multi-foil industry, it should have done, and a failure by the Department to appreciate that the proposed revision might be challenged on the basis of procedural unfairness and/or failure to take properly into account relevant factors would have been incompetent.

[101]As to point (e), in my view the obvious commercial effects of the change to BR 443 in 2006 at the least found strong arguments that fairness required that either none of the commercial competitors should have a direct input into the process leading to the change, or that the process should involve both sides of the argument being advanced by, or on behalf of, the commercial rivals. In other words, that the steering committee should either have included manufacturers from both, or neither, sides of the argument. Thus to my mind, whether or not as members of CPA or otherwise producers of multi-foil products were invited to take part in the revision process, or could have so taken part, it is hardly surprising that the Claimants would complain about the fairness of the process that was adopted and led to the proposed change to BR 443. As appears from the correspondence they did so complain.

[102]It is clear that Mr Tebbit was very alive to the prospect of legal challenge and that he told the Department of this risk by his email dated 10 February 2006 to Anne Hemming that, absent an agreement, litigation was likely or, as Mr Tebbit put it “someone is going to head to the lawyers”.

[103]I do not dispute that the legal analysis of the statutory scheme (and thus of the places and effects within it of the Approved Documents, BR 443 as it was and as it has been revised and the statutory presumption) has its complications, and that a number of the communications at the time do not fit with a correct legal analysis, whether or not the relevant person understood it correctly. However, to my mind given those complications, it seems to me that the communications set out in Schedule C show that unsurprisingly those involved, with the possible exception at times of the Department, were focusing on the commercial and practical realities of the existing situation and of the proposed changes, rather than the legal detail and the effect of the statutory presumption and its place in the overall scheme. This is for example demonstrated by:(a) Mr Tebbit’s description of what had been agreed in his e-mail of 16th February that after 31st December 2006 the values must be either from CE marking or the method set out in BR 443, and

(b) the absence of any exchanges setting out the statutory scheme and the place of the presumption and thus BR 443 in it. As to (b), it follows that there is an absence at the time of any assertion along the lines of the Department’s arguments on notification (i) that there has been no change in the way in which the statutory presumption can be utilised for the purposes of satisfying BCBs, and others, that the Building Regulations have been complied with and thus (ii) of the point that, as they were before the change, multi-foil manufacturers were free and able to, or just as free and able to, satisfy BCBs, and others, that their products should be accepted and approved under the Building Regulations.

[104]To my mind the absence of any such assertion at the time, or any assertion that this was in the mind of any representative of the Department at that time, is confirmation of:(a) my conclusions as to the effects of the proposed changes, and

(b) the point that none of those involved at the time thought this was the position of the multi-foil manufacturers, and therefore that they shared my conclusions as to the effects, or likely effects, of the proposed changes. Further, it indicates that whatever thought processes the Department was going through relating to the statutory scheme, the presumption and its promise, it did not include that one. Indeed, that thought process would run counter to Mr Nawaz’s assertion of his intention at the time being that independent certification during the interim period would be based on a method other than comparative (in-situ) testing.

[105]I repeat that an effect, and in my view an obvious effect, of the proposed changes would be to make it far more difficult for the multi-foil industry to convince BCBs to accept that their products should be approved and accepted under the Building Regulation on the basis of comparative (in-situ) testing and thus to continue the approach set out in the LABC October 2005 guidance. That approach was one that acknowledged the existence of the argument over the appropriateness of accepting comparative (in-situ) testing, but concluded that they could be accepted and that the position would be reviewed in the light of new substantive and authoritative evidence (see Schedule C paragraph 1(iii)).

[106]It follows, importantly in my view, that when words such as “derogation” and “co-existence period” were being used, and the interim period from April to the end of 2006 was being looked at and discussed, this was being done in the context of the practical effects of the proposed changes and thus by reference to what would be accepted or approved by BCBs, and others, and not in the narrow sense of the operation of the statutory presumption.

The rights and wrongs of the underlying scientific / technical / commercial dispute

[107]In my view for present purposes it does not matter which side of the argument is correct, or would ultimately be preferred by BCBs and others. Indeed my conclusions would be the same whichever side of the argument is correct or more powerful. This is because the argument is accepted as being a bona fide one and this was the position at the time, as indicated by Mr Tebbit’s reference to the jury being out in his e-mail of 16th February 2006, and the point made later by Mr Nawaz that the multi-foil industry would be subject to peer review and could seek to advance their arguments in favour of comparative (in-situ) testing when seeking an ETA.

[108]The bona fide nature of the argument is also shown by the LABC guidance in October 2005.

What was agreed or promised

[109]It is correctly common ground between the parties that this is evidenced by and contained in the letter of 17th February 2006 from the Department. In my view both sides were correct not to argue (as Mr Tebbit seems to have thought) that a promise was made, or an agreement was reached, at the meeting on 8th February 2006.

[110]In the letter accompanying the acknowledgment of service the Treasury Solicitor confirms that it was accepted that the Department “agreed to allow your clients to use independently certified test results [my emphasis]obtained from alternative test methodologies, possibly being developed as part of the CUAP”. The parties therefore understandably directed argument to what was promised or agreed, particularly having regard to that assertion and Mr Nawaz’s evidence that at the time he wrote the letter his intention was that in the interim period the independent testing that could be relied on would not include comparative (in-situ) testing.

[111]In this context it is important to remember and recognise that the Department(i) does not assert that this was expressly stated,

(ii) does not assert that any identified alternative was discussed, but

(iii) asserts that the letter and the previous dealing made it clear that Mr Nawaz was not referring to comparative (in-situ) testing because the Department together with others did not accept the validity of comparative testing. If Mr Nawaz had asserted any discussion along the lines in (i) or (ii), the issue as to his cross examination would have had to have been looked at differently. The Claimants accept that the Department and others were asserting that they did not accept the validity of that testing but do not accept that this has the consequence asserted.

[112]As I have said, the Claimants for the purposes of these proceedings do not challenge that Mr Nawaz’s intention was as he asserts.

[113]It is however common ground that what was agreed or promised has to be assessed objectively.

[114]It is also accepted that Mr Nawaz did agree to inform BCBs of the promise or agreement contained in the letter of 17th February 2006. It seems to me, therefore that it is appropriate to consider what the effect, or likely effect, would have been of the Department informing BCBs (and others) in the terms of(i) the two bullet points, and

(ii) the paragraph dealing with the interim arrangement contained therein. It is to be noted that this is effectively what the Department was asked to do by the Claimants in their letter of 18th April 2006 (paragraph 30 of Schedule C).

[115]It seems to me that if the Department had done this and thereby informed the BCBs that:(a) Actis would CE mark its multi-foil products by 31st December 2006 and that from 1st January 2007 R values would be taken from the CE marking or from test methods set out in BR 443, and

(b) in the interim multi-foil manufacturers need to confirm that multi-foil products placed on the UK market will be supported by independent certification incorporating , as appropriate, the latest test results by CMM members and, or independent bodies, the message that would have been given to BCBs and the industry was that the argument as to the suitability of comparative (in situ) testing would be continuing in the context of the process to obtain a CE marking and that, in the interim period, multi-foil products would be supported by independent certification as they had been in the past.

[116]In my view therefore the clear message would have been that the bona fide argument that was well known to BCBs and is mentioned in the LABC guidance in October 2005 was still a live one and the practical and commercial effects of multi-foil products being expressly mentioned in the revised BR 443 would have been avoided or greatly ameliorated.

[117]In my view this would have been so because like those involved in the discussion on 8th February 2006, the BCBs would not have gone through the detailed thought process relating to the place in law of the presumption in the statutory scheme, but would have focused on the day to day practical position in the knowledge of the underlying bona fide dispute as to which (like Mr Tebbit) they would have regarded the jury as still being out, and thus continued to have approached certificates based on comparative (in-situ) testing in that light.

[118]In my judgment it is plain that this was very likely to be the effect of the possible deal or solution discussed at the meeting on 8th February 2006.

[119]I do not see how Mr Nawaz could reasonably and competently have had the intention and thus the understanding he says. To my mind it simply makes no sense for him to have thought that the representatives of the multi-foil industry would think that in the interim period it made any sense for them to agree to, propose or accept an independent testing method that was not identified and would involve a change for an interim period from the testing method that they had been using, and which at the meeting they made quite clear they considered to be the appropriate one.

[120]The fact that, as he did in the letter of 17th February 2006, Mr Nawaz makes clear that the Department did not share the view of the multi-foil producers on testing and that, in the absence of a CE marking, testing should be through the hot-box does not indicate that in the interim, whilst that CE marking was being sought, the multi-foil producers could not continue to rely on comparative (in-situ) testing. Rather, that paragraph is clearly advanced in the context of the CE marking (CUAP), and in my view it would be read by someone with the relevant background knowledge as a recognition of the underlying bona fide dispute that would continue through the period that the CE marking was being sought and thus, what to my mind is the obvious ambit of the suggestion made at the meeting, and confirmed in the letter that:(a) a CE marking would be sought and from 1st January 2007 U values (or R values) would be taken from it or BR 443, and

(b) in the interim the multi-foil industry would and could continue to rely on comparative (in-situ) testing. Assertion (a) makes no mention of the point that under the statutory scheme the Building Regulations could be satisfied by other methods, but has clear advantages from the perspective of those who did not accept the validity of comparative (in-situ) testing and it recognises the practical effect of the proposed changes. Assertion (b) would not have been read by anyone who properly understood the statutory scheme as being directed to the application of the presumption, and thus the introduction of independent certification into it (although Mr Nawaz may have made this or a similar error). Rather, it would be read as giving the multi-foil industry an opportunity to continue marketing its products in the same way as it had in the past. This gave them an advantage and the limitation of this period would be regarded as beneficial by those (including the Department) who thought that comparative (in-situ) testing was not appropriate.

[121]The language used in the letter of 17th February 2006 is of “independent certification”. The Claimants’ product had independent certification from BM TRADA at that time. Again it seems to me that someone with the relevant background information would read that reference to “independent certification” as at least including the existing independent certification.

[122]I accept that the contemporaneous documents and exchanges include references to the development of a new testing methodology by the multi-foil industry as part of its application for a CE marking (CUAP). I also accept that the CMM always intended to argue and hoped that the CUAP would be based upon comparative (in situ) testing. Thus I accept(i) that the whole point of the suggested deal on 8th February 2006 (and thus of any derogation or arrangement during an interim period) was to allow time for such a method to be developed and agreed, as an alternative to the hot-box testing methodology used by BR443 (2006) and

(ii) that no such agreed method then existed.

[123]In my view that situation(i) was or should have been known to all involved in the meeting on 8th February 2006 and the writing of the letter of 17th February 2006, and

(ii) obviously underlay the commercial approach. To my mind it therefore clear that a part of that commercial approach must have been that multi-foil manufacturers would in the interim period be able to continue to rely on comparative (in-situ) testing.

[124]So I accept that looked at from both sides of the discussion and negotiation on 8th February 2006 the only “interim arrangement” or “derogation” that would make any sense in practice would be one that in practice allowed the Claimants until 1st January 2007 to continue to rely on the results of comparative (in-situ) testing by reputable independent bodies such as those used up to that date.

[125]To my mind it is quite clear that both Mr Tebbit (CPA) and Mr Anderson (BRE) understood that what was being proposed, and what was being agreed and promised, was an arrangement under which the multi-foil producers would continue to seek to rely on comparative (in-situ) testing rather than some other, unspecified, method of certification. For example:(a) The third bullet point in Mr Tebbit’s (CPA) suggested draft letter (see paragraph 17 of Schedule C), referred to existing independent certification, and his e-mail of 8th March 2006 circulated to CPA members refers to independently certified values still being accepted (paragraph 20 of Schedule C),

(b) Mr Anderson’s (BRE) general stance in his communications is inconsistent with a view that he thought that what was being offered and promised was independent certification based on something other than comparative (in-situ) testing and this can also be said of Mr Tebbit (CPA). For example the e-mails referred to in paragraph 8 of Schedule C strongly support this view (see my comments at paragraph 22 and other comments in Schedule C to similar effect),

(c) indeed as appears from Schedule C it is very difficult to see how some of Mr Nawaz’s exchanges at the time are consistent with his evidence as to his understanding and intention (see again for example the exchanges in paragraph 21 of Schedule C and the e-mail referred to in paragraph 34 and the comments in paragraph 35 thereof ). Also in his e-mails of 8 March (paragraph 21 of Schedule C) Mr Nawaz wrote (i) of the need to obtain regular reports on the multifoil manufacturers’ progress with the CUAP “every few months” but made no mention of any new interim testing method, which on his evidence would have been far more urgent, and (ii) of the multi-foil producers being subject to peer review which is difficult to understand if he understood that they had agreed to adopt a non-comparative testing method as an interim measure. Rather it suggests that the comparative testing method would be put under scrutiny during the CUAP, and

(d) Mr King of the Department and the Chairman of TIMSA (paragraphs 31 and 33 of Schedule C) make it clear that the competitors of the multi-foil producers were unhappy and it is difficult to see why they would have been if they had thought that the multi-foil producers could no longer rely on comparative (in-situ) testing.

[126]Accordingly, I do not see how Mr Nawaz could reasonably and competently have had the intention and thus the understanding he asserts.

What the Department did – the first stage

[127]The Department accepts that it made a promise or an agreement by the letter of 17th February 2006 and that to perform it the Department had to circularise BCBs.

[128]It is clear that it was vital that this circularisation took place before 6th April 2006. In fact it took place by the Circular Letter of 30th March 2006. As to that letter:(a) it was written after discussions between the Department and others who were on the opposing side of the underlying bona fide argument (and with whom discussions had taken place before the letter of 17th February 2006 was written),

(b) as with that earlier letter no discussions took place as to the wording of that Circular Letter with any representatives of the multi-foil producers,

(c) it does not repeat or accurately reflect the wording of the letter of 17th February 2006 because paragraph 27 of it does not repeat or reflect the paragraph of that letter referring to the interim period,

(d) the reference to UKAS accredited certification is acknowledged to have been a mistake, and

(e) the reference to that accreditation being urgently sought is not supported by any evidence. Rather what was being put in place urgently was the procedure for obtaining a CE marking.

[129]So, in purported performance of its promise or agreement the Department, after discussion with persons who opposed the arguments of the multi-foil producers and supported those of their competitors, but no discussion with the multi-foil producers, issued a Circular Letter at a time when the implementation of the relevant regulatory changes relating to the Building Regulations was imminent, and which, on any view, does not do what the Department promised to do.

[130]Further, by referring to UKAS accredited certification, and to it being urgently sought, the Department inevitably created confusion and obvious potential damage to the multi-foil industry. This is because it was indicating that in the interim period the multi-foil industry would seek to support its products by an accreditation that was not open to them, and could not urgently or quickly be open to them. The message was therefore that multi-foil products would be supported by an unavailable independent certification or the hot-box testing methodology to which multi-foil products were expressly linked in the new BR 443, but which they asserted under the bona fide background dispute was an inappropriate testing method for their product.

Legitimate expectation at this stage

[131]A representation had been made. On any view it was not performed.

[132]As a result of the timing of the making of the representation, the Claimants took no other actions before 6th April 2006. In my view such actions would almost inevitably have included, as Mr Tebbit predicted, the issue of proceedings challenging the proposed revisions of the Approved Documents and the introduction by them of the revised BR 443. The timing of the Department’s purported performance of its promise, without prior discussion with or notification to the Claimants, rendered any such challenge before the implementation of the changes on the basis that the Department had not kept its promise extremely difficult, if not impossible. As to that, the assertion in the letter of 18th April 2006 from the CMM that they only became aware of the Circular Letter on 7th April 2006 was not challenged.

[133]The Circular Letter includes a paragraph (paragraph 25) relating to BCBs making their own decisions, which was not included in the letter of 17th February 2006. But this does accurately reflect the statutory scheme and is an indication that paragraph 27 was not directed to BR 443 but to the alternative routes to gaining approval or acceptance under the Building Regulations. This addition was not complained of at the time and it seems to me that if in place of the last sentence of paragraph 27 the paragraph dealing with the interim arrangement in the letter of 17th February had been repeated, the Claimants could not and would not have complained. Indeed this is what they effectively asked for by the letter of 18th April 2006.

[134]As I have indicated, in my view, if this had been done the message given to and received by BCBs would have been that during the interim period the argument as to whether or not comparative (in-situ) testing was appropriate for multi-foil products was an ongoing one, notwithstanding the express mention of those products in the revised BR 443.

[135]If the Claimants had been consulted before the Circular Letter was sent they would have pointed out the errors in paragraph 27 and perhaps sought, and in my view could justifiably have sought, to include wording making it clear that the independent certification could be the same as that used in the past and thus based on comparative (in-situ) testing. If that had given rise to disagreement or dispute as to what had been promised, the Claimants would have had the opportunity to issue proceedings for judicial review based on the alternatives of the representation made, or the process by which the revisions were prepared and it seems likely that when instructions to issue proceedings had been given, as happened in these proceedings, a challenge based on a failure to notify under the Directive would have been included.

[136]In my view, at this stage a claim based on legitimate expectation is established. The Claimants had behaved openly and honestly, a representation had been made to them, it was not performed, they had relied on it (by embarking on the CUAP and not pursuing the question of issuing proceedings), if it had been performed their commercial position would have been promoted and the manner in which the Department failed to perform it caused detriment to the Claimants.

Conspicuous unfairness at this stage

[137]Even on the basis of Mr Nawaz’s expressed intention and understanding, without discussion with the Claimants, but after discussion with those who disagreed with their arguments on the underlying dispute, the Department issued a Circular Letter that on any view changed the promise it had made by adding a reference to UKAS accreditation, which it now accepts was a mistake, and a reference to that being urgently sought (which was not the case). But the Department does not offer an explanation as to why it made such mistakes. In the absence of an explanation I do not see how they could have been made by a reasonably competent person and conclude that the reason for them was incompetence and muddle.

[138]I repeat that the change from the representation in the letter of 17th February 2006 was also made without any prior notification to the Claimants, and the Circular Letter was sent out so close to the time of the implementation of the changes that it made it very difficult, if not impossible, for the Claimants to do anything about it even if they received a copy of it before 6th April 2006 (and I repeat that in correspondence they assert that they first became aware of it on 7th April 2006 and this has not been disputed).

[139]In my view that approach constitutes unfairness that leaps out of the page.

[140]If, as Mr Nawaz asserts in his second statement, he was told and therefore thought and realised before 30th March 2006 or 6th April 2006 that his letter of 17th February 2006 offered a relaxation which had not been his intention, his deliberate failure to do anything about this is a further factor establishing conspicuous unfairness.

What the Department did – the next stages

[141]To my mind it is clear that once the Department realised it had made mistakes in the Circular Letter of 30th March 2006, and at the latest it must have realised this shortly after receipt of the letter dated 18th April 2006 (and clearly was aware of it at and after the meeting on 2nd May) good administration required the Department to take urgent steps to address the situation and to do so in an open, clear and straightforward way. In my view that approach would have included keeping the Claimants regularly informed of the steps it was taking and the reasons for those steps, even if they should not have been invited to discuss what should be done.

[142]I am very sorry to have to record that as appears from Schedules C and D, this was not the approach taken by the Department. That approach is set out step by step on Schedule C. Rather than taking that approach:(a) the Department did nothing to address the situation until the letter of 19th June 2006,

(b) prior to that Mr Nawaz had sought and received legal advice, the detail of that is not known, but it is certainly not clear that it was correct. It however caused Mr Nawaz to think that he had made, or may have made, mistakes by offering a relaxation when that was not his intention and making an agreement he was not in a position to make without following the appropriate procedures and thus an agreement he could not confirm,

(c) in the light of that advice, and from Mr Nawaz’s evidence, a state of some muddle, confusion and concern, and after another letter from the CMM (dated 18th May 2006) asking for action, rather than face up to and address the problems as he then saw them and deal with them openly, clearly and straightforwardly, Mr Nawaz decided to obfuscate by his letter of 19th June 2006,

(d) part of that obfuscation was an intention, without actually saying so, to withdraw an agreement that he then thought he had not been entitled to make and thus (i) deliberately not to perform the promise given by the letter of 17th February 2006, and (ii) to do this without any explanation,

(e) another part of it was to make no reference to the paragraph and promise in the letter of 17th February 2006 relating to the period between April 2006 and 1st January 2007, or to the problems and difficulties he thought existed as a result of the advice he had received,

(f) at the same time as writing the letter of 19th June 2006 he sent a private e-mail, and the only explanation for doing that was that he wanted the letter of 19th June 2006 (and thus his obfuscation) to stand alone,

(g) the Department has not given any explanation for, or advanced any justification for, this overall approach to the mistakes in the Circular Letter of 30th March 2006 and its failure to carry out the promise made by the Department or any details as to whether the decision to take it was taken by Mr Nawaz alone, and if not, who else was involved (whether lawyers or administrators),

(h) after a further request from the CMM to remedy the confusing and damaging situation by a letter dated 17th July 2006, the Department refused to add to the letter of 19th June 2006, even though in the “private e-mail” of 19th June 2006 it was said that there would be a further circular, and sought it seems to rely on the point made that BCBs must make their own decisions, and

(i) around the time of the change in position by the LABC in its August 2006 technical guidance, Mr Nawaz asserted that the letter of 19th June superseded the Circular Letter of 30th March, and that the derogation period had therefore been removed, but now as I understand him Mr Nawaz says that, contrary to his intention that it should do this implicitly, the letter of 19th June did not have that effect.

[143]In my judgment the letter of 19th June 2006 adds to the confusion and problems caused by the Circular Letter of 30th March 2006 in that it does not admit that that contained mistakes, it does not make it clear whether or not it replaces paragraphs 25 to 27 of that Circular Letter and it fails to make any reference to the promise in the letter of 17th February 2006.

[144]To my mind the letter of 19th June leads inexorably to the situation reflected in the LABC technical guidance issued in August 2006, and did so during a period that the Department was being told, in no uncertain terms, that its failure to perform its promise and to correct the situation was causing dire consequences for the multi-foil manufacturers. That August 2006 LABC guidance is based on a view that the 30th March Circular Letter was extant, but it seems to me that an equivalent conclusion would probably have been reached by them (and by BCBs and others) if they had understood that the letter of 30th March 2006 had been withdrawn.

[145]The underlying point is that the failure of the Department to do what it promised by the letter of 17th February 2006, and the added confusion caused by the letters of 30th March and 19th June 2006, must in my view have made it much more difficult for the multi-foil industry to persuade BCBs (and others) that until it obtained a CE marking BCBs (and others) could accept that their product complied with the Building Regulations on the basis of comparative (in-situ) testing and would cause BCBs (and others) to seek or require UKAS certification or certificates based on the hot-box test.

Conspicuous unfairness at these stages

[146]In my view that approach constitutes unfairness that leaps out of the page and would do so even if what the Department had promised to do was unlawful. This is because even in that situation the Department failed to confront and deal with the problem openly, clearly and in a straight forward manner.

[147]Instead of facing up to and openly, clearly and straightforwardly dealing with the mistakes it had made and/or thought it had made and the situation that had arisen, which is clearly what good administration demanded, the Department, primarily it seems through Mr Nawaz, but after he had discussed the matter with others, decided to obfuscate.

[148]Very sadly in my view, the picture given by the contemporaneous exchanges that have been disclosed, the evidence and the approach to this litigation is that the approach of the Department has been based on muddle and incompetence and a desire to avoid the problems arising from its representation to the Claimants and its failure to perform it.

[149]So, very sadly in my view, the actions and approach of the Department fell a very long way short of the standard any citizen is entitled to expect, and merit severe criticism.

[150]Further, and again very sadly, as appears from Schedule D the problems were continued by the Department’s approach to the preparation and presentation of the case, which resulted in errors continuing until a very late stage both in respect of the evidence put in and a late addition to, and the abandonment of some of, the arguments advanced.

Legitimate expectation at these stages

[151]The Department failed to perform its promise or properly address and seek to remedy the mistakes in the Circular Letter of 30th March 2006.

[152]If it had done so promptly, in my view there would have been a chance that the failures to do what it promised to do before 6th April 2006 could have been remedied and the damage caused thereby to the Claimants thereby ameliorated. The Department failed to do this.

[153]In my judgment, having regard to the mistakes it made, and the added confusion caused by the letter of 19th June 2006 and its inexorable consequences, it is in my view disingenuous for the Department to assert, as it did, that the Claimants have had the benefit of a derogation period lasting I think on its submissions for over a year (and perhaps continuing) because the letter of 19th June 2006 did not do what Mr Nawaz intended it should do without expressly saying so. To my mind this misses the point that the Department has failed to do what it promised and that this has caused detriment to the Claimants.

[154]As in the earlier period, and as is also relevant to the claim based on conspicuous unfairness, if the Department had made its position clear and this had led to litigation then, that litigation would have started earlier and would have been based on a range of arguments which would probably have included the argument advanced before me on failure to notify under the Directive.

[155]So in my judgment the ingredients of the claim based on legitimate expectation continued to be satisfied because the Department, to the continuing detriment of the Claimants, failed to perform the promise it had made.

Ultra vires / illegality

[156]The arguments on this have changed during the course of the proceedings.

[157]The Department’s skeleton contained an argument reflecting points made by Mr Nawaz in his statements, and in correspondence, that Mr Nawaz (and the Department) had no power to agree what he did, or perform the promise he made, because the appropriate procedures were not followed and in particular that the statutory procedure under section 6 of the Building Act 1984 was not followed.

[158]I confess that I was unclear whether counsel had abandoned this argument. I thought she had but it is included as an alternative in her helpful final summary of case and so I will deal with it.

[159]That summary indicates that by the end of the hearing, the argument was that if the Department had promised what counsel submitted the Claimants alleged it had, namely: “to tell BCBs to accept the results of independently certified comparative test results for multi-foils as establishing their thermal transmittance values until 1 January 2007”, such a promise would be unlawful because (and I quote):(a) It would not only be outside the statutory purpose pursued by sections 1, 6 of the Building Act 1984 (and Schedule 1 (L1), Regs. 4A, 11(3), 17C, 17D of Building Regs) but would frustrate that purpose.

(b) It would be irrational; promoting the claims of a particular group of manufacturers for its products contrary to scientific evidence, including evidence commissioned and published by the Defendant.

(d) It could not have been adopted even if the procedure under section 6(3) Building Act had been complied with, which it was not; another ground of illegality.

[160]The argument was described as a construct by counsel for the Claimants. I agree, but point out that it had to be because the Department’s position was that Mr Nawaz’s understanding, and the promise it made by the letter of 17th February 2006, was that the independent certification would not include ones based on comparative (in-situ) testing. The argument is therefore necessarily based on an assessment of what the Department would or could have done.

[161]Nonetheless in my view it is instructive to note that:(a) when the Circular Letter of 30th March 2006 was sent, the Department did not perceive any difficulty in referring to UKAS certification under its general management powers, and

(b) after the problems arising from that Circular Letter arose, lawyers were involved, and it must have been clear that the Claimants were saying that the independent certification referred to in the letter of 17th February 2006 included comparative (in-situ) testing, of the illegality / ultra vires points now argued, the Department only raised the procedural one. In my view points (a) and (b) are an indication that the Department was of the view that (subject to the procedural point) its management powers enabled it to indicate in circulars the type of certification the multi-foil industry would be relying and could rely on.

[162]In my judgment that view as to the ambit of the Department’s management powers is correct. As to their existence and ambit, in my view correctly the Secretary of State has claimed (in the 2002 edition of Document L1) to have such a management role by claiming the power to issue “supplementary guidance” – “additional material to aid interpretation of the guidance contained in Approved Documents” – without going through any formal process.

[163]So leaving aside the procedural point, the illegality arguments are based on the contention that the Department could not lawfully have said anything that authorised or encouraged the acceptance after April 2006 by BCBs of certificates based on comparative (in-situ) testing. It is here that the argument breaks down and the evidence does not support the arguments on frustration, irrationality and negligence etc, because notwithstanding that the Department was of the view that comparative (in-situ) testing was not appropriate, it then and now accepted and accepts that there is a bona fide argument that it is, and that this argument is continuing. In short, to again borrow Mr Tebbit’s expression at the time “the jury is still out”.

[164]I add that as I understand it at least part of the evidence referred to in paragraph (b) of the submission quoted in paragraph 159 above is the 2005 BRE report, and thus evidence that comes from the organisation appointed to carry out the review of BR 443.

[165]On that basis, and given the potential in February 2006 for challenge to the revision of BR 443 (2006) and the New Approved Documents, in my view there is nothing unlawful in an agreement that whilst a CE marking is being sought the multi-foil products “will be supported by” (the language chosen by the Department in its letter of 17th February 2006) independent certification based on comparative (in-situ) testing.

[166]Indeed, in my view, such an agreement or promise would promote good regulation because it would avoid a challenge to the proposed changes supported by the Department and would recognise the underlying and continuing bona fide technical and scientific dispute. In broad terms it would transfer that underlying argument from the applicability of BR 443 (and thus the trigger to the statutory presumption) to the CUAP process.

[167]In my view there would have been nothing unlawful in the Department including what it said in its letter of 17th February 2006 concerning the interim period in the Circular Letter of 30th March 2006. This is what the Claimants were then seeking and in my view it would have had the practical and commercial effects I have set out.

[168]In my view the Department overstate and mis-state the Claimants’ position when it asserts it was that the Department “was to tell BCBs to accept the results of independently certified comparative tests”. This is not what the Department promised and was not what the CMM sought by its letters at the time. Indeed it seems to me that the Claimants would have known both(i) that the Department had no such power of direction under the statutory scheme, and

(ii) that the Department would not tell BCBs this because it did not accord with its view on the suitability of comparative (in-situ) testing.

[169]I accept that the expression of what was agreed to in the letter of 17th February 2006 when it is set within a correct analysis of the statutory scheme has complications and it seems to me that this has given rise to some confusion, for example, as to whether it was promising a derogation from BR 443 (2006) in the sense of an alteration or suspension to it. In my view in February 2006 the Claimants were not promised, and did not thereafter in the period leading up to the issue of proceedings, seek:(a) any derogation from BR 443 (2006) in that sense. At no stage has it been suggested that the promise was that comparative (in-situ) testing would be included within BR 443 and therefore it has always been the case that on a proper analysis of the statutory scheme the promise has been directed to a satisfaction of the Building Regulations by an alternative route to one based on the statutory presumption, and thus to the persuasion of BCBs (and others) to accept certificates put forward by the multi-foil manufacturers, or

(b) any statement from the Department telling BCBs (and others) to accept comparative (in-situ) test results. So in my view any assertions made by either side in the context of the proceedings that this was promised or sought are incorrect.

[170]Rather I repeat that what was promised, and sought, was an arrangement that enabled the multi-foil manufacturers to continue to seek to persuade BCBs and others that they should accept that their products satisfied the Building Regulations on the basis of comparative (in situ) testing, notwithstanding the clear messages from the new BR 443 (2006) (and on the Department’s case, scientific evidence commissioned and published by it) that the Department was of the view(i) that the hot-box test could be applied to multi-foil products and,

(ii) that comparative (in-situ) testing was inappropriate and gave misleading information. If at the time, Mr Nawaz (and the Department) had understood or thought that “independent certification” included, or might have included, certificates based on comparative (in-situ) testing and notwithstanding: (a) those messages, and (b) paragraph 25 of the Circular Letter of 30th March 2006 to the effect that BCBs should make their own decisions, had therefore felt a difficulty in creating the practical reality of the multi-foil manufactures being able to invite and persuade BCBs (and others) to make their decisions in the period during which a CE marking was sought on the basis of comparative (in-situ) tests, because (like Mr Anderson in one of his e-mails) it did not wish to give any implied support to that method of testing, it could have covered this in the Circular Letter.

[171]Any such additional explanation:(a) could have included the point argued before me correctly that both before and after the change the statutory presumption could only be satisfied by an application of the hot-box test, and

(b) probably would have included a statement of the Department’s position on comparative (in-situ) and hot-box testing (referred to in the letter of 17th February). But if it had it would have to have added that others held a different view and there was a bona fide dispute, which would be addressed in the process of obtaining a CE marking. The possibility of giving that additional clarity to the agreement demonstrates to my mind that it was lawful and rational, and did not open up the Department to civil claims.

[172]The reaction of the members of CMM to any such additional explanations being included is a matter of speculation. If they had not accepted such an approach it seems to me that they would have challenged the proposed changes in the Approved Documents and BR 443 (2006).

[173]What the Department in fact did, as I have explained, was to incompetently issue a Circular Letter that contained mistakes and then to fail to address the problems that arose in a prompt, open, clear and straightforward manner.

[174]For equivalent reasons there were no procedures that had to be followed for the Department to make and perform its promise in performance of its management role. Further any procedural defect could have been remedied in performing the promise.

[175]Further, and if the procedural argument is linked to a further revision or suspension of BR443 (2006), it would be self defeating from the point of view of the Department because the statutory procedure was not followed in respect of the revision. Further that procedural argument could support the arguments mentioned earlier that in any event a fair and appropriate procedure was not followed in making that revision. So the arguments lead to the revision as a whole being quashed, rather than to a conclusion that no revision, suspension or derogation from it could have lawfully been made, or promised, without following the s. 6 procedure or adopting a procedure that gave both sides of the argument a chance to comment.

[176]For those reasons the ultra vires / illegality arguments fail.

Timing of this claim

[177]In my view correctly no argument was pursued before me that any part of the claim should not be dealt with because it was out of time or not brought quickly enough. I therefore confirm that in my view any such point would have been a bad one but, for the avoidance of doubt, I indicate that if any part of the claim was out of time I grant the appropriate extension.

Relief, remedies and costs

[178]I shall deal with this when judgment is delivered and thus after the parties have had an opportunity to consider my judgment in draft. At this stage I simply mention that in this context the recognitions by Mr Nawaz that are mentioned in Schedule C that the time for obtaining a CE marking might be, or have to be, extended may have some relevance.