The National & Provincial Building Society, The Leeds Permanent Building Society and the Yorkshire building Society v. The United Kingdom (117/1996/736/933-935) 23 October1997: Applicants’ legal claims to restitution of monies paid under invalidated tax provisions extinguished under the effects of retrospective legislation -- Whether there was an unlawful expropriation of applicants’ assets – Meaning of ‘possessions’ --interference -- whether interference was justified.

United Kingdom – applicants’ legal claims to restitution of monies paid under invalidated tax provisions extinguished under the effects of retrospective legislation (section 53 of Finance Act 1991 and section 64 of Finance (No.2) Act 1992)

I. ARTICLE 1 OF PROTOCOL NO. 1

1. Whether there was an unlawful expropriation of applicants’ assets

Interest paid in gap period would inevitably have been taxed had voluntary arrangements between building societies and Inland Revenue continued to apply - it was held in applicants’ reserves waiting to be brought into account – in absence of transitional Regulations applicants would have obtained a windfall in changeover to new tax regime – no support in domestic litigation for argument that interest subjected to double imposition – interest never in fact taxed - Parliament clearly intended interest to be taxed – cannot be maintained that it was misled in this respect – no unlawful expropriation of assets or double imposition of interest through operation of 1986 Regulations.

2. Whether there were "possessions" within meaning of Article 1

Court expresses no concluded view on whether any of applicants’ claims could properly be considered "possessions" – Leeds and National & Provincial had not secured a final and enforceable judgment in their favor when they initiated first set of restitution proceedings notwithstanding favorable outcome of Woolwich 1 litigation – judicial review proceedings and second set of restitution proceedings launched by all three applicants cannot be said to be sufficiently established – in particular, applicants cannot maintain that they had a legitimate expectation that Government would not seek Parliament’s consent to adopt retrospective legislation to validate impugned Treasury Orders.

Nevertheless, Court prepared to proceed on assumption that applicants’ claims amounted to "possessions" and treat Article 1 as applicable given links between applicants’ arguments on this issue and substance of their claims to have been unjustifiably deprived of their "possessions".

3. Whether there was an interference

Not disputed – Court will examine whether interference justified on working assumption that applicants’ claims amounted to "possessions".

4. Whether the interference was justified Reiteration of Court’s case-law on approach to interpretation of Article 1 – Court will apply rule in second paragraph of Article 1 to facts to determine whether impugned measures were a control of use of property in general interest to secure payment of taxes – most natural approach in circumstances.

Obvious public interest considerations at stake justifying Parliament’s adoption of section 53 of 1991 Act and section 64 of 1992 Act – section 53 sought to reassert Parliament’s original intention to tax interest paid in gap period – that intention thwarted by ruling in Woolwich 1 that 1986 Regulations void on technical grounds – Leeds and National & Provincial must be reasonably considered to have appreciated Parliament would adopt retrospective legislation to remedy technical defects in 1986 Regulations – section 64 designed to safeguard substantial sums of revenue placed at risk by applicants’ challenge to validity of Treasury Orders – cannot be maintained in circumstances that sections 53 and 64 upset balance between protection of applicants’ rights to restitution and public interest in securing payment of taxes due.

Conclusion: no violation (unanimous).

II. ARTICLE 1 OF PROTOCOL NO 1 IN CONJUNCTION WITH ARTICLE 14 OF THE CONVENTION

Applicants not in relevantly similar situation to that of Woolwich – latter alone bore costs and risks of litigation and had secured victories in House of Lords and Court of Appeal before Leeds and National & Provincial had issued writs to launch their restitution proceedings – even if applicants could be so considered there was reasonable and objective justification for excluding Woolwich from scope of section 53 – understandable that Parliament did not wish to interfere with House of Lords ruling in Woolwich 1 – cannot be maintained that section 64 discriminated between applicants and Woolwich – measure was of general application.

Conclusion: no violation (8 votes to 1).

III. ARTICLE 6 § 1 OF THE CONVENTION

A. Applicability

Applicable – both sets of restitution proceedings were private law actions irrespective of fiscal dimension – judicial review proceedings clearly related to outcome of second set of restitution proceedings and therefore decisive of private rights.

B. Compliance

Effects of sections 53 and 64 were to render applicants’ legal actions unwinnable – whether this result constituted an interference with applicants’ right of access to court must be determined in light of all circumstances of case – Court must in particular subject to careful scrutiny justifications adduced by authorities in view of retrospective nature of impugned measures.

Applicants clearly understood that Parliament intended to tax interest paid in gap period and can reasonably be considered to have anticipated that Treasury would react as it did to remedy technical defects in 1986 Regulations following Woolwich 1 ruling – Leeds and National & Provincial in effect tried to pre-empt adoption of remedial legislation by issuing writs in restitution immediately before official announcement that Parliament would be asked to approve retrospective measures – section 53 not in fact specifically targeted at Leeds’ and National & Provincial’s restitution actions even if its effect was to stifle these actions – obvious public interest considerations justifying adoption of section 53 with retrospective effect having regard to Parliament’s need and resolve to reassert its original intention.

Furthermore, compelling public interest reasons for rendering Treasury Orders immune from legal challenge mounted by all applicants in taking judicial review proceedings and contingent restitution proceedings – these proceedings were in effect an indirect assault on Parliament's original intention to tax interest paid in gap period – even if section 64 adopted by Parliament in knowledge of initiation by applicants of judicial review proceedings, applicants themselves must be considered to have appreciated that Parliament would intervene as it did.

Conclusion: no violation (unanimous).

IV. ARTICLE 6 § 1 OF THE CONVENTION IN CONJUNCTION WITH ARTICLE 14

Court’s reasons supporting its earlier conclusion of no violation of Article No. 1 in conjunction with Article 14 equally valid for a finding of no violation under this head.

Conclusion: no violation (8 votes to 1).

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