Heathrow Hub Ltd & Anor, R (On the Application Of) v The Secretary of State for Transport

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This is the judgment of the court.

This is an appeal against an order handed down by the Divisional Court (Hickinbottom LJ, Holgate and Marcus Smith JJ) on 1 May 2019 in R (on the application of Heathrow Hub Limited and Another) v Secretary of State for Transport [2019] EWHC 1069

On the same day, the Divisional Court (Hickinbottom LJ and Holgate J) also handed down a linked order in (R (on the application of Neil Spurrier and Others) v Secretary of State for Transport[2019] EWHC 1070 (Admin)), whereby the Divisional Court dismissed challenges by various parties to the designation of the ANPS on environmental grounds. The order of this court on the appeal and applications for permission to appeal in those proceedings is also handed down today.

The parties to this appeal against the HUB Judgment are as follows:

The Appellants (collectively known as “HUB”), are the promoters of a proposal to extend the existing northern runway at Heathrow Airport so as to operate as two runways, a proposal known as the Extended Northern Runway (“ENR”) scheme.

The Respondent (“the Secretary of State”) is the Minister responsible for United Kingdom (“UK”) transport matters including aviation.

The First Interested Party, Heathrow Airport Limited (“HAL”) is the owner and operator of Heathrow Airport and the promoter of a proposal to build a third runway at Heathrow Airport, a proposal known as the Heathrow Northwest Runway (“NWR”) scheme.

The Second Interested Party, Arora Holdings Limited (“Arora”) and its associated subsidiary companies own land within the indicative boundary of the NWR scheme, including several hotels.

The Intervener is the Speaker of the House of Commons.

The decision of the Secretary of State to designate the ANPS was the culmination of a six-year process, which began in September 2012 with the establishment of the Airports Commission (“the Commission”), to examine two questions: (a) whether there was a need for additional airport capacity in the South East of England; and (b) if so, how that capacity requirement should be met.

The ANPS concluded that (a) there was a need for further airport capacity and (b) this need should be met by the construction of a third runway at Heathrow Airport, namely the NWR scheme promoted by HAL.

The ANPS chose the NWR proposal over two other rival proposals: first, the ENR scheme proposed by HUB; second, a proposal promoted by the owner and operator of Gatwick Airport, Gatwick Airport Limited (“GAL”), for the construction of a second runway at Gatwick Airport, known as the Gatwick scheme.

By its claim for judicial review in these proceedings (CO/3071/2018) HUB sought to challenge the Secretary of State’s decision to prefer the NWR scheme over the ENR scheme and to designate the ANPS accordingly. Unlike the other claimants in the linked Planning proceedings (CO/2760/2018, CO/3089/2018, CO/3147/2018 and CO/3149/2018), who oppose any expansion of Heathrow at all, HUB supports the expansion of Heathrow Airport but complains that legal errors were made in the process of selecting and preferring the NWR scheme over its ENR scheme.

The Divisional Court set out a full and clear account of the relevant facts (in paragraphs 21 to 86 of its judgment, under the heading “The Factual Background”). We gratefully adopt that account. For the hearing before us, the parties provided a detailed agreed narrative. We set out below the most salient events in that history.

On 7 September 2012, the Government established the Airports Commission, chaired by Sir Howard Davies, as an independent body of experts to examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub. The Airports Commission’s brief was to evaluate and report on how any need for additional capacity should be met in the short, medium and long term. The terms of reference of the Airports Commission required it to look, inter alia, at the environmental impact of meeting any capacity needs and required that the “Commission should base the recommendations in its final report on a detailed consideration of the case for each of the credible options. This should include the development or examination of detailed business cases and environmental assessments for each option, as well as consideration of their operational, commercial and technical viability”. The terms of reference further expressly required the Airports Commission to provide material by way of its Final Report which would support the Government in preparing a national policy statement (“NPS”).

Following its establishment, the Airports Commission issued an invitation for interested parties to submit proposals for long-term aviation capacity options. In connection with this invitation, in February 2013, the Airports Commission issued a guidance document, “Submitting evidence and proposals to the Airports Commission”, which explained in general terms the approach it proposed to take with its role and how those who wished to submit proposals might best engage with the Airport Commission. In that guidance document, Sir Howard Davies described in his Foreword how the

HUB put forward one of 52 proposals submitted to the Airports Commission in response to that invitation. These proposals were then published by the Airports Commission, together with six proposals of its own, with a further invitation for stakeholders to submit views and additional evidence.

HUB made its initial submission in respect of its proposed ENR scheme to the Airports Commission on 28 February 2013, followed by further submissions and engagement throughout the remainder of 2013.

On 17 December 2013, having considered the responses following the publication of the 58 proposals, the Airports Commission published an interim report (the “Airports Commission’s Interim Report”), which assessed the evidence on the nature, scale and timing of steps needed to maintain the UK’s status as an international hub for aviation. It also made recommendations for the better use of existing runway capacity consistent with long term options. The Airports Commission’s Interim Report selected three options for further consideration in its final report: the NWR scheme, the ENR scheme and the Gatwick scheme. The Airports Commission explained that it considered each of the shortlisted options had “a credible prospect of being deliverable within the required timescales” although it noted that “there are still important issues to examine for each of the proposals, together with significant risks”.

In January 2014, the Airports Commission consulted on a draft Appraisal Framework, and in February 2014, it adopted an Appraisal Framework. The “appraisal modules” adopted included noise, cost and commercial viability, operational efficiency, operational risk and delivery. The Airports Commission established an Expert Advisory Panel comprising 21 members to aid it in its assessment of the evidence.

On 1 July 2015, the Airports Commission published its Final Report which recommended, inter alia, that the NWR scheme was the most appropriate way to meet the identified need for additional runway capacity in the south east of England, combined with a significant package of measures to address environmental and community impacts.

The Airports Commission concluded that the ENR scheme performed better in two areas: (1) lower costs by approximately £3 billion, thereby lowering the financing risks and the potential for increase in aeronautical charges; and (2) it would require the loss of only 242 homes compared to the 783 homes for the NWR scheme. However, it concluded that these benefits were outweighed by five other matters where the NWR scheme outperformed the ENR scheme, namely (1) capacity, (2) respite, (3) noise, (4) air quality and (5) resilience.

The foreword to the Commission’s Final Report stated:

Under the heading “the best option for expansion at Heathrow”, the Executive Summary of the Airports Commission’s Final Report stated:

Its estimated costs are roughly £3 billion lower than those of the Northwest Runway option, reducing the financing risk associated with the scheme and lowering the increase in aeronautical charges paid by airlines.

It would require the loss of only 242 homes compared to 783 for the Northwest Runway option, and its impacts on community facilities such as schools and health centres would also be much more limited.

In terms of capacity, the Commission’s conclusion (at [12.11]) was that:

Following the publication of the Commission’s Final Report, the Department for Transport (“the Department”) undertook a review of the Airports Commission’s work.

Shortly after the Airports Commission issued its Final Report, the Department indicated that it intended to consider all three schemes which had been shortlisted by the Airports

The Department held discussions with the three short-listed promoters. The Department held a series of initial meetings with HUB between July and September 2015 at which various process issues were discussed. At the first of those meetings, which took place on 9 July 2015, the Department indicated that it wished the output of the meetings to be a “document that sets out commitments and gives confidence that parties can work together towards a successful project”. This document is what became known as the “Statement of Principles”, a final version of which was signed in June 2016. The HUB Statement of Principles was expressed to be a legally non-binding document containing the principles on which the Government and HUB intended to proceed “if the Government concludes no later than 31 October 2016 … that [HUB]’s Scheme is the preferred scheme” (see paragraph 1.5). It made clear that “at the date of signing this Statement of Principles … the Government has not yet formed a view on the recommendations in [the Airports Commission’s] Report as to how best to meet the need for more runway capacity in London and the south-east” (at paragraph 1.4). Similarly, the Statement of Principles stated that it “does not create any legitimate expectation, whether substantive or procedural, in relation to the exercise of functions of Government” (at paragraph 2.1.1).

The Department also concluded a Statement of Principles with each of HAL and GAL, the texts of which were negotiated during the summer of 2016.

The Statement of Principles concluded with HUB setting out the understanding of HUB and the Department as to the responsibility of HUB for developing the relationship between HUB and HAL if the ENR scheme was selected by the Government. It reflected the responsibility of HUB for negotiation between HUB and HAL after, and in the event that, the ENR scheme was selected by the Government. Section 3 of the document, which is headed “fundamental principles” reads (in relevant part) as follows:

On 9 December 2015, the Government’s “Review of the Airport[s] Commission’s Final Report” (published on 25 October 2016) concluded that the Department was satisfied that the Airports Commission’s Final Report was a sound and robust piece of evidence on which the Government could base decisions as to whether further airport capacity was required and as to where that capacity would best be located.

On 14 December 2015, the Secretary of State announced that the Government accepted the case for airport expansion; agreed with, and would further consider, the Airports Commission’s shortlist of options; and would use the mechanism of an NPS under the Planning Act to establish the policy framework within which to consider an application by the developer for planning consent. He went on to state that additional work would be required on air quality, noise, carbon emissions and the impacts on local communities. The decision to make the announcement had been agreed at a Cabinet Economic and Industrial Strategy (Airports) Sub-Committee meeting of 10 December 2015.

On 26 January 2016, the then Secretary of State (the Rt. Hon. Patrick McLoughlin MP) wrote to HUB to confirm that the Government’s assessment was ongoing and that he was continuing to “consider all three of the shortlisted schemes”. The Secretary of State proceeded to indicate “the key areas” on which he anticipated further engagement with HUB would be necessary.

On 17 August 2016, a meeting took place between HUB and the new Secretary of State

It should be noted that that request by the Secretary of State forms the major ground of complaint by HUB and is the foundation of each of the grounds of challenge by HUB in the judicial review proceedings (see further below).

On 19 August 2016, HUB wrote to the Secretary of State stating that HUB was “working to obtain comfort for you that, if our concept was chosen by the Government, HAL would be prepared to reach a prompt agreement with us to acquire or license our intellectual property and to implement an Extended Northern Runway. We will update you as soon as possible on progress”.

On 7 October 2016, HUB wrote to the Secretary of State again stating that HAL had yet to respond definitively to the request for written confirmation that they would implement HUB’s ENR. HUB stated that it would continue to use its best endeavours to reach agreement but if the Government wished for a definitive reply before the Cabinet Committee reached its decision “it is now down to the Government to obtain one”.

In addition to discussions on the approach of HAL to HUB’s scheme, there were also discussions between July 2015 and October 2016 on the substance of HUB’s proposal for expansion of the ENR. During this time HUB provided both solicited and unsolicited submissions and information in support of the ENR scheme. In particular, HUB produced technical reports seeking to challenge the findings of the Airports Commission insofar as they purported to show that the NWR scheme performed better than HUB’s scheme.

On 25 October 2016, the Secretary of State announced that the Government’s preferred option for the expansion of airport capacity was the NWR scheme at Heathrow. The decision to make the announcement had been, as previously, agreed at the Cabinet subCommittee meeting of the same date. The decision was noted by the Cabinet. A number of documents were published at the same time as announcing the preferred option for expansion of airport capacity (“the Preference Decision”), including a Review of the Airports Commission’s Final Report (dated 9 December 2015); a Further Review and Sensitivities Report Airport Capacity in the South East (dated October 2016) and a nonbinding Statement of Principles agreed between the Secretary of State and HAL.

The Secretary of State also made a statement to Parliament, on the same day, in which he announced that the Government’s preferred option was the NWR scheme.

Also on 25 October 2016, the Secretary of State appointed Sir Jeremy Sullivan, a former Lord Justice of Appeal, as Independent Consultation Adviser to oversee the consultation process on the draft ANPS and provide scrutiny and challenge to the Department.

On 2 February 2017, the Department laid before Parliament and published for consultation several documents, including a draft ANPS, an Appraisal of Sustainability (which assessed the three shortlisted schemes) and a number of technical supporting documents.

The draft ANPS included a section setting out why the NWR scheme was preferred for expansion at Heathrow instead of the ENR scheme. Three reasons were identified for preferring the NWR scheme, namely: (1) resilience and capacity; (2) respite from noise for local communities; and (3) deliverability. The draft ANPS explained the basis for these reasons, which are also the reasons that appear in materially identical terms in the final ANPS:

The Heathrow Northwest Runway scheme should provide greater resilience than the Heathrow Extended Northern Runway scheme because of the way the three separate runways could operate more flexibly when needed to reduce delays, and the less congested airfield. It delivers greater capacity (estimated on a like for like basis by the Airports Commission at 740,000 flights departing and arriving per annum compared to the Extended Northern Runway scheme at 700,000), accordingly higher economic benefits, and a broader route network. It also provides greater space for commercial development, which could be used to enhance onsite freight capacity.

The Airports Commission and the Civil Aviation Authority both assessed the Extended Northern Runway scheme to be deliverable. However, the Extended Northern Runway scheme has no direct global precedent. As such, there is greater uncertainty as to what measures may be required to ensure that the airport can operate safely, and what the impact of those measures may be, including the restriction on runway capacity.”

On 24 May 2017, HUB responded to the consultation on the draft ANPS with submissions addressing matters relating to capacity, safety, respite, noise, airspace, resilience, community property and infrastructure, capital cost, deliverability, and whether it was necessary for it to provide an assurance or guarantee from HAL. On this last matter, representations were made that there was no need for HUB to provide a guarantee or assurance because, inter alia, the Airports Commission considered all schemes to be deliverable.

HAL also made representations in May 2017 in response to the consultation, which supported the reasons set out in the draft ANPS as to the reasons for preferring the NWR scheme. These submissions were directed to matters relating to the ENR scheme’s capacity, ability to offer resilience, stand capacity, the untested nature of the ENR scheme, and as to whether it had been properly costed.

A further consultation was commenced in October 2017 to allow updated evidence, including the Government’s revised aviation demand forecasts and its final Air Quality Plan, to be taken into account and considered by the public. A revised draft ANPS and a number of other supporting documents were published at this time including an updated Appraisal of Sustainability. The revised draft ANPS repeated in materially identical terms the reasons why the NWR scheme was preferred over the ENR scheme.

On 18 December 2017, HUB made representations in response to this further consultation, supported by expert materials.

On 5 June 2018, the ‘proposed ANPS’ was laid before Parliament and the Government published a document entitled the “Government response to the consultations on the Airports National Policy Statement: Moving Britain Ahead” (“the Consultation Response”), which sought to address the key themes arising from these consultations. There had been 72,239 responses to the February 2017 consultation and 11,028 responses to the October 2017 consultation.

Sir Jeremy Sullivan, in his capacity as Independent Consultation Adviser, published reports covering the adequacy of both consultations and reached positive conclusions, including that the consultation had been carried out to “a high standard”.

In March and November 2017, the House of Commons Transport Committee invited submissions to its inquiry into the ANPS. The Transport Committee was appointed to carry out the necessary Parliamentary scrutiny of the revised draft ANPS and received written evidence, including from HUB, whose written evidence was substantially the same as its representations of 18 December 2017 in response to the second consultation on the revised draft ANPS.

In December 2017, HUB made further submissions in response to the consultation on the draft ANPS, in which it once again submitted technical evidence and asserted that the conclusions on capacity and respite relied on by both the Airports Commission and the Secretary of State (in its support of the NWR proposal) were flawed.

On 25 May 2018 HUB sent a letter to the Secretary of State stating:

the Extended Northern Runway scheme being included in the ANPS; and

a written guarantee from HAL to [HUB] that, if the Extended Runway Scheme is progressed, HAL will work on standard commercial terms with [HUB] to implement that scheme for the expansion of Heathrow airport”

On 4 June 2018, HUB wrote to the Prime Minister repeating arguments previously made by it.

On 5 June 2018, the Cabinet sub-Committee met and approved the laying before Parliament of the proposed ANPS. That decision was noted by the Cabinet. On the same day, the Secretary of State laid before Parliament the final proposed ANPS in accordance with section 9(8) of the Planning Act. The proposed ANPS continued to identify the same three reasons as were set out in the draft ANPS as to why the ENR scheme was not the Government’s preferred scheme, namely for reasons relating to resilience and capacity, respite from noise and deliverability.

On 5 June 2018, the Government published the Consultation Response stating that it remained satisfied that the Airports Commission’s reasons for recommending the NWR scheme continued to be sound:

As it would maintain Heathrow Airport's hub status, the scheme is expected to deliver substantial improvements in connectivity and bring about wider benefits in terms of trade, freight and productivity that are accompanied with a large increase in jobs. However, the relatively smaller increase in capacity offered by the scheme limits the overall size of these benefits, compared to the other two schemes.

The capacity of the schemes was considered by the Commission. It concluded that the Heathrow Northwest Runway scheme would provide capacity for around 40,000 additional ATMs compared with the Heathrow Extended Northern Runway scheme. This is on the basis of the Heathrow Northwest Runway scheme allowing for more flexibility, including all three runways being full length and capable of independent operation, allowing the airfield to be less constrained, easing airport taxiway congestion.

The Department has reviewed the Commission’s findings, taking into consideration the representations from [HUB]/RIL, and agrees with the Commission’s conclusions. The evidence provided by [HUB]/RIL uses an alternative, simplified methodology to model capacity, compared with the Commission’s work. Under this alternative methodology, the Heathrow Northwest Runway scheme would still have greater capacity than the Heathrow Extended Northern Runway scheme.”

A number of supporting technical documents were published at the same time, which included a redacted technical report from York Aviation (“the York Aviation Note”). The York Aviation Note stated that York Aviation had examined HUB’s evidence that its scheme could deliver in excess of 700,000 annual ATMs, and said that “based on the evidence presented, there must be some doubt as to whether the 700,000 annual ATMs would be achieved in practice”. As for HAL’s NWR scheme, the York Aviation Note stated “although we have not seen a full capacity assessment for

On 18 June 2018, HUB wrote to the Secretary of State challenging the accuracy of the York Aviation Note.

On 21 June 2018, the Government provided a response to HUB’s letter to the Prime Minister of 4 June 2018 addressing HUB’s submissions on capacity, cost, airport charges, phasing, safety, housing loss and competition and stating that the decision to lay the proposed ANPS before Parliament was reached “after considering the points raised in response to the two consultations (including detailed representations made by [HUB]), the report and recommendations of the Transport Select Committee, and the points subsequently made in correspondence by [HUB’s] representatives.”

On the same day, a letter from the Department’s legal advisers responded to HUB’s letters of 25 May, 6 June and 18 June 2018. Under the heading “Guarantee” it said:

On 25 June 2018, there was a debate and vote on the proposed ANPS in the House of Commons. MPs voted in favour of the ANPS by 415 votes to 119, a majority of 296.

On 26 June 2018, the Secretary of State designated the ANPS which provided for the NWR scheme and explained the need for new airport capacity and that the preferred NWR scheme was the most appropriate means of meeting that need (paragraphs 1.40 and 1.41).

The ANPS explained the reasons for preferring the NWR to the ENR, which did not include the absence of the assurance or guarantee from HAL in relation to the ENR:

Resilience;

Respite from noise for the local communities; and •Deliverability.

The Heathrow Northwest Runway scheme would provide respite by altering the pattern of arrivals and departures across the runways over the course of the day to give communities breaks from noise. However, respite would decrease from one half to one third of the day. The Heathrow Extended Northern Runway scheme has much less potential for respite. It would use both runways for arrivals and departures for most of the day, although it may be able to switch off one runway for a short time during nonpeak periods with a corresponding reduction in capacity.

The Heathrow Northwest Runway scheme should provide greater resilience than the Heathrow Extended Northern Runway scheme because of the way the three separate runways can operate more flexibly when needed to reduce delays, and the less congested airfield. It delivers greater capacity (estimated on a like-for-like basis by the Airports Commission at 740,000 flights departing and arriving per annum compared to the Extended Northern Runway scheme of 700,000), accordingly higher economic benefits and a broader route network. It also provides greater space for commercial development, which could be used to enhance onsite freight capacity.

The Airports Commission assessed the Heathrow

1 July 2015: the Airports Commission published its Final Report recommending the NWR scheme over the ENR scheme.

June 2016: the Statement of Principles was signed by HUB and the Secretary of State.

17 August 2016: the Secretary of State requested HUB obtain a written assurance from HAL to implement their ENR scheme if chosen (“the Assurance”).

25 October 2016: following the agreement of the Cabinet Sub-Committee, the Secretary of State announced that the NWR scheme was the Preference Decision.

2 February 2017: the Department published the draft ANPS recommending the NWR scheme.

26 June 2018: the Secretary of State designated the ANPS choosing the NWR scheme (“the Designation Decision”).

HUB brought judicial review proceedings pursuant to section 13 of the Planning Act challenging the Designation Decision.

HUB argued that the Secretary of State’s decision to designate the ANPS was legally flawed and should be quashed on five grounds, namely that in accepting the NWR scheme and rejecting the ENR scheme, the Secretary of State acted unlawfully in the following respects:

Judicial Review Ground 1 - breach of EU competition law: The Secretary of State breached European Union (“EU”) law by insisting that HAL provide a guarantee or assurance; and making its provision an effective pre-condition of ENR selection. This pre-condition was contrary to EU law insofar as it breached Articles 106(1) and 102 of the Treaty on the Functioning of the European Union(“TFEU”).

Judicial Review Ground 2 – legitimate expectation: The Secretary of State insisted on the provision of a guarantee or assurance when to do so was (i) procedurally unfair and (ii) in breach of HUB’s legitimate expectation that the Secretary of State would select the ENR scheme if he found it to be “the most suitable scheme”.

Judicial Review Ground 3 – immaterial and material considerations: The Secretary of State had regard to an immaterial consideration (an incorrect factual assumption that the NWR provided greater capacity and respite) and failed to have regard to a material consideration (that the evidence demonstrated that the ENR provided at least the same capacity as the NWR, and the NWR could not in practice deliver the attributed levels of respite).

Judicial Review Ground 4 – capacity: In the alternative to Ground 3, the Secretary of State failed to provide any (or any adequate and intelligible) reasons for rejecting HUB’s submissions that the ENR provided the same capacity and respite as the NWR.

Judicial Review Ground 5 - safety: The Secretary of State acted unlawfully by taking into account concerns relating to the safety of the ENR, and the implications of this for deliverability; and failing to provide any (or any intelligible) details or explanation of what the safety concerns were, or what those concerns were based on. He also acted contrary to a legitimate expectation that he would, before relying on a particular matter for rejecting HUB’s scheme, bring it to their attention and give them a reasonable opportunity to respond.

Ground 3 was not pursued. The remaining four grounds were heard by the Divisional Court on 20-22 March 2019 on a rolled-up hearing basis.

In its judgment ([2019] EWHC 1069 (Admin)), the Divisional Court granted permission to apply for judicial review on Judicial Review Grounds 1 and 2 advanced by HUB below but refused both substantive claims. The Divisional Court refused permission for judicial review in respect of Judicial Review Grounds 4 and 5. Accordingly, HUB’s claim was dismissed ([211]).

HUB sought permission to appeal the Divisional Court’s decision on Judicial Review

HUB’s Grounds of Appeal relate to the same issue, namely the request made by the Secretary of State on 17 August 2016 for what is referred to in the Background Facts as “a guarantee or assurance” that HAL would implement the ENR, if the scheme was selected by the Government as its preferred means for airport expansion. The Divisional Court found that the term “guarantee” was never used by the Secretary of State in the period leading up to the Preference Decision but that he did request HUB obtain a requisite written “letter of support”, “comfort” or “commitment” from HAL ([121]). For ease of reference we refer to this as the request for an “Assurance”.

HUB contends that the Divisional Court’s decision on Judicial Review Grounds 1 and 2 below was wrong in law. HUB advances four grounds by way of appeal which are, as summarised in HUB’s skeleton, as follows:

Appeal Ground 1: the Divisional Court erred in law insofar as it failed to find that a distortion of competition had arisen as a result of the State measure before the October 2016 Preference Decision was taken, and, accordingly, that the question of whether or not the issue of the Assurance was subsequently a material consideration for the Secretary of State is legally irrelevant.

Appeal Ground 2: the Divisional Court erred in law insofar as it found that no distortion of competition or potential abuse was capable of arising because of the fact that a subsequent Development Consent Order (“DCO”) application might be made. Grounds 1 and 2 are therefore related.

Appeal Ground 3: the Divisional Court’s analysis of whether the issue of the

Appeal Ground 4: the Divisional Court erred in finding that HUB had no legitimate expectation and that the Secretary of State could resile from any such expectation. Grounds 3 and 4 are therefore related as well.

It is convenient to consider HUB’s Grounds of Appeal in the following order:

Appeal Ground 4: LEGITIMATE EXPECTATION

Appeal Ground 3: MATERIALITY

Appeal Grounds 1 and 2: COMPETITION LAW ISSUES

We also consider the effect of section 31(2A) of the Senior Courts Act 1981 below.

In the agreed List of Issues for this Court and relevant propositions of law, at paragraph 12, the parties agreed that the propositions of law relating to the doctrine of legitimate expectation were accurately set out by the Divisional Court in its judgment (at [123]-[124]) in the following way:

Although we would not disagree with that summary, it is important, in our view, to be clear about the last sentence. That sentence must not be read out of context. In the context of the above passage read fairly and as a whole, what is required is that there must be a practice (even though there is no express promise) which is impliedly tantamount to such a promise. That practice must still give rise to a representation which is clear, unambiguous and devoid of any relevant qualification.

It is important to recall that the origin of the modern doctrine of legitimate expectation lies in the decision of the House of Lords in Council of Civil Service Union v Minister for the Civil Service[1985] AC 374 (“CCSU”). That was a case concerning a procedural expectation (a suggested duty to consult), but the fundamental ingredients of a legitimate expectation will be the same where there is asserted to be a substantive expectation (in effect a promise that a public authority will behave in a certain way on matters of substance and not merely procedure).

In the CCSU case, there was no express promise of consultation with the trade unions at GCHQ. Nevertheless, there had been a long-standing practice of consultation with the unions when fundamental terms of employment were to be altered. It was for that reason that the House of Lords held that, in the absence of national security considerations, there would have been a duty to consult the unions before the decision was made to ban union membership at GCHQ. That duty was subordinate to the interests of national security, which is why ultimately the application for judicial review failed.

In the CCSU case, at 401, Lord Fraser of Tullybelton said that a “legitimate … expectation may arise either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue” (our emphasis).

Furthermore, as subsequent decisions of the courts have made clear, a legitimate expectation will only be created if there has been some representation which is clear, unambiguous and devoid of relevant qualification: see the seminal decision of the Divisional Court in R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Limited[1990] 1 WLR 1545, at 1569 (Bingham LJ).

The position has been recently explained in the Supreme Court decision of R (Gallaher Group Ltd and others) v Competition and Markets Authority[2019] AC 96, in which the main judgment was given by Lord Carnwath JSC. Lord Carnwath considered earlier decisions, including the decision of the Court of Appeal in R v Inland Revenue Commissioners, ex parte Unilever Plc [1996] STC 681. At paragraph 37 of his judgment Lord Carnwath referred to the “principles of legitimate expectation derived from an express or implied promise …”, thus recognising that what is required is a promise although it need not be an express one as it may be implied. At [40], Lord Carnwath said:

It is clear therefore, in our view, that, although an express promise is not required to found a legitimate expectation, there must be a consistent practice which is sufficient to generate an implied representation to the same effect.

The Divisional Court considered the claim for legitimate expectation (Judicial Review Ground 2 before it) under three headings:

Was there a legitimate expectation?

If there was a legitimate expectation, could the Secretary of State resile from it?

If there was a legitimate expectation from which the Secretary of State could not resile, did he act unlawfully by breaching or frustrating that expectation?

The Divisional Court answered these questions respectively, (1) ‘No’, (2) ‘Yes’ and (3) ‘No’, in the Secretary of State’s favour. We turn to consider each of these questions in turn below.

The Divisional Court drew a useful working distinction between “scheme-specific” risks (i.e.risks inherent in the nature of the proposed scheme itself) and “promoterspecific” risks (i.e.risks consequent upon the nature of the promoter) ([17]). These were also described as “objective” and “subjective” deliverability risks respectively. In the case of the ENR scheme, promoter-specific risks or subjective deliverability risks arose because HUB did not own or operate Heathrow Airport and depended upon HAL to deliver its ENR scheme.

HUB contended that the Secretary of State’s request for an Assurance amounted to a breach of a legitimate expectation that the Secretary of State would not take into account any promoter-specific or subjective deliverability risks. Mr Kingston QC argued before the Divisional Court that a legitimate expectation could be derived from “assurances” given (i) by the Airports Commission, (ii) by the Secretary of State and (iii) in the Statement of Principles.

The Divisional Court held that there was no evidential basis for the legitimate expectation alleged by HUB for five reasons ([130]-[131]):

First, there was no express promise.

Second, the Airports Commission was only concerned with scheme-specific risks and, in any event, it was independent of the Department and its representations could not be attributed to the Secretary of State.

Third, it was impossible to see how the bare request by the Secretary of State on 17 August 2016 for an Assurance in relation to HUB’s inability itself to deliver the ENR scheme could itself found any legitimate expectation. Moreover, it is telling that HUB did not question the legitimacy or lawfulness of the Secretary of State’s request at the time but rather sought to comply with his request, without complaint.

Fourth, the Statement of Principles expressly stated that it did not create any legal obligation (paragraph 2.1.3) nor “any legitimate expectation, whether substantive or procedural, in relation to the exercise of functions of Government” (paragraph 2.1.1).

Fifth, given the express exclusion of rights based on a legitimate expectation contained in the Statement of Principles, which was a formal and carefully negotiated document, HUB could not reasonably have considered that any of the less formal messages emanating from the Secretary of State could be relied on as creating or supporting a legally enforceable legitimate expectation.

Mr Kingston submitted that the Divisional Court’s conclusion on this issue was wrong. It should have found on all the evidence that a legitimate expectation existed: that the Secretary of State would not regard it as a material matter for his Preference Decision whether or not a non-airport owner or operator had reached agreement with the owner or operator of the airport to implement their scheme.

Mr Kingston made three principal points.

First, he eschewed any reliance upon the Airports Commission and accepted that he could not attribute statements of the Airports Commission to the Secretary of State. He nevertheless relied upon the fact that Secretary of State (i) set the terms of reference for the Airports Commission, (ii) did not limit the Airports Commission to considering bids only from existing airport owners, (iii) did not specify that non airport-owning bidders would have to obtain assurances from the relevant airport owner that their scheme would be implemented and (iv) undertook a careful review of the Airports Commission’s Final Report.

Second, he relied upon the discussions prior to finalising the Statement of Principles during which the Department told HUB that it wished to adopt a fair procedure as between all promoters and that “each promoter was being treated equally in the review process”.

Third, he relied upon the findings of the Divisional Court that the “penny had dropped” by the time the Statement of Principles had been finalised in June or July 2016 that HAL could not be expected to engage with HUB on subjective deliverability risks until after the Preference Decision had been made and that the Secretary of State would not take sponsor-specific risks into account in making the Preference Decision (see [38]). He submitted that these findings were inconsistent with the Divisional Court’s conclusion that HUB were not entitled to rely upon a legitimate expectation to that effect.

In summary, Mr Kingston argued that there was a “common understanding” reached that it would not be a consideration in the Preference Decision that HUB was not the owner or operator of Heathrow; and at no stage did the Secretary of State make it clear, as he should have done, that promoter-specific risks would be regarded as material in the Preference Decision.

In our view, none of Mr Kingston’s points undermine the Divisional Court’s analysis.

As to Mr Kingston’s first point, the fact that the Secretary of State had a supervisory role in relation to the Airports Commission, setting its terms of reference and requiring the production of the Airports Commission Report, does not – and could not – begin to amount to an express or implied representation by the Secretary of State that only scheme-specific risks would be taken into account in the future when making the Preference Decision. As Mr Palmer QC pointed out, the Airports Commission Report was not part of any procurement process. The Airports Commission’s function was to look at possible technical solutions for the aviation capacity problem in the South of England. There was nothing in the Airports Commission’s terms of reference to suggest that the Secretary of State required the Airports Commission to consider promoterspecific issues. This does not mean that promoter-specific issues would not become relevant; plainly, at some stage they were bound to come into focus.

As to Mr Kingston’s second point, the fact that HUB were told that they would be treated “fairly” and “equally” does not amount to an express or implied representation that promoter-specific risk would not be a consideration.

As to Mr Kingston’s third point, there was nothing inconsistent between the Divisional Court’s findings at [38] and [138] and its conclusion that HUB were not entitled to rely upon a legitimate expectation. The growing realisation of the difficulties of getting HAL to co-operate with HUB when they were competitors for the same prize did not amount to an unequivocal representation that HUB would not be required to get some sort of letter of comfort in advance of the Preference Decision. In any event, the process leading up to the Preference Decision was governed by the Statement of Principles. Further, as Mr Palmer submitted, it is impossible to see how the discussions which led to the Statement of Principles could have created any legitimate expectation in circumstances where the finalised Statement of Principles expressly ruled out “any legitimate expectation”.

We agree with the Divisional Court that it is impossible to spell out from the matters referred to by Mr Kingston (whether taken individually or collectively) an express or implied promise or any regular pattern of behaviour amounting to a representation that promoter-specific risks would never be a consideration in the Preference Decision process, still less a clear and unambiguous representation devoid of any relevant qualification such as to justify a finding in law of legitimate expectation.

In our view, the analysis of the Divisional Court on this issue (at [130]-[131]) is clearly correct and cannot be faulted. HUB’s Appeal Ground 4 must be rejected on this basis alone.

The Divisional Court went on to pose a second question - which was in the circumstances hypothetical - namely, if it was wrong on the first question, could the Secretary of State nevertheless resile from any legitimate expectation? The Divisional Court answered this question in the affirmative and held that the Secretary of State was entitled to resile from any legitimate expectation in the public interest (see [132]-[136]). However, it was not necessary for the Divisional Court to consider this alternative hypothesis given its clear finding on the absence of a legitimate expectation in the first place. Moreover, it is surprising that the Divisional Court chose to do so given that, as Mr Palmer made clear, he never argued the point.

In these circumstances, and given the clear view we have ourselves reached on the first question, we do not think it necessary or appropriate to consider the Divisional Court’s findings on this second question.

The Divisional Court then went on to posit a further hypothetical question, namely, that even if a legitimate expectation was established and remained in place so that the Secretary of State could not properly resile from, it, did the Secretary of State in fact breach it? The Divisional Court answered this third question in the negative on the basis that promoter-specific risks were immaterial to the Secretary of State’s Preference Decision (see [137] and further below).

The issue of ‘materiality’ was a pivotal feature of the Divisional Court’s judgment in two ways. First, as we have explained above, the Divisional Court held that the Secretary of State’s request for a written Assurance (and HAL’s refusal to provide one) was not material to the Preference Decision or the Designation Decision and this provided a further answer to HUB’s claim based on legitimate expectation (i.e.Judicial Review Ground 2). Secondly, as we explain below, the Divisional Court held that the lack of materiality of the Assurance also provided the complete answer to HUB’s claim under EU competition law (i.e.Judicial Review Ground 1). It is convenient to consider the materiality issue under the next heading below relating to Appeal Ground 3.

The Divisional Court summarised its decision on the question of ‘materiality’ as follows (at [137]):

In coming to this conclusion, the Divisional Court explained that it took the following six matters into account (at [138](i)-(vi) ). First, its previous analysis of the evidence. Second, the fact that the approach laid down in the Statement of Principles had not changed. Third, the fact that there were various possible reasons why the Secretary of State made this request: he was seeking to explore the nature and depth of HAL’s objections to the ENR. Fourth, the fact that he was seeking to ensure HUB had given careful thought to promoter-specific risks before the Preference Decision. Fifth, the fact that the Airports Commission had determined that the NWR was in any event preferable, and the Secretary of State could not have sensibly “bucked” the recommendation of the Airports Commission unless he had good reason to do so; and

The Divisional Court held that nothing had changed as regards the ENR scheme to cause it to be promoted above the NWR scheme, and concluded (at [138(vii)]):

The Divisional Court further explained (at [138] (viii)):

HUB challenged the Secretary of State’s Designation Decision inter aliaon the basis that the Secretary of State took into account an - immaterial and therefore - unlawful reason, namely the promoter-specific risk of the failure of HUB to obtain an Assurance from HAL to implement the ENR scheme if chosen.

As explained above, the Divisional Court found in relation to the Legitimate Expectation challenge that the ENR scheme was not “in any way prejudiced” by the absence of an Assurance from HAL (see [138(vii)] cited above, our emphasis).

As we shall explain below, the Divisional Court also found in relation to the question of the competition law challenge that the Secretary of State’s request for an Assurance from HAL and the absence of any response from HAL “had no effect on the preference decision” (see [190], emphasis in the original).

HUB challenged these findings on the basis that they were arrived at following what

The Divisional Court committed errors of law in its approach to Article 9 of the Bill of Rights by failing to take at face value the Secretary of State’s repeated statements to Parliament that the lack of the Assurance was an (if not the most) important consideration in his deciding to prefer the NWR to the ENR.

The Divisional Court erred in law by ignoring and/or rejecting a series of concessions made by the Secretary of State in both his written and oral submissions to the effect that the issue of the Assurance was a factor to which he had regard. Thus, the fact of the Commitment request and reliance on it was common ground between the parties.

The Divisional Court erred in law by substituting ex post facto its own rationale for the Secretary of State’s decision to prefer the NWR over the ENR for the rationale actually given by the Secretary of State himself.

We begin by setting out the main points which it seems to us emerged clearly from the evidence before the Divisional Court:

The Airports Commission made a clear recommendation, on objective scheme-specific grounds, that the NWR scheme was to be preferred to the other two short-listed schemes, the ENR scheme and Gatwick schemes.

The decision which the Secretary of State then had to make was simply whether or not to accept the Airports Commission’s expert recommendation.

Nothing subsequently emerged which suggested that the Airports Commission’s analysis and conclusion was wrong.

The Preference Decision was agreed by the relevant Cabinet Sub-Committee prior to being formally announced by the Secretary of State on 25 October 2016.

The ANPS reflected the findings of the Airports Commission’s Final Report, namely that the NWR scheme was the best option on objective schemespecific grounds.

The absence of an Assurance from HAL played no material part in the

We expand on these points below.

The Airports Commission was an independent body, established to examine the need for additional capacity to maintain the UK’s ‘hub’ status and how any need should be met. The Airports Commission’s Guidance Document made it clear that its assessment was to be evidence-based and objective. As the Divisional Court held, the Airports Commission process was very much a “competition of ideas” and it was clear that it was focused on “objective delivery, that is to say factors affecting a scheme’s deliverability irrespective of who was delivering it” and “excluded promoter-specific risks” (see [24] and [25], emphasis in original).

The Airports Commission considered 58 different proposals of schemes for delivering additional airport capacity in London and the South East by 2030, including six proposals it had raised itself. In its Final Report dated 1 July 2015, the Airports Commission considered three short-listed options in detail: the NWR scheme, the ENR scheme and the Gatwick scheme.

The Airports Commission conducted a detailed analysis of the objective merits of the various proposed schemes and unanimously concluded and recommended in its Final Report in clear terms that the NWR scheme was the best option and was to be preferred to the ENR scheme for objective scheme-specific reasons.

In its final chapter (Chapter 13) headed “Recommended Option for Expansion”, the Airports Commission’s Final Report described each of the three options as “a credible option for expansion, capable of delivering valuable enhancements to the UK’s aviation capacity and connectivity” (paragraph 13.2). However, it concluded as follows:

The concluding chapter went on to explain that the ENR had some advantages, e.g. lower costs (£3 billion) and required the loss of fewer homes (242 compared to 783), but highlighted five areas where the ENR performed less strongly (at paragraphs 13.77-13.87):

Capacity: the ENR delivered a lower level of capacity than the NWR (700,000 ATMs a year compared to 740,000 ATMs) which would lead to

Respite: it would not be possible to maintain the principle of respite to the same degree with the ENR as with the NWR; and the Commission noted that respite through runway alternation was “highly valued by local communities”.

Noise concentration: the ENR would continue to concentrate take offs and landings along just two approach and departure paths, leading to a higher number of people within the highest noise contours close to the airport.

Air quality: the ENR presented greater challenges in terms of compliance with the EU Air Quality Directive.

Resilience: the ENR created a more congested airfield than the NWR, leading to lower resilience and less space for ancillary development.

In terms of objective delivery risks (i.e.those related to building the schemes), the Airports Commission concluded that there was no substantial difference between the two Heathrow schemes.

In terms of safety, the Airports Commission’s conclusion was that all three schemes raised issues which required detailed investigation and resolution but none should be considered 'show stoppers'. However, the Airports Commission’s Final Report observed:

The Airports Commission’s Final Report went on to summarise its conclusion:

Following a number of criticisms by HUB of the independence of the Airports Commission, the Department conducted a review of the methodology of the Airports Commission’s Final Report and satisfied itself that it was reliable. On 9 December 2015, in its “Review of the Airports Commission’s Final Report”, the Department stated:

A few days later, on 14 December 2016, the Government announced that it accepted the case for airport expansion and would consider the Airports Commission’s three shortlisted options using the policy framework provided for by the Planning Act.

It is important to note, therefore, that following the work of the Airports Commission, the decision which the Secretary of State then had to make was, in essence, a binary and simple one: namely, whether or not to accept the recommendation of the Airports Commission’s Final Reportthat the NWR scheme was “the best option”.

Both HUB and the operator of Gatwick Airport sought to persuade the Department that the Airports Commission’s findings regarding the relative merits of their schemes vis-àvis the NWR scheme were incorrect. Both submitted evidence and arguments to the Department to this effect. The Department commissioned a technical report from York Aviation in order to provide reassurance as to the Airports Commission’s conclusions on the relative merits of certain aspects of the NWR scheme and the ENR scheme. The Divisional Court held that, although the operator of Gatwick Airport had improved the objective merits of its Gatwick Scheme, “the merits of the ENR scheme had remained exactly the same” ([138(vi)]). Mr Kingston challenged this finding. He relied upon an acknowledgment in the evidence of Ms Low that HUB were able to point to an aspect of the Commission’s findings on air quality which HUB successfully challenged. Ms Low said as follows:

Following technical analysis by the Department’s environmental consultants (WSP) of the high level surface access iterations from [HUB], we concluded that that proposal could address the concerns raised by the [Commission] in regards to air quality:

However, as set out below, we did not consider that the other concerns raised by the [Commission] in relation to the ENR scheme had been satisfactorily met.”

Accordingly, as Ms Low makes clear (in paragraphs 569 ff.), apart from this one point - which was not seen as being of decisive significance - HUB were unable to undermine any of the other findings of the Commission’s Final Report. Thus, it would appear to be more accurate to say that, unlike the Gatwick scheme, the merits of the ENR scheme remained substantially the same (rather than ‘exactly’ the same). This point does not, therefore, materially advance Mr Kingston’s argument.

On 25 October 2016, the matter came before the relevant Cabinet Sub-Committee. A detailed briefing paper was circulated beforehand, which carefully set out and compared the merits of the two short-listed Heathrow schemes. There was an instruction that the paper was not to be summarised so that it would be read by Cabinet Sub-Committee members in full. The Divisional Court extensively cited the paper (at [62]) and observed (at [63]):

Mr Kingston’s reliance upon oral comments by the Secretary of State during the meeting must be seen in the context of the meeting as a whole and the detailed briefing paper which had been prepared. The decision was taken by the Cabinet SubCommittee to accept the Airports Commission’s recommendation and prefer the NWR scheme. This was then announced formally by the Secretary of State.

The reasons given in the ANPS for preferring the NWR scheme over the ENR scheme closely reflected the conclusions and recommendations of the Airports Commission (see paragraphs 3.56 to 3.60 of the ANPS). In summary:

The NWR scheme would provide better respite, by altering patterns of arrival and departures, thereby giving communities breaks from noise.

The NWR scheme would provide greater resilience, because of the way that the three separate runways could operate more flexibly when needed to reduce delays, and because of the less congested airfield. This in turn enables the NWR scheme to provide greater capacity, namely, 740,000 flights departing and arriving per annum compared to the 700,000 flights of the ENR scheme.

There was greater uncertainty as to what measures might be required to ensure that the ENR scheme, which had no direct global precedent, could operate safely, or what the impact of those measures might be, including on runway capacity (i.e. the capacity of the ENR scheme could be reduced yet further below the 700,000 flights estimated).

The ANPS concluded as follows:

The ANPS was, therefore, based on purely objective or scheme-specific reasons for preferring the NWR scheme to the ENR scheme - in effect, adopting the recommendations and rationale of the Airports Commission - and makes no mention of any subjective or promoter-specific matters.

At a meeting on 5 September 2018, the Secretary of State was asked about his thinking at the time when he designated the ANPS. The Divisional Court set out the note of the meeting in full (at [85]). We summarise the essence of the note as follows. The Secretary of State was asked specifically whether the absence of an Assurance from HAL was “a factor” in his decision to designate the ANPS. He explained that the matter needed to be looked at “the other way round”. He said that the decision to designate the ANPS was based on the Government’s acceptance of the Airports Commission’s recommendations. When he took over as Secretary of State, the only question was whether there was “anything new” to change the view that the Airports Commission had “got it right”. Nothing had changed as regards the objective merits of the ENR scheme. There had to be a good reason for departing from the recommendations of the Airports Commission. The absence of an Assurance from HAL was simply an additional reason for not overturning the Airports Commission’s conclusions. The following passage encapsulates the Secretary of State’s explanation:

In our view, the Divisional Court were right to reject Mr Kingston’s submission that this was merely an ex post facto rationalisation by the Secretary of State. The Divisional Court summarised the position neatly (at [138(v)-(viii)):

“The Secretary of State could not sensibly have bucked the recommendation of the Airports Commission unless he had good reason to do so. There was no such reason.”.

“Nothing had changed in the case of the ENR scheme to cause it to be promoted above the NWR scheme”.

“[W]e do not consider that the ENR scheme was no in any way prejudiced, in terms of how it was assessed, by the absence of any response from HAL…”.

“Even if HAL had responded positively to the request, this would have made no difference to the outcome, because it could not have improved the objective merits of the ENR scheme”.

The overall assessment of Ms Low in her first witness statement (at paragraph 707) was justified:

In summary, matters proceeded sequentially: there being no objective or schemespecific reasons to depart from the recommendation of the Airports Commission, the Secretary of State accepted the Airports Commission’s recommendation and preferred the NWR scheme to the ENR scheme when making both the Preference Decision and the Designation Decision; and, at most, the absence of an Assurance was an additional or confirmatory factor which played no material part in the essential decision. In our view, this is borne out by the evidence.

HUB mounted a full-frontal challenge to the conclusions of the ANPS. They went as far as contending that the reasons set out in paragraph 3.60 of the ANPS on the deliverability of the ENR scheme were “bogus”, and asserting that the real reason for rejecting the ENR scheme was the absence of an Assurance from HAL that they would implement the ENR scheme if selected by the Government as its preferred scheme. HUB also raised specific challenges as to the ANPS’s findings on capacity and safety.

In our view, the Divisional Court was right (at [82]) to characterise HUB’s contention as plainly “unsustainable” and to reject HUB’s challenges to the specific findings of the Airports Commission on capacity and safety (at [87]-[102] and [103]-[112] respectively).

Accordingly, the ANPS’s reasons for concluding that the NWR scheme was the objectively better scheme are lawful and rational.

For these reasons alone, in our view, Appeal Ground 3 is unsustainable.

Mr Kingston argued that the Divisional Court “substituted its own rationale” for that actually given by the Secretary of State for designating the ANPS by drawing an artificial distinction between “scheme-specific” factors and “promoter-specific” factors affecting deliverability.

This point is without substance. As mentioned above, the distinction drawn by the Divisional Court (at [16]-[18]) between “scheme-specific” factors and “promoterspecific” factors affecting deliverability was simply a useful shorthand way to describe the distinction between “objective” and “subjective” risks, which is a key theme running through the case. It did not give rise to a substantive point.

The shorthand was used accurately by the Divisional Court in its judgment to describe the distinction where it arose from time-to-time in the evidence, for instance: (i) the meetings between HUB and the Department for Transport in September 2015 which considered what the Court labelled as the “promoter-specific” factors ([31]-[32]); (ii) HAL’s objections to the ENR scheme related to what the Court described as “schemespecific” factors ([35]-[37]); and (iii) the ANPS’s use of “deliverability” to encompass what the Court described as “scheme-specific” factors ([80]-[81]).

As the Court held (at [82]-[86] and [113]-[138]), throughout the decision-making process, the Secretary of State treated as separate the issues of (a) deliverability arising from the ENR scheme itself (i.e.scheme-specific or objective risks) and (b) the issue of the need for HAL to build the ENR scheme if selected (i.e.promoter-specific or subjective risks). The Airports Commission and the ANPS found the NWR scheme to be objectively better than the ENR scheme.

The evidence demonstrates the distinction that the Divisional Court described by the shorthand terms. This is no ex post facto substitution of the Secretary of State’s reasons for designating the ANPS, which are clearly set out in the ANPS itself and do not rely on any promoter-specific factors.

Mr Kingston argued that the Divisional Court ignored admissions or concessions made by the Secretary of State in his evidence, pleadings and submissions to the effect that the failure of HUB to obtain a written Assurance from HAL was a relevant factor in the designation of the ANPS. He submitted that the Divisional Court erred by finding that the Assurance issue was not a material consideration for the Secretary of State at all, notwithstanding that he personally asked for an Assurance on 17 August 2016, and notwithstanding that he thereafter repeatedly referred to the lack of guarantee as, e.g.,the ‘biggest’ reason for rejecting the ENR scheme.

There is no merit in this point. HUB’s submission elides two separate questions, namely legal materiality and factual materiality, and ignores the latter question. The legal question is whether the “promoter-specific” factor of the absence of an Assurance could potentially be taken into account as a matter of law. The factual question is whether or not the “promoter-specific” factor was in fact material to the decision to designate the ANPS and taken into account (i.e.whether it in fact made any difference at all). As we explain, the answer to the legal question is ‘yes’ – the absence of an Assurance was potentially a relevant factor which could have been taken into account.

De Smith summarises the legal position in Judicial Review (Eighth edition) as follows: “DECISIONS BASED UPON IRRELEVANT

When exercising a discretionary power a decision-maker may take into account a range of lawful considerations. Some of these are specified in the statute as matters to which regard may be had. Others are specified as matters to which regard may not be had. There are other considerations which are not specified but which the decision-maker may or may not lawfully take into account. If the exercise of a discretionary power has been influenced by considerations that cannot lawfully be taken into account, or by disregard of relevant considerations required to be taken into account (expressly or impliedly), a court will normally hold that the power has not been validly exercised.

It may be immaterial that an authority has considered irrelevant matters in arriving at its decision [..] if it has not allowed itself to be influenced by those matters and it may be right to overlook a minor error of this kind even if it has affected an aspect of the decision. However, if the influence of irrelevant factors is established, it does not appear to be necessary to prove that they were the sole or even the dominant influence. As a general rule it is enough to prove that their influence was material or substantial. For this reason there may be a practical advantage in founding a challenge to the validity of a discretionary act on the basis of irrelevant considerations rather than extraneous purpose, though the line of demarcation between the two grounds of invalidity is often imperceptible.”

As recorded by the Divisional Court, it was common ground between the parties that the absence of an Assurance was material in the legal sense and that the Secretary of

The Divisional Court correctly went on to conclude that “[e]verything else being equal, whether and when the Secretary of State took [the Assurance issue] into account against the ENR scheme – and, if so, the weight he gave to it – were matters for him to determine, challengeable on only traditional public law grounds (see, e.g., R (Khatun) v London Borough of Newham [2004] EWCA Civ 55 at [35] per Laws LJ).” ([120]).

The Secretary of State accepted that the Assurance issue was potentially a material consideration in the legal sense, but did not accept that it was in fact material to the designation of the ANPS. The Divisional Court held that the promoter-specific issue ceased to be of any weight or significance once the Government accepted the Airports Commission’s recommendation that the NWR scheme was an objectively better scheme than the ENR scheme ([75]-[82] and [138]). As the Divisional Court explained (at [138(vi)]):

The Divisional Court accepted the Secretary of State’s evidence and case that, even if HAL had responded positively to HUB’s request for an Assurance, this would have made no difference to the outcome because “it could not have improved the objective merits of the ENR scheme” ([138(viii)]. This is a complete answer to this sub-ground, and indeed to appeal ground 3 entirely. It demonstrates that the Divisional Court directed itself correctly in law and that the Assurance issue was a matter which had been determined to be a potentially relevant consideration by the Secretary of State, but concluded on the evidence that ultimately it attracted no weight. The weight to be given to this issue was entirely a matter for the Secretary of State, reviewable only on traditional public law grounds: see Khatun, above.

The fact that a consideration may be potentially relevant to a decision does not mean that it, in fact, played a material part in that decision. This is the essential reason why the Divisional Court rejected HUB’s complaint. We agree with the Divisional Court’s reasoning.

Mr Kingston argued that the Divisional Court erred in its approach to Article 9 of the Bill of Rights by failing to take at face value the statements made by the Secretary of State to the House of Commons and to the House of Commons’ Transport Committee (see further below and [71] and [74]).

The Divisional Court explained (at paragraph 145 of its judgment) that the disputed material was essentially to the same effect as the admissible evidence: i.e. the statements made by the Secretary of State in Parliament were consistent with those made outside Parliament. It followed that the Court did not need to resolve the Article 9 issues raised, since they made no difference to the outcome.

On 25 October 2016, when the Secretary of State made an announcement to Parliament that the Government’s preferred option was the NWR scheme, in answer to a question from Sir Gerald Howarth MP, he said:

On 7 February 2018 the Secretary of State gave evidence before the House of

In the Divisional Court the Speaker of the House of Commons intervened to object to those two statements being relied on by the Appellant, on the ground that they were inadmissible by virtue of Article 9 of the Bill of Rights 1689. We have received submissions to similar effect on behalf of the Speaker, made in writing by Ms Sarah Hannett, dated 6 September 2019.

Article 9 of the Bill of Rights provides (using modern spelling):

At paragraph 145 of its judgment the Divisional Court concluded that, in view of the findings which it had reached under what was Ground 1 before it - in particular, that the real focus of the decision made on 25 October 2016, and of decision-making throughout the entire process leading up to the designation of the ANPS, was on the objective or scheme-specific merits and demerits of the ENR and that promoter-specific matters were immaterial - it was unnecessary for the Court to determine these issues under Article 9. The Divisional Court continued:

The Divisional Court was also of the view that it should not decide these important issues because it had not been possible for it to give as much time as would be needed to hear full submissions on the issues. It confined itself to some limited observations at paragraphs [147]-[152]. It said, at paragraph [152] of its judgment, that the answers to the difficult questions raised were “far from clear” but that it had some real reservations about the correctness of some of the submissions advanced by Ms Hannett on behalf of the Speaker, at least in their extreme form. That said, it concluded that the resolution of such issues should await full argument in a case where it was necessary for them to be decided.

We respectfully agree with that approach. We have come to the conclusion that the Divisional Court was entitled to reach the finding which it did, that it was unnecessary for it to resolve the Article 9 issues, having regard to the conclusions reached elsewhere in its judgment that this issue was simply not material.

Before this Court the Speaker does not take issue with the Divisional Court’s conclusions. The Speaker has intervened only in the event we should reach a different conclusion and consider it necessary and desirable to determine the admissibility of the disputed statements.

The Speaker accepts that there are circumstances in which reference can properly be made to proceedings in Parliament and where therefore this will not constitute impermissible “questioning” of statements made in Parliament:

The Courts may admit evidence of proceedings in Parliament to prove what was said or done in Parliament as a matter of historical fact where this is uncontentious: see Prebble v Television New Zealand Ltd [1995] 1 AC 321, at 337

Parliamentary material may be considered in determining whether legislation is compatible with the European Convention on Human Rights: see Wilson v First County Trust Ltd (No. 2)[2004] 1 AC 816, at paragraph 65 (Lord Nicholls of Birkenhead).

The Courts may have regard to a clear ministerial statement as an aid to the construction of ambiguous legislation: see Pepper v Hart[1993] AC 593, at 638.

The Courts may have regard to Parliamentary proceedings to ensure that the requirements of a statutory process have been complied with. For example, in this case, the Courts may admit such material in order to be satisfied that the steps specified in section 9 of the Planning Act have been complied with.

The Courts may have regard to Parliamentary proceedings in the context of the scope and effect of Parliamentary privilege, on which it is important for Parliament and the Courts to agree if possible: see the decision of Stanley Burnton J (as he then was) in Office of Government Commerce v Information Commissioner [2010] QB 98, at paragraph 61.

An exception has also been identified for the use of ministerial statements in judicial review proceedings. The Speaker accepts that such an exception exists but contends that the scope and nature of this exception has not yet been the subject of detailed judicial analysis. It calls for careful consideration of the constitutional issues involved. We respectfully agree

HUB cites the decision of the Privy Council in Toussaint v Attorney General of St Vincent and the Grenadines[2007] 1 WLR 2825 to support its submission that a ministerial statement in Parliament, relied on to explain ministerial conduct outside Parliament, is admissible in an application for judicial review. In Toussaint a decision to expropriate the claimant’s property was announced in the Government Gazette: the reason given was that it was necessary to use the land for a learning resource centre. On the same day the Prime Minister made a statement to Parliament in which he stated that the true reason for the expropriation was the claimant’s relationship with the previous Government. The claimant sought to rely on that statement to show that this was the real reason for the decision. The Privy Council held that the claimant could rely on the Prime Ministerial statement made in Parliament.

In Toussaint the judgment of the Privy Council was given by Lord Mance. At paragraph 19 he said that there was no allegation of impropriety as to what the Prime Minister had said in Parliament:

Later, at paragraph 23 Lord Mance said:

We accept the submissions made by Mr Palmer and Ms Hannett that that passage is obiter since on the facts of that case it had already been noted that there was no allegation that the Prime Minister had in fact misled Parliament.

In the present case the Speaker contends that the decision in Toussaint can be distinguished on its facts for two reasons:

It was an essential part of the Privy Council’s reasoning that the Prime Ministerial statement was not being questioned: there was no dispute as to its meaning or to the inferences that could be drawn from it.

The statement sought to be relied on by the claimant was a statement made by the Prime Minister explaining the reason for a particular decision and was not a statement made in the course of giving evidence or made ex tempore in answering questions from Members of Parliament.

The Speaker submits further that the decision in Toussaint gives rise to problems of principle. First, the Privy Council postulated obiter what would happen if the Prime Minister were to suggest that he expressed himself incorrectly in Parliament. It said that it would not be the claimant who was then questioning or challenging what was said in the House, but it did not acknowledge the risk of a breach of Parliamentary privilege by the Prime Minister should he wish to make such a submission and neither did it acknowledge the unfairness that would necessarily arise if the Prime Minister could not make such a submission before a Court.

Before this Court Mr Palmer felt constrained in the same way. He did not wish to submit that what the Secretary of State said was inaccurate. However, he felt that he would in fairness have to make such a submission if these statements were admissible.

Secondly, the Speaker submits that the Privy Council in Toussaint suggested that the meaning of the statements in Parliament was “an objective matter” for the Court to determine: see paragraph 23. But the Speaker submits that the determination by a Court of the meaning of statements made in Parliament, at least where there is a dispute as to that meaning, risks the Court being drawn into forbidden territory. It is submitted that this is at odds with the approach taken in England and Wales at least at first instance in Office of Government Commerce and in Kimathi & Ors v Foreign and Commonwealth Office[2018] 4 WLR 48.

Office of Government Commerce was subsequently considered by the Court of Appeal in R (Reilly and Another) v Secretary of State for Work and Pensions (No. 2)[2017] QB 657, at paragraph 109. In that passage the Court approved what had been said by Stanley Burnton J at paragraphs [46]-[48] in the Office of Government Commerce case. At paragraph [47] Stanley Burnton J said:

Kimathi concerned an attempt to use Parliamentary material to prove facts (the number of detainees held in camps in Kenya in the 1950s) which were neither confirmed nor denied by the other party to the case and in respect of which there was no other evidence. At paragraph [20] Stewart J said:

Although we do not have to decide this point, we see force in the submissions made on behalf of the Speaker. The fundamental difficulty, in our view, is that, if the statements were held to be admissible and if there is a dispute as to their meaning, the Court would be drawn into having to resolve whether what was said on behalf of the Secretary of State was accurate or not. That would bring the Court into the territory which is forbidden by Article 9 of the Bill of Rights.

Mr Kingston submitted that it was the Divisional Court itself which impermissibly questioned what was said in Parliament in the sense that it construed the Secretary of

In our view, Mr Palmer was right to contend that there will be circumstances in which the proper assertion of Parliamentary privilege has the consequence that a piece of evidence must be excluded from court proceedings and the result - serious though that may be - is that the case must be decided in the absence of that evidence: see Hamilton v Al Fayed[2001] 1 AC 395, at 403-404 (Lord Browne-Wilkinson).

For those reasons, we reject the submissions which have been made on behalf of the Appellant in relation to Parliamentary privilege and Article 9 of the Bill of Rights.

For all the above reasons, Appeal Ground 3 of the appeal must be rejected.

In a claim for judicial review, the court has a discretion whether to grant any remedy even if a ground of challenge succeeds on its substance (Simplex GE (Holdings) Ltd. v Secretary of State for the Environment [1988] 3 PLR 25 (at [42]). We explain at paragraphs 269 to 280 of our judgment in relation to the planning appeals how the Simplex test has been modified by the amendments made to section 31 of the Senior

As we have pointed out, the Divisional Court held in this case that even if HAL had responded positively to the request for an Assurance, “…this would have made no difference to the outcome, because it could not have improved the objective merits of the ENR scheme” (at [138(viii)]).

The Divisional Court was justified in coming to this conclusion on the evidence before it. It is clear that, if no request for an Assurance had been made by the Secretary of State or HAL had assented to such an Assurance, this would have made no difference to the ultimate decision because at all material times the objective merits of the ENR scheme remained the same.

For these reasons, we are satisfied that it is “highly likely” that the outcome for HUB would been the same whether or not an Assurance was forthcoming from HAL, and that the test in section 31 of the SCA 1981 is satisfied. Accordingly, the Divisional Court was bound to refuse HUB’s application for judicial review in any event.

The Divisional Court, having set out Articles 102 and 106(1) of TFEU in full, stated that actual infringement of Article 102 TFEU was not necessary, and that proof of risk of or potential for an abuse was sufficient ([159(iv)]).

It listed (at [160]) four issues which fell to be determined in order to ascertain whether there had been an infringement of the TFEU:

Is the undertaking in question a ‘public undertaking’ or an undertaking to which a Member State has granted ‘special or exclusive rights’?

What is the nature of the measure, enacted or maintained in force by the Member State, that is said to enable the undertaking to infringe Article 102 TFEU? We shall refer to such a measure as the ‘State Measure’.

Has the undertaking in fact infringed Article 102as a result of the State Measure?”

However, before turning to the competition law issues, the Divisional Court stressed what it referred to as a “fundamental point” regarding Judicial Review Ground 1 stating (at [162] and [163]):

Accordingly, the Divisional Court held that Judicial Review Ground 1 was bound to fail for the same ‘materiality’ reasons as Judicial Review Ground 2, namely, that promoter-specific issues played “no material part” in the decision to prefer the NWR over the ENR and therefore HUB’s public law challenge to the Secretary of State’s decision to designate the ANPS by way of judicial review could not succeed.

Nevertheless, the Divisional Court went on to consider and rule upon HUB’s competition law arguments on the hypothesis that HUB’s competition law claim had not been brought in a public law context within the framework of a claim for judicial review but was a “self-standing” competition law claim. As we explain below, it was not necessary for the Divisional Court to have gone on to decide the competition law issues. In our view, it could properly have declined to do so since, in view of its finding on ‘materiality’, the competition law issues were academic (see further below).

The Divisional Court decided the competition law issues under the four heads listed above.

The Divisional Court noted the dispute between the parties as to which is the relevant market for the purpose of assessing dominance and rehearsed the various arguments. The Divisional Court recorded that Mr Palmer for the Secretary of State contended that the relevant market was for “the supply of runway scheme designs” and although this argument was not pressed it was not abandoned and would be decided. Mr Facenna QC for HAL contended that HUB had simply adduced no evidence as to the market or HAL’s “dominance” and for this reason Appeal Ground 1 must fail. Mr O’Donoghue QC for HUB argued that HAL was in a position of dominance in the market for “the provision of airport operation services (and related services) at Heathrow” or, in the alternative, “for the development of new airport capacity in the South East of England” ([165]-[167]).

The Divisional Court found the relevant market to be “the provision of services (and related services) in the South East of England” and rejected the other arguments. It held (at [168]):

The Divisional Court found there was no distinction between the development of new airport capacity, and the existing market for airport capacity in the South East of England because a present market includes future potentiality and the two questions were inseparable. It said this (at [169]):

The Divisional Court dismissed the suggestion by Mr Palmer for the Secretary of State, that HUB and HAL were not competing with each other in any economic market, as an irrelevant question, because Article 102 “protects competition not competitors” (at [170]-[171], emphasis in original).

The Divisional Court then analysed the Notice of Determination of the Civil Aviation Authority (“CAA”) in some detail ([172]-[175]). It noted the CAA’s conclusion that “HAL was dominant in the market for the provision of airport operation services (and related services) at Heathrow” and continued (at [172]-[173]):

The Divisional Court then set out in full sections 4.35 and 4.36 of the CAA’s Notice of Determination’s analysis of the demand and supply side of the geographic market.

The Divisional Court rejected the suggestion by Mr Palmer and Mr Facenna that the

The Divisional Court concluded that HAL was a “privileged undertaking” for the following reasons (noting it was not suggested that HAL was a “public undertaking”). First, the operation of airports in the United Kingdom is highly regulated (European Aviation Safety Rules) ([182(i)]). Second, Heathrow is susceptible to ex ante price controls by the CAA because of the substantial market power it holds ([182(ii)]). Third, although the provisions of the CAA 2012 acted as constraints on HAL’s ability to charge fees rather than the grant of special or exclusive rights, the history of Heathrow demonstrated that HAL had not accumulated its substantial market power in a competitive market ([182(iii-iv)]. The Divisional Court rehearsed the history of the previous public ownership of Heathrow and other main airports and their privatisation in 1986 by the Airports Act 1986 and held (at [182(iv)(c)]):

The Divisional Court rejected other reasons suggested by Mr O’Donoghue for HAL being a “privileged undertaking” ([183]).

The Divisional Court then turned to the third and fourth questions of State Measure and infringement. It considered that “State Measure” had a wide meaning and could include a “request” ([184]). It framed the issue under these two heads compendiously - as to whether HAL abused its dominant position and whether the State Measure enabled that abuse ([186]).

The Divisional Court nevertheless held (again) that Judicial Review Ground 1 must fail because of its earlier finding of materiality on Judicial Review Ground 2, namely that the Secretary of State’s request that HUB obtain an assurance from HAL had no material effect on the decision to prefer the NWR to the ENR. It explained (at [190], and [192]-[193]):

The short point is that there is not even a potential anticompetitive consequence liable to result from the State Measure in this case.

For this reason also, we conclude that Ground 1 must fail.”

The Divisional Court nevertheless said that, “out of respect” to the arguments put to it on the basis that the absence of a guarantee or assurance from HAL was material to the Preference Decision, it would proceed to consider the question of infringement ([194]). Its analysis is set out in the next six paragraphs of the judgment ([195][200]). It relied upon the decision of the CJEU in Case C-475/99 Ambulanz Glöckner Landkreis Südwestpfalz [2002] 4 CMLR 21. We return to this below. For present purposes, it is sufficient to cite the Divisional Court’s conclusion on the basis of this hypothesis (at [200]):

The Divisional Court then went on to state that its hypothetical conclusion did not necessarily mean that there was an abuse of a dominant position by HAL, or that Ground 1 would be made out because influencing the Preference Decision and the ANPS Designation Decision itself were “two very different matters” ([201]). The Preference Decision “was part of an extended process” involving the Airports Commission, the Department, the Government and Parliamentary scrutiny and would be followed by a DCO application ([203]-[204]). The Divisional Court continued (at [205]):

The Divisional Court held that there was a “disconnect” between any breach of competition law and the relevant decision to designate the ANPS (at [206]):

The Divisional Court concluded as follows (at [207]):

The preference decision was just one step towards the designation of the ANPS. By itself, it had no anticompetitive effect. The question of which scheme should be preferred had no competitive effects at all.

In the period after the preference decision, the ANPS was drafted, consulted upon (twice), considered by the Transport Committee and the Cabinet Sub-Committee, laid before Parliament, debated and voted upon. Throughout this period, the Government was pressed to justify its choice, and it is quite clear that the relative merits of all three schemes continued to be debated. Indeed, as has been described, HAL was continuing to highlight the relative merits of and demerits of the ENR and NWR schemes in May 2017 (see paragraph 37 above).

When, after all this had taken place, the Secretary of State came to decide to designate the ANPS, he was designating an NPS that reflected the outcome of consultation and the input of Parliament.

The reasons for preferring the NWR scheme to the ENR scheme, as they are stated in the ANPS, are set out in paragraph 80 above. Three reasons for preferring the NWR scheme were given – resilience, respite and deliverability. Two of these reasons were challenged by way of the Ground 4 and Ground 5 challenges that we have already described and dealt with. The third reason was the subject of Ground 3, which is no longer pursued.

We note that the Claimants have suggested that the reasons articulated in the ANPS for the preference of the

In summary, the Divisional Court answered the four questions which it posed under Article 106(1) as follows:

Does the undertaking in question have a dominant position in a market and, if so, in which market or markets? Yes. HAL was in a dominant position in the market for the provision of airport services (and related services) in the South East of England.

Is the undertaking in question a “public undertaking” or an undertaking to which a Member State has granted “special or exclusive rights”? Yes. HAL had special and exclusive rights and therefore was a “privileged undertaking”.

What is the nature of the measure, enacted or maintained in force by the Member State, that is said to enable the undertaking to infringe Article 102 TFEU? [Is it a State Measure?]. Yes. The request from the Secretary of State for HUB to obtain a written Assurance from HAL was capable of amounting to a State Measure.

Has the undertaking in fact infringed Article 102as a result of the State Measure? No. The State Measure (i.e.the request for a written Assurance) did not materially affect the designation of the ANPS and, accordingly, there was no infringement - in other words the State Measure could not be said to have induced any actual or potential abuse of the dominant position.

The Divisional Court held, therefore, that Judicial Review Ground 1 failed on two separate bases:

First, because of the ‘materiality’ point, namely, as held under Judicial Review Ground 2, promoter-specific issues played no material part in the decision to prefer the NWR to the ENR ([162]) and the request for an Assurance was immaterial to the Preference Decision. Accordingly, it was impossible to see how any abuse of a dominant position or how the State Measure could have enabled any abuse ([189]-190]).

Second, because even if the absence of a guarantee or assurance was material to the Preference Decision, it could not be said to have materially affected the Designation Decision ([194]-[207]).

HAL and the Secretary of State challenge the first and second findings by the

HAL also raise a further point, namely, that the Divisional Court wrongly failed to consider whether any abuse which did take place was capable of being “objectively justified”.

Mr Facenna argued on behalf of HAL that it was inappropriate for the Divisional

It is well-established that Courts should not opine on academic or hypothetical issues in public law cases other than in exceptional circumstances where there is good reason in the public interest for doing so. As Lord Slynn of Hadley said in his classic statement in R v Secretary of State for the Home Department ex parte Salem [1999] 1 AC 450 (at 456):

Many similar statements are to be found in the relevant case law (see e.g. per Lord Goff in R v Secretary of State for the Home Department, ex parte Wynne [1993]1 WLR 115at 120A–B; per Lord Hutton in R (on the application of Rusbridger) v Attorney General [2004] 1 AC 357at [35]);per Munby J in Smeaton v Secretary of State [2002] 2 FLR 146, 244 at [420]; perDavis J in BBC v Sugar[2007] 1 WLR 2583at [70]). A helpful review of the authorities is to be found in the judgment of Silber J in R (Zoolife) v Secretary of State for the Environment, Food and Rural Affairs[2007] EWHC 2995 (Admin), at [32]-[36].

The dangers inherent in courts and tribunals expressing views on matters which do not arise for decision was emphasised in the competition law context by the Court of Appeal in Office of Communications v Floe Telecom Limited [2009] EWCA Civ 47 (see especially the judgment of Mummery LJ at [22] to [24] and Lawrence Collins LJ at [122]).

In the present case, the ‘materiality’ point rendered the remaining issues academic.

The Divisional Court’s fundamental – and in our view correct - finding on ‘materiality’ (at [137]) in the context of legitimate expectation under Judicial Review

As the Divisional Court itself correctly pointed out (at [162]), HUB were seeking to bring a competition law claim “within the framework of a claim for Judicial Review”, and such a claim could not succeed because promoter-specific issues regarding the ENR scheme played no material part in the Preference Decision. This was the complete answer to HUB’s competition law claim.

The Divisional Court held (at [189]-[190]) that, since the Secretary of State’s request for a written Assurance and the response to it was immaterial to the Preference Decision, “it [was] impossible to see how any abuse of a dominant position could arise on the part of HAL or how the State Measure… could in any way have enabled the abuse”. This was the inevitable consequence of its finding that the Assurance request and response “had no effect on the preference decision” (emphasis in original). The Divisional Court further held (at [206]) that the Preference Decision “did not, even potentially, affect competition or market structure” and the Designation Decision was not affected by the promoter-specific risk.

Further, the Divisional Court’s finding at [138(viii)] on the counterfactual basis - that, even if HAL had responded positively to the request for an Assurance, it would have made no difference to the outcome - meant that there was a further complete answer to HUB’s claim, namely under section 31(2A) of the SCA 1981.

However, having reflected on the matter, we have decided exceptionally that we should consider the findings of the Divisional Court’s judgment on competition law - notwithstanding that they are obiter dicta - because of their potentially wider implications.

There was a dispute between the parties as to which is the relevant “market” for the purposes of assessing “dominance” under Article 102 TFEU. The Divisional Court recorded that Mr Palmer for the Secretary of State initially contended that the relevant market was the market “for the supply of runway scheme designs” and, although the argument was not pressed by him (or Mr Facenna on behalf of HAL), it was not abandoned and, accordingly, the Court would decide the point ([165]-[166]). The Divisional Court ruled that the relevant market was the market “for the provision of airport operation services (and related services) in the South East of England” (168]).

Although the point was also not pressed before us, we should make it clear that we are not persuaded that the Divisional Court’s wide definition of the relevant market is correct. The Airports Commission ran what the Divisional Court described as a “competition of ideas” (at [24]). It was, in essence, soliciting designs for runways and airport solutions. It received 52 proposals and considered a further six designs of its own (see paragraph 12 above). We are not persuaded that HUB or others proposers who neither owned nor operated airports could be properly said to be competing in a market for the provision of “airport operation services” and services related thereto.

Competition law is not concerned with regulating a contest between rival schemes to be chosen under a national planning policy.

The Secretary of State and HAL submitted that the Divisional Court was wrong to find on the material before it that HAL had been granted “special and exclusive rights” which made it a “privileged undertaking” within Article 106(1) ([182(iii)]). HUB objected to the Secretary of State and HAL arguing this point since it did not specifically feature in the directions orders for this appeal, but they were not able to point to any particular prejudice.

We are unable to conclude that the material before the Divisional Court sustained a finding that HAL had been granted “special and exclusive rights” which made it a

The Divisional Court cited the well-known definition of “special and exclusive rights” by Advocate General Jacobs in his Opinion in the Case C-475/99 Ambulanz Glöckner Landkreis Südwestpfalz, Opinion (EU:C:2001:284) at [89]:

The Divisional Court gave four reasons for concluding that HAL was a “privileged undertaking” ([182(i)-(iv)]). We are not persuaded that these reasons necessarily justify such a finding.

First, the Divisional Court referred to the fact that the operation of airports is “highly regulated”. However, the EU and domestic UK regulatory requirements protecting public interests in the aviation sector (e.g. in relation to air safety) do not amount to the grant of “special and exclusive” rights to persons carrying on those activities. Indeed, HAL’s licence under the Civil Aviation Act 2012 (“CAA 2012”) acts as a constraint mechanism in relation to airport charges rather than being the grant of “special and exclusive” rights (see below).

Second, the Divisional Court referred to the fact that Heathrow is a “dominant airport” within the CAA 2012 with “substantial market power”. However, this simply means

Third, the Divisional Court heavily relied upon the fact that Heathrow Airport was once a public undertaking. It said (at [182(vi)]):

The fact that an undertaking purchases an asset which was historically part of a publicly owned undertaking or former State monopoly does not in itself mean that it is the beneficiary of a “special or exclusive right” under Article 106(1) TFEU, or that it thereby “substantially affects” the ability of other undertakings to exercise the economic activity in question in the same geographical area under substantially equivalent conditions”. The fact that Heathrow was, over 30 years ago, owned by a state-owned undertaking prior to privatisation by the Airports Act 1986 does not necessarily mean that the purchaser in an open sale, HAL, was thereby granted “special and exclusive” rights which “substantially affect the ability of other undertakings to exercise the economic activity in question in the same geographical area under substantially equivalent conditions”.

The authorities do not seem to support a finding that a history of state ownership ipso facto amounts to any ongoing “special or exclusive rights”. In Case C-302/94R v SSTI ex p British Telecommunications[1997] 1 CMLR 424, it was acknowledged that BT had been created through privatisation of a former state monopoly, but there was no suggestion that that it continued to be a monopoly or had “special or exclusive rights”. The Court of Justice held that “special or exclusive rights” did not arise from the existence of a licensing regime for operators of telecommunications networks in circumstances where licences were granted on an objective basis ([38]-[39]). It further held that “special or exclusive rights” do not arise by virtue of the fact that licence holders were empowered to acquire land compulsorily and exercise other statutory powers ([40]-[42]).

Further, as the Divisional Court itself noted (at [182(iv)(b)]), over the years BAA divested itself of its airports (Gatwick, Prestwick and Stansted) separately “to a variety

The Divisional Court held that HAL was in a “dominant position” in the relevant market which was the market “for the provision of airport services (and associated services) in the South East England” (see [178]). We are not convinced that there was sufficient evidence to justify that finding.

The term “dominant position” has been defined as “a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of its consumers" (see Case 85/76Hoffmann-La Roche & Co AG v Commission, EU:C:1979:36, at [38]).

The question whether an entity enjoys a “dominant position” in a relevant economic market in which it is competing generally invariably requires a court or competition authority to be provided with detailed expert economic evidence to enable it to do two things: first, define the relevant “economic market” (i.e. identifying the product and geographic parameters of the relevant economic market); and second, determine the particular enterprise is “dominant” in that market, an assessment of the degree to which the entity’s conduct in the market is constrained by competition (see the European Commission’s Guidance: Commission Notice on the definition of relevant market for the purposes of Community competition law, Official Journal 1997 C372/5; and Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, Official Journal 2009 C45/7, §§9-18).

The burden of proving both the relevant market and HAL’s dominance in that market was on HUB (see Streetmap.Eu Limited v Google Inc.[2016] EWHC 253 (Ch) at [40]).

HUB did not provide the Divisional Court with any such expert economic evidence. It merely invited the Court to rely entirely upon a “Notice of Determination” prepared by the CAA pursuant to its powers and duties under the CAA 2012 which identified Heathrow Airport as a “dominant airport” for the purposes of that Act.

We find it hard to accept that that was an adequate basis on which to reach a concluded view on this question. The CAA’s Notice of Determination’s identification of Heathrow as a “dominant airport” was the consequence of the application of a specific statutory test under section 6 of the CAA 2012, namely the “market power” test which requires the CAA to identify airport facilities which may be subject to the application of economic regulation under that Act. The “market power” test is significantly different from an assessment of “dominance” for the purposes of Article 102 TFEU, in particular sections 5 to 7 of the CAA 2012 require the CAA to make determinations about whether particular airport areas have market power. Article 102, in contrast, applies to an economic undertaking that has been found to have a dominant position in a particular economic market. The CAA’s identification of Heathrow as a “dominant airport” did not entail or comprise any finding with respect to the dominance or otherwise of the entity

HUB argue by their Appeal Ground 1 that a distortion of competition had already arisen before the Preference Decision. This does not assist them. As the Divisional Court correctly found, the absence of a written Assurance from HAL was “immaterial” to the Preference Decision and did not give rise to even “a potential anti-competitive consequence” (at [189]-[190] and [192]). The Divisional Court also went on to hold there was a “disconnect” between the alleged breach of competition law and the challenged decision, namely the Designation Decision two years later (at [206]). Accordingly, the Divisional Court’s findings on ‘materiality’ are the end of the matter, however it is approached.

Mr O’Donoghue submitted that the principle that the mere creation of a conflict of interest (or some analogous failure to guarantee equality of opportunity) is sufficient to infringe Articles 106(1) and Article 102 was “extremely well established” in the case law (to which reference in the Judgment was conspicuously lacking). He referred to seven cases which he said established this principle: Case C-18/88RTT v GB-Inno-BM; Case C-163/96Raso v Others; Case C-340/99TNT Traco; Case C-462/99Connect Austria;

Mr O’Donoghue’s reliance on these CJEU cases is misplaced. The cases do not support a free-standing principle that the mere existence of a conflict of interest is sufficient to found a breach of Article 102 and Article 106(1). Further, RTT, Ambulanz Glockner and MOTOE, were cases where organisations had been granted actual monopolies, or decision-making powers equivalent to de facto monopolies, becausethey enable the organisation to have decisive or very substantial influence overregulatory or other matters concerning its competitors, access to the relevant market, and/or the conditions under which competition in the market could take place. On the facts of those cases, the placing of the privileged undertaking in that position was inherently liable to facilitate an abuse of dominance by it, or otherwise to give rise to the distortion of competition or anti-competitive consequences. As the Grand Chamber explainedin MOTOE at [51]:

Contrary to Mr O’Donohogue’s assertion, none of those cases show that a measure giving rise to a “conflict of interest” constitutes a breach of Articles 102 and 106(1) without it being necessary to show that the “conflict” is liable to distort or otherwise harm competition in an economic market.

As the General Court explained in Case T-68/08FIFA v Commission [2011] ECR II-349:

In that regard, although it is true that special or exclusive rights within the meaning of that provision are granted when protection is conferred by the State on a limited number of undertakings which may substantially affect the ability of other undertakings to exercise the economic activity in question in the same geographical area under substantially equivalent conditions (Case C-475/99Ambulanz Glöckner [2001] ECR I-8089, paragraph 24), the fact remains that the United Kingdom legislation does not confer such protection on the broadcasters [BBC and ITV] in question.

Thus, such rights are at issue when the public authorities have granted a monopoly (Case C-163/96Raso and Others [1998] ECR I-533, paragraph 23), when they can prevent the entry of a competitor into the market sphere of the rights-holder on grounds relating to potential adverse effects on the operation and profitability of the rights-holder’s activities (Ambulanz Glöckner, paragraph 176 above, paragraphs 7, 23 and 25) or labour market requirements (Becu and Others, paragraph 175 above, paragraph 23), or where the rights-holder is entitled, under the relevant legislation, to influence the terms under which the activity in question may be pursued by his competitors according to his interests or according to the consequences of their activity on that market or even on a neighbouring market (see, to that effect, Case C-202/88France v Commission [1991] ECR I-1223, paragraph 51; ERT, paragraph 142 above, paragraph 37; GB-Inno-BM, paragraph 175 above, paragraph 25; and Case C-49/07 MOTOE [2008] ECR I-4863, paragraph 43).”

Mr O’Donoghue submitted that the request for an Assurance in effect granted HAL a de facto veto over the ENR scheme. This is not correct. HAL was not able to exercise a veto of any sort over HUB’s scheme. The decision as to what weight, if any, was to be given to any scheme-specific factors or the absence of an Assurance from HAL (or HAL’s views as to the demerits of the ENR scheme) when taking the Preference Decision was solely for the Secretary of State. There was no basis for assuming that any

A State Measure cannot found a breach of Articles 102/106(1) simply because it gives rise to some form of “conflict of interest” on the part of a “dominant undertaking” having “special and exclusive rights”. Article 106(1) is not a freestanding prohibition against

The position is summarised in the well-known definition of “abuse of dominance” by the ECJ in Case 85/76Hoffmann-La Roche v Commission, EU:C:1979:36, at [91]:

In the context of airport expansion, the operation of the process laid down in legislation for selecting a runway scheme as a matter of national planning policy is an aspect of the normal operation of markets for airport services. It is also a normal aspect of the operation of that policy that airport operators like HAL should be permitted to express their positions and views to the Secretary of State with regard to the runway schemes under consideration.

Thus, in summary, a State Measure giving rise to a “conflict of interest” will only constitute a breach of Articles 102 and 106(1) if it is liable to give rise to a distortion of competition, i.e.anti-competitive effects on competition in economic markets for goods or services. In order for the State Measure to constitute a breach, the “conflict” it creates would need to be liable to obstruct the achievement of the intended outcomes of Article 102 by producing, in a relevant economic market, anti-competitive consequences similar to those which Article 102 exists to prevent.

Mr O’Donoghue submitted that the request for a written Assurance amounted to the introduction of “a structural feature in the relevant market” which was liable to place HAL in a position of ‘conflict of interest’ which itself was a violation of Article 106(1)”.

HUB finally argue by their Appeal Ground 2 that the Divisional Court was wrong to find that there was no distortion of competition because of the fact that a subsequent DCO application might be made. Both HAL’s and HUB’s schemes involved the building of a new runway and associated airport facilities at Heathrow. The Preference Decision was concerned with the selection of a suitable runway scheme for national planning policy purposes. The question of who - whether HAL or someone else - would build those facilities was a separate matter to be decided in due course. Whilst it is likely to be HAL, the Divisional Court’s reference to and reliance upon the DCO was nevertheless a relevant consideration. Even if and insofar as HAL had, as a result of the request for an Assurance, been placed in a position where it could have influenced the Preference Decision against the ENR scheme, this would not have sufficed to show that the request by the Secretary of State for an Assurance was liable to distort competition in the SouthEast Market identified by the Divisional Court.

For the reasons set out in this judgment, HUB’s appeal must be dismissed.

We express our gratitude to all counsel and their legal teams for their able assistance in this case.