Vip Communications Ltd, R (On the Application Of) v Secretary of State for the Home Department

This is an application by VIP Communications Limited (in liquidation) (“the Claimant”) for judicial review of a direction made by the Secretary of State for the Home Department (“the Secretary of State”) to the Office of Communications (“Ofcom”) under section 5(2) Communications Act 2003 (“CA 2003”).

The application raises a point of construction of s.5(2) CA 2003, namely whether that subsection confers upon the Secretary of State the power to make a direction which overrides a statutory duty imposed upon Ofcom by other primary legislation; in this case, the duty upon Ofcom to make exemption regulations imposed by section 8(4) Wireless Telegraphy Act 2006 (“WTA 2006”).

This point of construction was considered in earlier proceedings, Recall Support Services Ltd v Secretary of State for Culture, Media and Sport and was the subject of differing views expressed at first instance by Rose J [2013] EWHC 3091 (Ch) [2014]

On 6 July 2017 Ofcom issued a notice (“the COMUG Notice”) stating its intention to make regulations under s.8(4) WTA 2006 exempting commercial multi-user gateway GSM apparatus (“COMUGs”) from the individual licensing requirement in s.8(1) WTA 2006.

On 25 September 2017 the Minister of State for Security (“the Minister”) gave a direction to Ofcom (“the Direction”) under s.5(2) CA 2003 not to make such regulations. The Direction was given on the basis of serious national security and public safety concerns. Those concerns are not disputed by the Claimant.

The Claimant contends that the Direction was ultra vires the Secretary of State’s powers to make a direction under s.5(2) and that the Direction is therefore unlawful and should be quashed. It contends, in summary, that s.5(2) CA 2003 does not confer any power upon the Minister to direct Ofcom not to comply with its duty under s.8(4) WTA 2006. If a statute is to confer upon a member of the Executive the power to override a duty in other primary legislation, then clear and specific words are required. Section 5 contains no such clear and specific words. That conclusion is supported by specific observations made by Richards LJ in Recall CA.

The Defendant contends in summary that, whilst s.8(4) WTA 2006 places a duty on Ofcom to introduce regulations, that is not the only relevant duty which Ofcom is under. It is also under a duty to act in accordance with directions given by the Secretary of State pursuant to s.5 CA 2003 on grounds such as national security and public safety. As a matter of pure construction of the power under s.5 CA 2003, the Direction was clearly not ultra vires. The Secretary of State’s interpretation of the power was expressly approved by Rose J in Recall HC and this Court ought to follow that decision.

The legislative and regulatory framework is set out in detail in paragraphs 17 to 24 below. The two legislative provisions directly in issue are s.8(4) WTA 2006 and s.5(2) CA 2003.

Section 8 WTA 2006, in its amended form at the relevant time, provides as follows:

“(1)

It is unlawful–

(a)

to establish or use a wireless telegraphy station, or

(b)

to install or use wireless telegraphy apparatus,

except under and in accordance with a licence (a “wireless telegraphy licence”) granted under this section by OFCOM.

Section 5 CA 2003 provides as follows:

“Directions in respect of networks and spectrum functions

(1)

This section applies to the following functions of

OFCOM—

(a)

their functions under Part 2;

(b)

their functions under the enactments relating to the management of the radio spectrum that are not contained in that Part.

(2)

It shall be the duty of OFCOM to carry out those functions in accordance with such general or specific directions as may be given to them by the Secretary of State.

(3)

The Secretary of State's power to give directions under this section shall be confined to a power to give directions for one or more of the following purposes—

(a)

in the interests of national security;

(b)

in the interests of relations with the government of a country or territory outside the United Kingdom;

(c)

for the purpose of securing compliance with international obligations of the United Kingdom;

(d)

in the interests of the safety of the public or of public health.

(3A) The Secretary of State may not give a direction under this section in respect of a function that Article 3(3a) of the Framework Directive requires OFCOM to exercise without seeking or taking instructions from any other body.

(4)

The Secretary of State is not entitled by virtue of any provision of this section to direct OFCOM to suspend or restrict—

(a)

a person's entitlement to provide an electronic communications network or electronic communications service; or

(b)

a person's entitlement to make available associated facilities.

(4A) Before giving a direction under this section, the Secretary of State must take due account of the desirability of not favouring—

(a)

one form of electronic communications network, electronic communications service or associated facility, or

(b)

one means of providing or making available such a network, service or facility, over another…

…

(7)

Subsection (4) does not affect the Secretary of State’s powers under section 132”

(emphasis added)

The Direction relates to telecommunications equipment known as a “GSM gateway”. GSM gateways contain one or more of the same SIM cards as are placed into mobile telephones. They enable telephone calls and text messages from a landline to be routed directly on to mobile networks, with the invention of saving money on call charges. These devices are used by a wide range of businesses and public bodies, with the aim of reducing their telephone bills. Commercial deployment of a GSM gateway may be as a “commercial single user gateway” (“COSUG”) or as a “commercial multi-user gateway” (COMUG). COSUGs are gateways which serve a single end-user. That single end-user may be an entire company or a large entity. By contrast, COMUGs involve the use of a GSM gateway to provide an electronic communication service by way of a business to multiple end-users. A COMUG is a

There are national security and public safety concerns surrounding the use of COMUGs. When a caller dials a number from a fixed line or a mobile phone, information identifying the number of the calling party is transmitted over the network, and in the case of a mobile phone, information as to the user’s location is also transmitted. This is referred to as “caller line/location information” or “CLI”. Such communications data has considerable utility for national security and public safety purposes as well as law enforcement purposes more generally. However where a call is routed through a GSM gateway, communications data concerning the caller is not conveyed to the network; instead that data is replaced by the number and location of the SIM card in the GSM gateway, making it almost impossible for communications data of the call or caller to be ascertained. This gives rise to serious national security and public safety concerns. These concerns have been explained in the witness statement of Thomas Rutherford, head of Interception and Equipment Interference Policy within the Office for Security and Counter-Terrorism at the Home Office.

As explained below, the use of COMUGs in the United Kingdom is currently unlawful, absent an individual licence from Ofcom. The restriction on the unlicensed use of COMUGs (“the Commercial Use Restriction”) is based on these serious national security and public safety concerns surrounding their use. In the Recall litigation, the High Court and the Court of Appeal held that the public security concerns of this kind justified the imposition of the Commercial Use Restriction in relation to COMUGs, although not in relation to COSUGs.

The Claimant is a company in liquidation. Prior to its liquidation, the Claimant’s business involved the commercial exploitation of COMUGs. By 2002 it had established a business delivering services by way of GSM gateways. In 2003 mobile network operators ceased supply to GSM gateway operators and this brought about the collapse of the Claimant’s business and that of others. In August 2005 the Claimant went into administration and in February 2010 it went into liquidation. Since 2003 it has brought a number of legal challenges with the aim of securing the liberalisation of GSM gateway use.

The Secretary of State is the cabinet minister whose remit includes the protection of national security. Acting through the Minister she made the Direction. Ofcom is the interested party. Its functions include being the national regulatory authority for the telecommunications sector in the United Kingdom.

On 26 April 2018 Walker J found that the Claimant has sufficient standing to bring this claim and went on to grant permission to apply for judicial review. On the other hand, he found that a second claimant did not have standing and, on that basis, refused permission. On 13 November 2018 I refused an application by Mr Tom McCabe, formerly a director and shareholder of the Claimant to intervene in these proceedings.

The regulatory framework in relation to telecommunications equipment both under EU and domestic legislation is set out in some detail by Rose J at §§10 to 30 in Recall HC. In the following paragraphs I summarise the position.

The relevant domestic regime was initially set out in s.1(1) WTA 1949, under which the use of any apparatus for wireless telegraphy was prohibited except under the authority of an individual licence granted by the Secretary of State. GSM gateways qualify as “wireless telegraphy apparatus” within the meaning s.1 WTA 1949, and now under s.8 WTA 2006. The requirement for an individual licence was subject to a power to make regulations providing for exemptions. Whilst under the Wireless Telegraphy (Exemption) Regulations 1999 a broad range of equipment was exempted from the licensing requirement, Regulation 4(2) of those Regulations had the effect that commercial use of GSM gateways remained subject to the individual licensing requirement. This is the Commercial Use Restriction. That was carried over to

Subsequently the use of telecommunications equipment became subject to EU regulation. The current EU regime is the Common Regulatory Framework (“CRF”), introduced in 2002 and which had to be implemented by 24 July 2003. The CRF includes Directive 2002/20/EC of 7 March 2002 of the European Parliament and of the Council on the authorisation of electronic communications networks and services (the “Authorisation Directive”). That Directive provides for two forms of authorisation, namely general authorisation (where no specific application for a licence is required) and individual rights of use subject to a licence (requiring application by a regulator). Article 5(1) of the Authorisation Directive (as subsequently amended) provides that Member States shall facilitate the use of radio frequencies under general authorisations, but that, where necessary, individual rights of use may be granted in order to avoid harmful interference, ensure technical quality of service, safeguard efficient use of spectrum, or fulfil other objectives of general interest as defined by Member States in conformity with Community law.

In July 2003 the Government decided that the Commercial Use Restriction should be retained. Security considerations were a prime reason for that decision.

The EU Common Regulatory Framework was principally implemented in the United

At the same time, and from 25 July 2003, the 2003 Exemption Regulations, including Regulation 4(2) were maintained in force by transitional provisions in Schedule 18 CA 2003. That meant that the use of COMUGs continued to be subject to the Commercial Use Restriction, notwithstanding the addition of s.1AA to WTA 1949.

WTA 1949 as amended in that way was subsequently replaced by WTA 2006. Section 8 WTA 2006 contained provisions relating to licences and exemptions corresponding to those previously contained in section 1 and s.1AA WTA 1949. In particular s.8(3) WTA 2006 re-enacted the proviso to s.1(1) WTA 1949 and s.8(4) and (5) WTA 2006 re-enacted s.1AA(1) and (2) WTA 1949.

Subsequently the CRF and the Authorisation Directive were substantially amended by the “Better Regulation Directive”, with a deadline for implementation of 25 May 2011. These were implemented by substantial amendments to both CA 2003 and WTA 2006. In particular s.8(5) WTA 2006 was subsequently further amended in 2011 to take account of these amendments by the addition in particular of the further conditions in s.8(5)(b) to (f).

In the Recall case, the issue was whether the Commercial Use Restriction (imposed by domestic legislation at the time – namely the 2003 Exemption Regulations) infringed EU law (because that domestic legislation failed properly to implement the European Directives). Rose J held that the public security justification was available in law both as a matter of EU and domestic law. She further found that the public security justification was made out on the facts in respect of COMUGs, but not in respect of COSUGs. Thus, there was a breach of EU law in requiring individual licences for COSUGs, but not for COMUGs. However the claimants had no claim for damages because the infringement was not a manifest and grave disregard of UK obligations. The Court of Appeal upheld that outcome.

In the course of their judgments, both Rose J and Richards LJ in the Court of Appeal considered the relationship between s.5 CA 2003 and s.8(4) WTA 2006. Both held that the public security justification, which underpinned the Commercial Use

Following that decision, on 28 April 2016, Ofcom made the Wireless Telegraphy (Exemption) Regulations 2016 (amending the 2003 Exemption Regulations) the effect of which was to allow use of COSUGs without an individual licence from Ofcom. However COMUG use was not exempted and thus remained, pursuant to s.8(1) WTA 2006, subject to individual licensing. Regulation 4(2) of the 2003 Exemption Regulations has the effect of maintaining in force the Commercial Use Restriction in respect of COMUGs unless and until that aspect of the 2003 Exemption Regulations is revoked or amended.

As a result of s.8(1) WTA 2006, it is unlawful to install or use COMUGs in the absence of either an individual licence from Ofcom or regulations, made under s.8(3) WTA 2006 exempting COMUGs from the licensing requirement.

On 16 December 2016 Ofcom published a consultation paper entitled “Commercial Multi User Gateway Review”, the purpose of which was to seek views on the possible exemption from the licensing requirement in s.8(1) WTA 2006 of COMUGs, as well as COSUGs. The paper explained that the then current position was governed by the 2003 Exemption Regulations and summarised the background relating to the Recall case. To that end, Ofcom sought views from consultees “by reference to the conditions set out in section 8(5)” WTA 2006. If Ofcom was satisfied that those conditions were met, that would give rise to the statutory duty upon Ofcom to exempt COMUGs under s.8(4).

Following the consultation, Ofcom published the COMUG Notice. In that notice Ofcom addressed a number of the statutory conditions set out in s.8(5). It concluded that concerns raised by Vodafone and EE about adverse effect on technical quality of service were not sufficient to maintain the current restriction on the use of COMUGs. The Notice further recorded that the Home Office, amongst others, had raised concerns about the risk of endangering safety of life (s.8(5)(d)), but concluded that the evidence did not suggest a sufficiently direct and material risk to safety of life to justify maintaining the restriction. Ofcom concluded that the conditions in s.8(5) were met. In the course of that consultation national security issues were not considered. On that basis, it indicated that it would be making, as required by s.8(4) WTA 2006, regulations under s.8(3) exempting COMUGs from any individual licensing requirement. Ofcom attached to the Notice a draft of its proposed Wireless Telegraphy (Exemption) Amendment Regulations 2017.

Following publication of the COMUG Notice, the Home Office considered its response. As Mr Rutherford explains in paragraphs 44 and 45 of his witness statement, on 17 August 2017 Home Office Ministers were advised of concerns relating to national security and public safety and health if the licensing requirement was to be removed, as Ofcom proposed. He explains that:

“Ministers were advised of a range of options available to them in relation to COMUGs, including options for giving a direction under section 5 of the Communications Act 2003”. One option was to give a direction which would require Ofcom to restrict the use of COMUGs by permitting them to operate only where the service provider could demonstrate that the caller identification would pass through the communications network and not impact on access communications data and content of the communications. Another was to direct Ofcom to maintain the status quo i.e. not to remove the licensing regime.” (emphasis added)

Mr Rutherford goes on to explain that the Security Minister preferred the latter option of maintaining the status quo, and that then on 1 September 2017, in response to a request from the Minister, officials gave further advice on two different options for the terms of a potential direction which would maintain the status quo by prohibiting the use of COMUGs without a licence. No further detail has been given of the “range of options” proposed on 17 August 2017, although it appears clear that a direction prohibiting use of COMUGs without a licence was not the only option considered. On one view of Mr Rutherford’s evidence in paragraph 44, the first option there referred to might have been achieved by way of condition or limitation imposed within a s.8(3) exemption regulation.

The Direction stated:

“I direct that the operation of a commercial multi-user gateway for the purpose of voice calls over a publicly available telephone service or SMS shall not be exempted by Ofcom from the requirement for a licence to be granted under section 8(1) of the Wireless Telegraphy Act 2006.” (emphasis added)

It is not disputed that the Direction by its terms instructed Ofcom not to comply with its statutory duty under section 8(4) WTA 2006.

The Direction went on to specify criteria for the grant, by Ofcom, of an individual licence for the commercial use of COMUGs. Those criteria were, first, that communications data can be obtained from the operator to the same level as can currently be obtained without the use of a COMUG; and, secondly, that the operator must be able to identify relevant communications without having to seek additional information from the COMUG provider so as to enable the operator to comply with an interception warrant.

The Secretary of State’s case is that both the obligation to refrain from exempting COMUGs and the specific individual licensing criteria were based on the same national security and public safety considerations that were considered and upheld in the Recall litigation. The Secretary of State further maintains that the Direction does not constitute an absolute ban on the use of COMUGs. Rather someone wishing to operate a COMUG requires an individual licence, which will be granted where the two specified criteria are satisfied. Where those criteria are met the national security

Subsequently, Ofcom responded by announcing on its website that, in the light of the Direction, it would not make the regulations contained in the COMUG Notice.

The Claimant submits that the Direction was not within the power conferred upon the Minister by s.5(2) CA 2003. It was unlawful and should be quashed:

The Secretary of State submits as follows:

The question is whether s.5(2) CA 2003 confers upon the Secretary of State a power to make a direction to Ofcom not to make an exemption regulation which it is otherwise under a duty to make, pursuant to s.8(4) WTA 2006.

I start by addressing the construction of the words in s.5(2) CA 2003 themselves. Secondly, I consider other relevant provisions in legislation in the communications sector. Thirdly, I address the issue of national security more widely. Fourthly, I look in more detail at the judgments in the Recall case. Fifthly, I address the question of “absurdity”. Finally, I consider s.31(2A) SCA 1981.

In his submission, the Secretary of State concentrates upon the duty upon Ofcom contained within s.5(2) CA 2003 to follow a direction given by the Secretary of State. However that ignores the issue as to the permissible content of such a direction as given by the Secretary of State. If there is a power to make such a direction under s.5(2), then clearly Ofcom is under a duty to comply with that direction. But the prior question here is whether the Secretary of State has the power to make a direction in the first place not to carry out its duty under s.8(4) or any other duty. I do not accept the Secretary of State’s characterisation of the issue as being simply a tussle between conflicting duties.

The issue is one of statutory construction of s.5(2), applying the principles derived from the authorities as set out above. Whilst not strictly an issue of the parliamentary supremacy, that is a key principle underlying those principles of construction. In my judgment, the starting point is that a restrictive approach to construction is to be adopted and clear words are required to give a power, by way of secondary legislation, to override a statutory duty imposed by other primary legislation. Absent clear wording, or a provision to resolve a conflict between duties, the Court should presume that Parliament would not impose inconsistent duties or clashing duties.

First, as regards the word “functions” in s.5(2), I consider that, despite the generality of the term, it does include “duties”, and thus includes the duty under s.8(4). In this regard, functions is apt to “embrace all the duties and powers” of Ofcom; i.e. “the sum total of the activities Parliament has entrusted to it”: see Hazell v Hammersmith LBC

Secondly, however, the words “carry out” in s.5(2) bear the connotation of

“performing”, “putting into effect” or “discharging” Ofcom’s “functions”. Moreover, I consider that the words “carry out” qualify the meaning of the word “directions”. Whilst s.5(2) does not expressly specify the content of any “general or specific direction” which may be given, in my judgment any “direction” given must, at the very least, be “in relation to” the “carrying out” of Ofcom’s functions. In answer to the question “a direction as to what?”, s.5(2) gives power to give a direction “in relation to the carrying out” of Ofcom’s functions. If the words “carry out” are then applied specifically to “the duty under s.8(4) WTA” encompassed within those functions (or indeed any other of Ofcom’s statutory duties), as a matter of construction a direction not to carry out that duty, cannot be a direction to carry out that duty, or even a direction “in relation to” the carrying out of that duty.

Thirdly, I do not accept that the words “in accordance with” are synonymous with “subject to”. The former phrase carries the meaning of “in line with” or “in the same direction as”; the latter phrase carries the connotation of something which has the potential to override or trump.

Fourthly, the decision of the Court of Appeal in EE (and in particular §54 of the judgment) provides some considerable support for the Claimant’s case. There, the Court of Appeal held that “in the absence of clear words” a direction to Ofcom “about the carrying out … of their radio spectrum functions” could not relieve Ofcom of a statutory duty placed on Ofcom by primary legislation. I do not accept the Secretary of State’s submission seeking to distinguish, or minimise the relevance of, the decision and analysis in that case. First the decision is based on the fact that there is nothing in s.5 WTA 2006 which expressly (“in terms”) overrides other statutory duties which have been imposed upon Ofcom by Parliament and on the fact that the language in s.5(1) as to the content of any such “general or specific directions” was “entirely neutral”. Secondly, whilst I accept that s.5(1) WTA 2006 does not expressly make reference to a “duty” upon Ofcom to act in accordance with directions given by the Secretary of State (unlike the position in s.5(2) CA 2003), it must be the case that Ofcom is under a duty to give effect to such directions, once made by the Secretary of State. In any event, it is clear from s.5(2) and (3) WTA 2006 (which specify in more detail the content of an order made under s.5(1)) that such an order may “require”

Fifthly, Ofcom’s duty under s.4(2) CA 2003 to “act in accordance with” Community requirements, in “carrying out” its functions (including the radio spectrum functions) does not assist in construing the words “carry out in accordance with” in s.5(2). It is not clear that any particular Community requirement itself imposes a “duty” not to carry out other duties. In any event, unlike the position with s.5(2) CA 2003, s.3(6) CA 2003 makes express provision for any consequential conflict between the s.4(2) duty and other duties of Ofcom. Thus if Community requirements were to impose a duty which conflicts with a duty involved in radio spectrum functions, then the s.4(2) duty takes priority and the latter duty must give way. If the Secretary of State’s construction of the words “carry out in accordance with” in s.4(2) CA 2003 and in s.5(2) were correct, s.3(6) CA 2003 would be surplusage. It is notable indeed that in the very same statute, there is no equivalent provision for resolving conflicts between competing duties in the case of a duty imposed under s.5(2) to apply a direction by the Secretary of State. This provides strong support for the conclusion that s.5(2) does not itself envisage a stark conflict which would arise from the giving of a direction specifically not to carry out another duty primary imposed upon Ofcom by legislation, whether in CA 2003 or otherwise.

As regards sub-section (3A) and (4A) of s.5 CA 2003, the Secretary of State contends that, since Parliament has, by these provisions, expressly placed limitations upon the power to give directions under s.5(2), applying the interpretive maxim expressio unius est exclusio alterius, s.5(2) should be interpreted as excluding the implication of an additional limitation upon that power. In other parts of s.5 there are restrictions and limitations on the power to make a direction, which absent such restrictions, would involve a direction overriding aim another duty or requirement. There is some force in this submission. However, it is not sufficient to displace the conclusion which flows from the reasoning in the foregoing paragraphs. First, the absence of power in s.5(2) to direct Ofcom not to carry out its statutory duty is not based on the “implication of a limitation”. Rather it is based on the absence of clear words conferring such a power expressly, which, as a matter of construction the words do not otherwise bear. Secondly, an “interpretive maxim” is just that. It is or may be an aid to construction, but cannot displace a construction otherwise properly placed upon the words.

I conclude therefore, that as a matter of pure construction of the words, in their context, a direction by the Secretary of State “not to carry out a duty” cannot be a

The absence of clear words, or express provision resolving conflicts of duties in the present case is highlighted by other provisions in legislation in this field which do make such express provision. First, s.94(3) Telecommunications Act 1984 expressly provided that a duty to give effect to a “national security” direction given by the

Secondly, s.3(5) WTA 2006 expressly provides for what is to happen where Ofcom is placed under conflicting duties by, on the one hand, s.3(1) and (2) WTA 2006, and, on the other hand, by ss.3 to 6 CA 2003 (which includes its duty under s.5(2) CA 2003). Ofcom is required to give priority to those duties arising under CA 2003. Section 3(5) WTA thus gives express priority to the very duty in question in the present case, namely s.5(2) CA 2003. The absence of a similar provision in relation to s. 8WTA 2006 suggests that it was not contemplated that a s.5(2) direction would conflict with the s.8(4) duty.

Nor do I accept, as a ground for distinguishing the position under s.3(5) WTA 2006, that the duty upon Ofcom in s.5(2) will conflict with its duty under s.8(4) WTA only in the specific case of a direction not to carry out that duty and in most cases is unlikely to conflict with that duty. Such a contention militates towards the view that the legislature did not contemplate such a conflicting direction at all. Mr Beard QC himself suggested in argument, the reason there is no conflict-resolving provision in this case, is because it was not generally a question of a hierarchy of duties, but that it was envisaged generally that the s.5(2) duty might modify the s.8(4) duty, and not seek to override or conflict with it. But that does not explain why there is no such provision to deal with the case where there is such a conflict.

Thirdly, as explained in paragraph 59 above, s.3(6) CA 2003 expressly gives priority to Ofcom’s duties under s.4 and other specified sections of CA 2003 over its general duties, in relation to the carrying out of its functions mentioned in s.4(1) CA 2003. By s.4(1)(b) those functions include its radio spectrum functions (and thus its duties under WTA 2006).

It is the case that under the regulatory framework put in place following the implementation of the EU directives, responsibility for technical functions was transferred to Ofcom, the national regulatory authority, whilst at the same time the Secretary of State (in the main) retained responsibility for matters of national security and other matters, such as public safety and public health. This is reflected in the terms of s.5 CA 2003.

However that consideration does not conclusively point towards the Secretary of State’s construction of the power in s.5(2). As explained below, there are other mechanisms open to the Secretary of State to exercise his powers to safeguard national security and other public interests. Exemption granted by regulation under s.8(3) WTA 2006 can be made subject to conditions or limitations. Moreover there is the power, by ss.5(7) and 132 CA 2003 for the Secretary of State, on grounds of national security, to direct Ofcom to give a direction suspending or restricting a provider’s entitlement to provide services.

I consider first, the analysis of each of Rose J and Richards LJ relevant to the issue before the Court now, before addressing the status, as a matter of precedent, of the judgment of Rose J.

Having concluded that the public security justification for the Commercial Use Restriction was available to the United Kingdom under Article 5 of the Authorisation Directive, the next issue for Rose J was whether that justification was available as a matter of domestic UK law. The claimants argued that when Article 5 was implemented into UK law (ultimately to be found in s.8 WTA 2006) the UK did not expressly incorporate into those provisions a “public security” justification. In response DCMS relied, inter alia, on s.5 CA 2003: even if the public security justification was not included in s.8 WTA, in fact that aspect of Article 5 was transposed through the route of the power in s.5 CA 2003 (§82). Rose J addressed that argument as follows:

“85.

However, I accept that section 5 of the CA 2003 does have the effect contended for by DCMS and does allow the UK to rely on a public security justification in relation to the making of exemptions under section 1AA/section 8. Indeed, it is also more likely, in my judgment, that the legislative intention was that decisions about the needs of national security would be placed in the hands of the Secretary of State rather than of OFCOM.

86.

The Claimants countered with three points on the potential application of section 5 of the CA 2003. They argue that a direction made under section 5 could not be used to override the duty imposed on OFCOM in primary legislation such as the duty to issue an exemption imposed in section 1AA/section 8. I do not see why this should be the case. Sections 5 and 405(1) of the CA 2003 (which defines which OFCOM functions the power relates to) contain no such limitation.

…”

She then addressed the third point in the following terms:

“88.

The Claimants also submit that even if the Secretary of State could have given a direction under section 5 of the CA 2003 to OFCOM to exercise its power under section 1AA/section 8 to impose an individual licensing regime on GSM gateways, the Secretary of State did not in fact do so. DCMS accept that there is no evidence that the Secretary of State ever made a direction under section 5 to this effect.

89.

On this point I agree with the submissions of DCMS that such a direction would only have been necessary if and when the 2003 Exemption Regulations were remade in exercise of the powers under section 1AA/section 8. The 2003 Exemption Regulations were made on 20 January 2003 under the power in section 1(1) WTA 1949 before section 1AA was inserted into the WTA 1949 on 25 July 2003 (by section 166 of the CA 2003). It is not suggested that the Regulations were ultra vires that power (i.e. the power in section 1(1) WTA 1949) when they were made.

90.

The 2003 Exemption Regulations were then continued in force by the transitional provisions set out in Schedule 18 to the CA 2003 …

91.

The 2003 Exemption Regulations were validly made by the Secretary of State under the power in section 1(1)

WTA 1949 and are treated by virtue of paragraph 1 of Schedule 18 to the CA 2003 as having been made under that power by OFCOM. In so far as the Commercial Use Restriction depended for its validity on a public security justification, it was capable of being made under section 1(1) WTA 1949 despite the insertion of section 1AA in 2003 because the CA 2003 also conferred a power on the Secretary of State under section 5 to give a direction to OFCOM to make the exemption subject to that restriction. The 2003 Exemption Regulations could therefore have been validly granted in their current form at any point in the relevant legislative history. There was no need to remake the 2003 Exemption Regulations after the coming into force of the CA 2003 and so no need for the Secretary of State actually to make a direction under section 5 of the CA 2003.” (emphasis added)

Finally she summarised her findings in §92, the relevant parts of which are as follows:

“92.

I can therefore summarise my findings on the question of whether it is open to DCMS to justify the restriction on the use of GSM gateways in the 2003 Exemption on the grounds of public security as follows.

•

…

•

…

•

…

•

However, section 5 of the CA 2003 implements the public security aspect of Article 5(1) of the Authorisation Directive by empowering the Secretary of State by direction to override

OFCOM’s duties under section 1AA of the WTA 1949 on grounds of public security.

•

The fact that no direction has in fact been given by the Secretary of State under section 5 of the CA 2003 in respect of the 2003 Exemption Regulations does not preclude DCMS from arguing that the exemption is justified on the grounds of public security. The exemption was in fact made under section 1(1) WTA 1949 before the CA 2003 provisions were brought into force; it was intra vires that power when made and was maintained in force by the transitional provisions in Schedule 18 to the CA 2003.”

Thus in summary, Rose J first accepted that s.5 does allow the UK to rely on a public security justification in relation to the making of exemptions under s.1AA/s.8. She then addressed three points. First, and significantly, at §86, she rejected the argument, now made in this case, that s.5 could not be used to override the duty imposed upon OFCOM to issue an exemption under s.8. Secondly, she rejected an argument based on s.5(4). Thirdly, she rejected the claimants’ argument that the Secretary of State had not in fact ever made a direction under s.5. There had never been a need to make such a direction, because the 2003 Exemption Regulations had continued in force and, because they could have been validly granted in their current form, because of the 2003 power, there had been no need for the Secretary of State actually to have made a s.5 direction. As appears from the emphasised words in §91 above, part of her reasoning on the third point appeared to be based on her earlier conclusion, under the first point, that s.5(2) does confer a power on the Secretary of State to override the duty upon Ofcom under s.8(4) WTA.

On appeal, the Court of Appeal dismissed the claimants’ appeal. Ground 1B of the grounds of appeal was that even if Article 5 of the Authorisation Directive permitted a public security justification for withholding a general authorisation (i.e. for the Commercial Use Restriction), the UK had chosen to implement the directive in a way that provided no basis for reliance on the ground. On the contrary the implementing legislation required the regulator to lift the Commercial Use Restriction - thus the maintenance of the Commercial Use Restriction was in breach of EU law.

Richards LJ addressed the specific issue of the transposition into domestic law of a public security justification at §§34 to 59. He concluded that the Commercial Use Restriction was not in breach of the Authorisation Directive in so far as it was justified on grounds of public security. In particular he stated as follows:

“53.

Whilst the appellants’ arguments have served to highlight unsatisfactory features of the domestic legislation, they have not persuaded me that the resulting situation is one in which the commercial use restriction is in breach of the Authorisation Directive in so far as the judge found it to be justified on the ground of public security. In my view the key lies in the 2003 Exemption Regulations which, by excluding the commercial use of GSM gateways from the scope

of the exemption otherwise conferred, kept in place the commercial use restriction. Those regulations were validly made prior to the date for implementation of the directive. A decision not to make any material amendment to them was made just before the implementation date and was based on considerations of public security as a prime reason. The regulations, together with the commercial use restriction inherent in them, were then maintained in force as from the implementation date by the transitional provisions of the 2003 Act. They have remained in force to this day. As a matter of domestic law, therefore, the commercial use restriction has been valid throughout. …

…

55.

The appellants’ submissions focus understandably on the fact that the duty to make exempting regulations which was imposed on Ofcom by section 1AA of the 1949 Act (as inserted by section 166 of the 2003 Act) and then by section 8 of the 2006 Act was not expressed to be subject to any public security exception. I find the domestic legislation very puzzling in that respect. There is a real tension between a duty expressed in those terms and the maintenance in force of the 2003 Exemption Regulations, under which GSM gateways were excluded from the scope of the exemption for reasons that had been openly stated to include public security. It would be surprising in those circumstances if the legislative intention was for Ofcom to make new exempting regulations, revoking or amending the 2003 Exemption Regulations, without regard to public security. Moreover, section 5 of the 2003 Act shows the importance attached by

Parliament to national security in this general context and gives the Secretary of State substantial powers to act to protect it.

56.

The wording of s.5 is, however, problematic. Section

5(2) provides that if directions are given by the Secretary of State, it is the duty of Ofcom to carry out its relevant functions (which include its duty under s.1AA of the 1949 Act to make exempting regulations)

“in accordance with those directions”. That cannot readily be interpreted as requiring Ofcom, if so directed by the Secretary of State, not to carry out a statutory duty otherwise imposed on it. The wording may be contrasted with the terms of s.94(3) of the Telecommunications Act 1984, quoted above, which require a person to give effect to a direction “notwithstanding any other duty imposed on him”, and with the terms of s.3(5) of the 2006 Act, also quoted above, which make clear how a conflict between statutory duties is to be resolved. On this point, therefore, I have greater reservations than did Rose J, who said at [86] of her judgment that she did not see why a direction under s.5 could not be used to override Ofcom’s duty to make exempting regulations. (I consider that the point is essentially one of construction of the 2003 Act and that the Joint Council for the Welfare of Immigrants [1997] 1 W.L.R. 275 case on which the appellants rely does not provide any real assistance.)

57.

On the other hand, I agree with the judge, albeit for a

slightly different reason, in rejecting the appellants’ argument based on section 5(4). ….

58.

No relevant direction has ever been issued under s.5. None has needed to be issued in the absence of any decision by Ofcom to make exempting regulations to remove the commercial use restriction. The relationship between s.5 and Ofcom’s duty to make exempting regulations has therefore never been put to the test in practice. I have expressed my doubts about the effectiveness of s.5 for the purpose on which the Secretary of State relies on it in these proceedings (and, as explained below, has relied on it in dealings with the European Commission) but I do not think it necessary to reach any concluded view on the subject. That is because, in my judgment, the compatibility of the commercial use restriction with the directive does not depend on whether the Secretary of State has the power under domestic law, by way of a direction under s.5, to prevent Ofcom from making exempting regulations to remove the restriction. I come back to the point that the commercial use restriction, as a valid measure of domestic law which is justified by considerations of public security insofar as it relates to COMUGs, is compatible to that extent with art.5 of the Authorisation Directive.” (emphasis added)

The reasoning of Richards LJ was based squarely upon the prior 2003 Exemption Regulations made before the relevant EU law was to be implemented and thereafter maintained in place, by the transitional provisions, for a prime reason of public security. As a matter of domestic law the Commercial Use Restriction was valid throughout. Since public security was at all material times an available ground of justification, the restriction in respect of COMUGs was compatible at all material times. The domestic exemption regulations remained a valid piece of UK legislation which Ofcom had not – at that point – sought to revisit. At that time Ofcom had not

He then went on to address specifically the relationship between s.5 CA 2003 and s.8(4) WTA and in particular the three points addressed by Rose J at §§86 to 91 of her judgment. As regards the first point, namely whether a section 5 direction could override Ofcom’s duty under section 8, he had “greater reservations” and “doubts”: §§56 and 58. He declined to reach a concluded view, because he reached the same conclusion on an alternative basis (third point). As regards the second point concerning s.5(4), he agreed with Rose J’s conclusion, albeit for slightly different reasons: §57. On the third point, he concluded that Rose J had reached the correct conclusion on the basis of, effectively, the third point, namely that there had been no need for there to have been in fact a direction under s.5 because of the continuing effect of the 2003 Exemption Regulations: §§58 and 53.

However, and significantly, this last conclusion was because, in his view, the compatibility of the Commercial Use restriction did not depend on whether the Secretary of State had power under domestic law by way of a direction under section 5 to prevent Ofcom from making exemption regulations. On the “third point”, Richards LJ’s conclusion expressly did not depend on s.5 giving a power to override; whilst it appears that Rose J’s conclusion on this point did or might have so depended. In this way, in my judgment, there is a material difference in the reasoning of Rose J and Richards LJ, when reaching the same ultimate conclusions.

The position as a matter of precedent is that a judge of the High Court is not technically bound by decisions of other High Court judges, but he or she should generally follow a decision of a court of co-ordinate jurisdiction unless there is a powerful reason for not doing so: see Willers v Joyce [2016] UKSC 44 [2018] AC 843 at §9. That which is binding in a previous decision is that part of it which is the ratio decidendi. Parts of the decision which are obiter dicta are not on any view binding.

I proceed on the basis that Rose J’s conclusion in the last sentence of §86 is part of the ratio of her decision. Whilst it might be said that her reasoning on the “third point” at §§88-91 formed the ratio, as I point out in paragraph 70 above, her conclusion (at §91) in relation to the effect of the 2003 Exemption Regulations itself appears to have been predicated on her conclusion in relation to the power under s.5 CA 2003.

However I am satisfied that in this case there is powerful reason not to follow her decision on this point. This is based on a number of considerations, first and foremost of which is the fact that in the very same case, the Court of Appeal expressly did not accept Rose J’s conclusion on this point. In this regard, I make a number of specific observations.

In my judgment, Richards LJ’s reservations and doubts about Rose J’s conclusions were well founded and provide powerful reason for this Court not to follow them. I have concluded, on the basis of very detailed argument before this Court that the Claimant’s construction of s.5(2) is the correct construction.

It is the case that the Claimant’s construction of s.5(2) CA 2003 means that the Secretary of State does not, under the existing legislation, have the power to impose, contrary to the views of Ofcom, a system of individual licensing in respect of COMUGs on grounds of national security or other related grounds. This is so even though as a matter of EU law such a system of individual licensing would be permitted.

However this is not an absurd construction nor does it lead to a lacuna. First, there are other ways for the Secretary of State to safeguard national security risk by preventing exemption of COMUGs. The Secretary of State could direct Ofcom, under s.5(2) CA 2003, to impose, in regulations made under s.8(3) WTA 2006, conditions or limitations upon the exemption from the requirement for a licence. Those conditions could be precisely the same as those set out in the second part of the Direction: see paragraph 33 above. There is no reason in principle why Parliament should not choose to address issues of national security in this way, rather than by way of an individual licensing system. Moreover if such conditions were not met in any case, then an individual licence would be required, and if not obtained, operating COMUGs would be a criminal offence. On the other hand, if those conditions were

Such measures are not precisely the same as a system of full “ex ante” regulation of COMUGs. Nevertheless they do allow the Secretary of State to protect matters of national security and do not leave the Secretary of State unable to take measures to protect those interests. This does not create such a lacuna in the Secretary of State’s powers as to render the Claimant’s construction of s.5(2) “absurd”.

That the Claimant’s construction does not lead to absurdity is borne out by the fact that in the lead up to the making of the Direction, the Home Office (officials and ministers) considered “a range of options” to meet their concerns on the national security issues raised by COMUGs: see paragraph 31 above. Whilst the detail of the options considered is not before the Court, it is clear that the Home Office considered options other than the making of a direction prohibiting outright the removal of the individual licensing regime. It appears that Home Office officials considered that they could achieve their objective by means other than a direction of the kind that was in fact made.

Finally, as pointed out by the Claimant, it remains open to the Secretary of State to amend s. 8 WTA 2006, to expand the list of conditions in s.8(5) either by way of delegated legislation under s. 2 European Communities Act 1972 or by way of primary legislation.

In my judgment, this supports the Claimant’s contention that the construction for which it contends does not lead an absurd result or a gaping hole, in which the Secretary of State is unable to safeguard national security and public safety issues.

Under s.31(2A) SCA 1981, this Court must refuse to grant relief if it “appears to the Court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred”. S. 31(2B) provides that the Court may disregard the duty in s.31(2A) “if it considers that it is appropriate to do so for reasons of exceptional public interest”.

In the present case, I conclude that the Court is not required to refuse relief by reason of s.31(2A). Here “the conduct complained of” is the making of the Direction. I do not find that it is highly likely that, had the Direction not been made, the outcome for the Claimant would not have been substantially different (or, put another way, would have been substantially the same). First, it is not possible to know or predict to a degree of high likelihood what the Secretary of State would have done, had she not given the Direction. The range of options being considered by the Secretary of State has not been disclosed. Secondly, even if the Secretary of State had adopted, instead, an option of attaching “CLI” conditions to the s.8(3) exemption regulations, whilst this may have safeguarded national security issues, the Claimant or any person wishing to offer COMUGs would not be required to go through the process of applying for an individual licence, as long as it complied with the conditions. Whilst

Moreover, even if the duty under s.31(2A) had otherwise arisen, I would have concluded that in the circumstances of this case it would have been appropriate to disregard that duty “for reasons of exceptional public interest”. Here the relevant exceptional public interest is ensuring that subordinate legislation made by the Executive which is ultra vires the power conferred upon it by Parliament is identified and declared to be such.

For the reasons given in paragraphs 61, 79 and 81, I conclude that the Direction was ultra vires the Secretary of State’s powers under s.5(2) Communications Act 2003 and is therefore unlawful. This application for judicial review is allowed.

I will hear submissions as to the appropriate form of relief and orders consequential upon this conclusion. Finally, I am grateful to all counsel for the assistance they have provided to the court in the presentation of oral and written argument.