Saturday 11 June 2011

Vandervell v. I.R.C.

Vandervell v. I.R.C.

[1967] 2 A.C. 291 (HL)

Facts and issues
Mr Vandervell wished to make a gift to the Royal College of Surgeons in order to endow a Chair of Pharmacology. They needed about £150,000.
He was equitable owner of a substantial number of shares in Vandervell Products Ltd, a private limited liability company which he controlled (which made, among other things, Vanwall racing cars).
The legal interest in Vandervell's shares was held by a bank as nominee.
In order to endow the Chair, he arranged with the bank orally (presumably to avoid stamp duty) to transfer both legal and equitable interests in these shares to the Royal College of Surgeons (RCS), giving a trustee company (Vandervell Trustees Ltd., which he controlled) an option to re-purchase them for £5,000 (well under the value of the shares).
This enabled the RCS to receive dividends of some £266,000 (£157,000 net after tax), but since, as a charity, RCS was not liable to pay income tax, it hoped to claim the tax back. Because of the option to re-purchase, Vandervell did not irrevocably relinquish control of Vandervell Products.
At this stage, therefore, the legal and equitable interest in the shares had been transferred to the RCS. This raises a formalities point.
Vandervell Trustees Ltd had the legal interest in the option. But where was the equitable interest? If it remained in Vandervell himself, he would be liable to surtax, on the basis of s. 415 of the Income Tax Act 1952:
(1) Where, during the life of the settlor, income arising under a settlement ... is, under the settlement and in the events that occur, payable to or applicable for the benefit of any person other than the settlor, then, unless, under the settlement and in the said events, the income ... (d) is income from property of which the settlor has divested himself absolutely by way of settlement ... the income shall be treated for the purposes of surtax as the income of the settlor and not as the income of any other person ...
(2) The settlor shall not be deemed for the purposes of this section to have divested himself absolutely of any property if that property or any income therefrom or any property directly or indirectly representing proceeds of, or income from, that property is, or will or may become, payable to him or applicable for his benefit in any circumstances whatsoever.
Held
The House of Lords held (Lords Reid and Donovan dissenting) that the option (the legal title to which was now in the trustee company) was held on resulting trust for Vandervell, along with liability to pay surtax on the dividends.
Vandervell had failed to state where the equitable interest was to go. He had not decided whether the option should be held on trust for his children, or for the employees of his products company. His only concern was that it was not held on trust for him.
Lord Wilberforce noted that the trusts upon which the option was supposed to be held were undefined and in the air. The trustee company itself was clearly not a beneficiary, and an equitable interest cannot remain in the air, and so the only possibility was a resulting trust in favour of the settlor.

Lord Wilberforce at 329B:

The conclusion, on the facts found, is simply that the option was vested in the trustee company as a trustee on trusts, not defined at the time, possibly to be defined later. But the equitable, or beneficial interest, cannot remain in the air: the consequence in law must be that it remains in the settlor. There is no need to consider some of the more refined intellectualities of the doctrine of resulting trust, nor to speculate whether, in possible circumstances, the shares might be applicable for Mr Vandervell's benefit: he had, as the direct result of the option and of the failure to place the beneficial interest in it securely away from him, not divested himself absolutely of the shares which it controlled.

Tuesday 7 June 2011

Standing

S 31(3) of Supreme Court Act 1981 provides that the court must not grant leave for an application for judicial review ‘unless it considers that the applicant has a sufficient interest (otherwise expressed as “standing” or locus standi) in the matter to which the application relates’. The justification for such a requirement lies in the need to limit challenges to administrative decision making to genuine cases of grievance and to avoid unnecessary interference in the administrative process by those whose objectives are not authentic. The applicant may be an individual whose personal rights and interests have been affected by a decision, or an individual concerned with official decisions which affect the interests of society as a whole.

Alternatively, the application be brought by an interest or pressure group desiring to challenge a decision which affects the rights and interests of members of that group or society at large. The rules of standing are not unique to administrative law. They are its equivalent of privity in contract and land law, or proximity within the law of negligence. The rules of standing are as important as equivalents in defining the class of persons entitled to bring an action in any particular case.

Constitutional principles of democracy mean that every citizen has an interest in the decision‑making of governmental bodies. Its legality is a matter of great public interest. Furthermore, the control of such decision‑making through the process of law is an aspect of the rule of law of vital importance within a healthy jurisdiction. Nonetheless, it could be argued that the rules of standing should not be abolished. They too have an important role to play within the legal system, and their existence can provide a worthwhile contribution to the preservation of the rule of law. The rules of standing are usually thought of as being a unique and restrictive force within the sphere of administrative law.

Whilst it is generally agreed that the ultra vires rule is concerned with review of the legality of public decisions, rather than with an appeal on the merits of such decisions, there is a conflict of opinion over whether review should be primarily concerned with ensuring the protection of human rights through effective challenges to the decisions of public bodies (the ‘red light theory’), or whether review should be exercised upon the primary consideration that public bodies need protection from unnecessary numerous challenges in order to ensure efficient public administration (the ‘green light theory’). The red light theory contends that judges should be activists in developing liberal approach of review so as to safeguard human rights from the many varieties of misuse of public power. In this regard they also follow a liberal approach of standing.

The starting point for consideration of locus standi is now the decision of the House of Lords in R v Inland Revenue Commissioners, ex p National Federation of Self‑Employed and Small Businesses Ltd.

The Federation sought to challenge the Inland Revenue’s decision to grant a tax amnesty to casual workers in Fleet Street. In particular the Federation sought a declaration that such an agreement was ultra vires the Revenue, and an order of mandamus compelling the Revenue to collect the amount due.
In concluding that the Federation did not have locus standi to challenge the tax amnesty, Lord Wilberforce sought to outline how the matter should be addressed. He explained that the issue of sufficient interest was to be regarded as a mixed decision of fact and law for the courts to decide on legal principles, ie it was not simply a matter of judicial discretion.

Further, that it should not be assumed that because one generic phrase was used as the test for standing it would necessarily be applied in the same way regardless of the remedy sought. As regards mandamus, for example, he agreed with the views expressed by the Lord Advocate to the effect that the courts should be guided by the definition of the duty, and should inquire whether expressly, or by implication, the definition indicates that the complaining applicant is within the scope or ambit of the duty.

The question as to whether there is standing should be examined in two stages. At the first instance, standing should be considered when leave to apply is sought. At that, stage, the court is concerned, according to Lord Scarman, to ensure that ‘it prevents abuse by busybodies, cranks and other mischief makers’. If leave is granted, the court may ‑ at a second stage, when the merits of the case are known ‑ revise its original decision and decide that after all the applicants do not have sufficient interest.

It is submitted that this two‑stage test is unlikely to have any damaging effect on the requirement of the rule of law that decision‑making be subject to judicial scrutiny. The first stage should simply exclude cases where there is clearly no real merit in the application, and is appropriate as a means of preventing wasteful litigation. By the time the second stage of the test comes to be applied, the court should have looked at the factual and legal context of the case and should thus have begun its scrutiny of the decision in question.

The flexibility of this two‑stage test provides the courts with a useful additional string to their bow in scrutinising cases of public interest, judicial review proceedings in this context may be compared with the relator action in civil law proceedings. The correct approach in public interest cases is normally to use the relator action under which the Attorney‑General brings the action.

But there is a serious gap in this type of case in that the Attorney‑General’s discretion in the matter is unchallengeable (Gouriet v Union of Post Office Workers (1978). So, there is no guarantee that the matter will reach the courts. The courts have used the more modern rules of standing to allow individuals or representative groups to bring judicial review cases of wider public importance, thus to some extent by, passing the deficiencies of the relator action.

On the other hand in R v IBA, ex parte Whitehouse (1985) a television viewer was held to have standing to challenge a decision of the Independent Broadcasting Authority to broadcast a particular programme. Thus, with other two important cases viz ex p Leigh (1987) and ex p Smedley (1985), ex p Whitehouse (1985) could be justified on the common ground that constitutional issue of general importance were persuasive.

From the academic point of view, three issues have, however, attracted attention since the English procedural reforms introduced by RSC 1977.

The first relates to the stage in judicial review proceedings at which, any standing question should be resolved. On the one hand, the rules themselves require that the ‘sufficient interest’ test be applied at the application for leave stage. This is readily coupled with an instinctive view that standing is a threshold procedural question to be resolved positively as a prerequisite of further progress on the application. This is not, however, a historically sound approach, and the questions of locus standi have been viewed as aspects of the substantive case to he made in pursuit of a particular remedy.

More importantly, it is clear that the statutory rules, while enabling standing to be raised at the leave stage, do not require it to be dealt with finally at that stage; neither do they preclude the raising of standing issues at a later stage. The point has furthermore, been taken that standing issues are intertwined with - and may indeed be the same as ‑ issues of substances. Most obviously, the same circumstances of fact and law which establish a person’s ‘legitimate expectation’ to a procedural benefit may also form the basis of the same person’s argument for standing in the case.

Thus, one of the principal conclusions reached by the majority in the famous IRC case was indeed that standing will usually need to be decided in the light of the legal and factual context. The point was also taken that a person’s standing may become relevant at the time at, which the court exercises its discretion whether to award a remedy and, if so, which, a person  may need to establish a different relationship to the subject matter of the case to be awarded an injunction or order of mandamus than for the award of a declaration. So, the ‘common’ approach to standing, which may be acceptable and indeed desirable at the outset of the litigation, is much more or less appropriate at its close.

A second feature of the standing literature has been a developing sophistication in the schematic categorisation of the principles to be applied in decisions on the standing of different types of applicant {to which Peter Cane has made the most substantial contribution, in particular his ‘Standing up for the Public (1995) Public Law 276 and Standing, Representation and the Environment’ in Loveland, Ian (ed)}.

Cane has distinguished those, who establish standing on the basis of their own personal interests from those who seek standing on the basis that they represent the interests of others. Regarding the former, the standing requirement is relatively easy to satisfy, since each of their members would have individual standing. Those claiming such ‘representative standing’ are then divisible into three groups.

1. ‘Associational standing’ is typified by the organisation suing on behalf of its members.

2. ‘Public interest standing’ is asserted by those who claim to represent not a group with identifiable membership but a wider ‘public interest’.

3. Cane’s third category, which is more formal in nature, is that of ‘surrogate standing’, where a nominal applicant represents the interests of the real party to the proceedings.

Such an analysis be used to explain why it is insufficient simply to claim that standing in public law proceedings should be treated differently from its private law counterpart: account should be taken of the different ways in which litigants may make legitimate use of judicial review and, therefore, of the different, tests of standing which may be appropriately laid down.

The third general issue of note is that adopting the Cane analysis, it is possible to conclude that while those applicants for review in the categories of ‘personal’ and ‘associational’ standing have benefited from the generosity of approach already referred to, there were initial difficulties with the treatment of the ‘public interest’ type which have only more recently been resolved, at least for the time being. These difficulties were demonstrated in the infamous R v Secretary of State for Environment, ex p Rose Theatre case (1990), where Schiemann J denied standing to a company formed to challenge the refusal of the minister to list an archaeological site. Incorporation could not of itself increase the sufficiency of interest of the individuals concerned.  Where individuals did not have sufficient interest, they did not obtain it by incorporating themselves into an association. Thus, it had to be anticipated that, in some circumstances, there might be no one at all with an interest sufficient to challenge an unlawful decision.

However, in ex p Blackfordby (2000) it was held that the court will not readily find that the incorporation of an action group is a bar to the bringing of an action for judicial review.

It has been argued that, on its particular facts, Rose Theatre is defensible. Whether viewed as a claim to ‘associational standing’  or to ‘public interest standing’ in circumstances in which the public interest had already been adequately accommodate, the applicant’s case may have been appropriately denied. On the whole, however, it has been interpreted as a case in which a very ungenerous attitude to standing was, rather provocatively, adopted.

There have been more recent signs of an apparently liberalising shift of approach. Two cases in particular are interpreted as illustrating this trend viz ex parte World Development Movement Ltd (1995) and the EOC case.

In the first case, the World Development Movement (WDM) sought judicial review of the Foreign Secretary’s decision to grant financial aid to Malaysia for the building of the Pergau dam. The WDM argued that the Secretary of State had exceeded his powers. The court held that the WDM had sufficient interest. The WDM played a prominent role in giving advice and assistance in relation to aid and had consultative status with United Nation’s bodies.

More importantly, the House of Lords has itself added to the weight of authority recognising the legitimacy of bona fide interested organisations, albeit without citing either the Rose Theatre or Greenpeace, by way of its ruling in ex p Equal Opportunities Commission and Another (1994).

Perhaps the most compromising and pragmatic solution has been made by Otton J in ex p Greenpeace Ltd (No 2) (1994). He explained his ruling on standing in favour of the applicants on the grounds that the court would take into account the nature of the applicant body, the extent of its interest, the remedies sought, the extent to which the applicant was a responsible body, its consultative status if any, the extent of its membership and support and whether the applicant body would have any other viable means of challenging the matter in question.

So, it could be submitted that the present law of standing provide some significant barriers to persons wishing to challenge the lawfulness of government decisions as a vexed body otherwise they are not so reluctant as Rose Theatre to provide standing.

Thursday 2 June 2011

STIPULATIONS IN MARRIAGE

Valid Stipulation

All the schools and sects regard as valid and enforceable any stipulation there merely seeks to reinforce the normal effects of marriage. Thus agreement to fix the amount of dower that shall be paid. Another example might be that express stipulations that hold the husband responsible for maintaining the wife and those which state that the wife will obey her husband within the permitted parameters. These are valid and enforceable stipulations but are not necessarily required to be covenanted as such because they are the objectives of the nikah itself, but if done, then it will reaffirm the already existing duties and obligations.

Invalid Stipulation

Invalid stipulations, which omit a condition in the marriage contract, for instance, one stating that the husband will not maintain his wife; one cancelling the wife’s dower; restricting a man’s sexual relations with his wife; or, one allowing a woman to partake from the share of her husband’s second wife. Imam Bukhari, reporting on the authority of ‘Abd Allah ibn-i-Mas’ud, states that a woman may not lay down in her marriage contract that her sister in Islam, i.e. the co-wife, be divorced. He also relates, on the authority of Abu Hurayrah, that the Holy Prophet (PBUH) has said that it is not legal for a woman to stipulate that the cowife be divorced in order to increase her own share because she will only get what Allah has prescribed for her.

Stipulations that invalidate the entire contract are those held to be contrary to the very essence of marriage. Into this category the four Sunni schools and the Ismaili sect of the  Shia place all stipulations attempting to impose a time limit on the marriage, as the law  regards marriage as being a life-long union. The Ithna‘ashari sect of the Shia regard such  stipulations as valid and recognise the institution of the mut’a, or temporary marriage.

Mut’a is concluded by the same way as the Nikah (i.e. by an offer and acceptance). As  in Nikah the wife receives a sum of money on the conclusion of the contract. This is  not referred to as dower but is termed salary or wages. The contract may stipulate  any time-limit. The wife is under no obligation to obey her husband and accordingly  her husband is under no obligation to maintain her. Any children born of a mut’a marriage are legitimate but if either party dies during the subsistence of the mut’a the other party will not inherit from them. Either party may terminate the marriage at  will. If the husband chooses to end the marriage before the expiry of the time-limit he  may not reclaim any of the money he has paid to her. However, if the wife terminates  the marriage she must repay her husband a proportionate amount of the money  paid by her husband, taking into account the time she has spent with him. When the  marriage ends the woman must observe an iddat of forty days or, if she is pregnant,  until the delivery of the child. A man may have an unlimited number of wives by the  mut’a contract. A mut’a marriage is dissolved ipso facto by the expiry of the term but if  cohabitation continues after the expiry of the term, the inference is that the term was  extended for the whole period of the cohabitation and that the children conceived  during the extended period are legitimate.

Neither Prohibited nor allowed Stipulation

This category of stipulations is the most important and consists of conditions that benefit the wife, but are neither prohibited, nor expressly allowed in Islam. The husband will give up some of his rights by accepting them, for example, when his wife lays down the restriction that he will not marry a second time during their marriage, or that she should not be taken out of her matrimonial home/city. Not surprisingly, the validity of such stipulations is disputed amongst different schools of thought. The Hanafi, Shafi‘i and Maliki schools regard these conditions to be illegitimate while the nikah containing them will itself remain valid. Meanwhile, the Hanbali School considers them to be valid and binding on both parties.

Arguments against stipulations

There is a Prophetic saying that goes, “Any stipulation that is not in the book of Allah (the Qur’a¯n) is void.” The majority of scholars believe that the above-stated stipulations are not mentioned in the Qur’a¯n and are, therefore, not binding.

Arguments for stipulations (Hanbali view)

There are, however, many great names in the list of those who regard these stipulations as legal and valid. ,whose arguments run as follows:The Holy Qur’a¯n states: “O you who believe abide by your contracts”. (Sura 5, verse 1) This verse, being the basis of all contracts, prevails and therefore all obligations, when undertaken, should be carried out accordingly. The Hanbalis regard the above verse as the basis of the law of contract, thereby invoking the principles of freedom of contract. Another Qur’a¯nic verse that is cited to support this view is: “And fulfil every engagement, for it will be enquired into (on the day of the Reckoning)” (27:34). These arguments are further supported by the following verse, “And fulfil the covenant of Allah when you have covenanted.”

Accordingly in Hanbali law, any stipulation, not itself forbidden or not contrary to or inconsistent with the essence of the contract of marriage, is valid. A stipulation falling  into this category would be a provision to the effect that the husband will not take a  second wife or that the wife will be free to leave the matrimonial home whenever she  wishes. If such a stipulation is inserted into the contract and the husband breaches it,  the wife’s remedy is to apply to the court to grant her a dissolution of the marriage on  the grounds that her husband is in breach of contract and she is therefore no longer  bound by it.

Reform

Reformers in many parts of the Muslim world have adopted the Hanbali law allowing stipulations which vary the normal incidence of the marriage contract to be inserted  if such stipulations are for the benefit of one or both parties to the contract. Such a stipulation in the marriage contract that restricts the husband’s right to practice polygamy is specifically recognized in many Middle Eastern Countries. Article 38 of The codified 1917 Ottoman Family Rights Code was the first piece of legislation that had adopted the Hanbalite’s rules on inserting stipulations in marriage contracts. This stipulation includes allowing the wife to seek a divorce in case the husband contracts another marriage.
Jordan
The Jordanian Law of Personal Status 1976  maintains provisions that allow the insertion of the stipulation in the marriage contract whereby the husband should not take another wife. In this stipulation the wife has the right to divorce in a situation where the husband has violated the stipulation.
Syria
The Syrian Personal Law Code of 1953 provides general provisions that allow the wife to insert a stipulation in her marriage contract. This general provision in actual fact does not state specifically that the wife has the right to divorce in case the husband violates the stipulation by contracting another marriage. However, such a stipulation was made possible under article 14 of the Syrian Personal Law Code 1953.

Morocco

The Moroccan Code of Personal Status of 1957 and 1958 has a similar provision. In Article 31:

… A woman has a right to stipulate in the marriage contract that her husband should not take any co-wives, and that if the husband does not comply with that to which he has bound himself, the wife shall have the right to demand that the marriage be terminated.

Iraq

Article 6(4) of the Iraqi Law of Personal Status (no. 188) of 1959 also gives a woman the right to apply to court for a divorce if her husband fails to honour a stipulation agreed upon in the marriage contract.

Kuwait

Kuwaiti law differentiates between three types of stipulations that may be incorporated into the marriage contract as stated in Articles 40 and 41 of Law No. 51 concerning personal status:

Firstly, a condition that violates the very purpose of marriage shall render the marriage contract absolutely void.
A stipulation that runs counter to the implications of marriage, without contravening its principles, shall be void, but the marriage contract itself will remain valid.

But a clause that contravenes neither the roots nor the implications of marriage is not prohibited by Shariah, and thus shall be binding and enforceable, but only if it is included in the marriage contract.

Tunisia

Article 11 of Tunisian Code of Personal States, 1956, permits stipulations in a marriage contract. ‘If any stipulation is violated the aggrieved party may apply for dissolution of marriage.’

Indian Sub-Continent

Similarly, such stipulations have been accepted as valid by courts in the sub-continent. However, they did not adopt the Hanbali doctrine but iterated that a Muslim marriage is a civil contract, and as long as a stipulation does not contravene the Indian Contract Act 1872, it will remain valid and binding. In Muhammad Amin v. Amina Bibi Addison J. put it this way: “marriage is a civil contract and the parties may contract in any way they wish to within certain limitations.”