I will come to this point because these are two sides of the same coin. The short answer to the noble and learned Lord’s point is that it would be almost incomprehensible that a court would use a prospective order in circumstances where people have paid taxes that were necessarily unlawfully raised—so the question would not arise. It is a nice theoretical question, but it would not arise. That is why I will deal with it later, and I am happy to take further interventions at that stage, if we can try to deal with the points separately. I see where the noble
and learned Lord is going, but at some point one has to live in the real world and consider whether a prospective-only order would be appropriate. Remember, the court has to look at the factors in subsection (8), including paragraph (f), which refers to
“any other matter that appears to the court to be relevant.”
It also has to look at where subsection (9) says
“unless it sees good reason not to do so.”
The idea that that could survive an unlawfully raised tax case is, I suggest, almost incomprehensible.
I will go back to where I was. We are not making an unlawful act lawful. The real question is: what is a remedy at all? In particular, what is a quashing order? This is something that has, frankly, bedevilled public law for some time. It is not clear that public lawyers, or indeed anyone else, have come up with a good answer to it. I suggest, however, that the remedy that the court gives, whether a quashing order or an order of prohibition, does not determine whether something was unlawful or not. It is the judgment and any declaration as to the state of the law that do that. The remedy decides what the effects of that unlawfulness should be, because there are cases where the court will declare that something was unlawful but not actually give a quashing order—but the action is still declared unlawful.
So this new power allows the court to modify the remedial effect of the quashing order so that, up to a point, the action or decision in question would be treated as being valid for all intents and purposes. The court is therefore doing its traditional job of declaring what the law is and what the law was, but it has greater flexibility in determining the real-world effects of its determination. I therefore respectfully agree with the way in which the noble Lord, Lord Anderson of Ipswich, put it. I heard his slightly in terrorem threat as to when we come to the presumption—but I will deal with that at that time.
That approach is consistent with public law as we understand it today. Judges are faced with situations where, despite a finding of unlawfulness, a quashing order does not issue, for a variety of reasons. I do not think therefore that it follows on principle that a finding of unlawfulness should always result in the voiding of the decision ab initio. I am grateful therefore for support on this point from the noble and learned Lords, Lord Hope of Craighead and Lord Brown of Eaton-under-Heywood, although I will avoid getting into any relitigating in this Committee of either Spectrum or Ahmed—we will leave that for later groups and possibly further editions of memoirs.
We need to avoid an approach which would take us right back into the straitjacket of nullity, and the academically interesting but practically frustrating doctrines that characterised decisions from Anisminic to Ahmed. We are not giving the court a binary choice of quashing retrospectively or giving declarations that state the law but do not necessarily deal with the effects of the impugned decision, even if it is declared to be unlawful. That is my response to the first main point from the noble Lord, Lord Pannick.
His second contention is that the new powers draw the courts into policy questions. I say respectfully that we are simply not doing that. We are asking the courts to do what in many ways they do already, which is to
assess the possible effects of their judgment on the parties and the public interest. It may well be the case that having given the courts these two new tools—I think the noble Lord, Lord Faulks, made this point—they do issue quashing orders in cases where they would not have done so if the only option open to them was an ab initio quashing order. Well, so be it. If Parliament has given them these extra tools, that is the way matters will work out. Subsection (8) sets out what we believe to be the pertinent factors, but we made it expressly a non-exhaustive list.
Courts have long recognised the principle that the administrative burden of rectifying the effects of a past decision can outweigh its potential benefits, especially if the Executive are rushed into action. Importantly, there are cases where the courts have recognised that regulations or policies that have a wide effect can create expectations for third parties: plans could have been made, contracts signed and money spent, all in pursuit of what everyone thought was a lawful policy.
We must not get lured into the example of somebody paying tax under regulation which turns out to be unlawful. People might have signed contracts on the basis of a regulation which turns out to be unlawful. They may have spent money or set up businesses. To undo all that could give rise to far more injustice than making sure that present and future situations are rectified. The example I gave at Second Reading, which the noble Lord, Lord Anderson of Ipswich, also mentioned, was the case of BASCA v Secretary of State for Business.
There is a further benefit to good administration, which is really what judicial review is all focused on anyway, which is that public bodies can make good a decision without having to revisit what can sometimes be long and drawn-out policy processes for the sake of a small error.
In cases relating to Heathrow expansion, for example, one point of contention was whether the Government had to take into account the Paris climate agreement. If the court had ended up finding that the decision not to take it into account was unlawful, it would surely have been far better to give a prospective order, so that the overall process of expansion was protected and the decision could be amended properly to take into account the relevant agreement. Quashing retrospectively would mean that the entire process would need to begin again from square one. A prospective remedy would allow the unlawfulness to be corrected at lower cost and in a shorter time, while still recognising—I underline this point—that the initial decision was unlawful.
I also emphasise the points in subsection (8)(c), which ask the court to have regard to
“the interests or expectations of persons who would benefit from the quashing of the impugned act”
and subsection (2), which allows the court to set conditions on the remedy. I hope that those provisions assuage any concerns that individual rights would be prejudiced—on the contrary, they ought to be taken into account by the court.
I have gone into some detail on that point because it was focused on by the Committee. I hope I can deal with the other amendments slightly more quickly with that background.
Amendment 3 removes the ability of the court to attach conditions to a suspended or prospective-only quashing order. These are intended to give the court maximum flexibility. For example, a court might want to make an order prospective only to reduce administrative chaos, but only on condition that parties who may have lost out financially are properly compensated. The conditions may not be necessary in every case, but it is an option for the court where appropriate.
Finally, Amendment 6 aims to ensure that the invalidity of quashed regulations can be relied on in criminal or civil proceedings. As I understand it, the concern of the noble Lord, Lord Ponsonby, is twofold. First, defendants could be prosecuted under regulations that have been ruled to be unlawful yet, because of the powers in this Bill, are treated as valid. That point was made by the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Marks.
Secondly, this might mean that claimants or victims would be less able to obtain damages, restitution or compensation. As I have suggested already, the amendment is unnecessary. As the noble Lord, Lord Faulks, said, collateral challenge is not at issue. The Bill does not necessarily prevent such challenges, because it gives the courts powers to formulate the remedies appropriately. In circumstances where provisions which create criminal penalties are being challenged, and have been challenged successfully, I find it very unlikely that a court would decide to use a prospective-only remedy. That is not only because the list of factors includes in subsection (8)(c)
“the interests or expectations of persons who would benefit from the quashing of the impugned act”
and, in subsection (8)(f),
“any other matter that appears to the court to be relevant”.
That would, I think, mean that the court would certainly find a “good reason”—to use the language in subsection (9)—to use a retrospective quashing order, so that any persons, for example, who had paid tax would have a remedy in restitution.
In similar cases where a court considers a suspended remedy, the ability to set conditions on the order would also mitigate any risk of injustice. For example, a court could use a suspended quashing order with the condition that the authority in question does not take any further enforcement action. This goes back to my main point about maximum flexibility. For those reasons, I invite the noble Lords who have tabled these amendments not to press them.
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