R v HM Treasury, ex p. Smedley

Factual and Procedural Background

The Appellant, a British taxpayer and elector, challenged the intention of H.M. Treasury to pay a sum exceeding 121.5 million from the Consolidated Fund to the European Community without the authority of Parliament through an Appropriation Act. Instead, the Treasury proposed to use the procedure under section 1 of the European Communities Act 1972, involving laying a draft Order in Council before Parliament and, upon approval by affirmative resolution of both Houses, making the payment under section 2(3) of the Act.

The Appellant obtained leave for judicial review from a High Court judge on 28 November. The application was heard and dismissed by another High Court judge on 7 December. The Appellant then appealed to the Court of Appeal, where the appeal was heard on 12 and 13 December. The Court of Appeal reserved judgment to issue a written decision.

Legal Issues Presented

1. Whether the Undertaking to make payments to the European Community qualifies as "a treaty ancillary to any of the Treaties" within the meaning of section 1(2) of the European Communities Act 1972.
2. Whether an Order in Council declaring such an Undertaking to be a Community Treaty would be intra vires the power conferred by the 1972 Act.
3. Whether the court should intervene by judicial review at the stage when only a draft Order in Council has been laid before Parliament and before Parliamentary approval.
4. Whether the Appellant has sufficient interest (locus standi) to bring the judicial review application.

Arguments of the Parties

Appellant's Arguments

• The Undertaking to make payments to the European Community is not "a treaty ancillary to any of the Treaties" as required by section 1(2) of the 1972 Act.
• The Undertaking contravenes Article 127 of the Act of Accession and the Council Decision of 21 April 1970, which require the Community budget to be financed entirely from the Community's own resources from 1 January 1975.
• The supplementary and amending budget, financed partly by member States' reimbursable advances, departs from the Community Treaties and is thus incapable of being regarded as ancillary to them.
• Accordingly, any Order in Council declaring the Undertaking to be a Community Treaty would be ultra vires.

Respondent's Arguments

• The Treasury submitted that it is premature for the court to consider the application before an Order in Council has been made and approved by Parliament.
• The Appellant lacks sufficient interest (locus standi) to bring the application.
• Even if the court were to consider the matter now, the power to make the Order in Council is a discretionary power to be exercised by Her Majesty in Council, subject to Parliamentary veto.
• The courts should refrain from interfering with Parliamentary procedures and the exercise of the veto power at this stage.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
R. v. Electricity Commissioners, ex parte London Electricity Joint Committee Co. (1920) Ltd [1924] 1 K.B. 171	Permitting judicial review of administrative orders before Parliamentary approval to avoid wasted costs and delay.	The court relied on this precedent to justify considering the application prior to Parliamentary approval, given the urgency and to avoid waste of Parliamentary time.
Bulmer (H.P.) Ltd. v. J. Bollinger S.A. [1974] 1 Ch. 410	Community instruments should be construed in light of Community principles, not English canons of construction.	Supported the court's interpretation that temporary departures from Community budget principles do not necessarily conflict with the Treaties.
Inland Revenue Commissioners v. National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617	Relaxation of locus standi rules allowing wider access to judicial review.	Supported the court's view that the Appellant, as a taxpayer, had sufficient interest to bring the application.
Hoffman-La Roche (F.) & Co. A.G. v. Secretary of State for Trade and Industry [1975] A.C. 295	Courts can declare an Order in Council invalid if ultra vires after Parliamentary approval.	Confirmed that judicial review is available post Parliamentary approval, but did not preclude pre-approval consideration.

Court's Reasoning and Analysis

The court carefully analysed the statutory framework under the European Communities Act 1972, focusing on sections 1 and 2. Section 1(2) defines "the Treaties" and "Community Treaties," including treaties ancillary to the Community Treaties entered into by the United Kingdom. Section 1(3) provides that an Order in Council, approved by Parliament, conclusively declares a treaty as a Community Treaty.

The court emphasized the constitutional separation between Parliament and the judiciary, noting that the court must avoid interfering with Parliamentary functions, particularly the power of veto Parliament holds over the draft Order in Council.

However, the court acknowledged that judicial review of subordinate legislation, including Orders in Council, is appropriate to ensure legality and that early judicial views can assist Parliament and the parties by avoiding wasted time and expense.

The court rejected the submission that the application was premature, holding that judicial consideration at this stage did not usurp Parliamentary functions and could provide useful guidance.

Regarding the Appellant's locus standi, the court found that as a taxpayer raising a serious legal question about the powers of Her Majesty in Council, the Appellant had sufficient interest to bring the application.

On the substantive legal issue, the court acknowledged the imprecise nature of the phrase "ancillary to" in the statute and that Parliament intended to confer a broad discretionary power on Her Majesty in Council to declare treaties ancillary to the Community Treaties.

The court found no clear inconsistency between the Undertaking and the Community Treaties, viewing the Undertaking as closely connected to the Treaties and properly ancillary, even if it involved a temporary departure from the principle that the Community budget should be financed from its own resources.

The court concluded that the proposed Order in Council would be intra vires the powers conferred by the 1972 Act and dismissed the appeal.

Holding and Implications

The Court of Appeal DISMISSED the appeal and refused the Appellant's application for leave to appeal to the House of Lords.

The direct effect of this decision is that the Treasury may proceed with the payment to the European Community under the procedure established by the European Communities Act 1972, subject to Parliamentary approval of the draft Order in Council. The court confirmed that the Undertaking qualifies as a treaty ancillary to the Community Treaties and that the making of the Order in Council would be within the statutory powers.

No new legal precedent altering the scope of judicial review or Parliamentary powers was established; rather, the decision clarified the proper interplay between Parliamentary veto, Orders in Council, and judicial review in this context.