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Lipton & Anor v BA Cityflyer Ltd
Factual and Procedural Background
The Respondents booked a flight from Milan Linate Airport to London City Airport scheduled for 30 January 2018. The flight was cancelled, and the Respondents sought compensation under EC Regulation 261/2004, which was directly effective EU legislation at that time. In earlier proceedings the Court of Appeal concluded that the amended, retained-EU-law version of Regulation 261/2004 applied. The matter reached the Supreme Court, where the Appellant invoked an “extraordinary circumstances” defence under article 5(3) of the Regulation and where the proper source of applicable law following the United Kingdom’s withdrawal from the European Union also became a central point of contention.
Legal Issues Presented
- Whether the Appellant may rely on the article 5(3) “extraordinary circumstances” defence to avoid liability for compensation.
- Which body of law governs the Respondents’ accrued right to compensation: (a) EU law in the form of Regulation 261/2004 as it stood in 2018; or (b) the unamended, retained-EU-law version of that Regulation created by the European Union (Withdrawal) Act 2018 and subsequent domestic amendments.
- More broadly, whether the 2018 Act prospectively created a new body of domestic “retained EU law” only, or also retroactively converted accrued EU law rights into that new category, notwithstanding section 16(1) of the Interpretation Act 1978 and the terms of the EU-UK Withdrawal Agreement.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5 | Presumption that accrued EU rights survive withdrawal unless expressly removed. | Used to illustrate judicial expectation that leaving the EU would not disturb rights that had already accrued. |
| R (Fratila) v Secretary of State for Work and Pensions [2021] UKSC 53 | Post-Brexit treatment of EU-derived rights. | Cited as consistent authority supporting the view that accrued rights can subsist as EU rights. |
| News Corp UK and Ireland Ltd v HMRC [2023] UKSC 7 | Handling of EU law claims after IP completion day. | Referred to demonstrate judicial practice of treating pre-exit claims under the original EU rules. |
| R (Open Rights Group Ltd) v Secretary of State for the Home Department [2021] EWCA Civ 800 | Accrued EU rights remaining enforceable post-exit. | Listed as supporting authority for the accrued-rights analysis. |
| Revenue and Customs Commrs v Perfect [2022] EWCA Civ 330 | Continuation of rights arising under EU legislation. | Cited as consistent with treating such rights as undisturbed by the 2018 Act. |
| Anan Kasei Co Ltd v Neo Chemicals & Oxides (Europe) Ltd [2023] EWCA Civ 11 | EU law effect on causes of action accruing before IP completion day. | Invoked to reinforce the non-retroactivity position. |
| Umbrella Interchange Fee Claimants v Umbrella Interchange Fee Defendants [2023] CAT 49 | Contrary view that section 3 of the 2018 Act transposes accrued causes of action. | Highlighted as authority reaching the opposite conclusion and therefore distinguished. |
| Aitken v South Hams District Council [1995] 1 AC 262 | Section 16 Interpretation Act 1978—preservation of accrued rights on repeal. | Relied upon to show that silence in later legislation does not rebut the presumption against retrospectivity. |
| R (York City Council) v Secretary of State for Housing [2018] EWHC 2699 | Application of section 16(1) Interpretation Act 1978. | Used to demonstrate courts’ consistent application of the non-retroactivity presumption. |
| AT v Secretary of State for Work and Pensions [2023] EWCA Civ 1307 | Effect of Articles 4 and 127 of the EU–UK Withdrawal Agreement. | Cited to underscore that EU law had to apply within the UK during the transition period. |
| Kabab-Ji SAL v Kout Food Group [2021] UKSC 48 | Treaty-consistent statutory interpretation. | Relied upon to support reading the 2018 Act in conformity with treaty obligations. |
| Argentum Exploration Ltd v Republic of South Africa [2024] UKSC 16 | Same principle as above—statutes to be read compatibly with treaties. | Used alongside Kabab-Ji to fortify the interpretive approach. |
| R v Montila [2004] UKHL 50 | Permissible use of section headings in statutory interpretation. | Cited to caution against overriding clear statutory text with headings. |
| R (O) v Secretary of State for the Home Department [2022] UKSC 3 | Limits of relying on headings for statutory meaning. | Applied to reject narrowing section 6(1)–(2) to retained EU law only. |
Court's Reasoning and Analysis
Judge Lloyd-Jones concurred with the majority on the substantive defence but diverged on the source of applicable law. His reasoning proceeded as follows:
- Common-law presumption against retroactivity. Courts generally apply the law in force when the relevant events occurred unless Parliament clearly indicates otherwise.
- Section 16(1) Interpretation Act 1978. This provision preserves accrued rights upon repeal of legislation; hence it already safeguarded the Respondents’ 2018 EU-law entitlement without need for further statutory action.
- Purpose and language of the 2018 Act. The Act aimed prospectively to create a “snapshot” of EU rules as domestic retained EU law to avoid a post-exit legislative vacuum; nothing in its text or explanatory notes shows an intention to convert pre-exit causes of action.
- Sections 2, 3 and 4 of the 2018 Act are inapt to transpose causes of action. They deal, respectively, with EU-derived domestic legislation, direct EU legislation, and directly effective rights, none of which naturally encompass accrued claims.
- Timing inconsistency. Reading section 3 as transposing accrued causes of action would entrench only the version of an EU instrument “in force immediately before IP completion day,” potentially ignoring earlier versions that generated the claim.
- Withdrawal Agreement constraints. Articles 4 and 127 mandated continued application of EU law during the transition period, making a retrospective domestic substitution with retained EU law incompatible.
- Section 6 of the 2018 Act. Sections 6(1)–(2), which free UK courts from post-IP-completion-day CJEU authority, apply generally and do not depend on a claim being framed as retained EU law. The power in section 6(4) to depart from pre-exit CJEU rulings is limited to cases governed by retained EU law and therefore does not undermine the accrued-rights model.
Accordingly, the Judge concluded that the Respondents’ claim remains governed by EU Regulation 261/2004 in the form operative on 30 January 2018, with accrued EU rights preserved by operation of section 16(1) of the Interpretation Act 1978.
Holding and Implications
APPEAL DISMISSED.
The article 5(3) defence failed, entitling the Respondents to compensation. Although disagreement persisted over whether accrued rights reside in EU law or retained EU law, that debate was declared obiter and did not affect the outcome. Practically, passengers retain their 2018 EU-law rights, and no new binding precedent on the retained-versus-EU-law question was set.
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