Case No: C1/2004/1161
Neutral Citation Number: [2004] EWCA Civ 1658
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MR JUSTICE KEITH (ADMINISTRATIVE COURT)

Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday, 8 December 2004

Before :

LORD JUSTICE BROOKE
Vice-President of the Court of Appeal
(Civil Division) 
LORD JUSTICE WALLER
and
LORD JUSTICE MAURICE KAY
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Between :
THE QUEEN on the application of

	CLAYS LANE HOUSING CO-OPERATIVE LIMITED	Appellant/
Claimant	
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	THE HOUSING CORPORATION	Respondent/Defendant	

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(Transcript of the Handed Down Judgment of
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David Wolfe (instructed by Bindman & Partners) for the Appellant
Paul Stanley (instructed by Trowers & Hamlins) for the Respondent

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Judgment
Lord Justice Maurice Kay : 
1.	Clays Lane Housing Co-operative (CLHC) is a housing cooperative whose members are the residents of premises in Clays Lane, Stratford, East London.  The premises are held by CLHC on long leases from the London Borough of Newham.  They comprise 50 self contained flats and 400 rooms in 57 houses.  They are let to members of CLHC.  CLHC is run by a management committee which is largely elected from its membership.  It is a non-profit making body and as such is registered and incorporated under the Industrial and Provident Societies Act 1965.  It is also registered as a social landlord under section 2(1) of the Housing Act 1996.
2.	The Housing Corporation (HC) is the regulatory body for registered social landlords.  It has statutory powers under Schedule 1 to the 1996 Act.  They include the following:
“20(1) The Corporation may direct an inquiry into the affairs of a registered social landlord if it appears to the Corporation that there may have been ….mismanagement….
27(1) Where as a result of an inquiry under paragraph 20….the Corporation is satisfied as regards a social landlord – 
(a) that there has been ….mismanagement in its administration, or
(b) that the management of its land would be improved if its land were transferred in accordance with the provisions of this paragraph, 
the Corporation may, with the consent of the Secretary of State, direct the registered social landlord to make such a transfer.
27(3)…The Corporation may direct a transfer to be made to the Corporation or to another registered social landlord.
27(4) The transfer shall be on such terms as the Corporation may direct on the basis of principles determined by it.  The consent of the Secretary of State is required both for the terms of the transfer and for the determination of the principles on which it is based.
27(5)  The price shall not be less than the amount certified by the District Valuer to be the amount the property would command if sold by a willing seller to another registered social landlord.”
In addition, by section 9(1), the consent of the Corporation is required for any disposal of land by a registered social landlord.
3.	An inquiry pursuant to paragraph 20(1) took place in 2000.  The ensuing report was submitted to HC in March 2001.  It concluded that there had been mismanagement of CLHC’s affairs in a number of areas including a complete lack of effectiveness in the work of the management committee, a lack of proper financial controls and a lack of proper day-to-day management and governance.  It further concluded that CLHC was being mismanaged to such an extent that its assets and the welfare of its tenants were at risk unless urgent action was taken to address the failings of management and to bring good order to such fundamental tasks as collecting rent and controlling expenditure.
4.	The report was accepted by HC which was therefore satisfied that there had been mismanagement within the meaning of paragraph 27(1)(a).  It considered that the appropriate course was to direct the transfer of CLHC’s land to the Governors of the Peabody Trust (Peabody).  Peabody is a large registered social landlord but it is not a cooperative.  On 14 March 2002 the Secretary of State gave his consent to the proposal and on 20 March 2002 HC directed that the transfer should take place.  CLHC issued an application for judicial review of HC’s transfer direction and the Secretary of State’s consent.  That application was settled when HC agreed to reconsider the matter.  
5.	At some stage the problems of CLHC came to the notice of Tenants First Housing Cooperative (TFHC).  TFHC is a large social landlord registered in Scotland.  As such, its affairs are regulated by Communities Scotland, the statutory equivalent of HC in England.  TFHC is also a housing cooperative.  Indeed, it is the largest mutual cooperative housing association in the United Kingdom.  In or about March 2002 it became interested in the possibility of a merger with CLHC.  By April 2002 CLHC had also become interested in such a merger.  TFHC proposed a meeting with representatives of CLHC, HC and Communities Scotland to discuss the matter.  HC did not think that such a meeting would serve any useful purpose.  At that time the first application for judicial review had not been issued and HC was expecting that the transfer to Peabody would take effect.  
6.	Following the settlement of the first application for judicial review, it fell to HC to reconsider its position.  By this time, the position of CLHC was that the finding of mismanagement was unchallengeable but it wanted to ensure that any transfer would be to another cooperative rather than to Peabody.  On 24 June 2002 HC decided again that CLHC’s land should be transferred because of the mismanagement.  However, it agreed to a request from CLHC to defer the decision as to the identity of the transferee.  The perceived alternatives were a transfer of the land to Peabody under paragraph 27 or a transfer of CLHC’s engagements to TFHC with the consent of HC under section 9(1) of the 1996 Act.  The reasons for the deferral were to enable HC to consider with Communities Scotland the regulatory implications of a cross-border transfer to TFHC and to give CLHC and TFHC more time to refine their proposal.  It was made clear that matters would not be allowed to drift and that rapid progress was expected.
7.	On 24 September 2002 HC decided upon a transfer to Peabody under paragraph 27 and against a transfer to TFHC.  On 9 July 2003 the consent of the Secretary of State was communicated.  Nevertheless HC gave further and final consideration to the matter at a Board meeting on 24 July 2003.  It concluded that there had been no material change since 24 September 2002 and it confirmed the decision to direct a transfer to Peabody.  Under the transfer Peabody would assume CLHC’s liability for the repayment of a loan and would carry out remedial works on the housing stock.
8.	The decision of 24 July 2003 gave rise to a second application for judicial review.  Inevitably any challenge to the decision of 24 July 2003 would involve scrutiny of the decision of 24 September 2002 as well.  Ouseley J refused permission to apply for judicial review following a consideration of the papers.  The application for permission was renewed before Stanley Burnton J who adjourned it and ordered that it be considered, together with the substantive hearing if permission were granted, at a single hearing.  On 14 May 2004 Keith J granted permission but dismissed the substantive application.  He refused permission to appeal to this court.  On 29 June 2004 Buxton LJ refused permission to appeal and gave detailed reasons for so doing.  However, permission to appeal was granted (save on one ground) by Auld and Jacob LJJ following a hearing on 28 July 2004.  
9.	The judgment of Keith J considered challenges under three broad headings.  First, it was submitted on behalf of CLHC that a compulsory transfer to Peabody amounted to an unlawful interference with CLHC’s rights under Article 1 of the First Protocol to the European Convention on Human Rights and Fundamental Freedoms (ECHR) and/or contravened its right of association under Article 11 of the ECHR.  Secondly, it was contended that the decision was made on the basis that the cross-border implications of the proposed merger with TFHC would create practical regulatory difficulties but HC had not observed the requirements of procedural fairness in that it had not given CLHC and TFHC an opportunity to discuss that issue with a view to resolving any difficulties.  Thirdly, there was a specific challenge to the decision of 24 July 2003 to the effect that there had been no material change of circumstance since 24 September 2002.  The case for CLHC was that between the two meetings there were concerns about Peabody’s financial position which were known to officers of HC and ought to have been known to its Board.   As the Board had placed reliance on Peabody’s financial strength, this change in circumstances ought to have been considered and CLHC ought to have been given the opportunity to make further representations about it.  Save for the issue under Article 11 (upon which permission to appeal was refused), the present appeal raises issues in relation to all three of the heads of challenge that were canvassed before Keith J.  Although the grounds of appeal number six, in essence they fall under the same three headings.  
10.	Before considering the grounds of appeal, it is appropriate to set out the factual basis of the decision of 22 September 2002 upon which Keith J based his judgment.  It is to be found in these paragraphs:
“13 The Board’s approach was to compare the relative merits of a compulsory transfer of [CLHC’s] housing stock to Peabody with the voluntary transfer of (its) engagements to [TFHC].  Thus it took into account its belief that 
(a) Public funding would be more at risk if [CLHC’s] engagements were transferred to [TFHC] because of the ‘relative financial strengths’ of [TFHC] and Peabody.
(b) Peabody would be more likely than [TFHC] to attract new public funding for the ….housing stock from the London Borough of Newham.
(c) Tenants would have greater security as assured tenants of Peabody than as contractual tenants of a fully mutual cooperative.
(d) Peabody provided the Board with the necessary level of certainty which the Board required that it would be able to discharge its regulatory responsibilities, in view of its ‘long history of working in Inner London, its financial strength and its commitment to tenant participation at Clays Lane’, whereas [TFHC’s] proposals did not give the Board that level of certainty.
The Board recognised that a voluntary transfer of…engagements to [TFHC] ‘would ensure continuing mutuality’, but it noted that the Peabody proposal ‘ would also provide the opportunity for tenant involvement in the management and development of the housing stock’.  
14.  The Board was aware of problems about cross-border regulation which a transfer of…engagements to [TFHC] might raise, i.e. the transfer of housing stock in an area governed by one regulator HC to a body regulated by a different regulator [Communities Scotland].  It noted that Communities Scotland had raised a number of regulatory concerns, in particular those relating to control, policy, planning, risk management, and a complex governance framework….(and) about the potential impact on [TFHC] were its proposed transfer engagements to proceed.’  The Board also noted that the London Borough of Newham did not support the proposed transfer of engagements to [TFHC] but did support the transfer of the housing stock to Peabody.
15 Finally the Board had permitted counsel for [CLHC] to address it.  It noted that he had submitted that it would be wrong for the Corporation to consider the relative merits of the two proposals because the exercise was not a comparative one.  The Board did not agree.  And to the extent that a compulsory transfer of its housing stock to Peabody amounted to an interference with its property rights and its rights of association….the Board concluded that ‘the public interest concerns in favour of a statutory transfer were sufficient to justify’ any such interference.”
I now turn to the grounds of appeal.
Issue 1: Article 1 of the First Protocol
11.	The primary question arising under this issue relates to the test to be applied by the court when considering whether or not there has been a breach of Article 1 of the First Protocol.  Article 1 of the First Protocol provides:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provision shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
It is common ground that the part of Article 1 which is engaged in the present case is the second sentence.  It is a “deprivation” case rather than a “peaceful enjoyment” or “use” case.  The primary issue between the parties is as to the test which has to be applied when considering the justification for a deprivation.  Keith J concluded (at paragraph 29):
“What the Board had to determine was whether a compelling case in the public interest had been established for the transfer of the….. housing stock to Peabody, having balanced the comparative benefits of the compulsory transfer of the housing stock to Peabody and the voluntary transfer of the housing stock to [TFHC], and [CLHC’s] wish for the latter so that its members could continue to enjoy the benefits of a cooperative.  If a comparison of the benefits and disadvantages of the two alternative options compellingly shows that the option which results in the deprivation of property is much to be preferred, a compelling case for adopting that option in the public interest will have been established.”
Keith J was satisfied that that was the test which the Board had applied.  In reviewing the Board’s decision, he said (at paragraph 30):
“It cannot be said that the Board made the wrong judgment as to where the ‘fair balance lay’, nor can it be said that the Board did not have rational grounds for concluding that the public interest in favour of a transfer to Peabody was such that it outweighed [CLHC’s] right (subject to [HC’s] consent) to dispose of its housing stock as it wished.”
In a nutshell, the criticism which Mr. Wolfe, on behalf of CLHC, makes of these passages is that they fail to apply a sufficiently rigorous test of proportionality, having regard to the decisions of the House of Lords in R (Daly) v. Secretary of State for the Home Department [2001] UKHL 26, [2001] 2 AC 532 and R v. Shayler [2002] UKHL 11, [2003] 1 AC 247 and the decision of the Court of Appeal in Samaroo v. Secretary of State for the Home Department [2001] EWCA Civ 1139.  
12.	It is appropriate to begin with a consideration of the origin and development of the test of “a compelling case in the public interest”.  Even before the Human Rights Act 1998, the courts of this country were alert to the need to scrutinise compulsory purchase orders with rigour.  The most recent authority was Chesterfield Properties PLC v. Secretary of State for the Environment (1997) 76 P&CR 117  in which it was held that for a compulsory purchase order to withstand challenge, it must be demonstrated that the Secretary of State had rational grounds to conclude that a substantial public interest existed which outweighed the landowner’s rights.  After the enactment of the Human Rights Act but before it came into force on 2 October 2000, Sullivan J considered the implications of Article 1 of the First Protocol in Tesco Stores Limited v. Secretary of State for the Environment Transport and the Regions  (2000) 80 P&CR 427.  He said (at page 429):
“In very broad terms the Convention requires that a fair balance must be struck between the public interest, in the present case  in securing much needed redevelopment of the western sector…., and an individual’s right to the  peaceful enjoyment of his possessions. Any interference with that right must be necessary and proportionate.
Although the Human Rights Act 1998 does not come into force until October 2, I am satisfied that for present purposes the Secretary of State’s policy, as set out in Circular 14 of 94 that a Compulsory Purchase Order should not be made unless there is ‘a compelling case in the public interest’, fairly reflects that necessary element of balance.”
Soon after the coming into force of the Human Rights Act Harrison J expressly approved that approach in London Borough of Bexley v. Secretary of State for the Environment Transport and the Regions [2001] EWHC (Admin) 323, at para. 46.
13.	There is no doubt that these decisions were informed and influenced by the decision of the European Court of Human Rights in James v. United Kingdom [1986] 8 EHRR 123.  The issue in that case related to the impact of Article 1 of the First Protocol on the rights of tenants under the Leasehold Reform Act 1967 to acquire the freehold of their properties at a price below market value.  The Court identified the aim of the 1967 Act as being the remedying of an injustice whereby a long leaseholder who may have expended large sums of money improving and maintaining his property was required to return the property to the lessor at the end of the lease without compensation.  The Court observed (at paragraph 50) that “there must….be a reasonable relationship of proportionality between the means employed and the aim sought to be realised”.  It then set out and rejected the landlord’s case in the following passage (at paragraph 51):
“According to the applicants, the security of tenure that tenants already had under the law in force…provided an adequate response and the draconian nature of the means devised to give effect to the alleged moral entitlement, namely deprivation of property, went too far.  This was said to be confirmed by the absence of any true equivalent to the 1967 Act in the municipal legislation of the other Contracting States and, indeed, generally in democratic societies.  It is, so the applicants argue, only if there was no other less drastic remedy for the perceived injustice that the extreme remedy of expropriation could satisfy the requirements of Article 1.  This amounts to reading a test of strict necessity into the Article, an interpretation which the Court does not find warranted.  The availability of alternative solutions does not in itself render the leasehold reform legislation unjustified; it constitutes one factor, along with others, relevant for determining whether the means chosen could be regarded as reasonable and suited to achieving a legitimate aim being pursued, having regard to the need to strike a ‘fair balance’.  Provided the legislature remained within these bounds, it is not for the Court to say whether the legislation represented the best solution for dealing with the problem or whether the legislative discretion should have been exercised in another way….The occupying leaseholder was considered by Parliament to have a ‘moral entitlement’ to ownership of the house, of which inadequate account was taken under the existing law…The concern of the legislature was not simply to regulate more fairly the relationship of landlord and tenant but to right a perceived injustice that went to the very issue of ownership.  Allowing a mechanism for the compulsory transfer of the freehold interest in the house and the land to the tenant, with financial compensation to the landlord, cannot in itself be qualified in the circumstances as an inappropriate or disproportionate method for readjusting the law so as to meet that concern.”
This approach was followed in Holy Monasteries v. Greece (1994) 20 EHRR 1 and Chassagnou v. France (1999) 29 EHRR 615.  It was also followed by Lightman J in Fisher v. English Nature [2003] EWHC 1599 (Admin) in which James was cited by the judge as authority for the proposition that “the fact that there may be other even better methods of achieving the same ends does not necessarily mean that any particular measure is disproportionate under  Article 1”  (Paragraph 46).  It is evident that in the present case Keith J founded his conclusion on this line of authority.
14.	Mr. Wolfe submits that, in the light of other authority, Keith J was wrong to approach proportionality in the context of Article 1 of the First Protocol on a less rigorous basis than is generally required when considering breaches of Convention rights.  He relies on Daly, Shayler and Samaroo, none of which was specifically concerned with Article 1 of the First Protocol, but which, it is suggested, have mapped out general principles of proportionality where Convention rights are in issue.
15.	In Daly Lord Steyn said at (paragraph 27):
“The contours of the principle of proportionality are familiar.  In de Freitas v. Permanent Secretary of Ministry of Agriculture Fisheries Lands and Housing [1991] 1 AC 69 the Privy Council adopted a three stage test.  Lord Clyde observed, at page 80, that in determining whether a limitation (by an act, rule or decision) is arbitrary or excessive the Court should ask itself ‘whether: (i) the legislative objective is sufficiently important to justify limiting a fundamental right; (ii) the measures designed to meet the legislative objective are rationally connected to it; and (iii) the means used to impair the right or freedom are no more than necessary to accomplish the objective’.”
Mr. Wolfe emphasises the “no more than necessary” requirement.  In Shayler, Lord Hope adopted a passage from an article by Professor Jeffrey Jowell QC, Beyond the Rule of Law: Towards Constitutional Judicial Review [2000] PL 671, 679.  Professor Jowell described proportionality in this way:
“It starts by asking whether the breach is justifiable in terms of aims it seeks.  Some Convention rights can only be violated for specific purpose such as national security and therefore other aims would not be legitimate, whatever their rationale.  It then proceeds to consider whether in reality those aims are capable of being achieved.  Spurious or impractical aims will not suffice. It then goes on to consider whether less restrictive means could have been employed.  The breach must be the minimum necessary.  Finally it asks whether the breach is necessary (not merely desirable or reasonable) in the interests of democracy.  Only a ‘pressing social need’ can justify the breach of a fundamental right.”
Again, Mr. Wolfe emphasises consideration of whether “less restrictive means could have been employed” and the requirement that “the breach must be the minimum necessary”.  
16.	In Samaroo the issue related to impact of deportation upon Mr. Samaroo’s rights under Article 8 of the ECHR.  Dyson LJ said (at paragraphs 19 to 20):
“…in deciding what proportionality requires in any particular case, the issue will usually have to be considered in two distinct stages.  At the first stage, the question is: can the objective of the measure be achieved by means which are less interfering of an individual’s rights?….
At the second stage, it is assumed that the means employed to achieve the legitimate aim are necessary in the sense that they are the least intrusive of Convention rights that can be devised in order to achieve the aim.  The question at this stage of the consideration is: does the measure have an excessive or disproportionate effect on the interests of affected persons?”
17.	All this leads Mr. Wolfe to submit that whilst there must be “a compelling case in the public interest” to justify a deprivation of property, that is a necessary but not a sufficient test.  It must also be established that the chosen course of action is “the least interfering with human rights, having regard to the public benefit to be achieved and the different means of achieving it”.  That this applies as much in relation to Article 1 of the First Protocol as it does to other Convention rights is illustrated by the observation of Dyson LJ in Samaroo (at paragraph 17) that “it is clear that what Lord Steyn said about proportionality (in Daly) was intended to be a general application”.  An illustration of this is to be found in the decision of Mr. Nicholas Blake QC sitting as a deputy judge of the High Court in Edith Baker v. First Secretary of State [2003] EWHC 2511 (Admin).  The latter was a case concerning compulsory acquisition of a house deemed to be statutorily unfit for habitation.  The learned deputy judge said (at paragraph 45):
“Proportionality is not simply whether at the end result the balance is fair, but whether, in getting there, it has been decided that the most appropriate course of conduct is also the least interfering with human rights, having regard to the public benefit to be achieved and the different means of achieving it.”
On this basis, it is suggested that the Board of HC and Keith J failed to ask the right question.  It was not enough to decide in favour of Peabody and against TFHC simply because a compelling case in the public interest had been established.  It was necessary also to consider whether such a decision was the least intrusive of CLHC’s rights under Article 1 of the First Protocol.  That in turn required a consideration of the relative intrusiveness of a decision in favour of Peabody and a decision in favour of TF but that was never carried out by the Board or by Keith J, who specifically rejected such an approach.
Discussion
18.	If I may begin with a statement of the obvious, this Court is bound by decisions of the House of Lords and by previous decisions of this Court.  Accordingly, Daly, Shayler and Samaroo are binding upon us, provided that their rationes apply to the circumstances of the present case.  So far as James and other decisions of the European Court of Human Rights are concerned, we are enjoined by section 2 of the Human Rights Act to “take them into account”.  We of course accord them the utmost respect.  However, if it be the case that binding decisions of domestic courts impose an additional or more rigorous test of proportionality than is required by James, then that additional or more rigorous test will fall to be applied by this Court.  Thus, if the correct analysis is that Strasbourg jurisprudence applies a less rigorous test of proportionality in the context of Article 1 of the First Protocol than it applies in the context of other Convention rights, but the House of Lords and previous decisions of the Court of Appeal demand a more rigorous test and one which equiparates to that applicable in the context of other Convention rights, then we must apply the more rigorous test, over and above the Strasbourg test.  It is no doubt on this basis that Mr. Wolfe refers to the Strasbourg (James) test as necessary but not sufficient in English Law.
19.	The first ground of appeal is that the judge fell into error in identifying the correct test.  Mr. Wolfe submits that the existence of a “compelling case in the public interest” is a necessary but not a sufficient condition and that the requirements of proportionality inherent in Article 1 are such that if the objective in question can be met by measures which interfere less with individual rights, then those measures must be preferred.  His argument is that, whatever domestic and Strasbourg authority had decided about proportionality in the context of the second sentence of Article 1 (and I shall come to that), the approach which must now prevail is that propounded by the House of Lords in R (Daly)  v Secretary of State for the Home Department [2001] 2 AC 532 and R v Shayler [2003] 1 AC 247.  Although Daly and Shayler were not cases in which Article 1 of the First Protocol was engaged, the principles there propounded are, submits Mr. Wolfe, applicable to all cases in which Convention rights and proportionality are in issue.  Clearly, this raises an important point of principle and it is necessary to consider it in some detail.
20.	The centre piece of the Strasbourg jurisprudence on this point is James v United Kingdom [1986] 8 EHRR 123.  The European Court of Human Rights plainly rejected a test of “strict necessity” and emphasised “the need to strike a fair balance” in relation to Article 1.  The speech of Lord Steyn in Daly adopts the language of “no more than necessary to accomplish the objective”.  Although Daly concerned Article 8 it was no doubt because it has been authoritatively applied more generally, and specifically to Article 1 of the First Protocol (see International Transport Roth GmbH v. Home Secretary [2002] EWCA Civ 158, [2003] QB 728 at para 51, per Simon Brown LJ)  that Mr. Stanley accepted in the course of his submissions that “necessity” is a requirement of proportionality in the present case.  His point is that “necessity” is a more flexible concept than the “strict necessity” that was rejected in James.  In particular, he submits, it does not compel and is not to be equated with the least intrusive option.  To this extent, he seeks to distinguish Samaroo, another Article 8 case.
21.	That Samaroo is not of universal application has been accepted by this Court in Lough v. First Secretary of State [2004] EWCA Civ 905, which was concerned with the application of Article 8 and Article 1 to a grant of planning permission.  Pill LJ said (at para 49):
“The concept of proportionality is inherent in the approach to decision-making in planning law.  The procedure stated by Dyson LJ in Samaroo….is not wholly appropriate to decision-making in the present context in that it does not take account of the right, recognized in the Convention, of a landowner to make use of his land, a right which is, however, to be weighed against the rights of others affected by the use of land and of the community in general.  The first stage of the procedure stated by Dyson LJ does not require, nor was it intended to require, that, before any development of land is permitted, it must be established that the objectives of the development cannot be achieved in some other way or on some other site.  The effect of the proposal on adjoining owners and occupants must however be considered in the context of Article 8, and a balancing of interests is necessary…..Dyson LJ stated, at paragraph 18, that ‘it is important to emphasise that the striking of a fair balance lies at the heart of proportionality’.”
Keene LJ, agreeing, said (at para 55):
“….the process outlined in Samaroo, while appropriate where there is direct interference with Article 8 rights by a public body, cannot be applied without adaptation in a situation where the essential conflict is between two or more groups of private interests.  In such a situation, a balancing exercise of the kind conducted in the present case by the Inspector is sufficient to meet any requirement of proportionality.”
I interpret this as signifying that what is “necessary” is driven by the balancing exercise rather than by a “least intrusive” requirement.
22.	There is nothing new about interpreting the word “necessary” in a less than absolute way.  In Handyside (1976) 1 EHHR 737 the Strasbourg Court observed that, in the context of Article 10(2), “the adjective ‘necessary’…. is not synonymous with ‘indispensable’.”  (Para 48).  It compared the position with that arising under Article 6(1) where the words are “strictly necessary” and Article 2(2) (“absolutely necessary”).  It seems to me that it was these more rigorous tests that were rejected by the Court in James in the context of Article 1 of the First Protocol.
23.	As the word adopted by Lord Steyn in Daly was “necessary” and not “strictly necessary”, I conclude that there is no real inconsistency between Daly and James.  They both allow “necessary”, where appropriate, to mean “reasonably”, rather than “strictly” or “absolutely” necessary.  Everything then depends on the context because, as Lord Steyn reminds us (at paragraph 28): “In law context is everything”.  In the present context, I do not regard what Lord Hope said in Shayler as having been intended to go further than Lord Steyn had gone in Daly.
24.	I therefore focus on the context in this case.  It is not a case of naked property deprivation.  It is common ground that the decision of 24 June 2002 that there should be a transfer by reason of mismanagement of CLHC is unassailable.  The context is one wherein a statutory regulator, HC, having unobjectionably decided upon a transfer, then had to choose between two alternatives, Peabody or TFHC.  It chose Peabody.
25.	In my judgment, the task in which HC was engaged was wholly different from the task of the Secretary of State in Samaroo.  Having lawfully decided that there would have to be a transfer, the decision was then one between two proferred alternatives.  Although not in every respect the same  as a planning decision, it approximated to what Keene LJ was describing in Lough (above), namely “a situation where the essential conflict is between two or more groups of private interests”.  I conclude that the appropriate test of proportionality requires a balancing exercise and a decision which is justified on the basis of a compelling case in the public interest and as being reasonably necessary but not obligatorily the least intrusive of Convention rights.  That accords with Strasbourg and domestic authority.  It is also consistent with sensible and practical decision-making in the public interest in this context.  If “strict necessity” were to compel the “least intrusive” alternative, decisions which were distinctly second best or worse when tested against the performance of a regulator’s statutory functions would become mandatory.  A decision which was fraught with adverse consequences, would have to prevail because it was, perhaps quite marginally, the least intrusive.  Whilst one can readily see why that should be so in some Convention contexts, it would be a recipe for poor public administration in the context of cases such as Lough and the present case.
26.	Where does this leave this ground of appeal?  By accepting that there is a requirement of “reasonable necessity”, I am adding to the test formulated by Keith J but rejecting the more demanding approach advocated by Mr. Wolfe.  What then has to be considered is whether the challenged decisions are vitiated by the application of the enlarged test.
27.	It is clear from the minutes that HC did not apply the test advocated by Mr. Wolfe – they expressly rejected it.  What the Board did was to explore “the public interest considerations of both options”.  It compared them.  It concluded:
“….the TFHC proposals did not provide the necessary level of certainty that the Board required in order to properly discharge its regulatory responsibilities in the public interest”
whereas
“….a statutory transfer to Peabody would provide the certainty that it required.”
It further considered that any interference with the right enshrined in Article 1 of the First Protocol was “lawful, in the public interest and proportionate”. 
28.	Whilst it cannot be said that HC consciously and specifically applied the whole of the test which I have concluded is the appropriate test of proportionality in this context, I am entirely satisfied that, if it had done so, it would have come to the same conclusion and for the same reasons.  I regard that as inevitable in the light of the language of the minutes and the material that was before the Board.  Accordingly, although I am differing from Keith J. as regards the appropriate test, I would not allow the appeal on this ground.
Issue 2: regulatory concerns
29.	This ground of appeal relates to the way in which HC considered the implications of dual, cross-border regulation and the extent to which it permitted CCHC to make representations on the subject.  In his skeleton argument, Mr. Wolfe puts his case in this way:
“In essence, (1) HC’s concerns about the practicality of regulation were an important factor in its decision; and (2)  HC failed to explain these concerns to CLHC and TFHC or to give them a reasonable opportunity to deal with them by meeting to discuss them.”
The first of the enumerated points takes issue with the following conclusion of the judge (at para 38):
“Since the legal and practical problems said to have been posed by [TFHC’s] presence in Scotland, though referred to at the meeting on 24 September 2002, did not play, on my reading of the minutes, any part in the Board’s ultimate decision to direct the transfer of [CLHC’s] housing stock to Peabody, the challenge to the Board’s decision on this topic must fail.”
Before this Court it is common ground that the implications of dual, cross-border regulation were of concern to the HC and did play a part in the Board’s ultimate decision.  To that extent the judge was in error in stating otherwise.  However, the real issue is whether HC failed to comply with the requirements of procedural fairness when considering the problem.  Mr. Wolfe relies on the common law requirement of procedural fairness and also Article 1 of the First Protocol which has a procedural component:  Jokela v. Finland (2003) 37 EHRR 26, at para. 45.  However, I perceive no significant difference between the requirements of the common law and of the First Protocol in this regard.  His complaint is that HC failed to comply with the requirements of procedural fairness in that it did not communicate its concerns to CLHC with sufficient clarity and it did not hold a meeting with CLHC’s representatives to enable those concerns to be considered.  In order to address these points it is first necessary to refer to more of the factual background.
30.	On 20 June 2002 HC’s solicitors wrote to CLHC’s solicitors.  Having just received advice from leading counsel, HC’s solicitors expressed the view that, whilst the legislation does not forbid a transfer of engagements by an English cooperative to a Scottish cooperative, “there is real difficulty as regards the regulatory framework if that were to happen”.  They added:
“The problem is the exercise of what are very similar regulatory functions in respect of the same body by two separate regulators…..In summary, they are potentially inconsistent regulatory actions or approaches in relation to the same [Registered Social Landlord], and inevitable administrative complexity which will be involved in ‘dual’ regulation.”
These are extracts from a lengthy letter which went into some detail before inviting comment.  Six days later HC’s assistant chief executive wrote to CLHC referring to “unique regulatory problems” arising from the cross-border implications.  The letter communicated a decision in the form of a resolution of the Board that there should be a transfer following the findings of the statutory inquiry but the question whether it should be to TFHC or to Peabody should be deferred to enable HC to assess the regulatory implications in concert with Communities Scotland and to allow CLHC more time “to work up their proposals”.  It was made clear that the matter would not be allowed to drift and that there must be “a strong commitment to rapid progress from all parties”.
31.	On 11 July HC’s solicitors wrote to CLHC’s solicitors chasing them for a reply to the letter of 20 June.  They said:
“…..we have heard nothing, apart from the brief statement by Counsel instructed by your firm that it is not a ‘significant problem’ as it is…merely ‘an administrative challenge’.”
The reference to the statement by Counsel relates to the Board meeting of HC which had taken place on 22 June and which had been attended by members of CLHC, its solicitor and counsel (in fact, Mr. Wolfe), who had been permitted to address the Board.
32.	CLHC’s solicitors wrote to HC’s solicitors on 16 July.  They took the position that the regulators should resolve any practical difficulties between them, “with appropriate consultation with our clients” and TFHC.  On the same day, HC’s assistant chief executive wrote to CLHC, stating that Communities Scotland “share our serious concerns” and referring to doubt about compliance with the legislation.  On 17 July HC’s solicitors wrote to CLHC’s solicitors, noting their letter of 16 July and adding: “We presume you have nothing further to add as to the substance” of the concerns about regulation.  This prompted a reply dated 19 July which expressed the view that “it ought to be possible for the parties to….reach a sensible agreement regarding the practicalities of regulation”.  On 12 August CLHC’s solicitors wrote again but concentrated more on the legality of cross-border regulation rather than any practical difficulties.  On 5 September HC’s solicitors said that HC “cannot lawfully give its consent” to a transfer to TFHC – a proposition with which CLHC’s solicitors took issue in a letter dated 9 September.  By this time there was a further Board meeting arranged for 24 September.  On 13 September HC’s solicitors wrote to CLHC’s solicitors informing them that the meeting would be requested to consider the position on the assumption that there was no statutory impediment.  They reiterated the view that “regulatory difficulties” remained.  This again prompted the reply that any regulatory difficulties should be resolved between the regulators but that CLHC and TFHC remained ready to meet with the regulators “to discuss ways of resolving any perceived difficulties”.
33.	In advance of the meeting of 24 September, CLHC and its representatives were given notice of the concerns about dual regulation.  HC’s officer’s report, of which CLHC had sight, said:
“…it is also relevant for the Board to consider whether it believes it will be possible to achieve satisfactory arrangements for the dual regulation of a single legal entity operating on both sides of the border.  The Board needs to consider whether it will be possible to put in place satisfactory arrangements on fundamentally important issues such as the protection of the public funding invested in the housing stock at CLHC, or the protection of the interests of CLHC’s tenants.  It also needs to consider the danger of potentially inconsistent and contradictory regulatory action and the administrative and legal complexity involved in dual regulation by [HC] and Communities Scotland.  Solicitors acting for CLHC have argued that these concerns could be overcome through negotiation and agreement between [HC] and Communities Scotland following any transfer of engagements.” (Emphasis added)
It also disclosed a letter from Communities Scotland dated 10 September stating that “we remain unclear about the issue of dual regulation and whether this is a) legally possible or b) practicable”.
34.	The Board meeting took place on 24 September.  Mr. Wolfe was again permitted to address the Board.  The transcript discloses that he encouraged it to proceed on the assumption that a transfer to TFHC would be lawful.  He does not appear to have referred to practical difficulties.  Understandably, he and others were more concerned about the business case which took up most of the available time.  The minutes of the meeting record that “very serious reservations would remain about [HC’s] ability to discharge its statutory responsibilities as regulator effectively” following any transfer to TFHC.  The Board resolved to direct CLHC to make a statutory transfer to Peabody and to authorise officers to seek the consent of the Secretary of State.
35.	Does this history demonstrate a lack of procedural fairness?  In my judgment, it does not.  I am prepared to accept that it was incumbent upon HC to make known to CLHC its concerns about dual regulation and to give due consideration to any representations made by CLHC.  I do not accept that it was obligatory to meet with CLHC’s representatives for this purpose.  We have not been referred to any authority which goes that far.  In any event, there was a meeting in this case, in particular that of 24 September.  It was preceded by disclosure of HC’s concerns, together with those of Communities Scotland.  CLHC was able to make representations in writing and at the meeting through counsel.  It adopted the position that any practical problems could be resolved later, after a decision in its favour.  It made no complaint about a lack of opportunity to make representations.  There was no such lack.
36.	Mr. Wolfe submits that HC was shifting its ground in such a way as to render it difficult to make effective representations.  I do not accept this submission.  By 24 September, HC was no longer taking a point about legality.  It was prepared to assume it, as CLHC accepted.  We are invited to conclude that there was a muddying of the waters and that it was unclear whether the remaining concerns went to “practicalities” or “effectiveness”.  This is a distinction which has been iterated by both Mr. Wolfe and Mr. Stanley.  In my judgment, it is a distinction without a difference or a sterile exercise in semantics.
37.	I am wholly unpersuaded that there was any procedural unfairness in the way in which HC dealt with its reasonable concerns about the regulatory implications of CLHC’s proposals.
Issue 3: Peabody
38.	The minutes of the Board Meeting of 24 September 2002, at which HC resolved to direct a transfer to Peabody, disclose that a factor taken into account was the financial position of Peabody.  They state:
“The £5.6 M of public funding would be at more risk on TFHC’s balance sheet, because of the relative financial strengths of the two registered social landlords.     
[The Board] further noted Peabody’s…..financial strength….”
As a regulatory body, HC is engaged in informing itself about the position, including the financial position, of its regulated subjects.  It carries out assessments, the results of which are categorised as green, amber or red under a “traffic lights” system.  At the time of the decision of 24 September 2002, the current assessment of Peabody’s financial position was dated 24 February 2002.  It stated:
“Financial performance has been satisfactory and we have no concerns regarding the financial health of this association.”
That remained the current assessment until 1 September 2003, when a further assessment resulted in Peabody remaining in the green category but in a lower sub-category which meant that its:
“financial condition is presently acceptable but exposures exist which make it vulnerable to deteriation.”
The September 2003 assessment described the position as follows:
“Whilst the financial position is acceptable, there are areas of potential vulnerability.  However, the group operates in areas where demand for housing is likely to remain high and it has a strong asset back.  It will also benefit financially from the impact of rent restructuring.
A key challenge facing the Trust is the condition of its stock and the costs involved in meeting the Decent Homes Standard, with the age of the stock being a relevant factor.  An updated asset management strategy is being prepared and the associated costs will feed into the next business planning round.  Any significant increase in costs could affect the financial position adversely.  Another challenge is the Trust’s need to make continued efficiency savings in operational costs year on year. ”
39.	There ensued a dialogue between officers of HC and Peabody.  It embraced meetings on 18 November 2003 and 29 January 2004.  As a result, HC published a further assessment of Peabody on 5 February 2004.  It relegated Peabody from the green category to the higher of two amber sub-categories.  An amber categorisation signifies “some material concerns about performance, resulting in regulatory action above the minimum”.  It seems that the requirements of the Decent Homes Standard were proving to be more expensive than had been anticipated, as a result of which Peabody “has….accepted the need for a substantial change in its business strategy in order to form the necessary resources on improving its existing stock”.  Remedial measures were being undertaken.  However, the assessment would remain amber “until the Trust is demonstrating delivery of the planned savings in 2004/05 and progress is being made in delivering the new asset management strategy”.  All this reflected news and comment which had appeared in the housing press in late 2003 and early 2004.
40.	It follows from this chronology that  at the time of HC’s original decision in favour of Peabody on 24 September 2002 and at the time of its decision  of 24 July 2003 that there had been no material change of circumstances to cause it to alter its earlier decision, the assessment of Peabody’s financial position remained in the green category.  Indeed, the reassessment of September 2003 was still green, the reduction to amber only taking place in February 2004.
41.	The complaint which Mr. Wolfe seeks to advance on behalf of CLHC is that the decision of 24 July 2003, confirming a transfer to Peabody, was vitiated by a mistake of fact.  He seeks to fit the facts into the principle formulated in E v. Secretary for the Home Department [2004] EWCA Civ 49, [2004] QB 1044, in which Carnwath LJ, giving the judgment of the Court of Appeal, said (at para 66):
“In our view, the time has now come to accept that a mistake of fact giving rise to unfairness is a separate head of challenge in an appeal on a point of law, at least in those statutory contexts where the parties share an interest in cooperating to achieve the correct result…….Without seeking to lay down a precise code, the ordinary requirements for a finding of unfairness are…First, there must have been a mistake as to an existing fact, including a mistake as to the availability of evidence on a particular matter.  Secondly, the fact or evidence must have been ‘established’ in the sense that it was uncontentious and objectively verifiable.  Thirdly, the appellant (or his adviser) must not have been responsible for the mistake.  Fourthly, the mistake must have played a material (not necessarily decisive) part in the Tribunal’s reasoning.”
Although the present case involves a regulatory decision and not a statutory appeal, Mr. Stanley, rightly in my view, is content to accept that, as a matter of law, the principles articulated by Carnwath LJ are capable of applying in the present context.
42.	On the face of it, Mr. Wolfe’s submission is somewhat bold, as it appears to challenge the decision of 24 July 2003 by reference to material which only came into existence significantly after that date.  However, this is how he puts it in his skeleton argument:
“[The] approach and assessment was entirely based (at least from the point of view of HC’s Board – which took the decision – and the Secretary of State) on the understanding that there was nothing which cast any doubt at all on Peabody’s financial strength.  In fact there was such information.  Not information which would suggest that Peabody’s is/was financially insecure in absolute terms…but information which might…have led the Board and/or the Secretary of State to shift the balance in relation to relative financial strength and thus….where the overall balance in the decision – making process lay.  The information was known to HC’s officers but not disclosed to the Board, or the Secretary of State or CLHC…..As a result, the Board made its decision ignorant of a material fact, namely the existence of material which might shift the balance of relative financial strength….The threshold is whether HC’s view on relative financial strength might have been different, which plainly it might.  And the court is not in a position to say that it would not have been.”
I am bound to say that these submissions, which were reiterated with confidence before us, are, in my judgment, utterly unsustainable.  They are built upon the proposition that HC’s officers were in possession of material before July 2003 but failed to disclose it to the Board.  The thread upon which this proposition hangs is that the assessment of September 2003, which kept Peabody in the green category but on the basis that “exposures exist which make it vulnerable to deteriation”, was based on material which was derived at least in part from contacts, meetings and reviews to which HC officials had been party in 2002 and the first half of 2003.  The September 2003 assessment says as much.  However, that takes the submission nowhere.  The clear evidence is that Peabody retained green status in September 2003 on the basis of the totality of information then in possession of HC.  The witness statement of Adrian Rowland, a senior adviser in the employment of HC, makes it clear that the subsequent relegation of HC to amber in January 2004 was the result of the asset management strategy pursued after 1 September 2003 and meetings held between HC officials and Peabody between September 2003 and 29 January 2004.
43.	In these circumstances, it simply cannot be said that on 24 July 2003, the Board was mistaken as to an existing and established fact, in the sense of E.  Moreover, the matter does not rest there.  The respective accounts of Peabody, CLHC and TFHC show just why there were no material concerns about Peabody’s viability as a transferee and why the balance of relative financial strength inevitably favoured Peabody.  It is a large organisation with net assets of £481M as against TFHC’s £18M.  It has resources of £105M as against £4M; a turnover of £79M as against £3M.  On any basis, the consideration that Peabody had relative financial strength, was not put in the balance in a way that could possibly be described as unfair.  For these reasons I reject Mr. Wolfe’s submission and this ground of appeal.  I also reject his associated submission that CLHC was treated unfairly because HC did not disclose its concerns to CLHC as and when they arose so as to enable CLHC to make further representations on relative financial strength.  Again the chronology of events does not accommodate that submission and, in any event, I am unpersuaded that HC, as regulator, is under any obligation to canvass the views of  representatives of one body upon the financial position of another – at least not in the circumstances of this case.
Conclusion
44.	I find no merit in any of the grounds of appeal which I have grouped under three headings or issues.  I would dismiss the appeal.
Lord Justice Waller
45.	I agree.  I also agree with the judgment of Brooke LJ which follows and which I have read in draft.
Lord Justice Brooke : 
46.	I also agree with the judgment of Maurice Kay LJ
47.	So far as the second issue is concerned, HC’s solicitors spelt out to CLHC’s solicitors in some detail in their letter dated 20th June 2002 the nature of the regulatory concerns which their client’s proposal had engendered.  They explained that the broad intention of the relevant statutory provisions was for HC to regulate English bodies registered by it as social landlords, for the Secretary of State to perform the same functions in Wales, and for the Scottish Ministers to perform them in Scotland.  There was nothing on the face of paragraph 12 of Schedule 1 to the Housing Act 1996 to prevent HC from giving its consent to a transfer of engagements to a Scottish registered society, but on a transfer of engagements the transferee is deemed to be “registered as a social landlord” upon the transfer taking effect (Sch 1, para 12 (3)).
48.	They were not aware of anything in the relevant provisions which expressly prevented HC registering a Scottish body as a registered social landlord.  The “real difficulty” they identified would arise if HC registered such a transferee body when it was also a registered social landlord for the purposes of the Housing (Scotland) Act 2001.  Two separate regulators would then be exercising very similar regulatory functions in respect of the same body.  This constituted a problem.
49.	It might be argued that HC’s regulatory functions should be regarded as applying only to the activities of TFHC as regards land held by it in England.  But what if HC wished to exercise its regulatory power to appoint a committee member to TFHC because of some concern about its management of land in England, and the Scottish ministers were not willing to agree?  Although in theory HC might take unilateral regulatory action, disagreement with the other regulator would clearly be unsatisfactory.  Similar difficulties would arise if HC were willing to consent to a proposed change to TFHC’s rules, but the Scottish Ministers were not.  HC’s solicitors ended their letter by saying that there was real doubt as to whether such a transfer would be compatible with the statutory scheme contained in the Housing Act 1985 and the Housing Associations Act 1985.  They invited CLHC’s solicitors to consider these issues with their client and to convey their views on the matters raised in their letter as soon as possible.
50.	At HC’s special board meeting on 22nd June 2002, which was attended by representatives of CLHC and TFHC and junior counsel for CLHC, counsel’s initial submissions understandably did not engage the detailed points raised in this very recent letter.  At the end of that meeting, however, these points were specifically raised, and after discussing the matter with his clients Mr Wolfe said:
“That is obviously again something which will need to be worked up in discussion between [HC, CLHC, TFHC] and Communities Scotland.  So there is another process to be gone through there.”
51.	It was this face to face discussion which led to HC’s letter dated 26th June 2002 to which Maurice Kay LJ has referred in paragraph 30 of his judgment.  HC’s letter dated 16th July then put CLHC on express notice that HC had honoured its undertaking to assess the regulatory implications in concert with Communities Scotland.  The writer said in terms:
“You are of course aware that [HC] had serious reservations about the regulatory implications of the proposed transfer of engagements to TFHC.  Since I last wrote to you, we have continued to explore these issues with our lawyers, and we have commenced our dialogue with Communities Scotland.  We await a response to the letter from [HC’s] solicitors to [CLHC’s] solicitors dated 20th June 2002, in which we asked them to explain how the many regulatory difficulties which we perceive could be overcome.  Given that our colleagues at Communities Scotland share our serious concerns, it is, I think, essential that we receive a very early and satisfactory response to that letter, particularly as we now have some doubt that (notwithstanding our satisfaction that the Industrial and Provident Societies Act would not prevent what is being proposed) when read together, the English and Scottish legislation actually enables [HC] to consent to the de facto registration of a Scottish registered social landlord.
You will appreciate that unless you are able to rapidly satisfy those regulatory concerns there would seem to be little point in your committing time and expense in pursuing your proposals.”
52.	This strongly worded letter from HC to CLHC crossed with the letter of the same date from CLHC’s solicitors which Maurice Kay LJ mentions at the start of paragraph 32 of his judgment.  It is clear that the solicitors simply had not engaged properly with the formidable difficulties which dual regulation might create when they referred to the fact that it seemed to be common ground that there was nothing legally to prevent the proposed transfer, followed by the registration of TFHC as a registered landlord in England, and continued:
“It appears, therefore, that any difficulties which might arise would be practical rather than legal, and would involve co-ordination between the respective regulators.  It is not unreasonable to expect the regulators to resolve such matters between them, with appropriate consultation with our clients and [TFHC].  Our client’s counsel submitted to the Board that the existence of practical difficulties would not be a good reason for refusing consent for such a transfer and instead directing transfer to Peabody.
In its letter of 26 June [HC] indicated that it would assess the regulatory implications of the proposed transfer in concert with Communities Scotland.  We look forward to hearing from you further when your clients have made some progress on this aspect of the matter.”
Unknown to the writer, this point had been dealt with by HC’s letter to CLHC of the same day, which placed the ball firmly back in CLHC’s court.
53.	In paragraph 32 of his judgment, Maurice Kay LJ has summarised the effect of the ensuing correspondence.  On 9th September CLHC’s solicitors again dwelt on issues concerned with the legality of cross-border regulation.  By their response dated 13th September HC’s solicitors could not have made their client’s position clearer:
“…[W]e would refer you to our letter to you of 20 June as to the regulatory aspects.  We have had no substantive reply in relation to the concerns raised in that letter.
Our client’s position is that there is real doubt as to whether the Board has power to consent to a Transfer of Engagements to a Scottish society under the statutory scheme, particularly given the ‘dual’ regulation by two regulators that this would involve.  But in any event, even if the power to give the consent is available in principle, the Board has to consider whether it is appropriate to exercise that power in view of, inter alia, the regulatory difficulties.”
54.	They ended their letter by saying that at the forthcoming meeting on 24th September the Board would be requested to consider the position on the assumption that they did have the power in principle to accede to the Transfer of Engagements.  They said that they would supply “shortly” a paper by HC’s officers which would be considered by the Board.  
55.	This elicited the response dated 17th September from CLHC’s solicitors which once again did not engage the real difficulties that were inherent in dual regulation.  They reiterated their view that “any regulatory difficulties could and should be resolved by constructive discussion between the regulators and the two co-operatives” and sought to transfer the onus onto HC’s officers to liaise with CLHC, TFHC and Communities Scotland to arrange a meeting.
56.	As Maurice Kay LJ shows in paragraph 33 of his judgment, HC’s deep concerns about the practicality of dual registration were ventilated once again in their officers’ paper which was sent to CLHC’s solicitors with the other Board papers seven days before the meeting fixed for 24th September.  In this paper HC’s worries about the possibility of achieving satisfactory arrangements on issues like the protection of the public funding invested in CLHC’s housing stock or the protection of the interests of CLHC’s tenants were also brought to the surface.
57.	These difficulties were simply not addressed in the submissions made by counsel for CLHC at the meeting on 24th September.  He seems to have adopted a lawyerly approach that if a transfer was assumed to be legally possible – and HC was willing to proceed on the assumption that it would be lawful – then HC’s very real concerns about the practicality of dual regulation, of which his clients had had full notice for over three months, could somehow or other be resolved amicably in due course.
58.	I have recited the history in some detail because it seems to me to be far-fetched for CLHC and their advisers now to be suggesting that they were prejudiced by some procedural irregularity.  They knew perfectly the nature of HC’s very understandable practical concerns about the feasibility of dual regulation and they simply did not address their minds towards propounding solutions to them which would have set HC’s mind at rest.  Cross-border questions have always had the potential to create practical difficulties, under different legislative schemes for England and Scotland, long before the new arrangements for devolved government came into effect, and when CLHC chose to seek a future in an association with a Scottish mutual co-operative, it should not have taken much imagination to see that there could be serious practical difficulties of the type HC’s solicitors identified in their letter of 20th June.  I therefore consider that there is no merit at all in this ground of appeal.
59.	As to the third issue, it was in my judgment absurd for CLHC to contend that matters known to HC’s officers about Peabody’s finances prior to 24th July 2003 should have been disclosed to CLHC.  It would be sad if the greater transparency with which HC now conducts its regulatory functions were to lead to a state of affairs in which the courts required disclosure of this kind at a time when HC’s officers were still willing to give Peabody a green light in its traffic lights system.  I agree so completely with what Maurice Kay LJ says in paragraphs 42 and 43 of his judgment, that I do not wish to add anything to what he has said.  As with the second issue, I found Mr Wolfe’s arguments on behalf of CLHC to be wholly unsustainable.
60.	For these additional reasons on the second and third issues, together with the reasons given by Maurice Kay LJ, with which I agree, I, too, would dismiss this appeal.