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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Wilson & Ors v. Secretary of State for Trade and Industry [2003] UKHL 40 (10 July 2003)
URL: http://www.bailii.org/uk/cases/UKHL/2003/40.html
Cite as: [2003] UKHL 40, [2003] UKHRR 1085, [2003] 4 All ER 97, [2003] 2 All ER (Comm) 491, [2003] HRLR 33, [2004] 1 AC 816, [2003] 3 WLR 568

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Wilson & Ors v. Secretary of State for Trade and Industry [2003] UKHL 40 (10 July 2003)

    Judgments - Wilson and others v. Secretary of State for Trade and Industry (Appellant)

    HOUSE OF LORDS

    SESSION 2002-03
    [2003] UKHL 40
    on appeal from: [2001] EWCA Civ 633

    OPINIONS
    OF THE LORDS OF APPEAL
    FOR JUDGMENT IN THE CAUSE
    Wilson and others
    v.
    Secretary of State for Trade and Industry (Appellant)
    ON
    THURSDAY 10 JULY 2003

    The Appellate Committee comprised:

    Lord Nicholls of Birkenhead

    Lord Hope of Craighead

    Lord Hobhouse of Woodborough

    Lord Scott of Foscote

    Lord Rodger of Earlsferry

    HOUSE OF LORDS
    OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
    IN THE CAUSE
    Wilson and others v. Secretary of State for Trade and Industry (Appellant)
    [2003] UKHL 40

    LORD NICHOLLS OF BIRKENHEAD

    My Lords,

    1.      In January 1999 Penelope Wilson borrowed £5,000 from a pawnbroker for a period of six months. The pawned property was her car, a BMW 318 Convertible. She did not repay the loan. The pawnbroker sought repayment, failing which the car would be sold. Mrs Wilson's response was to commence proceedings in the Kingston upon Thames County Court. She claimed the agreement was unenforceable because it did not contain all the prescribed terms. She sought on order for the return of her car. Alternatively she sought to reopen the agreement as grossly exorbitant. At the trial Mrs Wilson appeared in person. The pawnbroker was a two-man company, First County Trust Ltd. The company was represented in court by its finance director.

    2.      From these modest beginnings the County Court proceedings burgeoned into a case with wide-ranging implications. Neither Mrs Wilson nor First County Trust appeared before the House. But the Attorney General appeared on behalf of the Secretary of State for Trade and Industry. The Speaker of the House of Commons and the Clerk of the Parliaments intervened. They were represented by leading and junior counsel. The Finance and Leasing Association also intervened, as did four insurance companies which are among the largest providers of motor insurance in this country. And leading and junior counsel also appeared as amicus curi'.

    The £250 fee: was it 'credit'?

    3.      When Mrs Wilson signed her agreement and pawn receipt she was charged a 'document fee' of £250. This was added to the amount of her loan. In the agreement the amount of the loan was stated as £5,250. The amount payable on redemption was £7,327, made up of £5,250 and interest of £1,827. The annual percentage rate of interest was stated to be 94.78%.

    4.      The agreement was a regulated agreement for the purposes of section 8 of the Consumer Credit Act 1974. A regulated agreement is not properly executed unless the document signed contains all the prescribed terms: section 61(1)(a). One of the prescribed terms is the 'amount of the credit': see the Consumer Credit (Agreements) Regulations 1983 (SI 1983/1553), regulation 6 and Schedule 6, para 2. The consequence of failure to state all the prescribed terms of the agreement is that the court is precluded, by section 127(3), from enforcing the agreement. In the absence of enforcement by the court the agreement is altogether unenforceable: section 65(1).

    5.      On 24 September 1999 His Honour Judge Hull QC, in a carefully reasoned judgment, held that the fee of £250 was part of the amount of the credit. So the agreement was enforceable. He reopened the agreement as an extortionate credit bargain and reduced the amount of interest payable by one half. Mrs Wilson appealed to the Court of Appeal. Pending the hearing of her appeal she paid First County Trust £6,900 to redeem her car. That was in December 1999.

    6.      The appeal was heard in November 2000, shortly after the Human Rights Act 1998 came into force. The Court of Appeal, comprising Sir Andrew Morritt V-C, and Chadwick and Rix LJJ, allowed Mrs Wilson's appeal: see [2001] QB 407. Sir Andrew Morritt V-C recognised there was considerable force in First County Trust's submissions in support of the judge's view. But having analysed the statutory provisions, the court held that the £250 added to the loan to enable Mrs Wilson to pay the document fee was not 'credit' for the purposes of the Consumer Credit Act. So one of the prescribed terms was not correctly stated. In consequence the agreement was unenforceable. So also was the security. First County Trust was ordered to repay the amount of £6,900 Mrs Wilson had paid the company after Judge Hull's judgment together with interest amounting to £662. The overall result was that Mrs Wilson was entitled to keep the amount of her loan, pay no interest and recover her car.

    The adjourned hearing

    7.      Sir Andrew Morritt V-C expressed concern at this outcome. He considered it might be arguable that section 127(3) of the Consumer Credit Act infringes article 6(1) of the European Convention on Human Rights and article 1 of the First Protocol to the Convention. The court adjourned the further hearing of the appeal for notice to be given to the Crown, pursuant to section 5 of the Human Rights Act, that the court was considering whether to make a declaration of incompatibility. The Secretary of State for Trade and Industry was then added as a party to the proceedings.

    8.      On 2 May 2001 the court gave judgment at the adjourned hearing: see [2001] EWCA Civ 633, [2002] QB 74. The court held that the inflexible exclusion of a judicial remedy by section 127(3), preventing the court from doing what is just in the circumstances of the case, is disproportionate to the legitimate policy objective of ensuring that particular attention is paid to the inclusion of certain terms in the document signed by the borrower. It is not possible to read and give effect to section 113 or section 127(3) in a way compatible with First County Trust's Convention rights. The court made a declaration, pursuant to section 4 of the Human Rights Act, that section 127(3), in so far as it prevents the court from making an enforcement order under section 65 of the Consumer Credit Act unless a document containing all the prescribed terms of the agreement has been signed by the debtor, is incompatible with the rights guaranteed to the creditor by article 6(1) of the Convention and article 1 of the First Protocol to the Convention.

    9.      The Secretary of State appealed to your Lordships' House. First County Trust did not. The Secretary of State accepted that Mrs Wilson's agreement was not 'properly executed' within the meaning of section 61 of the Consumer Credit Act. She accepted that, in consequence, no enforcement order could be made under section 65 and that the security over the car was unenforceable. The Secretary of State also accepted it is not possible to 'read down' the relevant provisions of the Consumer Credit Act and thereby save them from any Convention rights incompatibility otherwise existing. But she challenged the decision of the Court of Appeal on several grounds. Her primary submission was that the court has no jurisdiction to make a declaration of incompatibility in relation to events occurring before the Human Rights Act came fully into force on 2 October 2000. Here, the agreement was made in January 1999 for a period of six months. Additionally, the parties' rights were determined before the Human Rights Act came into force. The County Court decision was in September 1999.

    Retrospectivity and section 4 of the Human Rights Act

    10.      As everyone knows, the purpose of the Human Rights Act 1998 was to make the human rights and fundamental freedoms set out in the European Convention on Human Rights directly enforceable in this country as part of its domestic law. The question raised by the Secretary of State's submission is how the Act was intended to operate regarding events occurring before the Act came into force, that is to say, events taking place at a time when these human rights were not as such part of the domestic law of this country.

    11.      Section 1 of the Act defines 'Convention rights' and states how the relevant articles of the Convention and its Protocols are to have effect for the purposes of the Act. Section 2 provides that when determining a question arising in connection with a Convention right courts must take into account, among other matters, decisions of the European Court of Human Rights and the European Commission of Human Rights. I can put these two introductory sections on one side. Contrary to the submissions of the Secretary of State, I do not think they assist either way on the point now under consideration. They are neutral.

    12.      The Act prescribes two principal means whereby it 'brings human rights home' from Strasbourg: first, by making provision for the interpretation and amendment of legislation and, secondly, by making it unlawful for a public authority to act in a way incompatible with a Convention right. Sections 3 to 5 and 10 are concerned with the former of these objectives, sections 6 to 9 with the latter. I shall consider the latter group of sections first. Sections 6 to 9 are forward looking in their reach. Section 6(1) provides that it 'is unlawful for a public authority to act in a way which is incompatible with a Convention right'. On a natural reading this provision is directed at post-Act conduct. The context powerfully supports this interpretation. One would not expect a statute promoting human rights values to render unlawful acts which were lawful when done. That would be to impose liability where none existed at the time the act was done. Sections 7 to 9 are concerned with conduct outlawed by section 6(1). They prescribe remedial consequences which ensue when a public authority has acted, or proposes to act, in a way 'which is made unlawful by section 6(1)': section 7(1). It follows therefore that, like section 6(1), sections 7 to 9 are concerned with post-Act events.

    13.      Section 22(4) is an exception to this scheme. It is a curious provision. Commentators and judges have spilled much ink in discussing it. Its effect is that in response to proceedings brought by a public authority a victim of an unlawful act may rely on a Convention right 'whenever the act in question took place'. So this provision enables a victim to assert and rely on a Convention right in respect of conduct which was not unlawful when it took place. In circumstances where section 22(4) applies the Human Rights Act gives a remedy in respect of pre-Act conduct. What is not apparent is why, in respect of pre-Act violations of human rights, victims are given a domestic remedy in this one respect but not more widely. What is special about this one particular situation is not clear. But there it is.

    14.      With these provisions in mind I turn to sections 3 and 4. It can be noted at once that section 4 rides in harness with section 3. Section 4 contains two prerequisites to the court's jurisdiction to make a declaration of incompatibility. First, subsections (2) and (4) of section 4 apply to proceedings in which the court 'determines' whether a legislative provision is compatible with a Convention right. So section 4 does not apply unless the court, in the proceedings in question, actually decides whether the relevant legislation is Convention-compliant. The second prerequisite is that the court must be satisfied the relevant legislative provision is incompatible with a Convention right: section 4(2) and (4). This presupposes that, despite application of the principle of interpretation stated in section 3, the legislation is non-compliant. In other words, interpretation of the legislation in accordance with section 3 is an essential preliminary step to making a declaration of incompatibility. It is an essential preliminary step because the court cannot be satisfied the legislation is incompatible until effect has been given to the interpretative obligation set out in section 3.

    15.      This interpretation of section 4 accords with the consequence flowing from a declaration of incompatibility. A declaration of incompatibility triggers the 'fast track' legislative procedures set out in section 10. It would make no sense for these procedures to be set in motion if it remains uncertain whether it is possible to interpret the legislation in a Convention-compliant way.

    16.      In the ordinary course this sequential approach goes without saying. Courts will interpret legislation, as they are required to do, in accordance with section 3. Only when they have done this will any question of a declaration of incompatibility arise. But the present case is exceptional because of its transitional nature: the agreement was made pre-Act, and the Court of Appeal was interpreting the legislation post-Act. Hence the all-important question: is section 3 applicable in such a case?

    17.      On its face section 3 is of general application. So far as possible legislation must be read and given effect in a way compatible with the Convention rights. Section 3 is retrospective in the sense that, expressly, it applies to legislation whenever enacted. Thus section 3 may have the effect of changing the interpretation and effect of legislation already in force. An interpretation appropriate before the Act came into force may have to be reconsidered and revised in post-Act proceedings. This effect of section 3(1) is implicit in section 3(2)(a). So much is clear.

    18.      Considerable difficulties, however, might arise if the new interpretation of legislation, consequent on an application of section 3, were always to apply to pre-Act events. It would mean that parties' rights under existing legislation in respect of a transaction completed before the Act came into force could be changed overnight, to the benefit of one party and the prejudice of the other. This change, moreover, would operate capriciously, with the outcome depending on whether the parties' rights were determined by a court before or after 2 October 2000. The outcome in one case involving pre-Act happenings could differ from the outcome in another comparable case depending solely on when the cases were heard by a court. Parliament cannot have intended section 3(1) should operate in this unfair and arbitrary fashion.

    19.      The answer to this difficulty lies in the principle underlying the presumption against retrospective operation and the similar but rather narrower presumption against interference with vested interests. These are established presumptions but they are vague and imprecise. As Lord Mustill pointed out in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486, 524-525, the subject matter of statutes is so varied that these generalised maxims are not a reliable guide. As always, therefore, the underlying rationale should be sought. This was well identified by Staughton LJ in Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712, 724:

    'the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.'

        Thus the appropriate approach is to identify the intention of Parliament in respect of the relevant statutory provision in accordance with this statement of principle.

    20.      Applying this approach to the Human Rights Act, I agree with Mummery LJ in Wainwright v Home Office [2001] EWCA Civ 2081, [2002] QB 1334, 1352, para 61, that in general the principle of interpretation set out in section 3(1) does not apply to causes of action accruing before the section came into force. The principle does not apply because to apply it in such cases, and thereby change the interpretation and effect of existing legislation, might well produce an unfair result for one party or the other. The Human Rights Act was not intended to have this effect.

    21.      I emphasise that this conclusion does not mean that section 3 never applies to pre-Act events. Whether section 3 applies to pre-Act events depends upon the application of the principle identified by Staughton LJ in the context of the particular issue before the court. To give one important instance: different considerations apply to post-Act criminal trials in respect of pre-Act happenings. The prosecution does not have an accrued or vested right in any relevant sense.

    22.      In the present case Parliament cannot have intended that application of section 3(1) should have the effect of altering parties' existing rights and obligations under the Consumer Credit Act. For the purpose of identifying the rights of Mrs Wilson and First County Trust under their January 1999 agreement the Consumer Credit Act is to be interpreted without reference to section 3(1).

    23.      It follows that, in this transitional type of case concerning the Consumer Credit Act, no question can arise of the court making a declaration of incompatibility. For the reasons already considered, it is only when a court is called upon to interpret legislation in accordance with section 3(1) that the court may proceed, where appropriate, to make a declaration of incompatibility. The court can make a declaration of incompatibility only where section 3 is available as an interpretative tool. That is not this case.

    The court as a public authority

    24.      The Court of Appeal reached a contrary conclusion on the applicability of Convention rights by a different route. The court held that the relevant event is not the making of the January 1999 agreement. The relevant event is the Court of Appeal's order. The court is a public authority. The court, required by section 6(1) to act in a way compatible with Convention rights, must have regard to the facts as they are at the time when it makes its order: [2002] QB 74, 87-89, paras 17, 18 and 22. The decision of the Court of Appeal, I should note, was given before the decisions of this House in R v Lambert [2001] UKHL 37, [2002] 2 AC 545, and R v Kansal (No 2) [2001] UKHL 62, [2002] 2 AC 69.

    25.      As is well known, the application of section 6(1) to judicial decisions on matters of substantive law is a highly controversial topic. It is not necessary to venture onto this quicksand in the present case. One insuperable difficulty with the Court of Appeal's analysis, as it respectfully seems to me, is that it fails to take into account the mandatory nature of the relevant provisions of the Consumer Credit Act. Let it be assumed, but without deciding, that the court's order in these proceedings is an 'act' by a public authority within the meaning of section 6(1). Even so, there can be no question of the court acting unlawfully. The court's decision in these proceeding gives effect to the mandatory provisions of the Consumer Credit Act. An order giving effect to these provisions of primary legislation is excluded from the scope of section 6(1) by section 6(2)(a). Thus, reference to section 6(1) takes the matter no further forward. The question which remains to be answered is whether, in interpreting and giving effect to the provisions of the Consumer Credit Act in this case, section 3(1) of the Human Rights Act applies. That is the crucial question. That is the question I have already considered.

    26.      For these reasons the appeal by the Secretary of State must succeed. In this transitional type of case section 3(1) is inapplicable to the interpretation of the Consumer Credit Act. Consequently, the court has no jurisdiction to make a declaration of incompatibility. The declaration made by the Court of Appeal should be set aside.

    27.      This conclusion makes it strictly unnecessary for the House to consider the further issues arising out of the judgment of the Court of Appeal. But it would not be satisfactory to leave these other issues unresolved. They have been fully argued by experienced counsel, the House has the benefit of the views of the Court of Appeal, and the issues are of importance to innumerable transactions being entered into every day. I turn, therefore, to consider what the position would be in this case had the Human Rights Act applied.

    Whether article 6 of the Convention or article 1 of the First Protocol applies

    28.      The first of the further issues is whether article 6 of the Convention or article 1 of the First Protocol applies in the present case. Before turning to these articles I should outline the salient provisions of the Consumer Credit Act 1974. Subject to exemptions, a regulated agreement is an agreement between an individual debtor and another person by which the latter provides the former with a cash loan or other financial accommodation not exceeding a specified amount. Currently the amount is £25,000. Section 61(1) sets out conditions which must be satisfied if a regulated agreement is to be treated as properly executed. One of these conditions, in paragraph (a), is that the agreement must be in a prescribed form containing all the prescribed terms. The prescribed terms are the amount of the credit or the credit limit, rate of interest (in some cases), how the borrower is to discharge his obligations, and any power the creditor may have to vary what is payable: Consumer Credit (Agreements) Regulations 1983, Schedule 6. The consequence of improper execution is that the agreement is not enforceable against the debtor save by an order of the court: section 65(1). Section 127(1) provides what is to happen on an application for an enforcement order under section 65. The court 'shall dismiss' the application if, but only if, the court considers it just to do so having regard to the prejudice caused to any person by the contravention in question and the degree of culpability for it. The court may reduce the amount payable by the debtor so as to compensate him for prejudice suffered as a result of the contravention, or impose conditions, or suspend the operation of any term of the order or make consequential changes in the agreement or security.

    29.      The court's powers under section 127(1) are subject to significant qualification in two types of cases. The first type is where section 61(1)(a), regarding signing of agreements, is not complied with. In such cases the court 'shall not make' an enforcement order unless a document, whether or not in the prescribed form, containing all the prescribed terms, was signed by the debtor: section 127(3). Thus, signature of a document containing all the prescribed terms is an essential prerequisite to the court's power to make an enforcement order. The second type of case concerns failure to comply with the duty to supply a copy of an executed or unexecuted agreement pursuant to sections 62 and 63, or failure to comply with the duty to give notice of cancellation rights in accordance with section 64(1). Here again, subject to one exception regarding sections 62 and 63, section 127(4) precludes the court from making an enforcement order.

    30.      These restrictions on enforcement of a regulated agreement cannot be side-stepped by recourse to a pledge or other form of security furnished in support of the debtor's obligations under the agreement. The security is not enforceable to a greater extent than the loan: section 113. Where an application for an enforcement order is dismissed, except on technical grounds only, or the court makes a declaration under section 142 that the agreement is not enforceable, any security provided in relation to a regulated agreement 'shall be treated as never having effect': section 106(a). Property lodged with the creditor by way of security has to be returned by him 'forthwith'.

    31.      These restrictions on enforcement of a regulated agreement are for the protection of borrowers. They do not deprive a regulated agreement of all legal effect. They do not render a regulated agreement void. A regulated agreement is enforceable by the debtor against the creditor. It seems, for instance, that a borrower may insist on making further drawdowns under a regulated agreement even though the agreement is unenforceable against him. Further, section 173(3) expressly permits consensual enforcement against a borrower. A borrower may consent to the sale of a security or to judgment. Moreover, the creditor is entitled to retain any security lodged until either an application for an enforcement order is dismissed or the court makes a declaration under section 142 that the agreement is not enforceable. That is the effect of sections 113(3) and 106.

    32.      Against this background I turn to the relevant Convention rights. Article 6(1) of the Convention guarantees everyone a fair, expeditious and public trial of disputes about his civil rights. This guarantee includes an implied right of access to a court: see Golder v United Kingdom (1975) EHRR 524, 536, para 36. The scope of this guarantee has been considered on many occasions by the European Court of Human Rights. The relevant principles were explored recently by your Lordships' House in Matthews v Ministry of Defence [2003] UKHL 4, [2003] 3 WLR 435: see, for instance, the pithy introductory summary by Lord Bingham of Cornhill, at para 3.

    33.      For present purposes it is sufficient to note that the established case law of the European Court of Human Rights is to the effect that article 6(1) does not itself guarantee any particular content for civil rights and obligations in the substantive law of the Contracting States. Section 6(1) applies only to disputes over what, at least arguably, are recognised under domestic law to be 'rights and obligations': see Z v United Kingdom [2001] 2 FLR 612, 634, para 87. Article 6(1) may not be used as a means of creating a substantive civil right having no basis in national law. The content of substantive national law may call for scrutiny under other articles of the Convention or its Protocols, but that is not the target of article 6(1).

    34.      The basic principle underlying article 6(1) is that 'civil claims must be capable of being submitted to a judge for adjudication': see Fayed v United Kingdom (1994) 18 EHRR 393, 429, para 65. Thus a typical case within article 6(1) is where a person enjoys under national law what is arguably a civil right but the only forum for deciding a dispute over the existence or enforcement of the right is a tribunal which is not independent and impartial. So procedural bars on bringing claims to court may fall within article 6(1). So also may procedural bars having the effect of preventing claims being decided on their merits. Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249, 288-292, paras 72 to 79, is an example of the latter. The issue of a 'national security' certificate had the effect of preventing complaints of religious discrimination being considered on their merits by a Fair Employment Tribunal. That was a violation of article 6(1).

    35. The distinction between the substantive content of a right and an unacceptable procedural bar to its enforcement by a court can give rise to difficulty in distinguishing the one from the other in a particular case. As a matter of drafting, a restriction on the scope of a right may be framed in several different ways. But the drafting technique chosen by the draftsman cannot be determinative of this issue. Human Rights conventions are concerned with substance, not form, with practicalities and realities, not linguistic niceties. The crucial question in the present context is whether, as a matter of substance, the relevant provision of national law has the effect of preventing an issue which ought to be decided by a court from being so decided. The touchstone in this regard is the proper role of courts in a democratic society. A right of access to a court is one of the checks on the danger of arbitrary power. In Matthews v Ministry of Defence [2003] UKHL 4, [2003] 3 WLR 435, 477, para 142, Lord Walker of Gestingthorpe noted that article 6 is in principle concerned with the procedural fairness and integrity of a state's judicial system. Lord Hoffmann observed, at p. 447, para 29, that it should not matter how the law is framed, provided one holds onto the underlying principle, which is to maintain the rule of law and the separation of powers.

    36.      In the present case the essence of the complaint is that section 127(3) of the Consumer Credit Act has the effect that a regulated agreement is not enforceable unless a document containing all the prescribed terms is signed by the debtor. In my view, thus framed, the complaint does not bring article 6(1) into play. In terms of labels, that is a restriction on the scope of the rights a creditor acquires under a regulated agreement. It does not bar access to court to decide whether the case is caught by the restriction. It does bar a court from exercising any discretion over whether to make an enforcement order. But in taking that power away from a court the legislature was not encroaching on territory which ought properly to be the province of the courts in a democratic society.

    37.      In reaching the opposite conclusion the Court of Appeal focused on the exclusion of any meaningful consideration by the court of the creditor's rights under the agreement in a case where the document signed by the debtor does not include all the prescribed terms. The court held that the exclusion of any judicial remedy in such a case engages article 6(1): [2002] QB 74, 92-93, paras 31, 32. I am unable to agree. The inability of the court to make an enforcement order in such a case, whatever the circumstances, is a limitation on the substantive scope of a creditor's rights. It no more offends the rule of law and the separation of powers than would be the case if Parliament had said that such an agreement is void.

    38.      In contrast to article 6(1), article 1 of the First Protocol is concerned with the content of substantive national law. Article 1 provides:

    'Every natural and 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 … The preceding provisions 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 … '

    39.      On its face article 1 is engaged in this case, most obviously with regard to the BMW car delivered by Mrs Wilson to First County Trust as security. On delivery First County Trust as pawnee acquired a proprietary interest in the car. That was in January 1999. The company's proprietary interest ceased eight months later, in September 1999, when the court refused to make an enforcement order. In addition, both parties acquired contractual rights under the agreement. 'Possessions' in article 1 is apt to embrace contractual rights as much as personal rights. Contractual rights may be more valuable and enduring than proprietary rights. But, by virtue of the statute, the contractual rights acquired by First County Trust were enforceable only with the consent of the borrower pursuant to section 173(3).

    40.      The response of the Secretary of State and others is that all the rights acquired by First County Trust under the agreement were from their inception subject to the limitations prescribed by the Consumer Credit Act. A restriction on the scope of the rights acquired by a lender under a transaction is not within article 1 of the First Protocol. A person who acquires property subject to limitations under national law which subsequently bite according to their tenor cannot complain that his rights under article 1 of the First Protocol have been infringed.

    41.      I do not agree. This proposition is stated too widely and too loosely to be acceptable. Clearly, the expiry of a limited interest such as a licence in accordance with its terms does not engage article 1. That is not this case. Here the transaction between the parties provided for repayment of the loan and for the car to be held as security. What is in issue is the 'lawfulness' of overriding legislation. The proposition advanced by the Secretary of State would mean that however arbitrary or discriminatory such legislation might be, if it was in existence when the transaction took place a court enforcing human rights values would be impotent. A Convention right guaranteeing a right of property would have nothing to say. That is not an attractive conclusion.

    42.      There are of course many circumstances where statutes empower the executive or the courts to make orders depriving a person of some of his possessions. Compulsory acquisition, and property adjustment orders on divorce, are instances. The exercise of powers such as these prima facie engages article 1. This is so irrespective of whether the enabling statute was enacted before or after the property affected by the order was acquired. Hakansson v Sweden (1990) 13 EHRR 1 is an example where the law was in place before the property in question was acquired. The law providing for the compulsory resale of the applicants' land within two years existed when they bought the land. Thus a provision in the Consumer Credit Act empowering a court to refuse to enforce a regulated agreement may engage article 1 even though the Act was in force before the agreement was entered into.

    43.      In the present case the relevant statutory provisions are framed differently. They do not empower the court to refuse to enforce the agreement now in question. They go further. The court is compelled to refuse to make an enforcement order. Is this difference material? I think not. It would be passing strange if article 1 were engaged in the former case but not the latter. A law regulating the effect of a transaction between the parties in the public interest does not always escape review under article 1 of the First Protocol. Such a law may infringe article 1 if it creates an 'imbalance' between the parties which would result in one party being arbitrarily or unjustly deprived of his possessions for the benefit of the other: see Bramelid v Sweden (1983) 5 EHRR 249, 256.

    44.      Thus the question in the present case is one of characterisation of the nature and effect of the relevant provisions of the Consumer Credit Act, considered as a matter of substance rather than form. In my view, consistently with the underlying objective of article 1 of the First Protocol, the relevant provisions in the Consumer Credit Act are more readily and appropriately characterised as a statutory deprivation of the lender's rights of property in the broadest sense of that expression than as a mere delimitation of the extent of the rights granted by a transaction. The rigid ban on enforcement of security and contractual rights prescribed by section 127(3) alone and in conjunction with sections 106 and 113 engages article 1 of the First Protocol. The lender's rights were extinguished in favour of the borrower by legislation for which the state is responsible. This was a deprivation of possessions within the meaning of article 1: see James v United Kingdom (1986) 8 EHRR 123,140, para 38. Whether this statutory interference with First County Trust's peaceful enjoyment of its possessions was justified, and therefore not a breach of article 1, is a separate issue.

    45.      I do not think there is any inconsistency between this conclusion and the conclusion stated above regarding article 6 (1). A statutory provision may be characterised at one and the same time as a limitation on the scope of a creditor's rights for the purposes of article 6 (1) and as a law depriving a person of his possessions for the (different) purposes of article 1 of the First Protocol.

    Restitution

    46.      Before considering whether section 127(3) is compatible with article 1 of the First Protocol I must digress to deal with two preliminary matters. The first concerns the legal consequences of section 127(3). When a regulated agreement is rendered irredeemably unenforceable by section 127(3), the lender is unable to enforce the agreement. But does he, quite apart from his (unenforceable) rights under the agreement, have a restitutionary claim against the borrower in respect of the money lent? The parties to the agreement intended the money would be repayable in accordance with the terms of the agreement. Inability to enforce the terms of the agreement does not inevitably carry with it the consequence that the borrower may simply keep the money. Retention of the money, it is said, would be unjust enrichment, for which the appropriate remedy would be an order that the borrower repay what was never intended to be other than a loan. Reliance was placed, by way of analogy, on the decision of the Court of Appeal in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938. There a bank paid money to a local authority under an interest rate swap agreement, which was held later to be outside the local authority's powers. The local authority had been unjustly enriched and the bank was entitled to a restitutionary remedy.

    47.      A secondary question also arises: if the lender does have a restitutionary claim, is that a matter to be taken into account when considering whether section 127(3) is compatible with article 1 of the First Protocol?

    48.      I can deal with these two questions quite shortly, starting with the latter. I am in no doubt that a lender's restitutionary remedy, if he has one, is a matter to be taken into account when considering whether section 127(3) is compatible with article 1 of the First Protocol. The adverse consequences of an alleged infringement of a Convention right cannot sensibly be assessed other than in the round. The real position of the claimant is what matters. If in practice a lender can ameliorate the immediate and directly adverse consequence of section 127(3) by resort to some other right or remedy readily available to him, that is a matter to which the court must have regard. I cannot accept the contrary arguments addressed to the House.

    49.      I consider, however, that there is no relevant restitutionary remedy generally available to a lender in the circumstances now under consideration. The message to be gleaned from sections 65, 106, 113 and 127 of the Consumer Credit Act is that where a court dismisses an application for an enforcement order under section 65 the lender is intended by Parliament to be left without recourse against the borrower in respect of the loan. That being the consequence intended by Parliament, the lender cannot assert at common law that the borrower has been unjustly enriched. That would be inconsistent with the parliamentary intention in rendering the entire agreement unenforceable. True, the Consumer Credit Act does not expressly negative any other remedy available to the lender, nor does it render an improperly executed agreement unlawful. But when legislation renders the entire agreement inoperative, to use a neutral word, for failure to comply with prescribed formalities the legislation itself is the primary source of guidance on what are the legal consequences. Here the intention of Parliament is clear.

    50.      This interpretation of the Consumer Credit Act accords with the approach adopted by the House in Orakpo v Manson Investments Ltd [1978] AC 95, regarding section 6 of the Moneylenders Act 1927 and, more recently, in Dimond v Lovell [2002] 1 AC 384, another case where section 127(3) precluded the making of an enforcement order. In Dimond's case the restitutionary remedy sought was payment of the hire charge for a replacement car used by Mrs Dimond. The House rejected a claim advanced on the basis of unjust enrichment. Lord Hoffmann observed that Parliament contemplated that a debtor might be enriched consequential upon non-enforcement of an agreement pursuant to the statutory provisions. It was not open to the court to say this consequence is unjust and should be reversed by a remedy at common law: [2002] 1 AC 384, 397-398.

    Use of Hansard in compatibility cases

    51.      The second preliminary matter concerns the Court of Appeal's use of Hansard in the present case. When considering whether this was a case where the courts should be ready to defer to the considered opinion of elected representatives, the Court of Appeal, at [2002] QB 74, 93-94, para 33, pointed to the need for the court to identify the social policy issue which the legislature or the executive thought it necessary to address and 'the thinking which led to that issue being dealt with in the way that it was':

    'It is one thing to accept the need to defer to an opinion which can be seen to be the product of reasoned consideration based on policy; it is quite another thing to be required to accept, without question, an opinion for which no reason of policy is advanced.'

    52.      In this connection the Court of Appeal considered the 'lengthy gestation' of the Consumer Credit Act. The court referred to parliamentary debates on the Bill, not as an aid to interpretation, but on the reason which led Parliament to enact section 127(3). The Court of Appeal concluded that the debates provide no answer to this issue: such references as there are 'tend to confuse rather than to illuminate' (para 36). The court added, in para 37:

    'In the present case, therefore, we are left without the assistance which examination of reports, preparatory material and debates in Parliament might have been expected to provide on the question: "why was it thought necessary to deny to the courts the power to do what was just in those cases in which there was no document signed by the debtor which contained terms which would or might, at some future date, be prescribed by the Secretary of State?" … We have been shown no material which helps us to understand why the executive thought it necessary to propose, or why Parliament thought it necessary to enact, section 127(3) of the 1974 Act in the form which it takes.'

    53.      Although the references to Hansard in the present case were inconclusive, Mr Sumption QC expressed to your Lordships' House the concern of the Speaker of the House of Commons and of the Clerk of the Parliaments at the 'wider significance' of the exercise undertaken by the Court of Appeal. This exercise, he submitted, involved measuring against standards derived from the Convention the acceptability of Parliament's reasons for legislating in a particular way, and doing so by reference to the 'thinking' apparent from the record of debates. Further, it involved treating the absence of expressed reasons, acceptable or otherwise, as a factor making it more difficult to justify the enactment in Convention terms. The courts should not treat speeches made in Parliament, whether by ministers or others, as evidence of the policy considerations which led to legislation taking a particular form. The exercise on which the Court of Appeal engaged is not an appropriate exercise for a court. There are no circumstances in which it is appropriate for a court to refer to the record of parliamentary debates in order to decide whether an enactment is compatible with the Convention. The policy and objects of a statute must by determined by interpreting its language, which alone represents Parliament's intention. Reference to debates for the purpose of determining whether the policy considerations put forward by those participating in debates in either House were justifiable in Convention terms and proportionate to the remedy proposed would involve 'questioning' what is said in Parliament contrary to article 9 of the Bill of Rights 1689. That is a different exercise from the one undertaken in Pepper v Hart [1993] AC 593, and it is an exercise essentially adverse to Parliament's intention, not supportive of it.

    54.      These submissions raise a point of constitutional importance. This House sitting in its judicial capacity is keenly aware, as indeed are all courts, of the importance of the legislature and the judiciary discharging their own constitutional roles and not trespassing inadvertently into the other's province. Thus, in resolving any question which may arise on the practical application of this principle in a particular case, the courts welcome the participation of the Speaker of the House of Commons and the Clerk of the Parliaments in the proceedings. The House has been much assisted by the submissions made on their behalf by Mr Sumption. The present case is in fact the first time the authorities of Parliament have sought to be heard on the use of Hansard by the courts.

    55.      The starting point for any consideration of the matters raised by these submissions is, indeed, the respective roles of Parliament and the courts. Parliament enacts legislation, the courts interpret and apply it. The enactment of legislation, and the process by which legislation is enacted, are matters for Parliament, not the courts. Thus, article 9 of the Bill of Rights 1689 provides, in modern spelling, that 'the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.' This provision is part of the wider principle that the courts and Parliament are both astute to recognise their constitutional roles: Lord Browne-Wilkinson in Prebble v Television New Zealand Ltd [1995] 1 AC 321, 332. These distinct roles reflect one aspect of the separation of powers under this country's constitution.

    56.      The decision in Pepper v Hart [1993] AC 593 removed from the law an irrational exception. When a court is carrying out its constitutional task of interpreting legislation it is seeking to identify the intention of Parliament expressed in the language used. This is an objective concept. In this context the intention of Parliament is the intention the court reasonably imputes to Parliament in respect of the language used. In seeking this intention the courts have recourse to recognised principles of interpretation and also a variety of aids, some internal, found within the statute itself, some external, found outside the statute. External aids include the background to the legislation, because no legislation is enacted in a vacuum. It has long been established that the courts may look outside a statute in order to identify the 'mischief' Parliament was seeking to remedy. Lord Simon of Glaisdale noted it is 'rare indeed' that a statute can be properly interpreted without knowing the legislative object: Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591, 647. Reports of the Law Commission or advisory committees, and government white papers, are everyday examples of background material which may assist in understanding the purpose and scope of legislation.

    57.      Before the decision in Pepper v Hart a self-imposed judicial rule excluded use of parliamentary materials as an external aid. The courts drew a veil around everything said in Parliament. This had the consequence that a statement made in a government white paper, issued by the relevant government department before legislation was introduced, could be used as an external aid. But if the same statement were made by a minister of the department in Parliament when promoting the Bill in one or other House, the courts were strictly unable to take cognisance of the minister's statement.

    58.      In relaxing this self-imposed rule the House enunciated some practical safeguards in Pepper v Hart. These were intended to keep references to Hansard within reasonable bounds. One of these safeguards is that the parliamentary statement must be made by the minister or other promoter of the Bill. In imposing this cautionary limitation the House was not, I believe, intending to attribute to ministerial statements some special status, thereby encroaching upon the court's constitutional task of determining objectively what was the intention of Parliament in using the language in question. A clear and unambiguous ministerial statement is part of the background to the legislation. In the words of Lord Browne-Wilkinson in Pepper v Hart [1993] AC 593, 635, such statements 'are as much background to the enactment of legislation as white papers and Parliamentary reports'. But they are no more than part of the background. As I emphasised in R v Secretary of State for the Environment, Transport and the Regions, Ex parte Spath Holme Ltd [2001] 2 AC 349, 399, however such statements are made and however explicit they may be, they cannot control the meaning of an Act of Parliament.

    59.      Suggestions have been made that unequivocal ministerial statements made in Parliament regarding an ambiguous provision in a Bill may have a more exalted role. In his influential article 'Pepper v Hart; A Re-examination' (2001) 21 OJLS 59, Lord Steyn noted it may be unobjectionable for a judge to use Hansard to identify the mischief at which a statute is aimed. But he rightly drew attention to the conceptual and constitutional difficulties in treating the intentions of the government revealed in debates as reflecting the will of Parliament, as distinct from the possibility that they may give rise to an estoppel or the like against the government.

    60.      In the present case Mr Sumption did not submit that Pepper v Hart was wrongly decided. Nor is it necessary to decide whether Pepper v Hart does more than permit courts, when ascertaining the intention of Parliament, to have regard to ministerial statements made in Parliament in the same way as they may have regard to ministerial statements made outside Parliament. What is important is to recognise there are occasions when courts may properly have regard to ministerial and other statements made in Parliament without in any way 'questioning' what has been said in Parliament, without giving rise to difficulties inherent in treating such statements as indicative of the will of Parliament, and without in any other way encroaching upon parliamentary privilege by interfering in matters properly for consideration and regulation by Parliament alone. The use by courts of ministerial and other promoters' statements as part of the background of legislation, pursuant to Pepper v Hart, is one instance. Another instance is the established practice by which courts, when adjudicating upon an application for judicial review of a ministerial decision, may have regard to a ministerial statement made in Parliament. The decision of your Lordships' House in R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696 is an example of this. I now turn to consider whether a challenge to the compatibility of legislation with Convention rights may be a further instance of the innocuous use by courts of statements made in Parliament.

    61.      The Human Rights Act 1998 requires the court to exercise a new role in respect of primary legislation. This new role is fundamentally different from interpreting and applying legislation. The courts are now required to evaluate the effect of primary legislation in terms of Convention rights and, where appropriate, make a formal declaration of incompatibility. In carrying out this evaluation the court has to compare the effect of the legislation with the Convention right. If the legislation impinges upon a Convention right the court must then compare the policy objective of the legislation with the policy objective which under the Convention may justify a prima facie infringement of the Convention right. When making these two comparisons the court will look primarily at the legislation, but not exclusively so. Convention rights are concerned with practicalities. When identifying the practical effect of an impugned statutory provision the court may need to look outside the statute in order to see the complete picture, as already instanced in the present case regarding the possible availability of a restitutionary remedy. As to the objective of the statute, at one level this will be coincident with its effect. At this level, the object of section 127(3) is to prevent an enforcement order being made when the circumstances specified in that provision apply. But that is not the relevant level for Convention purposes. What is relevant is the underlying social purpose sought to be achieved by the statutory provision. Frequently that purpose will be self-evident, but this will not always be so.

    62.      The legislation must not only have a legitimate policy objective. It must also satisfy a 'proportionality' test. The court must decide whether the means employed by the statute to achieve the policy objective is appropriate and not disproportionate in its adverse effect. This involves a 'value judgment' by the court, made by reference to the circumstances prevailing when the issue has to be decided. It is the current effect and impact of the legislation which matter, not the position when the legislation was enacted or came into force. (I interpose that in the present case no suggestion was made that there has been any relevant change of circumstances since the Consumer Credit Act was enacted.)

    63.      When a court makes this value judgment the facts will often speak for themselves. But sometimes the court may need additional background information tending to show, for instance, the likely practical impact of the statutory measure and why the course adopted by the legislature is or is not appropriate. Moreover, as when interpreting a statute, so when identifying the policy objective of a statutory provision or assessing the 'proportionality' of a statutory provision, the court may need enlightenment on the nature and extent of the social problem (the 'mischief') at which the legislation is aimed. This may throw light on the rationale underlying the legislation.

    64.      This additional background material may be found in published documents, such as a government white paper. If relevant information is provided by a minister or, indeed, any other member of either House in the course of a debate on a Bill, the courts must also be able to take this into account. The courts, similarly, must be able to have regard to information contained in explanatory notes prepared by the relevant government department and published with a Bill. The courts would be failing in the due discharge of the new role assigned to them by Parliament if they were to exclude from consideration relevant background information whose only source was a ministerial statement in Parliament or an explanatory note prepared by his department while the Bill was proceeding through Parliament. By having regard to such material the court would not be 'questioning' proceedings in Parliament or intruding improperly into the legislative process or ascribing to Parliament the views expressed by a minister. The court would merely be placing itself in a better position to understand the legislation.

    65. To that limited extent there may be occasion for the courts, when conducting the statutory 'compatibility' exercise, to have regard to matters stated in Parliament. It is a consequence flowing from the Human Rights Act. The constitutionally unexceptionable nature of this consequence receives some confirmation from the view expressed in the unanimous report of the parliamentary Joint Committee on Parliamentary Privilege (1999) (HL Paper 43-I, HC 214-I), p 28, para 86, that it is difficult to see how there could be any objection to the court taking account of something said in Parliament when there is no suggestion the statement was inspired by improper motives or was untrue or misleading and there is no question of legal liability.

    66.      I expect that occasions when resort to Hansard is necessary as part of the statutory 'compatibility' exercise will seldom arise. The present case is not such an occasion. Should such an occasion arise the courts must be careful not to treat the ministerial or other statement as indicative of the objective intention of Parliament. Nor should the courts give a ministerial statement, whether made inside or outside Parliament, determinative weight. It should not be supposed that members necessarily agreed with the minister's reasoning or his conclusions.

    67.      Beyond this use of Hansard as a source of background information, the content of parliamentary debates has no direct relevance to the issues the court is called upon to decide in compatibility cases and, hence, these debates are not a proper matter for investigation or consideration by the courts. In particular, it is a cardinal constitutional principle that the will of Parliament is expressed in the language used by it in its enactments. The proportionality of legislation is to be judged on that basis. The courts are to have due regard to the legislation as an expression of the will of Parliament. The proportionality of a statutory measure is not to be judged by the quality of the reasons advanced in support of it in the course of parliamentary debate, or by the subjective state of mind of individual ministers or other members. Different members may well have different reasons, not expressed in debates, for approving particular statutory provisions. They may have different perceptions of the desirability or likely effect of the legislation. Ministerial statements, especially if made ex tempore in response to questions, may sometimes lack clarity or be misdirected. Lack of cogent justification in the course of parliamentary debate is not a matter which 'counts against' the legislation on issues of proportionality. The court is called upon to evaluate the proportionality of the legislation, not the adequacy of the minister's exploration of the policy options or of his explanations to Parliament. The latter would contravene article 9 of the Bill of Rights. The court would then be presuming to evaluate the sufficiency of the legislative process leading up to the enactment of the statute. I agree with Laws LJ's observations on this in International Transport Roth GmbH v Secretary of State for the Home Department [2002] 3 WLR 344, 386, paras 113-114.

    Article 1 of the First Protocol and proportionality

    68.      I turn now to consider whether section 127(3) of the Consumer Credit Act is compatible with the rights guaranteed by article 1 of the First Protocol. Inherent in article 1 is the need to hold a fair balance between the public interest and the protection of the fundamental rights of creditors such as First County Trust. It is common ground that section 127(3) pursues a legitimate aim. The fairness of a system of law governing the contractual or property rights of private persons is a matter of public concern. Legislative provisions intended to bring about such fairness are capable of being in the public interest, even if they involve the compulsory transfer of property from one person to another: see the leasehold enfranchisement case of James v United Kingdom (1986) 8 EHRR 123, 141, para 41. More specifically, persons wishing to borrow money are often vulnerable. There is a public interest in protecting such persons from exploitation.

    69.      There must also be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. The means chosen to cure the social mischief must be appropriate and not disproportionate in its adverse impact. Whether that relationship exists in the case of section 127(3) is the key issue.

    70.      In approaching this issue, as noted in R v Johnstone [2003] UKHL 28 para 51, courts should have in mind that theirs is a reviewing role. Parliament is charged with the primary responsibility for deciding whether the means chosen to deal with a social problem are both necessary and appropriate. Assessment of the advantages and disadvantages of the various legislative alternatives is primarily a matter for Parliament. The possible existence of alternative solutions does not in itself render the contested legislation unjustified: see the Rent Act case of Mellacher v Austria (1989) 12 EHRR 391, 411, para 53. The court will reach a different conclusion from the legislature only when it is apparent that the legislature has attached insufficient importance to a person's Convention right. The readiness of a court to depart from the views of the legislature depends upon the circumstances, one of which is the subject matter of the legislation. The more the legislation concerns matters of broad social policy, the less ready will be a court to intervene.

    71.      I turn to the statutory setting of section 127(3). The Consumer Credit Act contains many requirements about the form and contents of regulated agreements. Parliament has singled out some obligations as having such importance that non-compliance leads automatically and inflexibly to a ban on the making of an enforcement order whatever the circumstances. These obligations are specified in section 127(3) and (4). In these two subsections Parliament has chosen, deliberately, to exclude consideration of what is just and equitable in the particular case. The latter approach, enabling the court to consider the circumstances of the particular case, was adopted as the general rule in section 127(1). Section 127(3) and (4) are, expressly, exceptions to the general rule. In prescribing these two exceptions Parliament must be taken to have considered that the sanction generally attaching to non-compliance with the statutory requirements was not sufficient to achieve compliance with the duty to include all the prescribed terms in the agreement (section 61(1)(a)) or the duties to provide copies and notice of cancellation rights (sections 62 to 64). Something more drastic was needed in order to focus attention on the need for lenders to comply strictly with these particular obligations.

    72.      Undoubtedly, as illustrated by the facts of the present case, section 127(3) may be drastic, even harsh, in its adverse consequences for a lender. He loses all his rights under the agreement, including his rights to any security which has been lodged. Conversely, the borrower acquires what can only be described as a windfall. He keeps the money and recovers his security. These consequences apply just as much where the lender was acting in good faith throughout and the error was due to a mistaken reading of the complex statutory requirements as in cases of deliberate non-compliance. These consequences also apply where, as in the present case, the borrower suffered no prejudice as a result of the non-compliance as they do where the borrower was misled. Parliament was painting here with a broad brush.

    73.      The unattractive feature of this approach is that it will sometimes involve punishing the blameless pour encourager les autres. On its face, considered in the context of one particular case, a sanction having this effect is difficult to justify. The Moneylenders Act 1927 adopted a similarly severe approach. Infringement of statutory requirements rendered the loan and any security unenforceable. So did the Hire Purchase Act 1965, although to a lesser extent. This approach was roundly condemned in the Crowther report (Report of the Committee on Consumer Credit, under the presidency of Lord Crowther, March 1971) (Cmnd 4596), vol 1, p 311, para 6.11.4:

    'It offends every notion of justice or fairness that because of some technical slip which in no way prejudices him, a borrower, having received a substantial sum of money, should be entitled to retain or spend it without any obligation to repay a single penny.'

    74.      Despite this criticism I have no difficulty in accepting that in suitable instances it is open to Parliament, when Parliament considers the public interest so requires, to decide that failure to comply with certain formalities is an essential prerequisite to enforcement of certain types of agreements. This course is open to Parliament even though this will sometimes yield a seemingly unreasonable result in a particular case. Considered overall, this course may well be a proportionate response in practice to a perceived social problem. Parliament may consider the response should be a uniform solution across the board. A tailor-made response, fitting the facts of each case as decided in an application to the court, may not be appropriate. This may be considered an insufficient incentive and insufficient deterrent. And it may fail to protect consumers adequately. Persons most in need of protection are perhaps the least likely to participate in court proceedings. They may well let proceedings go by default: see, in relation to money lending agreements, the Crowther report, p 236, para 6.1.19.

    75.      Nor do I have any difficulty in accepting that money lending transactions as a class give rise to significant social problems. Bargaining power lies with the lender, and the social evils flowing from this are notorious. The activities of some lenders have long given the business of money lending a bad reputation. Nor, becoming more specific, do I have any difficulty in accepting, in principle, that Parliament may properly make compliance with the formalities required by the Consumer Credit Act regarding 'prescribed terms' an essential prerequisite to enforcement. In principle that course must be open to Parliament. It must be open to Parliament to decide that, severe though this sanction may be, it is an appropriate way of protecting consumers as a matter of social policy. In making its decision in the present case Parliament had the benefit of experience gained over many years in the working of the Moneylenders Act 1927 and the hire purchase legislation, and also the views of the Crowther committee. Further, it must be open to Parliament so to decide even though the lender's inability to enforce an agreement will not assist a borrower who consents to the enforcement of the agreement in ignorance of the true legal position.

    76.      The one point which has caused me difficulty is whether the requirement to state the amount of 'credit' is sufficiently clear and certain. The more severe the sanction, the more important it is that the law should be unambiguous. In the present case the confusion over the treatment of the document fee of £250 as 'credit' may have been due to a widespread misunderstanding within the trade. Certainly it was shared by an experienced trial judge. Mr Hibbert on behalf of the Finance and Leasing Association submitted it is sometimes far from easy to apply the complex provisions of the Consumer Credit Act and the ancillary regulations. He gave examples of types of cases where, he said, identifying the amount of 'credit' is fraught with difficulty.

    77.      That there was genuine confusion in the present case is admitted. But I am not persuaded the degree of uncertainty involved in identifying the amount of 'credit' is unacceptably high. The consumer credit legislation has to cope with a wide range of types of transactions. It is not surprising that now and again problems of definition will arise. With the assistance of court decisions points of uncertainty, when they occur, can be clarified. The mere fact that a legal provision is capable of more than one interpretation does not mean that it fails to meet the requirement implied in the Convention concept of 'prescribed by law': Vogt v Germany (1995) 21 EHRR 205, para 48. Moreover, I have in mind that the statutory provisions apply only to loans up to a prescribed financial limit, currently £25,000. So the exposure of a creditor in any one case is confined. The burden imposed on him is not excessive.

    78.      Accordingly, in my view section 127(3) is compatible with article 1 of the First Protocol.

    79.      The Court of Appeal reached the opposite conclusion. In doing so the court approached the matter from a slightly different angle. The effect of the court's judgment was to treat section 127(1) as the touchstone for proportionality and then require positive justification for any more draconian provision: see [2002] QB 74, 95-96, paras 38-39. I respectfully consider this is an erroneous approach. Section 127(3) is one provision in an overall package of measures, some more severe than others, approved by the legislature in response to a perennial social problem. In this type of case the court should approach the relevant statutory provision without any preconceptions of the requirements of proportionality based on other provisions of the statute. The court should simply have regard to the relevant statutory provision and its policy objective and consider whether the provision bears so unfairly on the applicant that it was not open to Parliament to adopt this provision, even as part of an overall package, in response to the social problem in question. In other words, is it apparent that Parliament must have attached insufficient importance to the applicant's Convention right? As I have indicated, I would answer 'no' to this question in the present case.

    80.      As a footnote I should add that in stating this conclusion I am not to be taken as expressing a view on what would be the position if, as is now under consideration, the current limit of £25,000 were removed and the Consumer Credit Act were to apply to loans regardless of their amount. An adverse consequence, acceptable for a loan of £25,000, may not be acceptable when applied to a loan of £250,000.

    LORD HOPE OF CRAIGHEAD

    My Lords,

    81.      It is a mark of the importance of the issues which have been raised by the case that neither of the parties to the dispute which have given rise to it have taken any part in the appeal to this House. It has been brought by the Secretary of State for Trade and Industry, who was joined as a party to the proceedings in the Court of Appeal in response to a notice which was served on her under section 5(1) of the Human Rights Act 1998 ("the 1998 Act"). It has been responded to by four providers of motor insurance to the general pubic in the United Kingdom, by the Speaker of the House of Commons and the Clerk of the Parliaments ("the House Authorities") and by the Finance and Leasing Association which is the leading trade association representing the consumer finance industry. Your Lordships have also had the benefit of helpful submissions by an amicus curi' appointed by the Attorney General. In this situation the facts of the case may seem to be of little importance. But they cannot be overlooked entirely, as they provide the context for an examination of the wider issues that need to be dealt with.

    82.      My noble and learned friend, Lord Nicholls of Birkenhead, has set out the underlying facts. I am happy to adopt what he has said about them and confine myself to what I see as the essential details. The first point is that the transaction between Mrs Wilson and First County Trust ("FCT") was entered into, was acted upon by both sides and was the subject of proceedings in the County Court all before the relevant provisions of the 1998 Act were brought into force on 2 October 2000 by the Human Rights Act (Commencement No 2) Order 2000 (SI 2000/1851).

    83.      The loan agreement was signed on 22 January 1999. The loan was for a period of six months. It was due to be repaid, together with interest, on 21 July 1999. Mrs Wilson did not repay the loan on that date. On 23 July 1999 FCT sought payment of the amount due under the agreement. Mrs Wilson then instituted proceedings against FCT in the county court. She sought a declaration under the Consumer Credit Act 1974 ("the 1974 Act") that the agreement was unenforceable, its reopening on the ground that the rate of interest at 94.78 % was grossly excessive and an injunction forbidding FCT from disposing of the motor car which it taken from Mrs Wilson in pawn as security for the loan. An interim injunction was granted on 12 August 1999. On 24 September 1999 the District Judge refused Mrs Wilson's application for a declaration that the agreement was void and unenforceable. But he granted a declaration that the credit agreement was extortionate, substituted a monthly interest charge at an agreed rate and permitted Mrs Wilson to redeem the motor car on payment of the loan with interest on or before 1 October 1999. On 18 October 1999 she gave notice of an appeal against the rejection of her claim that the agreement was unenforceable. But on 17 December 1999 she redeemed her car by paying the whole of the sum that was then due to FCT.

    84.      Mrs Wilson's appeal against FCT came before the Court of Appeal for hearing on 9 November 2000. By that date the 1998 Act had come into force. As Sir Andrew Morritt V-C observed when judgment was given on 23 November, neither party relied on it: [2001] QB 407, 417F-G, para 25. But he said that that did not absolve the court from considering its application. So it was that the court, having concluded that it was barred by section 127(3) of the 1974 Act from enforcing the agreement and that Mrs Wilson was entitled to repayment of the sum which she had paid to redeem her motor car, decided to adjourn the appeal to enable further consideration to be given to the question whether the bar on its enforcement infringed FCT's Convention rights and, if so, whether it should make a declaration of incompatibility under section 4 of the 1998 Act.

    85.      This brief history shows that the transaction which has given rise to this appeal was over and done with before the relevant provisions of the 1998 Act were brought into force, subject only to the question whether Mrs Wilson is entitled to repayment of the sum which she paid over to redeem her motor car. This raises a difficult and important question about the extent to which the 1998 Act can be relied upon so as to affect rights and obligations arising from previous transactions ("the retrospectivity issue"). Then there is the question whether, if the 1998 Act can be relied upon in these circumstances, the effect of section 127(3) of the 1974 Act in the events which have happened is to engage any of FCT's Convention rights ("the Convention rights issue").

    86.      The second point is that, in the course of its discussion in the judgment which was delivered on 2 May 2001 of the question whether the provisions of section 127(3) of the 1984 Act were incompatible with FCT's Convention rights, the Court of Appeal examined the content of the debates on the Consumer Credit Bill in Parliament as reported in Hansard in order to identify the aims and issues of social policy which led to its enactment: [2001 EWCA Civ 633, [2002] QB 74, 94D-95F, paras 35-37. In the Court of Appeal the Secretary of State submitted that an attempt to do this was illegitimate. Her position before your Lordships was, as the learned Attorney General put it on her behalf, more moderate. But he urged caution in the use of this material and criticised the way it had been used by the Court of Appeal. The argument that its use is illegitimate has not gone away, however. It was the subject of submissions made by Mr Sumption QC on behalf of the House Authorities, and it is plain in view of its importance that we must deal with it: ("the reference to Hansard issue").

    87.      There is one other issue which has to be addressed. As has already mentioned, the Court of Appeal held in its first judgment that the effect of section 127(3) of the 1984 Act was that the agreement between Mrs Wilson and FCT was unenforceable and that she was entitled to repayment of the sum which she paid over to redeem her motor car. Sir Andrew Morritt V-C said that he would not wish to arrive at a conclusion which permitted Mrs Wilson both to retain her car and to recover the money which she paid to redeem it unless the statutory provisions left no alternative: [2001] QB 407, 416D, para 20. Having considered the decision of your Lordships' House in Dimond v Lovell [2000] 1 AC 384 however he concluded that prima facie she was entitled to the orders which she sought: para 25. FCT have not sought to appeal against this decision, and it will not be disturbed. But the Secretary of State submits that the decision in Dimond v Lovell is distinguishable and that, if the agreement is unenforceable, FCT is entitled to a restitutionary remedy against Mrs Wilson ("the Dimond v Lovell issue").

    The retrospectivity issue

    88.      The Court of Appeal decided that it would be appropriate to declare that, having regard to the terms prescribed by regulation 6(1) of and Schedule 6 to the Consumer Credit (Agreements) Regulations 1983 (SI 1983/1553), the provisions of section 127(3) of the 1974 Act, in so far as they prevent the court from making an enforcement order under section 6(1) of that Act unless a document containing all the prescribed forms of the agreement has been signed by the debtor or hirer are incompatible with the rights guaranteed to the creditor or hirer by article 6(1) of the Convention and article 1 of the First Protocol:[2002] QB 74, 99B-C, para 50. The issue is whether it was open to the Court of Appeal to make this declaration.

    89.      The Secretary of State submits that it was not open to the Court of Appeal to do so, as sections 1 and 4 of the 1998 Act came into force after the agreement was made, after the due date for payment under that agreement and after judgment had been pronounced in the County Court on Mrs Wilson's application for a declaration that the agreement was void and unenforceable. Her argument is that FCT had at the relevant times no Convention rights under the 1998 Act that were capable of being infringed by the operation of section 127(3) of the 1974 Act. In short, as the declaration was made in relation to events which occurred before the 1998 Act fully came into force, it offends against the general principle that legislation does not have effect retrospectively: Bennion, Statutory Interpretation, 4th ed (2002), pp 265-269, 689-690.

    90.      The only provision in the 1998 Act which gives retrospective effect to any of its provisions is section 22(4). It directs attention exclusively to that part of the Act which deals with the acts of public authorities: see sections 6 to 9. What it says is that section 7(1)(b) applies to proceedings brought by or at the instigation of a public authority whenever the act in question took place. I do not think that there is any mystery as to why this provision was included in the 1998 Act, although the consequences that flow from it are much less certain. The explanation lies in the fact that the purpose of sections 6 to 9 of the Act is to provide a remedial structure in domestic law for the rights guaranteed by the Convention. As article 13 of the Convention makes clear, it is the obligation of states which have ratified the Convention to provide everyone within their jurisdiction with an effective remedy if the rights or freedoms which it protects are violated. The scheme of the Act is to give effect in domestic law to the obligation which is set out in article 13. If that scheme was to be followed through, victims had to be given an effective remedy in domestic law for a violation by the state of their Convention rights. The principle upon which the Act proceeds is that actions by public authorities are unlawful if they are in breach of Convention rights: section 6(1). Effect is given to that principle in section 7. But it was appreciated that victims of a violation by the state of their Convention rights were already entitled to obtain a remedy in the European Court of Human Rights under article 41 of the Convention. In that context it made sense for the provisions of section 6(1) to be made available for use defensively where proceedings are brought against the victim by or at the instigation of a public authority, whenever the violation took place. That is what section 22(4) achieves by enabling section 7(1)(b) to be given effect retrospectively.

    91.      But we are not concerned with the acts of public authorities in this case or with proceedings brought by or at the instigation of a public authority. There is no claim by a victim that a public authority has acted in a way that is made unlawful by section 6(1) of the Act.

    92.      It has been held that acts of courts or tribunals which took place before 2 October 2000 which they were required to do by primary legislation and were done according to the meaning which was to be given to the legislation at that time are not affected by section 22(4): see R v Kansal [2001] UKHL 62, [2002] 2 AC 69, 112F-113A, para 84; Wainwright v Home Office [2001] EWCA Civ 2081, [2002] QB 1334, 1346A-1347C, paras 29-36. It has also been held that the Act cannot be relied upon retrospectively to make unlawful conduct which was lawful at the time when it took place: Wainwright v Home Office [2002] QB 1334, 1337G-H para 40. The effect of these decisions is that the 1998 Act cannot be applied retroactively so as to deem the law to have been different from what it was when these acts were done. But we are not concerned in this case with the lawfulness of acts done or the lawfulness of conduct which took place before the Act was brought fully into force. The question in this case is whether the rights and obligations of parties to an agreement made before 2 October 2000 are, as a result of the coming into force of the relevant provisions of the 1998 Act, different now from what they were when the agreement was entered into.

    93.      The approach which the Court of Appeal took to this problem was to apply section 6(1) of the 1998 Act to the facts of this case, as the court was required by that subsection to act in a way which was compatible with Convention rights, and then to ask itself whether the order which it was about to make was or was not compatible with Convention rights. Its conclusion was that, approached in this way, the relevant event was not the making of the agreement on 22 January 1999 but the making of its order on the appeal. Section 22(4) had no relevance, as the court had had to have regard to the facts as they were at the time when it made its order: [2002] QB 74, 88B, para 17, 89G-H, para 22.

    94.      While it is true that the court is required by section 6(1) of the 1998 Act to act in a way that is compatible with Convention rights, the issue in this case relates to the meaning and effect of legislation. The first task which confronts the court in a case of this kind is to construe the provisions of the statute which it is being asked to apply. The question which the Court of Appeal posed for itself in November 2000 was whether it was possible to read and give effect to section 127(3) of the 1974 Act in a way that was compatible with FCT's rights under article 6(1) of the Convention and article 1 of the First Protocol.

    95. But one does not need to go to section 6(1) of the 1998 Act to discover the obligation which the court had to fulfil in these circumstances. Its obligation is to be found in section 3(1). That subsection provides that, so far as it is possible to do so, primary and subordinate legislation must be read and given effect in a way that is compatible with Convention rights. A person who claims that a court or tribunal has acted in a way that is made unlawful by section 6(1) may bring proceedings under section 7(1)(a) in the manner provided for by section 9(1) and, if compensation is required under article 5(5), may be awarded damages under section 9(3). But a person who claims that a court or tribunal has failed to fulfil the interpretative obligation laid down by section 3(1) has no need to go to section 7(1)(a) for his remedy. The meaning and effect of legislation is a question of law, so if an error is made about this the ordinary avenues of appeal are available.

    96.      In my opinion the issue about retrospectivity in this case resolves itself into a question as to whether section 3(1) permits the court, when it is determining after 2 October 2000 whether section 127(3) of the 1974 Act is compatible with FCT's Convention rights, to hold that the rights and obligations of parties to the agreement are, as a result of the coming into force of the relevant provisions of the 1998 Act on that date, different now from what they were at the time when the agreement was entered into in January 1999.

    97.      The first thing to notice about section 3(1) of the 1998 Act is that, as to its temporal effect, it is entirely general and unqualified. But some guidance can be found in section 3(2)(a), which says that section 3 applies to primary and secondary legislation "whenever enacted". So at least it can be said that it was plainly not the intention that legislation which was enacted before 2 October 2000 should be immune from the interpretative obligation which section 3(1) lays down. It would have been surprising if the Act had that effect. It would have greatly emasculated the underlying concept of bringing human rights home.

    98.      Then there is the general presumption that legislation is not intended to operate retrospectively. That presumption is based on concepts of fairness and legal certainty. These concepts require that accrued rights and the legal effect of past acts should not be altered by subsequent legislation. But the mere fact that a statute depends for its application in the future on events that have happened in the past does not offend against the presumption. For a recent example of this point reference may be made to R v Field [2002] EWCA Crim 2913; [2003] 1 WLR 882 (CA). In that case it was held that the making of a disqualification order under section 28 of the Criminal Justice and Court Services Act 2000 against a defendant from working with children in the future did not offend against the presumption where the offending behaviour had occurred before that Act came into force. It illustrates the point that there is an important distinction to be made between legislation which affects transactions that have created rights and obligations which the parties seek to enforce against each other and legislation which affects transactions that have resulted in the bringing of proceedings in the public interest by a public authority. The concepts of fairness and legal certainty carry much greater weight when it is being suggested that rights or obligations which were acquired or entered into before 2 October 2000 should be altered retrospectively.

    99.      Account may also be taken of the purpose of the 1998 Act. Its long title states that it was intended to give further effect to rights and freedoms guaranteed under the European Convention on Human Rights. The rights to which the Act gives effect are rights guaranteed by the Convention which the United Kingdom has already signed and ratified. In R v Field [2003] 1 WLR 882, 896E-F, para 61 the Court of Appeal accepted a submission by the Secretary of State for the Home Department that the court should take a more relaxed approach to a potentially retroactive element in legislation where its intended purpose was, as it clearly was in the case of section 28 of the Criminal Justice and Court Services Act 2000, to protect children. I would apply the same reasoning to section 3 of the 1998 Act. Its purpose is to ensure that legislation is read and given effect in a way that is compatible with Convention rights, so far as it is possible to do so, whenever the legislation was enacted. To restrict the application of the interpretative obligation, without exception, to "events" that happened or "transactions" entered into on or after 2 October 2000 would be to introduce a restriction which is not stated expressly anywhere in the 1998 Act. A restriction in such absolute and all-embracing terms would seem to be contrary to the intention of the legislation and incapable of being read into it by necessary implication.

    100.      But the consequence of reading section 127(3) of the 1974 Act in a way that is compatible with FCT's Convention rights cannot be looked at without taking account of the effects of doing so on the other party to the transaction, Mrs Wilson. She too acquired rights as a result of the transaction, as well as FCT. The set of provisions of which it forms part, and on which she relies, were enacted for the protection of consumers. Section 61(1) provides that a regulated agreement is not properly executed unless it satisfies certain requirements. It must include a statement of all the prescribed terms, which include a term stating the amount of the credit: paragraph 2 of Schedule 6 to the Consumer Credit (Agreements) Regulations 1983. Section 65(1) provides that an improperly executed agreement is enforceable against the debtor or the hirer on an order of the court only. The amount of the credit in this agreement was incorrectly stated, so Mrs Wilson became entitled to the protection of section 65(1) as soon as it was entered into. What this right meant in her case was spelled out in section 127(3), which provides:

    "The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner)."

    101.      Let it be assumed, then, that the effect of section 127(3) is to engage FCT's Convention rights and that it is possible to read and give effect to the subsection in a way that is compatible with them. This will, inevitably, have the consequence of removing from Mrs Wilson the protection which sections 61(1)(a), 65(1) and 127(3) were designed to give her when the agreement was entered into. It seems to me that the presumption against the retrospective effect of legislation ought to be given its full weight in these circumstances. The case may be regarded as a typical example of the situation where legislation in question affects transactions that have created rights and obligations which the parties to it seek to enforce against each other. I recognise that there may be cases (and I have referred to R v Field [2003] 1 WLR 882 as an example) where a more relaxed approach will be appropriate. There is an obvious attraction in a solution to the application of the presumption to the obligation in section 3(1) which depends on clear, bright line rules which do not admit of any exceptions. But rules of that kind would be bound to lead to unfairness in some cases or to have consequences that could not have been intended for other reasons. So I would prefer to base my decision in this case on the particular facts and circumstances. I would hold that the presumption would be violated in this case if section 127(3) were to be construed in FCT's favour in a way that deprived Mrs Wilson of the protection which it was designed to give her when she entered into the agreement on 22 January 1999.

    102.      It follows that, as a determination of the question whether section 127(3) of the 1974 Act could be read and given effect in a way that was compatible with FCT's Convention rights would offend against the principle that legislation does not have effect retrospectively, it was not open to the Court of Appeal in these proceedings to make a declaration of incompatibility.

    The Convention rights issue

    103.      The question is whether the effect of section 127(3) of the 1974 Act in the events which have happened is to engage any of FCT's Convention rights. If I am right on the retrospectivity issue this question does not arise. But the Court of Appeal dealt with the question, so I should like to make these brief observations about it. The Convention rights that are in issue are those which are set out in article 6(1) of the Convention and article 1 of the First Protocol. The Court of Appeal asked itself whether the exclusion of what it described as "any meaningful consideration by the court" of the creditor's rights under an improperly executed agreement was legitimate, having regard to the fundamental nature of the right guaranteed by article 6(1), and it held that the exclusion of any judicial remedy engaged that article and also article 1 of the First Protocol: [2002] QB 74, 92B- 93F, paras 31, 32.

    104.      Article 6(1) of the Convention provides a guarantee to everyone of access to the court for the determination of his or her civil rights and obligations. As the European Court of Human Rights has explained, this provision must be read in the light of the rule of law referred to in the preamble to the Convention of which an integral part is the principle that a civil claim must be capable of being submitted to a judge: Golder v United Kingdom (1975) 1 EHRR 524, paras 35, 36. A provision which operated as a procedural bar to access to the court for the enforcement of a civil right would be engaged by this article. But it is for domestic law to determine the extent and content of a person's civil rights: H v Belgium (1987) 10 EHRR 339, para 40. The rights which article 6(1) guarantees are rights of procedural fairness. They do not guarantee that a person's substantive civil rights are of any particular character.

    105.      As the European Court said in Powell v United Kingdom, application no 45305/99,4 May 2000, unreported:

    "For the Court, it still remains the case that an applicant must be able to demonstrate an arguable claim under domestic law that there has been a breach of a civil right actionable in law. It is still impermissible for the Court to arrogate to itself the task of creating in favour of an individual a substantive right where none is recognised under domestic law."

        What article 6(1) seeks to do, then, is to protect the individual against anything which restricts or impairs his access to the courts for the determination of a civil right whose existence is at least arguable. But the precise scope and content of the individual's civil rights is a matter for each state party to determine: see also Matthews v Ministry of Defence [2002] UKHL 4, [2003] 2 WLR 435, 452-543, paras 49-53.

    106.      Article 1 of the First Protocol has a similar character. It does not confer a right of property as such nor does it guarantee the content of any rights in property. What it does instead is to guarantee the peaceful enjoyment of the possessions that a person already owns, of which a person cannot be deprived except in the public interest and subject to the conditions provided for by law: Marckx v Belgium (1979) 2 EHRR 330, para 50. Here too it is a matter for domestic law to define the nature and extent of any rights which a party acquires from time to time as a result of the transactions which he or she enters into. One must, of course, distinguish carefully between cases where the effect of the relevant law is to deprive a person of something that he already owns and those where its effect is to subject his right from the outset to the reservation or qualification which is now being enforced against him. The making of a compulsory order or of an order for the division of property on divorce are examples of the former category. In those cases it is the making of the order, not the existence of the law under which the order is made, that interrupts the peaceful enjoyment by the owner of his property. The fact that the relevant law was already in force when the right of property was acquired is immaterial, if it did not have the effect of qualifying the right from the moment when it was acquired.

    107.      The rights of property which are in issue in this case are those set in an agreement which is regulated by the 1974 Act. The Act subjects the rights of the creditor to restrictions in some circumstances. Section 65 declares that a regulated agreement which is improperly executed cannot be enforced by the creditor except by means of an order of the court, and section 127(3) declares that it is not to be enforceable at all except upon the condition which it lays down. The agreement which was entered into in this case was from the outset an agreement which was improperly executed. So it was always subject to the restrictions on its execution which sections 65(1) and 127(3) of the 1974 Act set out. I would hold that FCT's Convention rights under article 1 of the First Protocol are not engaged in these circumstances.

    108.      The Court of Appeal said that the effect of sections 65(1) and 127(3) was to deprive the pawnbroker of its ability to enjoy benefit from the contractual rights arising from the agreement or from the rights arising from the delivery of the pawn: para 32. But the fact is that FCT never had an absolute and unqualified right to enforce this agreement or to enforce the rights arising from the delivery of the motor car. Article 6(1) of the Convention and article 1 of the First Protocol cannot be used to confer absolute and unqualified rights on FCT which, having regard to the terms of the statute by which agreements of this kind are regulated, it never had at any time under the improperly executed agreement which it entered into.

    109.      As I would hold that article 1 of the First Protocol is not engaged in this case, I do not need to examine the question whether section 127(3) is compatible with the rights guaranteed by that article. Had it been necessary for me to do so, I would have reached the same conclusion as Lord Nicholls has done for the reasons he gives.

    The reference to Hansard issue

    110.      One of the happy characteristics of the Human Rights Act 1998 is that it did not attempt to solve all the problems that were bound to arise as a result of giving effect in domestic law to Convention rights. Among these problems was the effect which its provisions would be likely to have on the relationship between the courts and Parliament. This was left to be worked out in accordance with familiar constitutional principles.

    111.      One of these principles, which has repeatedly been emphasised, is that legislation is the exclusive responsibility of Parliament. The judges' task is to interpret, not to legislate: Poplar Housing and Regeneration Community Association Ltd v Donoghue [2001] EWCA Civ 595, [2002] QB 48, 72-73, para 75, per Lord Woolf CJ; R v Lambert [2001] UKHL 37, [2002] 2 AC 545, 585C-D, para 79; In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10, [2002] 2 AC 291, 313E, para 39, per Lord Nicholls of Birkenhead. Another is that it is the intention of Parliament that defines the policy and objects of its enactments, not the purpose or intention of the executive. The courts for their part must respect this principle, which means that the legislative function belongs to Parliament not to the executive. Then there is the rule which article 9 of the Bill of Rights 1689 lays down that proceedings in Parliament ought not to be impeached or questioned in any court or place outside Parliament. For their part both Houses of Parliament abstain from discussing the merits of disputes that are about to be tried and adjudicated on by the courts: Erskine May, Treatise on the Law, Privileges, Proceedings and Usage of Parliament, 22nd ed (1997), pp 383-384, 452-453. As Lord Nicholls has said, all courts are keenly aware of the importance of the legislature and the judiciary each discharging their own constitutional roles and not trespassing into functions that belong to the other.

    112.      The question which the House Authorities have raised is therefore an important one, and the position needs to be clarified. It has been prompted by the use which the Court of Appeal made of Hansard in its examination of the question whether this was a case where it should defer, on democratic grounds, to the considered opinion of the legislature: [2002] QB 74, 94A-95D, paras 34-36. The Court of Appeal rejected the Secretary of State's submission that, because the legislation had been enacted, it must be taken to represent the considered opinion of the elected body and that it was not for the courts to question the basis upon which that opinion was reached: para 34. Having done so, it embarked upon an examination of the parliamentary debates on the Bill. It did this not as an aid to construction of the legislation as its meaning was not in doubt, but to discover the reason which led Parliament to think that it was necessary to enact section 127(3) and thus to deny to the courts the power to do what was just in the cases to which it refers: paras 35-36.

    113.      Mr Sumption QC for the House Authorities did not seek to question the use of Hansard for the limited purpose described in Pepper v Hart [1993] AC 593, although he drew attention to some of the conceptual difficulties. As I understand that decision, it recognised a limited exception to the general rule that resort to Hansard was inadmissible. Its purpose is to prevent the executive seeking to place a meaning on words used in legislation which is different from that which ministers attributed to those words when promoting the legislation in Parliament: R v Secretary of State for the Environment, Ex p Spath Holme Ltd [2001] 2 AC 349, 407-408. Mr Sumption recognised that the exception thus stated has commanded broad acceptance where it has operated as a kind of quasi-estoppel against the executive. He also recognised that Hansard might be referred to where a statement made by a Minister in Parliament was relevant to a challenge by way of judicial review to what he had done: see, for example, R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696. This was because what the Minister said in Parliament was evidence of why he acted as he did. The position was no different from what it would have been if his statement had been recorded in a letter. But Mr Sumption stressed that any such exceptions should be clearly defined and that they should be based on principle.

    114.      The concern which he expressed was directed to the use of Hansard in this case for the purpose of seeking to discover from debates in Parliament the reasons which Parliament had for making the enactment. He said that this was quite different from seeking to discover what words mean. It was one thing to refer to Hansard to ensure that legislation was not misconstrued in favour of the executive. That use could be said to be in support of the principle of Parliamentary sovereignty. It was another to refer to it in order to form a view as to whether Parliament had given sufficient reasons for doing what it did and, if not, whether the legislation was incompatible with Convention rights. To use Hansard in this way was to use it for a purpose which was adverse to the intention of Parliament.

    115.      Mr Sumption put forward two objections to this use of Hansard on grounds of principle. The first was that it involved examining the nature and quality of Parliament's reasoning in a case where there was no doubt about what Parliament had enacted. Where it was used for the purpose explained in Pepper v Hart there was a threshold that had to be satisfied - the test of ambiguity. Here there was no such threshold, as the suggestion was that Hansard could be resorted to however clear were the provisions set out in the enactment. The second was that its object was not to give effect to the will of Parliament but to measure the sufficiency of reasons given for the legislation against standards derived from the Convention. He said that this was contrary to article 9 of the Bill of Rights. It was not for the courts to consider whether speeches made during debates in Parliament had put forward Convention-compliant reasons for supporting it.

    116.      I think that there is much force in these criticisms of the approach which the Court of Appeal took to this issue. But it would be going too far to say, as Mr Sumption did, that there are no circumstances where use may be made of Hansard where the purpose of doing so is to answer the question whether legislation is compatible with Convention rights. The boundaries between the respective powers and functions of the courts and of Parliament must, of course, be respected. It is no part of the court's function to determine whether sufficient reasons were given by Parliament for passing the enactment. On the other hand it has to perform the tasks which have been given to it by Parliament. Among those tasks is that to which section 4(1) refers. It has the task of determining, if the issue is raised, whether a provision of primary legislation is compatible with a Convention right. It does not follow from recognition that there is an area of judgment within which the judiciary will defer to the elected body on democratic grounds that the court is absolutely disabled from forming its own view in these cases as to whether or not the legislation is compatible. That question is ultimately for the court not for Parliament, as Parliament itself has enacted. The harder that question is to answer, the more important it is that the court is equipped with the information that it needs to perform its task.

    117.      This, then, is the justification for resorting to Hansard in cases where the question at issue is not one of interpretation but whether the legislation is compatible. A cautious approach is needed, and particular care must be taken not to stray beyond the search for material that will simply inform the court into the forbidden territory of questioning the proceedings in Parliament. To suggest, as the Court of Appeal did at [2002] QB 74, para 36, that what was said in debate tends to confuse rather than illuminate would be to cross that boundary. It is for Parliament alone to decide what reasons, if any, need to be given for the legislation that it enacts. The quality or sufficiency of reasons given by the promoter of the legislation is a matter for Parliament to determine, not the court.

    118.      But proceedings in Parliament are replete with information from a whole variety of sources. It appears in a variety of forms also, all of which are made public. Ministers make statements, members ask questions or propose amendments based on information which they have obtained from their constituencies, answers are given to written questions, issues are explored by select committees by examining witnesses and explanatory notes are provided with Bills to assist members in their consideration of it. Resort to information of this kind may cast light on what Parliament's aim was when it passed the provision which is in question or it may not. If it does not this cannot, and must not, be a ground for criticism. But if it does, the court would be unduly inhibited if it were to be disabled from obtaining and using this information for the strictly limited purpose of considering whether legislation is compatible with Convention rights. This is an exercise which the European Court may wish to perform in order to determine, for example, whether the aim of the contested legislation was a legitimate one or whether an interference with the peaceful enjoyment of possession was justified: see James v United Kingdom (1986) 8 EHRR 123, 143, para 48; Mellacher v Austria (1989) 12 EHRR 391, 409, para 47; Ambruosi v Italy (2002) 35 EHRR 125, 131, para 28. It is an exercise which the domestic court too may perform when it is carrying out the task under section 4(1) of the 1998 Act which has been entrusted to it by Parliament.

    The Dimond v Lovell issue

    119.      The Court of Appeal made it clear in its first judgment that it did not wish to arrive at a conclusion which permitted Mrs Wilson both to retain the car and to recover the £6,900 unless the statutory provisions left no alternative: [2001] QB 407, para 20, per Sir Andrew Morritt V-C. But it held, following Lord Hoffmann's observations in Dimond v Lovell [2002] 1 AC 384, 397-398, that the effect of section 127(3) of the 1974 Act was to render the agreement irredeemably unenforceable and that a claim for unjust enrichment must fail because this was precisely the consequence prescribed by Parliament.

    120.      Mr Crow for the Secretary of State submitted that Dimond v Lovell [2002] 1 AC 384 was distinguishable and that it should not be applied in this case. He pointed out that the transaction in that case was different from that which Mrs Wilson had entered into with FCT. In Dimond the payments which were in issue were the cost of hiring the replacement car. It was held that those payments were not recoverable as a matter of contract, and there was no basis for implying an obligation to pay which was contrary to the provisions of the statute. In this case Mrs Wilson's enrichment was not limited to the cost of the loan. It was not just that she was being relieved of the obligation of paying interest on it. Her enrichment extended to the principal of the loan itself, because the effect of section 127(3) was that she kept the sum of £5,000 as well as the motor car. He submitted that, while exoneration of the obligation to pay interest was plainly within the contemplation of the statute, retention of the principal sum which had been lent to her under the agreement was not.

    121.      At first sight there is, to say the least, something odd about the result that Mrs Wilson has achieved in this case. But the effect of the failure to comply with the requirements of the Consumer Credit (Agreements) Regulations 1983 was that the entire agreement under which FCT provided the loan to Mrs Wilson, having taken possession of her car in pawn, was unenforceable. The statutory bar on its enforcement extended to FCT's right to recover the total sum payable on redemption, which included the principal as well as interest. That is what the statute provides. I do not think that it is open to us to say that Parliament did not contemplate that the effect of this provision, which was to disable the creditor from recovering the principal of the sum lent as well as the interest on it, might be to enrich the borrower. Once that position is reached, the position is clear. The court cannot override the statutory provision by substituting a common law remedy.

    122.      As Lord Hoffmann pointed out in Dimond at p 398, the conclusion which he reached in that case was consistent with previous authority. In Orakpo v Manson Investments Ltd [1978] AC 95 the transaction entered into under which loans were made to enable the borrower to acquire and develop certain properties were held to be unenforceable under sections 6 and 13(1) of the Moneylenders Act 1927. The effect was to enrich the borrower, who had fallen into arrears of payments of interest and moneys due but was successful in his defence that all the transactions including those which provided security rights to the creditor were unenforceable. Lord Diplock observed that, while the Moneylenders' Acts were designed to protect unsophisticated borrowers from being overreached by unscrupulous moneylenders, they were capable of being used by unscrupulous borrowers to avoid paying their just debts to moneylenders. He considered whether a remedy in subrogation to redress the unjust enrichment might be available. But he concluded that, much as he should have liked to have done so, it was not open to him to mitigate the harshness to the moneylender and the undeserved enrichment of the borrower which had resulted from the technical failure to observe the provisions of the Act.

     123. In my opinion the same result must follow in this case. I would be reluctant to say that the enrichment of Mrs Wilson was an unjustified enrichment. There is no doubt that she has received a benefit which cannot be justified on legal grounds at the expense of the creditor. But section 127(3) of the 1974 Act too, like sections 6 and 13(1) of the 1927 Act, was designed to protect unsophisticated borrowers. There is no doubt that they would be exposed to the risk of harassment by unscrupulous creditors if creditors could override the statute by appealing to the common law. I would prefer to say that it would be inconsistent with the statute to provide FCT with a common law remedy to redress the enrichment which Mrs Wilson has received at its expense.

    Conclusion

    124.      I would allow the appeal and set aside the declaration of incompatibility.

    LORD HOBHOUSE OF WOODBOROUGH

    My Lords,

    125.      This exceptional appeal raises important questions under two distinct heads, the first relating to the proper construction of the Human Rights Act 1998 and the second regarding the use of parliamentary materials, specifically Hansard, in relation to questions arising under the provisions contained in Schedule 1 to the Act defining the Convention rights. The facts which gave rise to the original litigation have been set out in the Opinion of my noble and learned friend Lord Nicholls of Birkenhead as have the relevant dates and the unusual procedural history leading to this appeal which has been argued not by either of the original parties but by other interests. The House has also had the valuable assistance of counsel acting as amici curi'.

        The Human Rights Act 1988:

    126.      Although the main question of construction is to decide to what extent (if at all) the Act has retrospective effect, the first task is to examine the structure of the Act. The Act does not simply say, as do some comparable Acts (eg s.1(2) of the Carriage of Goods by Sea Act 1971), that the provisions of the European Convention "shall have the force of law". Its approach is more subtle. It has a limited definition of 'Convention rights': s.1. It requires courts in determining a question in connection with a Convention right to "take into account" judgments of the European Court of Human Rights and other cognate material: s.2. It thus, at the outset, draws a distinction between the international obligations of the United Kingdom under the Convention and what are to be the municipal law obligations of the three organs of the state, the Executive, the Legislature and the Judiciary. So far as the Convention is concerned such distinctions are in principle irrelevant. If the provisions of the Convention have been broken, the relevant state is in breach and no further analysis is required. The Act, on the other hand, follows a scheme which recognises t