R v Her Majesty’s Treasury, Ex parte Smedley (Smedley, Ex parte)

Where subordinate legislation requires prior approval by both Houses, the court may, in an appropriate case, determine its prospective validity before that approval. It must not control Parliament’s statutory role, which may be no more than a power of veto.

Under section 1 of the European Communities Act 1972, an Order in Council may treat an agreement as a Community Treaty if it could properly be regarded as ancillary to the Treaties. The court does not substitute its own view in a borderline case. A temporary variation from a Treaty’s general financing principle does not necessarily prevent an agreement that funds Community functions from being ancillary.

The applicant, a taxpayer and elector, sought judicial review of the Treasury’s intended use of an Order in Council to treat a 1984 undertaking by member-state representatives as a Community Treaty. The intended consequence was payment of more than £121.5 million from the Consolidated Fund to finance a supplementary Community budget.

A draft Order had been laid before both Houses but had not yet been approved, and no Order in Council had been made. Hodgson J granted leave. Woolf J in the Divisional Court dismissed the application. The applicant appealed.

The central issues were whether the application was premature and whether the undertaking was incapable of being a treaty ancillary to the Treaties for section 1 of the European Communities Act 1972.

1. Appeal dismissed unanimously. The Master of the Rolls held that the court could determine the legal issue before an Order in Council was made. Parliament’s consideration of the draft engaged a different function. The court could not comment upon the wisdom of Parliament’s approval, but could determine whether a resulting Order would be intra vires.

2. Lord Justice Slade agreed. The approval required by section 1(3) of the European Communities Act 1972 was, in substance, a parliamentary power of veto. It did not itself confer the order-making power. In an appropriate and urgent case, a declaration on the prospective validity of subordinate legislation may assist Parliament and need not usurp its functions: Rex v Electricity Commissioners, ex parte London Electricity Joint Committee Co (1920) Ltd [1924] 1 K.B. 171.

3. The statutory power was limited to an agreement which could properly be regarded as ancillary to the Community Treaties. “Ancillary to” was an imprecise expression. Section 1(3) left borderline characterisation to Her Majesty in Council, subject to Parliament’s veto. Judicial intervention required the applicant to show that the undertaking was incapable, as a matter of law, of falling within that description.

4. The undertaking could properly be so regarded. It provided funds enabling the Community to perform essential functions. The Treaty provisions expressed a general principle that the budget should ordinarily be financed from the Community’s own resources. A temporary response to exceptional circumstances did not necessarily conflict with that principle or deprive the undertaking of its ancillary character. The proposed Order would therefore be intra vires.

5. Lord Justice Slade considered that the applicant also had sufficient interest as a taxpayer to raise the issue, though the Master of the Rolls did not find it necessary to decide standing. Lord Justice Lloyd agreed. The appeal was dismissed with costs and leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) — dismissed the appeal, holding that the proposed Order in Council would be intra vires section 1 of the European Communities Act 1972.
• Divisional Court, Queen’s Bench Division — Woolf J dismissed the application for judicial review on 7 December 1984.
• Queen’s Bench Division — Hodgson J granted leave to apply for judicial review on 28 November 1984.