R (on the application of VIP Communications Ltd (In Liquidation)) v Secretary of State for the Home Department

A statutory power to direct a regulator may authorise a direction which precludes performance of what would otherwise be a statutory duty. There is no general presumption requiring clear words before such a power can have that effect, unless fundamental or constitutional rights or rule-of-law principles are engaged.

Interacting provisions forming one regulatory scheme must be construed together, in their legislative context and according to their purpose. Under section 5(2) of the Communications Act 2003, the Secretary of State may direct Ofcom, on the limited grounds in section 5(3), not to make exemption regulations which Ofcom would otherwise have to make under section 8(4) of the Wireless Telegraphy Act 2006. The power remains subject to public law requirements of reasonableness and proportionality.

Ofcom decided that commercial multi-user GSM gateway apparatus satisfied the conditions in section 8(5) of the Wireless Telegraphy Act 2006 and proposed regulations exempting it from individual licensing. The Secretary of State, relying on serious national security and public safety concerns, directed Ofcom under section 5(2) of the Communications Act 2003 not to grant that exemption.

VIP Communications Ltd sought judicial review, alleging that the direction was ultra vires because Ofcom's duty to make exemption regulations under section 8(4) could not be displaced. Morris J upheld the claim and quashed the direction in [2019] EWHC 994 (Admin). The Court of Appeal dismissed the Secretary of State's appeal in [2020] EWCA Civ 1564; [2021] 1 WLR 2839.

The central issue was whether Ofcom's section 8(4) duty was qualified by its duty under section 5(2) to carry out its functions in accordance with the Secretary of State's directions.

1. Appeal allowed unanimously. Lord Richards delivered the judgment, with which Lord Reed, Lord Lloyd-Jones, Lord Sales and Lord Stephens agreed. The direction was within the Secretary of State's powers. VIP's application for judicial review was dismissed.

2. Section 5 of the Communications Act 2003 and section 8 of the Wireless Telegraphy Act 2006 form part of a single regulatory scheme and must be construed as if contained in one statute. Their meaning depended on their language, legislative context and purpose. Parliament had divided responsibility between Ofcom and the Government. Ofcom addresses the technical and regulatory considerations in section 8(5), while national security, public safety and the other limited matters in section 5(3) are reserved to the Secretary of State.

3. The duty under section 5(2) qualified the duty under section 8(4). Ofcom carries out its functions both when it makes exemption regulations and when, pursuant to a lawful direction, it refrains from making them. It would be an improbable construction of a provision safeguarding vital national interests to permit directions requiring positive action or conditions, but not directions preventing action which would prejudice those interests. This interpretation was consistent with the preceding statutory regime and with the EU framework's express preservation of member-state responsibility for public security.

4. There is no general principle that a statutory direction-making power cannot preclude performance of another statutory duty unless Parliament uses clear words. That effect is a relevant consideration when comparing possible constructions, but it is only one factor. The special presumptions protecting fundamental rights and the rule of law did not apply because neither duty infringed such rights. A section 5 direction did not amend primary legislation or exercise a Henry VIII power; the question concerned the proper relationship between two primary statutory provisions.

5. The decision in EE Ltd v Office of Communications [2017] EWCA Civ 1873 did not establish the asserted general principle. There, the direction unlawfully substituted the Secretary of State for Ofcom in a regulatory function assigned to Ofcom under the applicable EU regime. That reasoning gave no guidance on the different issue in this appeal. The court preferred Rose J's construction in Recall Support Services Ltd v Secretary of State for Culture, Media and Sport [2013] EWHC 3091 (Ch) to the contrary obiter reservations expressed in the Court of Appeal.

6. The breadth of the direction-making power was controlled by the requirement that the Secretary of State act reasonably and proportionately. Whether security concerns could instead be addressed through conditions was not for the court to decide on this claim. VIP had challenged only the existence of the power and had neither disputed the security concerns nor alleged irrationality in choosing prohibition instead of conditional exemption.

1. United Kingdom Supreme Court: Allowed the Secretary of State's appeal unanimously in [2023] UKSC 10, set aside the decisions below and dismissed the application for judicial review.

2. Court of Appeal: In [2020] EWCA Civ 1564; [2021] 1 WLR 2839, dismissed the Secretary of State's appeal and held that section 5(2) of the Communications Act 2003 did not empower the Secretary of State to direct Ofcom not to comply with section 8(4) of the Wireless Telegraphy Act 2006.

3. High Court, Administrative Court: Morris J upheld VIP's judicial review claim in [2019] EWHC 994 (Admin) and quashed the direction as ultra vires.