West Law Report

R (M) v HM TREASURY & OTHERS

Last updated: 7:18 PM BST 07/05/2008
House of Lords

Lord Bingham of Cornhill, Lord Hoffmann, Lord Walker of Gestingthorpe, Baroness Hale of Richmond, Lord Brown of Eaton-under-Heywood

April 30, 2008

Benefits – Licences – Possession for terrorist purposes – Regulations – Spouses – Statutory interpretation – Terrorists – Benefits payments to spouses of listed persons Meaning of “for the benefit of” in Art. 2.2 Regulation 881/2002 – Art. 2a(1)(a) Regulation 881/2002 – Art. 2.2 Regulation 881/2002 – Art. 2.3 Regulation 881/2002

FACTS

The court was required to consider the proper interpretation of Regulation 881/2002 art. 2.2. The issue had arisen in connection with the payment of social security benefits to the spouses of persons and groups within the Taliban and al-Qa’ida network who were named in a list drawn up by the Sanctions Committee of the United Nations Security Council. It was not in dispute that a listed person would require a licence from HM Treasury for payment of funds to him, and that a family member of a listed person, such as a wife for example, would not be entitled without such a licence to make funds available to her husband. The question was whether a licence was necessary to enable social security benefits to be paid to the wife herself. The Treasury submitted that a licence was necessary because money spent by the wife on the running of the family household would be “for the benefit” of the husband within the meaning of art. 2.2 of the Regulation and that it had a duty to ensure that none of the benefit money paid to a wife was spent for purposes that might benefit the husband outside of the scope of art. 2a(1)(a) of the Regulation. It maintained that in order to police that restriction, the wife should have her benefits paid into a bank account, from which she could only draw up to £10 in cash for each member of the household and that she must send a monthly account to the Treasury detailing her expenditure and enclosing receipts.

ISSUE

The proper interpretation of Regulation 881/2002 art. 2.2.

HELD (Question referred to ECJ)

(1) The intrusive regime described by the Treasury was not required by art. 2.2 of the Regulation. It produced a disproportionate and oppressive result. The licence conditions were “to provide safeguards against the risk of these funds being diverted to terrorism” and it was hard to see how the expenditure of money on domestic expenses, such as food, from which a listed person derived a benefit in kind, could create any risk that the listed person may divert the funds to terrorism. Also, the broad construction given by the Treasury to the words “for the benefit of” produced an anomalous discrepancy with art. 2.3, and there was accordingly no limit to the non-financial economic resources that a wife may provide to a husband provided that they did not enable him to obtain funds, goods or services. It was likely that the words “made available…. for the benefit of” in art. 2.2 of the Regulation were intended to mean a benefit made available to the listed person that he could use for terrorist purposes. In the case of a family living on state benefits, which were carefully calibrated to provide them with no more than they needed to live on, it was wholly unrealistic to assume that anyone living with a listed person was likely to make any funds she received available to the listed person for the purposes of terrorism.

(2) A question was referred to the ECJ, namely whether payments of money to persons other than the listed person were required to be licensed on the ground that some of their expenditure of that money would be for the benefit of the listed person. That question involved interpreting the words “for the benefit of” in art. 2.2 to determine whether they had a wide meaning that covered any application of money from which a listed person derived some benefit, or whether they applied only to cases in which funds, financial assets or economic resources were “made available” for his benefit, so that he was in a position to choose how to use them.

Rabinder Singh QC and Simon Cox (instructed by Birnberg Pierce & Partners) for the appellants. Jonathan Swift and Cecilia Ivimy (instructed by Treasury Solicitors) for the respondents.

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