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Hearings in the Supreme Court are now shown live on the Court’s website.

The UK Supreme Court is now in recess for Easter. Term begins again on the 30th April 2019.

A full list of the cases scheduled for the Easter term can be found here.

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Second human rights claim does not automatically trigger right of appeal says Supreme Court

In this judgment concerning appeal rights, the Supreme Court unanimously dismissed a Jamaican national’s appeal but it took the opportunity to express serious concern about the huge pressures confronting the appeals system and the complexities of the Immigration Rules. Highlighting the Law Commission’s consultation paper Law Commission: Simplification of the Immigration Rules; CP 242, 21 January 2019, Lord Lloyd-Jones lamented that “the structure of both primary and secondary legislation in this field has reached such a degree of complexity that there is an urgent need to make the law and procedure clear and comprehensible.” Aged only seven, Mr Jamar Robinson arrived in the UK from Jamaica in October 1998 with six months’ leave to enter and then overstayed. Among his criminal convictions were two robberies that led to a deportation order being issued in July 2013. Lengthy deportation proceedings ensued and his appeal to the FTT was dismissed, it being accepted at the time that there was no family life in play. Permission to appeal to the UT was refused. He became appeal rights exhausted in May 2015 when further representations were made to the Home Office since his then partner was pregnant but the representations did not expressly seek the revocation of the deportation order and did not refer to human rights. The decision-maker refused to revoke the deportation order and concluded that deportation would not breach ECHR, art 8.

Equally, the representations did not amount to a fresh human rights claim within the meaning of the Immigration Rules, para 353. Mr Robinson’s son was born in July 2015 and further representations were made but again the decision-maker concluded that deportation would not breach art 8 and also that the further submissions did not amount to a fresh claim. An appeal to the FTT failed to aid him because it declined jurisdiction because the decision did not attract a right of appeal. Subsequently, the UT dismissed Mr Robinson’s application for judicial review of the decision that the further representations were not a fresh claim and the FTT’s decision that he had no right of appeal. The Court of Appeal dismissed his appeal in May 2017. In the Supreme Court, the question raised by the appeal was: where a person has already had a human rights claim refused and there is no pending appeal, do further representations/submissions that rely on human rights grounds have to be accepted by the decision-maker as a fresh claim in accordance with rule 353 if a decision in response to those submissions is to attract a right of appeal under the Nationality, Immigration and Asylum Act 2002, s 82.

Parties’ submissions

Firstly, Mr Robinson submitted that the line of authority beginning with Onibiyo [1996] EWCA Civ 1338 – which established that it was for the Secretary of State to decide whether further submissions constituted a fresh claim giving rise to a right of appeal – did not survive the Supreme Court’s decision in BA (Nigeria) [2009] UKSC 7. Secondly, he argued that the amendments to Pt 5 of the 2002 Act made by the Immigration Act 2014 fundamentally changed how the statutory scheme operates with the result that rule 353 no longer applies. As a result of the amendments, it was argued, the control mechanism established by the Onibiyo line of authority and rule 353 was abrogated. So the words “human rights claim” as they appeared in s 82(1)(b) following amendment had to be interpreted without reference to rule 353 and hence any second or subsequent submission which was a “human rights claim” under s 113(1) of the 2002 Act attracted a right of appeal under s 82, irrespective of whether the decision-maker accepted that it was a fresh claim within the meaning of rule 353.

These submissions were resisted by the Government which, first of all, argued that BA (Nigeria) does not establish that the words “human rights claim” – as they appear in Pt 5 of the 2002 Act – are to be interpreted without reference to the Onibiyo line of authority or rule 353. Secondly, the amendments to the 2002 Act achieved by the 2014 Act have not changed the position because it remains the case that there will only be an asylum or human rights claim to be determined if, in relevant cases, further submissions are considered to amount to a fresh claim.

The Supreme Court

Lady Hale, Lord Wilson, Lady Black, Lord Lloyd-Jones and Lady Arden dismissed the appeal on both points. The Justices decided that a second human rights claim does not without more automatically trigger a right of appeal. Delivering the court’s unanimous judgment, Lord Lloyd-Jones explained that whilst “a conspicuous feature of litigation” in UK immigration and asylum practice, if there is a sound basis, it is necessary to allow failed asylum and human rights claimants to make further applications adducing further submissions and/or supporting evidence “not least because circumstances may change significantly and unforeseeably following the rejection of a claim.”

In Onibiyo Lord Bingham found it easy to imagine cases in which an initial claim for asylum might be made on insubstantial, or even bogus, grounds, and then be rightly rejected, but in which circumstances would subsequently arise or come to light showing a threat of a kind requiring the grant of asylum. Hence, a system of legal protection unable to accommodate that possibility would be very seriously defective. Thus, in appropriate cases, affording access to the system of appeals is necessary when the second submission is rejected. But protecting the statutory system of appeals from abuse is also important and it is necessary to exclude second or successive applications which are made on previously rejected grounds or grounds which have no realistic prospect of success, and which are deliberately advanced as a tactic to delay removal. Centrally, the challenge is to operate a fair system effectively dealing with such matters in compliance with the UK’s international obligations.

In Onibiyo, while answering the question “what constitutes a fresh claim”, Lord Bingham’s “acid test” was whether the new claim is sufficiently different from the earlier claim to present a realistic prospect that a favourable view could be taken of the new claim despite the negative conclusion reached on the earlier claim. In the present case, the Supreme Court concurred with Jackson, Hamblen and Flaux LJJ that “human rights claim” in s 82(1)(b) of the 2002 Act must mean an “original human rights claim” or a fresh human rights claim which falls within rule 353 of the Immigration Rules.

(i) Scope of BA (Nigeria)

Essentially, the court disagreed with the submission that the Onibiyo line of authority was extinguished by BA (Nigeria), it found that the latter ruling was limited to cases where the further submissions have been rejected and there was an appealable decision. In ZA (Nigeria) [2010] EWCA Civ 926, Lord Neuberger MR explained that once there is such a decision, the complete code contained in the legislative scheme applies and rule 353 has no part to play. However, as held in ZT (Kosovo) [2009] UKHL 6, rule 353 still has a part to play: the Home Office can decide that the further submissions are not a “fresh claim”, i.e. matters do not enter into the territory governed by the “complete code” of “the legislative scheme”. Whereas certain passages of Lord Hope’s judgment in BA (Nigeria) – namely paras 29, 30, 31 and 33 – did lend support to the view that the new scheme introduced by the 2002 Act rendered the reasoning in Onibiyo and rule 353 redundant, Lord Lloyd-Jones found “major difficulties inherent in this reading” of that authority.

First of all, he found “no conflict” between Onibiyo and rule 353 and the statutory scheme in Pt 5 of the 2002 Act and deciphered that BA (Nigeria) established that, where further submissions are received on which an immigration decision was made within s 82 of the 2002 Act, in the absence of certification there will be an in-country right of appeal. By contrast, Onibiyo and rule 353 address a prior issue of whether there is a claim requiring a decision at all.

Secondly, the 2002 Act’s provisions, especially the powers of certification under ss 94 and 96, do not render Onibiyo and rule 353 redundant. Lord Lloyd-Jones concurred with Lord Neuberger’s observation in ZA (Nigeria) that rule 353 has an independent effect which is that no right of appeal ever arises, rather than only to limit to an out-of-country appeal, and the rule operates at a prior stage to s 94. Furthermore, s 96(1) addresses a different aspect of renewed claims, because it applies where a person relies on a matter that could have been raised in an earlier appeal but has no satisfactory reason for not doing so.

Thirdly, Parliament did not intend the 2002 Act to provide a comprehensive code for dealing with repeat claims or for rule 353 no longer to be effective. There was no attempt to repeal or amend the rule’s predecessor (rule 346) and Parliament approved subsequent amendments to the Immigration Rules that did not delete rule 353. Notably, following the amendment of the 2002 Act by the 2014 Act, it was also the case that rule 353 was amended to ensure it applies to human rights claims and protection claims, which suggests it was still effective.

Fourthly, the ambitiously broad reading of BA (Nigeria) that was contended for was “inconsistent” with ZT (Kosovo) where it was held that the Home Office had erred in applying s 94(2) of the 2002 Act instead of rule 353 in considering further submissions. BA (Nigeria) merely decided that rule 353 has no part to play once there is an appealable immigration decision and agreeing with Lord Neuberger’s views in ZA (Nigeria), Lord Lloyd-Jones judged that

49. … If the Supreme Court did decide in BA (Nigeria) that rule 353 is entirely redundant following the introduction of Part 5 of the 2002 Act, it must have intended to overrule or to depart from the decision of the House of Lords some nine months earlier in ZT (Kosovo). However, BA (Nigeria) contains no express statement to that effect. Moreover, while an earlier decision may be impliedly overruled, it is extremely improbable that this was the intention here, for reasons summarised by Lord Neuberger in ZA (Nigeria) …

Accordingly, the primary case advanced on appeal was not made out and so the court rejected the proposition that the reasoning in Onibiyo did not survive the decision in BA (Nigeria).

(ii) Amendments to the 2002 Act in 2014

Furthermore, the court roundly rejected the submission that the amendments to the 2002 Act, effected by the “flagship” Immigration Act 2014 which infamously restructured appeal rights, fundamentally changed the operation of the statutory scheme with the result that rule 353 no longer applies. Prior to embarking upon a full analysis of the second point the court conducted a survey of key post-2014 authorities, and all of these endorsed the overall conclusion that appeal should be dismissed. Cases such as Waqar [2015] UKUT 169 (IAC), R (MG) [2016] UKUT 283 (IAC) and R (Sharif Hussein) [2016] UKUT 409 (IAC) failed to provide any assistance to Mr Robinson. Lord Lloyd-Jones said that Sales LJ had been right in VM (Jamaica) [2017] EWCA Civ 225 to uphold the point made in Waqar that no right of appeal arises in relation to the decision that the new representations do not amount to a fresh claim and that such a decision can only be challenged by way of judicial review. The UT was right to classify rule 353 as the “gateway” to human rights appeals in Waqar.

The court said that referring to rule 353 to determine if subsequent submissions are a “human rights claim” does not result in the same words bearing different meanings. In BA (Nigeria) there was in each case a “human rights claim”. But the reason an entitlement to appeal arose was because the human rights claims had resulted in refusals to revoke deportation orders, an action that was a qualifying immigration decision under s 82(2)(k) of the 2002 Act. Consequently, the operation of rule 353 was excluded. In the present case, the legal issue was the prior question of whether there is a claim at all.

Lord Lloyd-Jones said that the amendments to Pt 5 of the 2002 Act from 20 October 2014 limit appeals to where there has been a refusal of a protection claim or a human rights claim, or the revocation of protection status. However, the structure and operation of s 82 remain unchanged and the amended version of s 82 does not relieve a person of the burden of establishing that the decision-maker has refused a valid human rights claim.

A series of submissions connected to the intention of Parliament in enacting the 2014 amendments were made in aid of the appeal but the points failed to curry favour with the court. Among other creative points, it was argued that Parliament did not introduce Lord Bingham’s “acid test” into the definition of “asylum claim” in Pt 5 of the 2002 Act.

The Supreme Court pointed out that Parliament is presumed to legislate in the knowledge of and having regard to relevant judicial decisions, and notably in the present context Lord Neuberger’s approach in ZA (Nigeria) had provided an authoritative explanation of the effect of BA (Nigeria). In agreement with the views of the government, the court explained that:

62. … Parliament can therefore be assumed to have legislated in the light of a consistent line of authority which established that a purported human rights claim that did not meet the threshold of a fresh claim under rule 353 was not a claim at all. Had Parliament intended to depart from this approach, it would surely have made express provision to that effect. On the contrary, there is nothing in the amendments made in 2014 which supports the view that Parliament intended to open the door so as to enable repeated claims raising human rights issues to generate multiple appeals.

Therefore, Lord Lloyd-Jones agreed with the Court of Appeal that “human rights claim” in s 82 of the (amended) 2002 Act means an original human rights claim or a fresh human rights claim within rule 353. In general terms, he opined that where a person has already had a protection claim or a human rights claim refused and no appeal is pending, any further submissions relying on protection or human rights grounds must first be accepted by the decision-maker as a fresh claim in accordance with rule 353 if a decision in response to those submissions is to trigger a right of appeal under s 82.

Comment

Through the “hostile” mechanics of the Immigration Act 2014, during her tenure in the Home Office, Theresa May vowed to finally end the “snakes and ladders” system of meritless appeals. In 2013 she misleadingly accused the judiciary of being on the “side of foreign criminals”. Similarly, she also vilified immigration lawyers by labelling them “winners” like their foreign criminal clients. Mrs May’s outbursts stirred up resentment against immigrants and pitted the public against the judiciary and the legal profession. Under her orders, immigration law grew in complexity and inflicted harsh outcomes all around making everyone a loser.

This judgment is another reminder at apex court level that a grave need exists to simplify the sphere of immigration law, a field that Mrs May worked relentlessly to complicate and obfuscate beyond all comprehension. In addition to the Law Commission’s “timely and welcome” consultation paper, the Supreme Court also flagged up the report published by Justice on immigration and asylum appeals to reiterate the point that immigration law is excessively complicated and must be reformed and simplified urgently.

As seen earlier in KO (Nigeria) [2018] UKSC 53, it is extremely ironic that Lord Carnwath found it “profoundly unsatisfactory” that even those provisions intending to provide clear guidelines to minimise the need for judicial assessment, i.e. the ones laid down in ss 117A to 117D of Part 5A of the 2002 Act on art 8 and the public interestshould create huge chaos when in reality statute “deliberately establishes an uncomplicated set of rules.”

This article was originally posted here.

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Tillman v Egon Zehnder Ltd was heard on 21st and 22nd January. This case is considering a non-competition covenant. The matter arose in the context of the respondent who, following her termination of employment with the appellant company, wished to take employment with a competitor. The appellant successfully obtained an injunction against this, and the respondent’s argument that this was in unreasonable restraint of trade failed. The Supreme Court is to determine whether the doctrine of restraint of trade is engaged by a restriction on post-employment shareholding; the proper construction of the phrase ‘interested in’ in a non-competition covenant, and the correct approach so severance in such a covenant.

Samuels v Birmingham City Council was heard on 31st January. This appeal is considering whether the respondent council was entitled to treat the appellant as intentionally homeless. This is because the appellant’s tenancy was terminated due to rent arrears and she was in receipt of benefits, including housing benefit, which did not cover her actual rent, but left her with a monthly shortfall. Because her house was considered affordable, upon her homelessness application she was judged to have become homeless intentionally. On this appeal, the Supreme Court is to consider the appellant’s contention that the respondent failed to follow the relevant guidance or to give adequate reasons for its conclusion that there was sufficient flexibility in her income from benefits to fund the weekly shortfall in rent.

Frederick & Ors v Positive Solutions (Financial Services) Ltd was heard on 13th and 14th February. This case is considering whether the respondent company is vicariously liable for the fraudulent and dishonest actions of its agent. This matter has arisen in the context of an appeal by the appellants against a decision granting summary judgment to the respondent. The appellants claim that the respondent financial advice company is vicariously liable for a fraud perpetrated by its agent through which the appellants remortgaged their property, raising monies for an investment in a property development scheme which were then misappropriated and lost by the agent.

Cape Intermediate Ltd v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK) was heard 18th and 19th February. This appeal is considering what the powers of the court are pursuant to the Civil Procedure Rules or its inherent jurisdiction to permit access to documents used in litigation to which the applicant was not a part. This has arisen as the respondent has applied for copies of documents used in two sets of proceedings involving the appellant company, which settled after trial but before judgment.

Telereal Trillium v Hewitt (Valuation Officer) was heard on 21st February. This case is considering whether regard should be given to general demand for comparable properties in the market when ascertaining the rateable value of a properly under the statutory hypothesis in the Local Government Finance Act 1988, sch 6, para 2(1), and what the relevance is of the absence of an actual prospective tenant who would pay a positive price in order to occupy the property at the valuation date. The property in question in this appeal is Mexford House, a substantial three-storey block of offices in the North Shore area of Blackpool.

R (Association of Independent Meat Suppliers & Anor) v Food Standards Agency was heard on 5th March. This case is considering  whether there is a right of appeal against an Official Veterinarian’s assessment of the fitness of meat for human consumption where there is a dispute as to the fitness of the meat for human consumption. This matter arose where respondent considered there to be no right of appeal against the Official Veterinarian’s assessment when he found that a bull bought by Cleveland Meat Company Ltd was diseased and so unfit for human consumption.

Secretary of State for Work & Pensions v Gubeladze was heard on 12th and 13th March. This appeal is considering whether the UK’s decision to extend the applicability of Workers’ Registration Scheme (which applied to individuals coming from the 8 Accession States which joined the EU in 2004) by two years was lawful. This matter has arisen in the case of the respondent. This is because she has contended that she had acquired a right of permanent residence by November 2012 because she had lived in the UK for more than 3 years and she had been working for at least the preceding 12 months. However this was rejected by the Secretary of State because the respondent had not registered under the Workers’ Registration Scheme during the first part of her employment and for that period had not been residing legally in the UK. The Upper Tribunal and Court of Appeal have both concluded that the extension of the WRS in 2009 was unlawful.

In the matter of an application by Dennis Hutchings for Judicial Review (NI) was heard on 14th March. This case is considering the construction of condition 4 of the Justice and Security (Northern Ireland) Act 2007, s 1. The Supreme Court must determine whether the condition embraces members of the security forces in Northern Ireland accused of offences that are not part of sectarian violence, and whether the ordinary rules of natural justice apply to the issuance of a certificate under the provision. This matter has arisen as Mr Hutchings, who was a serving soldier with the Life Guards Regiment in 1974, is appealing against the issuing of a certificate under the 2007 Act. This is because the certificate would mean his trial for attempted murder and attempted grievous bodily harm with intent would be before a judge alone, rather than before a jury.

Akcil & Ors v Koza & Anor was heard on 19th March. This appeal is considering whether the Recast Regulation (Regulation (EU) No. 1215/2012), art 24(2) confers exclusive jurisdiction on the English courts to determine the authority in England of directors appointed in foreign proceedings to the board of a foreign corporate shareholder of a company registered in England to cause or permit the foreign corporate shareholder to do anything as a shareholder of the English company. The Supreme Court will also determine whether art 24(2) confers exclusive jurisdiction against anyone other than the foreign corporate shareholder, such as its directors of a corporate shareholder as co-defendants.

Computer Associates (UK) Ltd v The Software Incubator Ltd was heard on 28th March. This case is considering whether software supplied to customers electronically constitutes “goods” within the meaning of the Commercial Agents (Council Directive) Regulations 1993/3053, reg 2(1). This matter arose as the appellant company claimed damages for breach of contract when the respondent terminated their agreement under which the appellant had been promoting the software in the UK, which was produced by the respondent. However the respondent has argued that the appellant is not entitled to compensation because the software supplied electronically did not amount to ‘goods’ and so the Regulations do not apply.

Secretary of State for Work and Pensions v MM (Scotland) was heard on 9th April. This appeal is considering whether, where a claim to PIP under the Social Security (Personal Independence Payment) Regulations 2013 is based on a person needing social support to engage with other people, the social support must be needed contemporaneously with the engagement, and whether anything that constitutes needing “prompting” to be able to engage with other people also constitutes social support. This has arisen in the case of the respondent, who has suffered from anxiety and depression for six years, and who is heavily reliant on his partner’s assistance for daily living, including in social situations.

Svergies Anfgartygs Assurans Forening (The Swedish Club) & Ors v Connect Shipping Inc & Anor was heard on 10th and 11th April. This appeal is considering, in the case of a vessel on which a fire broke out causing extensive damage, whether the respondent owners could rightly declare the vessel a constructive total loss and whether, in any event, they had lost the right to abandon the Vessel and claim such loss, as contended by the appellant insurers.

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Hearings in the Supreme Court are now shown live on the Court’s website.

The Supreme Court is in recess from 18 to 29 April inclusive.

Court sittings will resume at the start of the Easter Term which begins on 30 April 2019.

A full list of the cases heard in Hilary term can be found here.

The full details of the cases scheduled for Easter Term can be found here.

The following Supreme Court judgments remain outstanding:

Keefe (by his litigation friend Eyton) v Hoteles Pinero Canarias SL, heard 7 Mar 2017.

Arcadia Petroleum Ltd & Ors v Bosworth & Anor, heard 10-11 Apr 2017.

OWD Ltd, trading as Birmingham Cash & Carry, & Anor v Commissioners for HMRC, heard 12 Jul 2018.

Poole Borough Council v GN (through his litigation friend, ‘The Official Solicitor’) & Anor, heard 16-17 Jul 2018.

R (DA & Ors) v Secretary of State for Work and Pensions, heard 17-19 Jul 2018.

In the matter of D (a child), heard 3-4 Oct 2018.

Lachaux v Independent Print Ltd & Anor, hears 13-14 Nov 2018.

R (Privacy International) v Investigatory Powers Tribunal & Ors, heard 3-4 Dec 2018.

Hancock & Anor v Commissioners for HMRC, heard 7 Dec 2018.

Vedanta Resources Plc & Anor v Lungowe & Ors, heard 15-16 Jan 2019.

Tillman v Egon Zehnder Ltd, heard 21-22 Jan 2019.

Samuels v Birmingham City Council, heard 31 Jan 2019.

Shanks v Unilever Plc & Ors, heard 6-7 Feb 2019.

Secretary of State for the Home Department v Franco Vomero (Italy), heard 7 Feb 2019.

Cape Intermediate Ltd v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK), heard 18-19 Feb 2019.

Telereal Trillium v Hewitt (Valuation Officer), heard 21 Feb 2019.

R (Association of Independent Meat Suppliers & Anor) v Food Standards Agency, heard 5 Mar 2019.

Commissioners for HMRC v Frank A Smart & Sons Ltd (Scotland), heard 6 Mar 2019.

Secretary of State for Work and Pensions v Gubeladze, heard 12-13 Mar 2019.

In re an application by Dennis Hutchings for Judicial Review (Northern Ireland), heard 14 Mar 2019.

Akcil & Ors v Koza & Anor, heard 19 Mar 2019.

Routier & Anor v Commissioners for HMRC, heard 2-3 April 2019.

Svergies Anfgartygs Assurans Forening (The Swedish Club) & Ors v Connect Shipping Inc & Anor, heard 10-11 April 2019.

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On appeal from: [2017] EWCA Civ 1528.

Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents) - YouTube

1826 Zambian citizens issued proceedings against Zambian company KCM and Vedanta (KCM’s ultimate parent company) for personal injury, damage to property and loss of income, amenity and enjoyment of land as a result of pollution and environmental damage caused by discharges of harmful effluent from the Nchanga mine since 2005. Vedanta was served within the jurisdiction, while KCM was served out of the jurisdiction, with permission obtained on a without notice application.  In September and October 2015 Vedanta and KCM respectively applied for declarations that the court lacked jurisdiction to try the claims or, alternatively, that it should not exercise such jurisdiction that it might have. Coulson J dismissed those applications. The Court of Appeal upheld the dismissal of those applications.

Held: the Supreme Court dismisses the appeal on three grounds. (1) Article 4.1 of the Recast Brussels Regulation confers a right on any claimant (regardless of their domicile) to sue an English domiciled defendant in England irrespective of connecting factors to other jurisdictions. The abuse of law test is whether the sole purpose of joining a defendant is to sue them other than in their Member State of domicile. The EU case law also suggests that the abuse of law doctrine is limited to situations where EU law is invoked collusively to subvert other EU provisions.

(2) On the facts, there was sufficient material identified by the judge in support of the view that the claimants’ case was arguable and the judge made no error of law in assessing whether there was a real triable issue against Vedanta, so his decision on the negligence claim must stand.

(3) In terms of the “proper place” test, the search is for a single jurisdiction in which the claims against all defendants may most suitably be tried. The lower courts had viewed irreconcilable judgments as a decisive factor in favour of England as the proper place for the claim against KCM, but  Vedanta had by the time of the hearing offered to submit to the Zambian jurisdiction, so that the whole case could be tried there. Looking at the relevant connecting factors in the round, Zambia would plainly have been the proper place for this litigation as a whole, provided substantial justice was available to the parties in Zambia. However, cogent evidence shows that there is a real risk that substantial justice would not be obtainable in that foreign jurisdiction. It is not in doubt that Zambia has independent judges, courts and civil procedure which would ensure a just trial of large environmental group claims like this one, But the practicable impossibility of funding such group claims where the claimants are all in extreme poverty, because they could not obtain legal aid and because conditional fee agreements (CFAs) are unlawful in Zambia. Secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable effective litigation of this size and complexity, in particular against a well-resourced opponent like KCM.

For judgment, please download: [2019] UKSC 20
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (15 Jan 2019 morning session) (15 Jan 2019 afternoon session) (16 Jan 2019 morning session)(16 Jan 2019 afternoon session)

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On appeal from: [2017] EWCA Civ 435

R (on the application of Derry) v Commissioners for Her Majesty’s Revenue and Customs - YouTube

This appeal considered the correct procedure HMRC is required to follow under the Taxes Management Act 1970, where it wishes to enquire into a claim for carry-back share loss relief made in a self-assessed and calculated tax return.

On 22 March 2010 (tax year 2009/10), Mr Derry bought 500,000 shares at a cost of £500,000 in a company called Media Pro Four Ltd. On 4 November 2010 (tax year 2010/11) he sold them to the ‘Island House Private Charitable Trust’ for £85,500, realising a loss of £414,500. In his tax return for 2009/10, submitted by his accountants on 24 January 2011, Mr Derry claimed share loss relief for that amount against his income for that year under of the Income Taxes Act 2007, s132 (‘the 2007 Act’), with the aim of reducing to that extent his taxable income for that year. HMRC have identified the claim as a case of possible tax avoidance.

In December 2011, Mr Derry’s accountants submitted his tax return for 2010/11 online, which said that the relief for the loss of £414,500 had already been claimed and relief obtained in 2009/10. In response, HMRC opened an enquiry into the claim for share loss relief.

Mr Derry began judicial review proceedings relating to the demand. The two issues were

  1. Whether, having exercised his right to claim the relevant loss relief in the previous year (2009/10), Mr Derry was correct to deduct that loss in calculating his net income for that year; or whether, as HMRC contend, that right was overridden by the 1970 Act, Sch 1B such that the loss, although claimed in year 2009/10, was to be treated as “relating to” the following year.
  2. Whether, if it was an error for Mr Derry to make a claim for relief in the tax return for 2009/10, that claim is nonetheless part of the tax return for that year.

Held: The Supreme Court unanimously dismisses the appeal as it finds in favour of Mr Derry on the first issue. The court found that 2007 Act,  s23 and ss131-132 create a clear and self-contained code for the treatment of a claim to share-loss relief such as that of Mr Derry. This legislation gives him an “entitlement” to make the claim, to specify the tax year to which it is to be applied, and to do so by deducting it in the calculation of his “net income”. The court finds that it would be extraordinary for that entitlement to be taken away, without any direct reference or signpost, by a provision in a relatively obscure schedule of another statute.

The court notes that the conclusion on the first issue makes it strictly unnecessary to reach a conclusion on the second issue

For judgment, please download: [2019] UKSC 19
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (12 Dec 2018 morning session) (12 Dec 2018 afternoon session)

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Nicholas Medniuk, Neil Beighton and Simon Kilgour, who work within the insurance and reinsurance group at CMS, comment on the decision handed down in the matter of R&S Pilling t/a Phoenix Engineering (Respondent) v UK Insurance Ltd [2019] UKSC 16, which concerns the question of when a motor insurer will not be liable for third party property damage. 

On 27 March 2019, the UK Supreme Court decided that a motor policy did not cover fire damage arising from repair work carried out to a car on private land.

Since 1930, UK law has made it compulsory for a driver of a vehicle to hold an insurance policy that includes third party cover to meet a liability in damages for injury to another person or property caused by the use of a motor vehicle. There have been a number of issues in recent years as to what constitutes the “use” of a vehicle for Road Traffic Act 1988 (RTA) purposes, with R & S Pilling t/a Phoenix Engineering v UK Insurance Ltd the latest Supreme Court authority to address the question.

Background

Phoenix operated a garage and permitted an employee to carry out DIY repairs to his car there. The work set the car on fire causing damage of over £2 million to the garage and neighbouring premises. Phoenix’s insurer paid for the damage and subrogated against the employee’s motor insurer asserting cover under the third party liability section of the employee’s policy. The motor insurer commenced proceedings seeking the court’s declaration that it was not liable to the employee because the car was being repaired on private premises. By contrast, Phoenix argued that the repair work was covered because, although off-road, the repair arose out of use of the car on a road or other public place.

Compulsory insurance and the policy

Part VI of the Road Traffic Act 1988 deals with third party liabilities, within which section 145(3) states that a policy only satisfies the requirements of the Act where it provides cover for “any liability… incurred… in respect of… damage to property caused by, or arising out of, the use of the vehicle on a road or other public place”.

The employee’s policy stated, in what the Supreme Court described as “admirably simple English”, that the insured was covered “if you have an accident in your vehicle and you kill or injure someone, you damage their property or you damage their vehicle”. Cover was available for damage occurring while the driver was “in” the car. However, this did not cover all the circumstances that the RTA requires to be covered, including damage “caused by or arising out of the use of the vehicle on the road or other public place in Great Britain”. The employee’s policy was supplemented by a certificate that formed part of the contract and included a statement from the insurer’s CEO that the policy was compliant with UK law.

Judge Waksman in the High Court gave the declaration sought by the motor insurer on the basis that the employee’s act did not amount to “use” of the car and that the fire arose out of his negligence in effecting repairs. The Court of Appeal disagreed, holding that the insuring clause should read “we will cover you for your legal responsibility if there is an accident involving your vehicle” because the “UK law” comment in the certificate meant that the policy provided the cover required by law.

Supreme Court judgment

A unanimous Supreme Court restored Waksman J’s decision because, although the need for repair work arose from the prior use of the car on the road, the policy, properly construed, did not cover the property damage arising from the negligent repair work.

Policy construction: The Supreme Court found that the policy contained a linguistic error that failed to reflect the intention of the parties because the insuring clause was not wide enough to encompass the CEO’s statement in the certificate that the policy satisfied UK law. By this statement, the Court considered it clear that a reasonable person must have understood the policy to provide the third party cover as required by section 145(3) of the RTA. Since the certificate itself is distinct from a policy and so did not provide any additional cover, the Court found a need to read words into the insuring clause to correct the policy, so that it met the requirements of the RTA.

Critical to determining what was to be inserted into the policy was to understand the meaning of the phrase from the RTA “caused by, or arising out of, the use of the vehicle on a road or other public place”. The Court noted that:

  • the word “use” had been broadly construed by English courts to cover any situation where the owner has an element of control, management or operation of the vehicle on the road or in a public place. The reason is that even a parked car may be a hazard on a road or in a public place.
  • the words “caused by, or arising out of the use of” allowed for a causal link between use of a vehicle on a road and damage resulting from that use but occurring elsewhere, however, this must be subject to a reasonable limit to the length of the causal chain.

The Court considered how to add new language into the policy. Citing the House of Lords decision, Chartbrook Ltd v Persimmon Homes Ltd (2009), the Court recognised that to adopt a corrective construction:

“it should be clear that something has gone wrong with the language and it should be clear what a reasonable person would have understood the parties to have meant”.

The correction required was limited to ensuring that the cover complied with the RTA, so that the policy also covered “an accident caused by or arising out of your use of your vehicle on a road or other public place”. The Supreme Court considered that the formulation inserted by the Court of Appeal was too broad by extending cover to “any accident involving” the employee’s vehicle. It was important to go no further than necessary: the policy was intended to cover circumstances other than the driver being in the car for which there was a need for compulsory insurance under the RTA.

Contract terms that may have different meanings: The Court dismissed a contra proferentum argument advanced against the insurer that a doubt about the meaning of the policy should be resolved in favour of the policyholder, and similarly, under section 69 of the Consumer Rights Act 2015, that the interpretation most favourable to the consumer must prevail. The Court considered that, although the contract wording contained a mistake, there was no doubt about the parties’ intended meaning and the corrective construction was to cure the linguistic mistake.

EU Law: The Court debated the concept of “use” within the meaning of the EU Motor Insurance Directive 2009/103/EC, which had been interpreted to require insurance for “any use of a vehicle as a means of transport” including on private property, and so went beyond the geographical requirement of the RTA expressed by the words “on a road or other public place”. However, the Court resolved that the policy only needed to comply with UK law – the RTA; any failure of UK law to reflect EU law was a matter for Parliament and the responsibility of the State to implement EU law. In any event, applying the EU extension, a car being repaired on private property was thought not to fall within the definition of “use as a means of transport”.

Comment

This is a common sense decision for the application of the RTA and will likely be welcomed by motor insurers whose policies are governed by the law of England and Wales; the Supreme Court gave effect to what the parties appeared to intend. Still, a cautionary note is wise given the language of the insuring clause since, with only a subtle change of the facts – had the employee been “in” his car when the accident occurred – a different result might have been achieved. Insurers should be careful to review their policies to ensure that they understand the cover they are providing.

It might be considered odd that repair work could be considered a “use of a vehicle” if carried out on a public road, but not when carried out on private land. The Court endorses “as good sense” those cases providing a broad interpretation of the word “use” under the RTA because they are concerned with protecting the public from hazards that, for example, unattended cars might create. As such, the Court recognised that liability under the statute comes from the concepts of control, management or operation of a vehicle but only while it is on the road. The physical location of Phoenix’s employee was vital, i.e. had the car been on the road or in a public place, as opposed to private property, when the repair was carried out, it seems that the damage would have been covered by the motor policy.

Insofar as off road use is concerned, there has been some divergence in recent years between England & Wales decisions under the RTA and EU authority on the use of a motor vehicle. The R&S Pilling decision follows previous High Court authority Lewis v Tindale (2018) which held that a driver was uninsured for injury caused while driving the vehicle off-road. The industry has also had to grapple with the apportionment of liability arising from vehicles used in the commission of crime. The most extreme case is the use of vehicles as weapons in terrorist incidents, such as the Westminster Bridge attack. This deliberate commission of crime is an excluded peril, but the industry has agreed to the mutualisation of exposure through the Motor Insurers Bureau. With the advent of autonomous vehicles, what constitutes the “use” of the vehicle and the causal connection with a “driver” who may not be in direct control is likely to remain an area of developing law.

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Hearings in the Supreme Court are now shown live on the Court’s website.

On Tuesday 9 April, the Supreme Court will hear the appeal of Secretary of State for Work and Pensions v MM (Scotland) and on Wednesday 10 and Thursday 11 April, Svergies Anfgartygs Assurans Forening (The Swedish Club) & Ors v Connect Shipping Inc & Anor.

On Wednesday 10 April, the Supreme Court will hand down judgments in R (Derry) v Commissioners for Her Majesty’s Revenue and Customs and Vedanta Resources PLC & Anor v Lungowe & Ors

The appeal in Derry considers the correct procedure HMRC is required to follow under the Taxes Management Act 1970 where it wishes to enquire into a claim for carry-back share loss relief made in a self-assessed and calculated tax return.

And in Vedanta Resources PLC 1826 Zambian citizens issued proceedings against KCM and Vedanta for personal injury, damage to property and loss of income, amenity and enjoyment of land as a result of pollution and environmental damage caused by discharges of harmful effluent from the Nchanga mine since 2005. In September and October 2015 Vedanta and KCM respectively applied for declarations that the court lacked jurisdiction to try the claims or, alternatively, that it should not exercise such jurisdiction that it might have. Coulson J dismissed those applications. The Court of Appeal upheld the dismissal of those applications.

The proposed panel for hand down is Lord Reed, Lord Briggs, Lord Sales.

A full list of the cases scheduled for the Hilary term can be found here.

The following Supreme Court judgments remain outstanding:

Keefe (by his litigation friend Eyton) v Hoteles Pinero Canarias SL, heard 7 Mar 2017.

Arcadia Petroleum Ltd & Ors v Bosworth & Anor, heard 10-11 Apr 2017.

OWD Ltd, trading as Birmingham Cash & Carry, & Anor v Commissioners for HMRC, heard 12 Jul 2018.

Poole Borough Council v GN (through his litigation friend, ‘The Official Solicitor’) & Anor, heard 16-17 Jul 2018.

R (DA & Ors) v Secretary of State for Work and Pensions, heard 17-19 Jul 2018.

In the matter of D (a child), heard 3-4 Oct 2018.

Lachaux v Independent Print Ltd & Anor, hears 13-14 Nov 2018.

R (Privacy International) v Investigatory Powers Tribunal & Ors, heard 3-4 Dec 2018.

Hancock & Anor v Commissioners for HMRC, heard 7 Dec 2018.

R (Derry) v Commissioners for HMRC, heard 12 Dec 2018.

Vedanta Resources Plc & Anor v Lungowe & Ors, heard 15-16 Jan 2019.

Tillman v Egon Zehnder Ltd, heard 21-22 Jan 2019.

Samuels v Birmingham City Council, heard 31 Jan 2019.

Shanks v Unilever Plc & Ors, heard 6-7 Feb 2019.

Secretary of State for the Home Department v Franco Vomero (Italy), heard 7 Feb 2019.

Cape Intermediate Ltd v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK), heard 18-19 Feb 2019.

Telereal Trillium v Hewitt (Valuation Officer), heard 21 Feb 2019.

R (Association of Independent Meat Suppliers & Anor) v Food Standards Agency, heard 5 Mar 2019.

Commissioners for HMRC v Frank A Smart & Sons Ltd (Scotland), heard 6 Mar 2019.

Secretary of State for Work and Pensions v Gubeladze, heard 12-13 Mar 2019.

In the matter of an application by Dennis Hutchings for Judicial Review (Northern Ireland), heard 14 Mar 2019.

Akcil & Ors v Koza & Anor, heard 19 Mar 2019.

Routier & Anor v Commissioners for HMRC, heard 2-3 April 2019.

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Aisling O’Dwyer, an associate in the IP team and Frances Denney, a trainee patent attorney, comment on the decision of the UK Supreme Court in the matter of Actavis Group PTC EHF and Ors v ICOS Corporation and Anor [2019] UKSC 15.

   

When is clinical research obvious?  The Supreme Court was asked to decide in November 2018, when it heard the appeal by Actavis Group PTC EHF and Ors (the Respondents) against ICOS Corporation and Anor (the Appellants).

BACKGROUND

ICOS is the owner of the European patent at issue (EP1173181 (the ‘181 Patent)). Eli Lilly (the Second Appellant), is the exclusive licensee.

The ‘181 Patent is directed to the use of tadalafil in a 1 to 5mg dosage form for the treatment of erectile dysfunction (ED). Tadalafil is the generic name for the drug Cialis, which is used to treat ED as an alternative to sildenafil (more commonly known by its brand name, Viagra). The alleged essence of the ‘181 Patent invention is the discovery that tadalafil is effective in treating ED at such a low dose and with minimal side effects. This discovery has allowed the drug to be taken daily rather than on demand. However, tadalafil had already been the subject of an earlier patent (the “Daugan” patent, transferred to ICOS from GlaxoSmithKline) which disclosed the use of tadalafil in the treatment of ED, albeit at higher dosages than envisaged by the ‘181 Patent.

In 2016, the Respondents (Actavis, Teva and Generics UK t/a Mylan) started proceedings to “clear the way” and revoke the ’181 Patent, with the intention of launching their own generic products.

The central question of the proceedings was whether, in light of the common general knowledge and Daugan as the closest prior art, the claims of the ‘181 Patent were obvious.

EARLIER DECISIONS

  • High Court

At first instance, Birss J found the ‘181 Patent to be valid and infringed [2016] EWHC 1955 (Pat).

Birss J considered that, based on Daugan, it would have been entirely obvious for a skilled team to set out to take tadalafil forward into a routine pre-clinical and clinical trial programme (Phases I-IV) as an oral treatment for ED at the priority date.

Looking to carry out Phase IIb (and specifically determine the dose-response relationship), Birss J considered that, again based on Daugan, the skilled team would likely carry out a first dose ranging study of “on demand” and “daily” dosing using 25, 50 and 100mg of tadalafil. At these doses, the skilled team would have found an apparent therapeutic plateau, i.e. no difference in efficacy between the three doses. It was accepted this result would be unexpected.

The critical point was whether, in light of this finding, it would be obvious for the skilled person to conduct further dose ranging studies at lower doses to determine the minimum effective dose, which would lead to the dosage regimen of the ‘181 Patent – 1 to 5mg of tadalafil. This process would require the skilled person to make “value judgements”.

Birss J concluded that it was “very likely” that the skilled team would conduct such further lower dose studies.

However, Birss J further considered that, a 5mg/day dose would not have been tested with a reasonable expectation of success given the teachings in Daugan, which only exemplified 50mg doses. A 5mg/day dose is significantly lower than the 50mg starting point and also provided a surprising result – efficacy with reduced side effects. In addition, the skilled team needed to make many “value judgements” to arrive at the invention.

Thus, Birss J concluded that the claims of the ‘181 patent involved an inventive step.

  • Court of Appeal

The Respondents appealed the decision on five grounds, including obviousness in view of Daugan.

The Court of Appeal, composed of Kitchin LJ, Floyd LJ and Lewison LJ allowed the appeal on the ground of obviousness, and declared the ‘181 Patent invalid [2017] EWCA Civ 1671.

Kitchin LJ generally agreed with the reasoning of Birss J, until it came to considering the actions of the skilled team once the therapeutic plateau had been identified.

Kitchin LJ referred to Birss J’s findings that it would have been “very likely” lower doses would have been investigated once the therapeutic plateau was discovered as the purpose of the Phase IIb study would not have been fulfilled otherwise.  This was supported by expert evidence that it would have been a “no brainer” for the skilled team to conduct further lower dose studies. Kitchin LJ therefore rejected Birss J’s conclusion that the skilled person would be faced with multiple parallel avenues of possible studies and would have to make multiple value judgements to arrive at the invention.

Kitchin LJ also considered Birss J should not have attached any weight to the 5mg dose being considerably less than 50mg, or that the 5mg dose had an unexpected effect of reduced side effects, this was a bonus effect, which did not cause the 5mg dose to cease to be obvious.

Kitchin LJ thus concluded that the skilled but unimaginative team would embark on a clinical trial process with a reasonable expectation of success, and in the course of doing so would have arrived at the claimed invention.

DECISION OF THE SUPREME COURT

The Supreme Court composed of President Lady Hale, Lord Kerr, Lord Sumption, Lord Hodge and Lord Briggs unanimously dismissed the appeal.

The Court was satisfied that the Court of Appeal was entitled to interfere with the trial judge’s assessment of obviousness and to hold that the ‘181 patent was invalid for lacking an inventive step.

  • Reversal of trial judge’s evaluation

The Court determined that the Court of Appeal was entitled to reject Birss J’s evaluation of the ‘181 Patent. The Court held that the Court of Appeal did not reverse any of Birss J’s findings primary of fact, but correctly highlighted the failure of Birss J to appreciate the logical consequences of said findings – that is it was “very likely” that the skilled team would continue low dose testing. This is an error of principle, which thus allows an appellate court to carry out its own evaluation.

  • Obviousness

The Court generally agreed with the Court of Appeal, although the Court developed its own reasoning as to why the claims lacked an inventive step in view of Daugan.

Lord Hodge, with whom the other Lords concurred, considered ten factors relevant to the case, although this was non-exhaustive:

  1. whether something was “obvious to try” at the priority date;
  2. the routine nature of the research and established practice of following such research;
  3. the burden and cost of the research programme;
  4. the necessity for and the nature of value judgements;
  5. alternative or multiple paths of research;
  6. the motive of the skilled person;
  7. whether the results of research are unexpected;
  8. hindsight;
  9. whether a feature of a claimed invention is an added benefit in a context in which the claimed invention is obvious for another purpose; and
  10. dosage patents with EPC 2000/Swiss-style claims may be valid.

In view of these factors, the Court held the skilled team was engaged in the familiar and routine testing required to establish the appropriate dosage regime for tadalafil, in order to implement Daugan. It was obvious to embark on that exercise and carry out tests in a routine way until an appropriate dose was ascertained. Those tests included the completion of the dose-ranging studies, which was the purpose of Phase IIb. The fact a 5mg dose of tadalafil remained effective as a treatment of ED but also had the additional and unexpected result of reduced side effects was an added benefit. This did not prevent the identification of 5mg as the appropriate dose from being obvious. The invention was arrived at due to completion of the required Phase IIb dose ranging studies.

COMMENT 

This case provides an important update on how the UK Courts view the patentability of necessary or routine investigations.  Significantly, the Court did not find that the product of such enquiries can never be inventive. Lord Hodge recognised that “efficacious drugs discovered by research involving standard pre-clinical and clinical trials should be rewarded with a patent if they meet the statutory tests”. The relevant statutory requirement is that an invention involves an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art.

Significantly, a large number of dosage regimen patents may now be vulnerable in the UK.  Whereas previously a selection or undertaking of multiple non-inventive steps might, in combination, be deemed inventive because the invention was not directly obtainable from the closest prior art, Lord Hodge’s approach makes it clear that this is no longer the case.  Applicants will need to consider if their invention is obvious on a case by case basis, a position advocated by The IP Federation, the British Generic Manufacturers Association and the UK BioIndustry Association, who intervened in the case.

The ten factors set out in Lord Hodge’s judgment are likely to assist parties in assessing their invention, though no one factor is of overriding importance.  Rather, the inventive step will be assessed in light of all the circumstances. However, the extent to which this this approach will be extended to patents beyond those for dosage regimes remains to be seen.

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On appeal from: [2017] EWCA Civ 400.

This appeal considered whether the left-over meat on an animal carcass after it has been mechanically butchered, which is then removed from that carcass via a second mechanical process which does not crush the meat, should properly be categorised as “Mechanically separated meat” (“MSM”) within the definition in Point 1.14 of Annex I to EU Regulation No. 853/2004. The Supreme Court unanimously dismisses the appeal.

The court discussed the proper interpretation of point 1.14 to decide whether the meat should be classified as MSM, requires a correct application of the guidance provided in the CJEU judgment. The CJEU found three criteria for defining MSM:

  1. the use of bones from which the intact muscles have already been detached, or of poultry carcasses, to which meat remains attached;
  2. the use of methods of mechanical separation to recover that meat; and
  3. the loss or modification of the muscle fibre structure of the meat recovered through the use of those processes.

The CJEU added that any meat product which satisfies those three criteria must be classified as MSM, irrespective of the degree of loss or modification of the muscle fibre structure, provided the loss or modification is greater than that which is strictly confined to the cutting point (“the cutting point qualification”) [26].

The Supreme Court chose to give a narrow reading to this ‘cutting point’ qualification, referring to the cutting of intact muscles. They concluded that meat removed from a carcase will not be MSM if it is removed by mechanical means in the first phase of cutting meat from the whole carcase, but will generally be MSM if it is later removed by mechanical means [57].

Finally, as the CJEU judgment made it explicit that, applying the definition in point 1.14, that the Appellant’s products fall to be categorised as MSM, the position is acte clair and no further reference to the CJEU is needed.

For judgment, please download: [2019] UKSC 18
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (30th Jan Morning Session) (30th Jan Afternoon Session)

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