Case No: CO/1582 /99 
 
IN THE SUPREME COURT OF JUDICATURE
QUEENS BENCH DIVISION
CROWN OFFICE LIST
Royal Courts of Justice
Strand, London, WC2A 2LL

Monday 15 May 2000

B e f o r e :

Mr Justice Harrison

THE QUEEN
      V
                      DIRECTOR GENERAL OF ELECTRICITY SUPPLY               Respondent

Ex parte
                                                LONDON ELECTRICITY plc                                      Applicants

__________________________________
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040,  Fax No:  0171 831 8838
Official Shorthand Writers to the Court)
__________________________________

Richard Field QC and Nigel Giffin  - for the Applicants
(Instructed by Herbert Smith Solicitors)
Kenneth Parker QC and Mark Shaw  - for the Respondent
(Instructed by Treasury Solicitor)
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Judgment
As Approved by the Court

Crown Copyright ©

Introduction
This is an application for judicial review of a determination made on behalf of the respondent, the Director General of Electricity Supply (“the Director General”), by Mr Saunders, who is the Director of Regulation and Business Affairs at the Office of Electricity Regulation (“Offer”). The determination was made on 27 January 1999 with reasons given later on 7 April 1999.  The determination was that the charge which the applicant, a public electricity supplier, might properly require Mrs Elnaugh to pay for an upgraded supply of electricity to her home was zero.  

Mrs Elnaugh is a resident of Mitcham Garden Village (“the Village”).  The Village consists of some 88 dwellings which are all owned by the Mitcham Garden Village Trust (“the Trust”) which is a registered charity with the object of providing housing accommodation for the elderly,   In February 1997 the Trust proposed to install electricity night storage heating in the dwellings in the Village.  That would have involved a very significant increase in the peak night demand for electricity, necessitating reinforcement works to the distribution system including the provision of a new transformer and substation, the total cost of the works being £44,693.    The Trust was unwilling to pay for the reinforcement costs but, following discussions with Offer, it was decided to deal with the matter by way of separate applications by the individual tenants of the dwellings rather than by way of an application by the Trust itself.  Under a principle contained in a condition of the applicant’s licence, to which I will have to refer but which is known colloquially as the “25% rule”, no charge is normally made for reinforcement works to the distribution system if the new or increased load requirement does not exceed 25% of the existing effective capacity at the relevant point of the system.  None of the individual applications for connection by the tenants would, in themselves, taken individually, have resulted in a load requirement in excess of 25% of the existing capacity of the system.  Twelve of them could have been accommodated within the existing capacity in any event.  However, the cumulative increased load from all the night storage heaters would have exceeded 25% of the existing capacity of the system.  
A number of individual applications were made by tenants but Mrs Elnaugh’s application was dealt with as the lead application for the purposes of resolving the dispute about payment for the reinforcement costs.   The applicant offered Mrs Elnaugh terms for connecting her night storage heater  which included a proposed charge of £508.  That charge reflected her proportionate share of the total reinforcement costs.  It was unacceptable to Mrs Elnaugh, so the applicant referred the dispute to the Director General for resolution.  As I have mentioned, the Director General determined that no charge for the connection should be payable by Mrs Elnaugh.  That is the determination under challenge.   It gives rise to the issue whether the matter should have been dealt with by treating the effect of each application individually or whether the effect of the whole project should be taken into account when dealing with each of the applications.  The applicant refers to it as “disaggregation or aggregation” and the Director General refers to it as an  “individualised approach or a global approach.”  

There is a dispute between the parties as to the appropriate test to be applied in resolving that issue.  It is said to raise an important point of principle which could have significant commercial consequences for the electricity supply  industry generally, although the amount at stake in this case is, in itself, relatively modest.  The applicant, being anxious that this point of principle should be decided by the court, but recognising the uncertainty caused to the residents of the Village by the case, has undertaken to ensure that, if its application succeeds, they will not be left out of pocket.

Statutory and licensing provisions

I should first refer to the statutory provisions and to the conditions of the applicant’s licence which are relevant to a consideration of the issues in this case.  
	The statutory regime is contained in the Electricity Act 1989. Section 3 contains the duties imposed on the Director General.  Under subsection (1) he has to exercise his function in the manner which he considers is best calculated to secure that all reasonable demands for electricity are satisfied, to secure that licence holders are able to finance the carrying on of their authorised activities and to promote competition in the generation and supply of electricity.  Under subsection (3), and subject to the duties in subsection (1), the Director General has a duty to exercise his functions in the manner which he considers is best calculated, inter alia, to promote the interests of consumers and to promote efficiency and economy in the supply and use of electricity.  

Section 6 provides for the grant of licences authorising the licensee (known as a “public electricity supplier”) to supply electricity to premises in the supplier’s authorised area.  Section 7 deals with the categories of conditions which may be included in a licence.  Section 7(3) provides that such conditions may require the licence holder to refer for determination by the Director General such questions arising under the licence as are specified in the licence or are of a description so specified.
Section 9 imposes a duty on public electricity suppliers to develop and maintain an efficient, co-ordinated and economical system of electricity supply.
Section 16 imposes a duty on a public electricity supplier, upon being required to do so by the owner or occupier of any premises, to give a supply of electricity to those premises and, so far as may be necessary for that purpose, to provide electric lines or electrical plant or both.  Having received notification of a request for a supply of electricity, the supplier has to serve a notice on the person requesting the supply containing a number of matters which include specification of any payment which that person will by required to make under section 19(1) of the Act.
Section  17(2)(c) provides that nothing in section 16 shall be taken as requiring a public electricity supplier to supply electricity to any premises if it is not reasonable in all the circumstances for him to be required to do so.

Section 19 (1) provides as follows:-

“Where any electric line or electrical plant is provided by a public electricity supplier in pursuance of section 16(1) above, the supplier may require any expenses reasonably incurred in providing it to be defrayed by the person requiring the supply of electricity to such extent as is reasonable in all the circumstances”. 
	
Finally, so far as the Act is concerned, section 23 enables a public electricity supplier or a person requiring a supply of electricity to refer any dispute between them under sections 16 to 22 for determination by the Director General who makes the determination by an order which has to include his reasons for reaching his decision.

Turning to the terms of the applicant’s licence, Condition 1, paragraph 1 provides that, unless the contrary contention appears, words and expressions used in the conditions of the licence are to be construed as if they were an Act of Parliament and the Interpretation Act 1978 is applied to them.  
The relevant terms of the applicant’s licence as a public electricity supplier are to be found in Condition 8 of the licence.  Condition 8, paragraph 1 requires the licensee to prepare a statement in a form approved by the Director General (known as a Condition 8 statement) setting out the basis on which certain charges (including charges for use of system and for connection) will be made.  Condition 8, paragraph 5 spells out in greater detail what has to be in the statement relating to connection to the supplier’s distribution system.
Condition 8, paragraph 9 provides that connection charges shall be set at a level which will enable the licensee to recover, firstly, the appropriate proportion of the costs directly or indirectly incurred in carrying out, inter alia, the extension or reinforcement of the licensee’s distribution system and, secondly, a reasonable rate of return on the capital represented by such costs.
Condition 8B, paragraph 2 requires that, on application by any person, the licensee shall offer to enter into an agreement for the provision of a connection or for the modification of an existing connection to the distribution system.  The offer has to make detailed provision regarding, inter alia, the connection charges to be paid to the licensee.  Unless manifestly inappropriate, the charges must be presented in a way referable to the condition 8 statement and must be set in conformity with condition 8, paragraph 9 and (where relevant) condition 8B, paragraph 5.

Condition 8B, paragraph 5 provides as follows:

“For the purpose of determining an appropriate proportion of the costs directly or indirectly incurred in carrying out works under an agreement for making a connection or modification to an existing connection, the Licensee shall have regard to:

(a) 	the benefit (if any) to be obtained or likely in the future to be obtained by the Licensee or any other person as a result of the carrying out of such works whether by reason of the reinforcement or extension of the Licensee’s Distribution System or the provision of additional entry or exit points on such system or otherwise;
(b)	the ability or likely future ability of the Licensee to recoup a proportion of such costs from third parties; and 
(c)	the principles that:  

(i)	 no charge will normally be made for reinforcement of the existing Distribution System if the new or increased load requirement does not exceed 25 per cent of the existing effective capacity at the relevant points on the system; and
(ii)	charges will not generally take into account system reinforcement carried out at more than one voltage level above the voltage of connection.”

It is condition 8B, paragraph 5(c)(i) that contains “the 25% rule” which is the main subject of controversy in this case.
Finally, so far as the contents of the licence are concerned, Condition 8D, paragraph 1 empowers the Director General to settle any dispute about the terms of an agreement between the licensee and a person requiring the provision of, or modification to, a connection.   The Director General can settle the terms of the agreement in such manner as appears to him to be reasonable having regard, inter alia, to the consideration that such person should pay to the licensee the whole or an appropriate proportion (as determined in accordance with paragraph 5 of Condition 8B), of the cost referred to in sub-paragraph 9(a) of Condition 8, together with a reasonable rate of return on the capital represented by such costs. 

The applicant’s current Condition 8 statement was promulgated in April 1998.  Paragraph 2 of Appendix 1 of the statement deals with reinforcement of the existing system.  Paragraph 2.1(a) states that reinforcement of the existing system will be included in the connection charge save that no charge will normally be made for reinforcement of the existing distribution system if the new or increased load requirement does not exceed 25% of the existing effective capacity at the relevant point on the system.  There then follows Note 1 which states;-

“Previous related increases will be taken into account in deciding whether the aggregate load requirement meets the 25% test”.

It is clear from other documentation that the purpose of taking previous related increases into account in deciding whether the aggregate load requirement meets the 25% test is to guard against a customer reducing connection charges by artificially seeking a succession of incremental upgrades.

The position therefore is that a person requiring a new or enhanced supply of electricity must generally pay for additional plant or line (or modifications to existing plant and line), required for that purpose at a level which compensates the applicant for its costs and provides it with a reasonable rate of return upon its capital.  However, where the increased requirement does not exceed 25% of existing effective capacity, no such charge for reinforcement of the distribution system will normally be made.  Furthermore, in applying the 25% rule, regard will be paid to previous related increases.

The charging system distinguishes between use of system charges and connection charges.  Expenditure caused by normal load growth is recovered by way of use of system charges from customers generally.  Expenditure caused by an identifiable specific demand is recovered by connection charges in accordance with section 19 of the 1989 Act and Condition 8 to 8D of the licence, subject to the 25% rule.  The point at issue in this case is, in reality, whether that identifiable specific demand can arise from a number of customers with related increases arising from a single project or whether it is restricted to an increase from an individual customer.

Factual background

Having dealt with the general principles of the charging regime arising from the statutory and licensing provisions, I turn next to the factual background relating to the way in which the question of payment for the reinforcement works necessitated by the installation of the night storage heaters in the dwellings in the village was dealt with.  

	The matter was first raised by the Trust in February 1997.  The Trust was informed by the applicant that reinforcement works would be necessary and that the Trust would have to be responsible for the cost of the works.  
In the ensuing correspondence it was clear that the Trust was making the application as a single entity.  It had decided to install the night storage heating in the village, it had obtained a single quote from Seeboard for the supply of the equipment, it had arranged for grant applications to be made to the local authority by residents who qualified for a grant and it paid for the equipment itself in cases where grants were not forthcoming.  

	In October 1997 the Trust referred the matter to Offer, maintaining that the applicant should be responsible for the cost of the reinforcement works.   On 19 December 1997 the Regional Manager of Offer decided that the dispute was not determinable because the Trust was not the person requiring a supply of electricity within the meaning of section 23 of the 1989 Act.  The applicant contends that that was an erroneous decision, but it is not the subject matter of these proceedings and I have not heard any argument relating to it.  Offer then suggested to the Trust that the individual residents should make their own applications to the applicant, no doubt with  a view to each of those individual applicants seeking to take advantage of the 25% rule.  As a result, the Trust arranged for the individual applications to be made.    In fact, all the night storage heaters had already been installed before the individual requests for the upgraded supply were made.

	As I have already mentioned, Mrs Elnaugh’s application was dealt with as the lead application.  The applicant refused to offer any terms to her and insisted on treating the Trust as the true customer.  Alternatively, the applicant relied on section 17(2) of the 1989 Act maintaining that it was not reasonable to be required to supply her if a connection charge was not to be paid.

	Mrs Elnaugh referred the dispute to the Director General.  On 24 November 1998 Mr Saunders, acting on behalf of the Director General, determined that the applicant was under a duty to supply Mrs Elnaugh.  The applicant does not challenge that decision.  Mr Saunders added the following observation at the end of his determination:-

		“As a consequence of this determination, I now expect the Company to offer terms for the required works to Mrs Elnaugh.  In making such an offer I expect the Company to be cognisant of its normal charging principles, including application of the 25% rule, as set out in its published charging statement”.
	
	The applicant, however, held to the view that the 25% rule had no application where the request for an increased supply was not an independent request but was part and parcel of an overall scheme giving rise to an increase in excess of 25%.  On 13 January 1999 the applicant therefore offered Mrs Elnaugh terms of connection which included the proposed charge of £508.  In the letter of 13 January 1999 the applicant stated:-

		“Bearing in mind that your connection is only part of a larger project, the charge payable by you under our terms of connection is derived from the total connection charge calculated for the complete project, in reflection of our normal charging principles as applied in the Village context, divided equally by the number of customers within the village (88) whom we constructively believe will benefit from the project by reason of their take-up of new storage heating capacity”.

Those terms were rejected by Mrs Elnaugh and, on 22 January 1999, the applicant applied to the Director General under Condition 8D of its licence for him to settle the terms of the agreement for the provision of Mrs Elnaugh’s upgraded supply.  On 26 January 1999 the applicant sent the Director General its detailed submissions in support of its case, referring, inter alia, to the collective nature of the project with the residents joining together through the aegis of the Trust to switch to night storage heating.  

	Remarkably, the Director General’s decision was made by Mr Saunders the next day on 27 January 1999.  Despite the reasons given by Mr Saunders for the speed of the decision, I feel sure that, commendable as the speed of the decision  was, it must have been at least partly due to the fact that the local Member of Parliament had secured an adjournment debate in the House of Commons on this subject that afternoon.  Mr Saunders faxed through to her a copy of his decision which she was able to refer to during the debate.   

Perhaps not surprisingly in the circumstances, the determination was very short.  It stated:-

“2.1	I determine that the charge which the company may properly require the customer to pay is zero.
  2.2  I will publish my reasons for this decision in due course”.

The applicant immediately issued a press statement saying that it was minded to apply for judicial review, subject to seeing the reasons for the decision.  Those reasons were not given until 8 April 1999 due to pressure of work in Mr Saunders’ department.  

	The reasons are contained in paragraphs 5.1 to 5.6 of the document issued by Mr Saunders.  In paragraph 5.1 it is accepted that reinforcement works would be necessary if night storage heating was installed in each of the dwellings.  Paragraph 5.2 states:-

		“The Company has connected the Customer to the network, and no reinforcement of the network was required in order to do so.  Consequently, no costs were incurred in reinforcing the network, and there is nothing to pass on to the Customer.  The only costs that were incurred were those associated with the change of metering, for which the Company has not sought any charges.  On this ground alone, the Company has failed to justify imposing a connection charge on the Customer”.

Paragraph 5.3 refers to the applicant’s argument contained in its written submissions.

Paragraphs 5.4 to 5.6 state as follows:-

5.4	“It is accepted that the Customer’s new heating system will increase the load on the local network, but by an amount which is far below 25% of the existing effective capacity.  Since I have already determined that it is the Customer and not the Trust who is supplied by the Company, it follows that the premises which attract any connection charge are the Premises (that is, the flat which the customer occupies) and accordingly the normal operation of the 25% rule would prevent the Company from recovering from the Customer any part of the cost of reinforcing the system.

5.5	I need to consider whether the circumstances in which the Customer seeks a modification to her connection are such as to justify not applying the 25% rule.  When the occupier of a house in a street of houses installs off-peak heating, the character of his demand changes in the same way as the Customer’s has.  Yet the 25% rule would apply to that occupier.  And it would apply even if his neighbours chose to do the same, so that the cumulative effect was that the aggregate new demand exceeded 25% of existing effective capacity.  I do not consider that there are any circumstances to justify treating the Customer differently from such an occupier.  I do not consider that it is justifiable to treat her differently because she happens to be a tenant rather that a freeholder; because her neighbours happen to be tenants of the same landlord; or because she and some (or all) of her neighbours are elderly persons eligible for grant aid to assist with the cost of installing off-peak heating.

5.6	While I have not considered the circumstances of the other 87 Dwellings, and while each case must be determined in the light of its own circumstances, it may well prove difficult to justify recovering the costs of reinforcing the system from the occupier of any of the other Dwellings”.

A postcript to the reasons document states that, although the applicant had referred the dispute to the Director General under condition 8D of its licence, the matter should strictly have been referred under section 23 of the Act.  Both parties, however, are agreed that nothing turns on that point.  

It is part of the applicant’s case that those reasons are wholly inadequate in that they completely fail to address the point in issue.   It is further contended that the Director General should not be allowed to make good that inadequacy by relying on the matters now advanced by Mr Saunders in his written statement.
However, before coming to the question of the adequacy of the reasons given for the decision, it is necessary first to deal with the main issue in the case. 

 Submissions on the main issue

The main issue in the case is, what is the correct test to apply in order to decide whether the applications should be treated individually, each taking advantage of the 25% rule, or whether the whole project should be taken into account when dealing with each of the applications?  In other words, what is the correct test to apply in deciding whether to adopt an individualised approach or a global approach?
	Both sides accept that the identification of the appropriate test is a matter of law for the court to decide, involving a question of construction of the statutory and licensing provisions.  The application of the appropriate test to the facts involves the exercise of judgment by the Director General who can claim a margin of appreciation in arriving at his decision.  It is accepted on behalf of the Director General that there can be occasions when it is right to take the global approach, but it is contended that it is not right to do so in the circumstances of this case.  
	Mr Field QC submitted on behalf of the applicant that the test is one of causation, namely whether the individual requests are in truth part of a single larger scheme or project which is the cause of the necessity for the reinforcement works.  He suggested that the right question for the Director General is whether the need for the reinforcement works is linked to, or arises out of, the causally connected actions of a number of individuals such that those individual actions are not properly to be regarded as separate causes of the need for the reinforcement works but are rather simply parts of a single overall cause of the need for the reinforcement works.  Mr Field submitted that such a test gives effect to the purpose of the 25% rule in that a customer whose own small requirement for a new or increased supply arises   independently of the enhanced requirement or other customers, but who, coming after those customers, happens to tip the balance and render the reinforcement works necessary, has not by himself truly caused that need for reinforcement – he is simply the straw that broke the camel’s back.  However, a group of customers, whose requests for a new or increased supply are inter-linked collectively, represent the cause of the need for reinforcement.  They are, it is said, not separate straws but a bale of hay bound together.  They have together caused the need for reinforcement and it makes no difference whether their demands are expressed as a single request by the common owner of the properties or as a series of individual requests by the occupiers.  Applying that test to the circumstances of this case, it was submitted that there is only one answer – namely, that the night storage heating project was a single project which was the cause of the need for the reinforcement works.
	Mr Parker QC, on the other hand, submitted on behalf of the Director General that the 25% rule is based on non-discrimination and fairness between customers and that it involves the rejection of causation as the touchstone.  Indeed, to go back to causation would, he said, involve going  back to the mischief that the 25% rule was designed to avoid.  Mr Parker submitted that the correct test to adopt is to determine whether there is an arrangement involving at least a moral obligation between the residents to participate in the night storage heating scheme.  That test was derived from the Court of Appeal’s interpretation of the word “arrangement” in section 6(3) of the Restrictive Trade Practices Act 1956 in the case of Re British Basic Slag, Ltd’s Agreements (1963) 2 All ER 807.  Wilmer L.J. stated at p814:-

		…when each of two or more parties intentionally arouses in the other an expectation that he will act in a certain way, it seems to me that he incurs at least a moral obligation to do so. An arrangement as so defined is therefore something ‘whereby the parties to it accept mutual rights and obligations’.”

	Applying that test to the circumstances of this case, Mr Parker submitted that, although the Trust understandably initiated, co-ordinated, arranged and managed the scheme, each resident still took an independent decision whether to take advantage of the facility. No resident was under any obligation, moral or otherwise, to do so.  Mr Saunders, in his witness  statement, and Mr Parker in his submissions laid great stress on the freedom of choice of the residents and the voluntary nature of their decisions.  In those circumstances, the primary submission on behalf of the Director General was that it was right to take the  “individualised” approach to the facts of the case.  Alternatively, it was submitted that it was a matter upon which  different decision makers might rationally reach different conclusions and that it was within the Director General’s margin of appreciation to reach the decision that he did.  

Decision on the main issue 

	Dealing first with the test to be applied, I consider that the appropriate test is one of causation.  That is consistent with the charging regime contained in the statutory and licensing provisions.  Expenditure caused by normal load growth is recovered from customers generally by way of use of  system charges.  The 25% rule ensures that an increased load requirement within the scope of that rule will normally be recovered by way of use of system charges.  That is not only fair but it also serves to provide a yardstick for distinguishing normal load growth from growth caused by an identifiable specific demand which causes an increased load requirement over the 25% limit.  Where that increased demand arises from a single identifiable project or scheme, it would be unrealistic and contrary to the purpose of section 19 of the Act to allow it to be broken down into the individual requirements of each of the customers involved in the project, each claiming the benefit of the 25% rule, thereby enabling avoidance of payment of the connection charges by those requiring and benefiting from the increased supply with the result that the cost is borne by customers generally by way of use of system charges.   The rationale of section 19 is that those who require an increased supply should pay for it to such an extent as is reasonable in the circumstances.    Such a disaggregation of the components of the project would, in my view, constitute a device to avoid the reality of the situation which is that there is a single cause for the increased supply constituted by the single identifiable project.  It is interesting to note that, under the applicant’s existing Condition 8 statement, previous related increases are taken into account in deciding whether the aggregate load requirement exceeds the  25% limit, the purpose of that provision being to guard against a customer reducing connection charges by artificially seeking a succession of incremental upgrades.  That provision is, of course, dealing with a single customer, but the same concept of artificiality and contrivance can equally be applied to the disaggregation of the component parts of a single identifiable project which causes an increased load requirement over the 25% limit.  
In my judgment it would not be appropriate to import from the law relating to restrictive trade practices the test of an arrangement involving at least a moral obligation to participate in the scheme.  The Restrictive Trade Practices Act 1956 is dealing with a very different subject matter and the word “arrangement” is expressly used in that context in section 6(3) of the Act, whereas in this case the word “arrangement” does not appear either in the 1989 Act or in the licence itself.  In my view, a causative test, involving, if it be the case, the identification of a single project or scheme which causes the reinforcement works, is the appropriate test, whether or not that causative scheme or project involves a moral obligation to participate in it.
	Applying that test to the facts of this case, there can, in my judgment, be only one answer, namely that the increased supply which necessitated the reinforcement works was caused by the collective night storage heating project.  The Trust initiated, co-ordinated, arranged and managed that project.  Whilst I appreciate that the Trust’s co-ordinating role was for the benefit of the residents who were elderly and of modest means, the fact remains that it was the Trust who devised  and initiated the project and who even paid for the  equipment for residents who did not obtain grants from the local authority.  The Trust’s role clearly identified a single cohesive project or scheme.  It was not until Offer suggested that the individual residents should make their own applications that the applicability of the 25% rule to the individual applications came into play, but the existence of the individual applications cannot mask the undoubted existence of the single identifiable project for the installation of the night storage heating in the Village.  I have no doubt that it was that project which caused the increased demand necessitating the reinforcement works and that it would be unreasonable and wrong to hold otherwise by disaggregating that project into the residents’ individual applications, thereby throwing the cost onto consumers generally as if it were natural load growth within the 25% rule.
	I entirely appreciate and accept that each resident made a bona fide and voluntary decision of his or her own free choice to join the scheme or project, but the fact that a decision to join the scheme is made out of free choice does not alter the fact that the scheme exists.  The more people join it voluntarily and of their own free choice, the more the collective nature of the scheme is increased.  I do not see the residents’ freedom of choice as being determinative of the issue.  
	I therefore hold that the Director General applied the wrong test in this case and that, if he had applied the correct test, the inevitable conclusion would have been that the increased demand necessitating the reinforcement works was caused by the night storage heating project.  The result is that the benefit of the 25% rule cannot be claimed. The residents involved in the scheme are therefore liable to pay their proportionate share of the expenses reasonably incurred by the applicant in carrying out the reinforcement works to such extent as is reasonable in all the circumstances.  

Reasons challenge
I should also add that I consider that the reasons given by the Director General on 7 April 1999 are inadequate because they simply do not address the main point in issue raised by the applicant.  Furthermore, if one compares the points made by Mr Saunders in his witness statement with the reasons given on 7 April 1999, the inescapable conclusion is that they are very different.  I would have been very reluctant to accept that the points made by Mr Saunders in his witness statement were merely elucidation of the reasons that had been given.   The reasons were given over two months after the determination and in the knowledge that the applicant was minded to seek judicial review, subject to seeing the reasons for the determination.  The points made in Mr Saunders’ witness statement seem to me to smack of ex post facto rationalisation having seen the grounds advanced by the applicant in its Form 86A.  However, in view of my conclusion as to the appropriate test to be applied and the inevitable result of its application, it is not necessary for me to decide whether Mr Saunders should be allowed to rely on the reasoning contained in his witness statement in substitution for, or in addition to, the reasons given on 7 April 1999.

Conclusion
	For the reasons I have given, there will be an order of certiorari to quash the Director General’s determination.  I will hear submissions from counsel as to whether, in the light of this judgment, it is necessary to consider the grant of the declaratory relief sought. 
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(Submissions by Counsel)
MR JUSTICE HARRISON:  Thank you very much.  My conclusion on the point of permission to appeal is that I do not think it appropriate to grant permission to appeal.  Therefore, leave is refused, and costs to the applicant.  I also make an interim award of £50,000 to be paid within 28 days.