[HOUSE OF LORDS]

AND

Injunction - Interlocutory - Crown - Proceedings for declaration that statutory order invalid - Secretary of State seeking interim injunction to enforce order - Refusal to give undertaking in damages - Whether injunction to be granted - Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 (11 & 12 Geo. 6, c. 66), s. 11 (2) - Monopolies and Mergers Act 1965 (c. 50), s. 3 - Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973 (S.I. 1973 No. 1093)

In April 1973, following an inquiry and report by the Monopolies Commission on the level of profits made by the appellant companies on certain patented tranquillising drugs, the Secretary of State for Trade and Industry laid before Parliament, pursuant to section 3 (4) of the Monopolies and Mergers Act 1965, the first of three identical consecutive statutory orders directing the appellants to reduce the prices of the drugs. After debate, and investigation by a special orders committee of the House of Lords, both Houses of Parliament approved the third order. The appellants informed the Secretary of State that they would not obey the order and brought proceedings against him claiming declarations that the procedures adopted by the Monopolies Commission were contrary to the rules of natural justice and that the order was ultra vires and invalid. The Secretary of State, pursuant to section 11 (2) of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948,¹ brought proceedings for an injunction restraining the appellants from charging any prices in excess of those specified in the order. On a motion for an interim injunction in the same terms the Secretary of State refused to give an undertaking in damages so as to recompense the appellants if at the trial of the action the order was held to be invalid. On July 13, 1973, Walton J., treating the motion as if made in the appellants' action, refused to grant the interim injunction on the appellants' undertaking to pay the difference between the prices being charged and those specified in the order into a bank account in the joint names of the parties' solicitors. The Court of Appeal allowed an appeal by the Secretary of State, accepting undertakings by the appellants in the terms prayed by the Secretary of State in lieu of the injunction sought by him.

1 Monopolies and Restrictive Practices (Inquiry and Control) Act 1948, s. 11: see post, p. 340E-F.

On appeal by the appellants by leave of the Court of Appeal:-

Held, dismissing the appeal (Lord Wilberforce dissenting), that since the Crown Proceedings Act 1947 the former rule or practice whereby the Crown was not required to give an undertaking in damages as a condition of being granted an interim injunction was no longer justified (post, pp. 341C-D, 351D-E,362B-E, 364C, 370H); that, however, in a case where the Crown sought by the injunction to enforce what was prima facie the law of the land, as opposed to its proprietary rights, the person against whom it sought the injunction was required to show very good reason why the Crown should be required to give the undertaking as a condition of being granted the injunction (post, pp. 341D-G, 350B-C, 351H - 352B,D-E, 353A, 364D-G, 367B-C, 371A-G); that in determining whether there was such good reason all the circumstances were to be taken into account; that in the present case those circumstances included the Crown's financial interest, the consequences so far as the public were concerned of whether the injunction were granted or not, taking into account a scheme put forward by the appellants for their protection if an injunction were not granted, the likelihood of the order being held to be ultra vires, the fact that the appellants' contention was not that what they were doing was not prohibited by the order but that the order, which was on the face of it the law of the land, was not in fact the law and that the injunction was the only means available to the Crown of enforcing the order (post, pp. 341G - 342E, 352H, 364G - 365B,370D-F, 371G - 372E); and that, in all the circumstances, the Secretary of State was entitled to the injunction which he sought without being required to give an undertaking in damages (post, pp. 342E, 354A, 370G, 372D-E).

Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, C.A. considered.

Decision of the Court of Appeal, post, p. 314C; [1973] 3 W.L.R. 805; [1973] 3 All E.R. 945 affirmed.

The following cases are referred to in their Lordships' opinions:

Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147; [1969] 2 W.L.R. 163; [1969] 1 All E.R. 208, H.L.(E.).

Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, North J. and C.A.

Attorney-General v. Cockermouth Local Board (1874) L.R. 18 Eq. 172.

Attorney-General v. Oxford, Worcester and Wolverhampton Railway Co. (1854) 2 W.R. 330.

Durayappah v. Fernando [1967] 2 A.C. 337; [1967] 3 W.L.R. 289; [1967] 2 All E.R. 152, P.C.

Pergamon Press Ltd., In re [1971] Ch. 388; [1970] 3 W.L.R. 792; [1970] 3 All E.R. 535, C.A.

Post Office v. Estuary Radio Ltd. [1967] 1 W.L.R. 847; [1967] 3 All E.R. 663; [1968] 2 Q.B. 740; [1967] 1 W.L.R. 1396; [1967] 3 All E.R. 663, C.A.

Ridge v. Baldwin [1964] A.C. 40; [1963] 2 W.L.R. 935; [1963] 2 All E.R. 66, H.L.(E.).

Secretary of State for War v. Cope [1919] 2 Ch. 339.

Smith v. Day (1882) 21 Ch.D. 421, C.A.

Smith v. East Elloe Rural District Council [1956] A.C. 736; [1956] 2 W.L.R. 888; [1956] 1 All E.R. 855, H.L.(E.).

The following additional cases were cited in argument in the House of Lords:

Furnell v. Whangarei High Schools Board [1973] A.C. 660; [1973] 2 W.L.R. 92; [1973] 1 All E.R. 400, P.C.

Graham v. Campbell (1878) 7 Ch.D. 490, C.A.

Harper v. Secretary of State for the Home Department [1955] Ch. 238; [1955] 2 W.L.R. 316; [1955] 1 All E.R. 331, C.A.

Howard v. Press Printers Ltd. (1904) 74 L.J.Ch. 100; 91 L.T. 718, C.A.

Maxwell v. Department of Trade and Industry [1974] Q.B. 523; [1974] 2 W.L.R. 338; [1974] 2 All E.R. 122, C.A.

Reg. v. Rent Justices, Ex parte Lye [1967] 2 Q.B. 153; [1967] 2 W.L.R. 765; [1967] 1 All E.R. 560, D.C.

Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171, C.A.

Rigby v. Great Western Railway Co. (1846) 2 Ph. 44.

Sanxter v. Foster (1841) Cr. & Ph. 302.

Sydney Municipal Council v. Campbell [1925] A.C. 338, P.C.

Webb v. Minister of Housing and Local Government [1965] 1 W.L.R. 755; [1965] 2 All E.R. 193, C.A.

The following cases are referred to in the judgments of the Court of Appeal:

Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147; [1969] 2 W.L.R. 163; [1969] 1 All E.R. 208, H.L.(E.).

Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, C.A.

Attorney-General v. Bastow [1957] 1 Q.B. 514; [1957] 2 W.L.R. 340; [1957] 1 All E.R. 497.

Attorney-General v. Chaudry [1971] 1 W.L.R. 1614; [1971] 3 All E.R. 938, Plowman J. and C.A.

Attorney-General v. Harris [1961] 1 Q.B. 74; [1960] 3 W.L.R. 532; [1960] 3 All E.R. 207, C.A.

Attorney-General v. Times Newspapers Ltd. [1973] Q.B. 710; [1973] 2 W.L.R. 452; [1973] 1 All E.R. 815, C.A.

Attorney-General ex rel. McWhirter v. Independent Broadcasting Authority [1973] Q.B. 629; [1973] 2 W.L.R. 344; [1973] 1 All E.R. 689, C.A.

Durayappah v. Fernando [1967] 2 A.C. 337; [1967] 3 W.L.R. 289; [1967] 2 All E.R. 152, P.C.

Glynn v. Keele University [1971] 1 W.L.R. 487; [1971] 2 All E.R. 89.

Griffith v. Blake (1884) 27 Ch.D. 474, C.A.

Hoffmann-La Roche (F.) & Co. A.G. v. Inter-Continental Pharmaceuticals Ltd. [1965] Ch. 795; [1965] 2 W.L.R. 1045; [1965] 2 All E.R. 15, C.A.

Lee v. Bude and Torrington Junction Railway Co. (1871) L.R. 6 C.P. 576.

MacFoy v. United Africa Co. Ltd. [1962] A.C. 152; [1961] 3 W.L.R. 1405; [1961] 3 All E.R. 1169, P.C.

Maxwell v. Department of Trade and Industry (unreported), December 20, 1972.

Medicaments Reference (No. 2), In re [1970] 1 W.L.R. 1339; [1971] 1 All E.R. 12, R.P.Ct. (E. & W.).

Pickin v. British Railways Board [1973] Q.B. 219; [1972] 3 W.L.R. 824; [1972] 3 All E.R. 923, C.A.

Reg. v. Aston University Senate, Ex parte Roffey [1969] 2 Q.B. 538; [1969] 2 W.L.R. 1418; [1969] 2 All E.R. 964, D.C.

Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171, C.A.

Ridge v. Baldwin [1964] A.C. 40; [1963] 2 W.L.R. 935; [1963] 2 All E.R. 66, H.L.(E.).

Secretary of State for War v. Cope [1919] 2 Ch. 339.

Smith v. Day (1882) 21 Ch.D. 421, C.A.

Smith v. East Elloe Rural District Council [1956] A.C. 736; [1956] 2 W.L.R. 888; [1956] 1 All E.R. 855, H.L.(E.).

Ward v. Bradford Corpn. (1971) 70 L.G.R. 27, C.A.

The following additional cases were cited in argument before the Court of Appeal:

Dyson v. Attorney-General [1911] 1 K.B. 410, C.A.

Evans Marshall & Co. Ltd. v. Bertola S.A. [1973] 1 W.L.R. 349; [1973] 1 All E.R. 992, C.A.

Fenner v. Wilson [1893] 2 Ch. 656.

Harper v. Secretary of State for the Home Department [1955] Ch. 238; [1955] 2 W.L.R. 316; [1955] 1 All E.R. 331, C.A.

Hill v. C. A. Parsons & Co. Ltd. [1972] Ch. 305; [1971] 3 W.L.R. 995; [1971] 3 All E.R. 1345, C.A.

Hubbard v. Vosper [1972] 2 Q.B. 84; [1972] 2 W.L.R. 389; [1972] 1 All E.R. 1023, C.A.

McEldowney v. Forde [1971] A.C. 632; [1969] 3 W.L.R. 179; [1969] 2 All E.R. 1039, H.L.(N.I.).

Pergamon Press Ltd., In re [1971] Ch. 388; [1970] 3 W.L.R. 792; [1970] 3 All E.R. 535, C.A.

Preston v. Luck (1884) 27 Ch.D. 497, C.A.

Sparks v. Edward Ash Ltd. [1943] K.B. 223; [1943] 1 All E.R. 1, C.A.

Wicks v. Director of Public Prosecutions [1947] A.C. 362; [1947] 1 All E.R. 205, H.L.(E.).

The following cases are referred to in the judgment of Walton J.:

Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, C.A.

Attorney-General v. Moore [1893] 1 Ch. 676.

Attorney-General v. South Eastern Railway Co. (1882) (unreported), but see [1896] 2 Ch. 700.

Secretary of State for War v. Cope [1919] 2 Ch. 339.

Smith v. Day (1882) 21 Ch.D. 421, C.A.

The following additional cases were cited in argument before Walton J.:

Attorney-General v. Harris [1961] 1 Q.B. 74; [1960] 3 W.L.R. 532; [1960] 3 All E.R. 207, C.A.

Durayappah v. Fernando [1967] 2 A.C. 337; [1967] 3 W.L.R. 289; [1967] 2 All E.R. 152, P.C.

Fenner v. Wilson [1893] 2 Ch. 656.

Griffith v. Blake (1884) 27 Ch.D. 474, C.A.

Harper v. Secretary of State for the Home Department [1955] Ch. 238; [1955] 2 W.L.R. 316; [1955] 1 All E.R. 331, C.A.

Lee v. Bude and Torrington Junction Railway Co. (1871) L.R. 6 C.P. 576.

Maxwell v. Department of Trade and Industry (unreported), December 20, 1972.

Pickin v. British Railways Board [1973] Q.B. 219; [1972] 3 W.L.R. 824; [1972] 3 All E.R. 923, C.A.

Preston v. Luck (1884) 27 Ch.D. 497, C.A.

Secretary of State for War v. Chubb (1880) 43 L.T. 83.

MOTION

By writ dated June 25, 1973, the plaintiffs, F. Hoffmann-La Roche & Co. A.G., a Swiss company, Sapac Corporation Ltd., a Canadian company, and Roche Products Ltd., an English company, brought proceedings against the Secretary of State for Trade and Industry claiming declarations, inter alia, (1) that the procedures adopted by the Monopolies Commission in its investigation and report on the supply of chlordiazepoxide and diazepam were unfair and contrary to the rules of natural justice; (2) that the findings, conclusions and recommendations contained in the report of the Monopolies Commission were invalid and of no effect; and (3) that the three Regulation of Prices (Tranquillising Drugs) Orders 1973 based on those findings, conclusions and recommendations were ultra vires, invalid and of no effect.

By writ dated June 28, 1973, the Department of Trade and Industry sought an injunction restraining the plaintiffs in the first action from charging prices for certain drugs in excess of the relevant prices specified in the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973. By notice of motion of the same date the Department of Trade and Industry moved for an interim injunction in the same terms.

On July 13, 1973, Walton J. ordered that the motion be treated as if brought in the first action and that all further proceedings in the second action be stayed.

The facts are stated in the judgments of Walton J. (infra) and Lord Denning M.R. (post, pp. 314C - 322C) and in the opinions of Lord Reid and Lord Morris of Borth-y-Gest (post, pp. 338E - 340D, 342F - 349G).

Kenneth Jupp Q.C. and Peter Gibson for the Secretary of State for Trade and Industry.

Richard Yorke Q.C., Anthony Barrowclough and Genevra Caws for the plaintiffs.

WALTON J. This is an age of drug taking. Those who supply drugs for ultimate public consumption go happily and profitably about their business. Until recently this was true of the plaintiff companies, F. Hoffmann-La Roche & Co. A.G. (a Swiss company), Sapac Corporation Ltd. (a Canadian company) and Roche Products Ltd. (an English company). The first company is the parent company of the English company. I am not sure as to the precise status of the second company. The plaintiffs manufactured and manufacture a drug known as chlordiazepoxide, of which the trade name is "Librium," and another known as diazepam, of which the trade name is "Valium."

On September 14, 1971, the Department of Trade and Industry, as the successor to the Board of Trade, referred to the Monopolies Commission, established under the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 and the Monopolies and Mergers Act 1965, the conditions surrounding the supply of these two drugs and their respective sales, and the commission duly made a report on February 13, 1973, entitled

"A report on the supply of chlordiazepoxide and diazepam." The tenor of such report was to the effect that the prices charged by the plaintiffs for the two drugs was or had been such as to operate against the public interest. Accordingly, the Department of Trade and Industry duly made an order, the Regulation of Prices (Tranquillising Drugs) Order 1973 (S.I. 1973 No. 720) on April 12, 1973, under powers conferred by sections 3 (3) (a) and (d) and 4 (c) of the Act of 1965 and section 10 (3) of the Act of 1948.

I think it would be convenient at this point if I read the relevant statutory provisions, starting with section 10 of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 which provides:

"(1) The provisions of this section shall have effect where - (a) the Board of Trade have referred a matter to the commission under the preceding provisions of this Act for investigation and report; and (b) the reference is not so framed as to limit the investigation and report to the facts; and (c) the report of the commission has been laid before Parliament, with or without omissions; and (d) according to the report of the commission, as laid before Parliament, conditions to which this Act applies prevail [i.e., shortly stated, monopoly conditions]; and (e) ... according to the report, as laid before Parliament, those conditions, or any things done by the parties concerned as a result of, or for the purpose of preserving, those conditions, operate or may be expected to operate against the public interest; ... (3) An order of a competent authority under this section declaring a thing to be unlawful may declare it to be unlawful either for all persons or for such persons as may be specified or described in the order."

The Monopolies and Mergers Act 1965, section 3, provides:

"(1) In the circumstances described in section 10 (1) of the principal Act as amended by the next following subsection, the Board of Trade, for the purpose of remedying or preventing any mischiefs which in their opinion result or may be expected to result from the conditions or things which, according to the report of the commission as laid before Parliament, operate or may be expected to operate against the public interest, may by order (whatever the recommendation, if any, made by the commission) exercise all or any of the powers conferred by subsections (3) to (7) below."

One of those subsections - (4) (c) which I think is the material one for present purposes - provides that the board may

"regulate to such extent and in such circumstances as may be provided by or under the order the prices to be charged for any goods or services so specified or described, but the board shall not, in relation to goods or services of any class to which the report relates, exercise the power conferred by virtue of paragraph (c) above unless it appears to the board on the facts found by the commission as stated in the report that prices charged in the case of goods or services of that class are, or have been, such as to operate, or to be expected to operate, against the public interest."

It was under those powers that the Board of Trade, the necessary conditions in section 10 (1) of the Act of 1948 being satisfied, made the order. For present purposes it is sufficient to say that the effect of this order was to fix the maximum prices which the plaintiffs could lawfully charge for the two drugs - prices which the plaintiffs find unacceptably low.

Orders made in exercise of the statutory powers to which I have referred run automatically for a period of 28 days from which period, putting it shortly, Parliamentary vacations are excluded, but if not approved by a resolution of each House of Parliament within such 28 days the order ceases to have effect without prejudice to anything previously done thereunder: see section 3 (11) of the Act of 1965.

On May 1, 1973, the plaintiffs petitioned the House of Lords against the order, the application being heard by a special orders committee. During the course of the hearing the original 28 days would have run out (the House being unable to approve the order whilst the petition was still pending), so on May 18, 1973, another order in identical terms, the Regulation of Prices (Tranquillising Drugs) (No. 2) Order 1973 (S.I. 1973 No. 925) was made; and later on, for the same reason, on June 21, 1973, the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973 (S.I. 1973 No. 1093) was made. The proceedings in the House of Lords were appropriately amended to refer to the No. 2 order.

The special orders committee reported to the House of Lords recommending that a select committee should be appointed to consider one special point, and one point only, namely, whether the prices so fixed for the drugs by the order sufficiently provided for research expenditure. It will, of course, be appreciated that any ethical drug firm such as the plaintiffs has heavy and continuous research expenditure, since its future prosperity depends upon the continuous discovery of new and better drugs.

In what I am told is an unprecedented move, the House of Lords on June 22, 1973, rejected the report of the special orders committee. Thereafter the No. 3 order was approved by resolution of the House of Commons on July 4, 1973, and by resolution of the House of Lords on July 5, 1973.

The plaintiffs believe that the procedure adopted by the Monopolies Commission in making the report to which I have already referred was unfair and contrary to the rules of natural justice. From this they conclude that the various orders, and particularly the No. 3 order, being based on the findings, conclusions and recommendations of the report, are equally bad, being ultra vires, invalid and of no effect. Moreover, the No. 3 order was made at a time when the Secretary of State had been apprised of the plaintiffs' objections to the report. Quite apart from the invalidity of the No. 3 order as being based on an insecure foundation in the shape of the report, the order itself is also directly attacked as fixing prices which are penal, arbitrary and discriminatory.

There was considerable correspondence between the Department of Trade and Industry and the plaintiffs or their respective advisers, which I do not think it necessary to consider. Its basis was simply that the plaintiffs wanted to be certain, if they ultimately managed to establish the invalidity of the order, that they would not, at the end of the day, be out of pocket by having obeyed it in the meantime. The Department, on the other

hand, was quite clearly not going to give any assurance or undertaking in the plaintiffs' favour to this effect.

Ultimately, the plaintiffs hit upon a simple piece of legal mechanics, which piece is, in effect, now before me. The plaintiffs would threaten to cease to obey the terms of the order, which would force the Department of Trade and Industry to move against it for an appropriate injunction. That this was the appropriate form of relief is apparent from section 11 (2) of the Act of 1948. Then, virtually certainly, on interlocutory application, an injunction would be granted, for it is quite impossible interlocutorily to go into the rights and wrongs of the plaintiffs' views of the practice of the Monopolies Commission, or the other possible grounds of invalidity of the order. But, as part of the usual injunction, there would be a cross-undertaking in damages, so that if, at the end of the day, the plaintiffs were right, they would not have suffered financially in the meantime, apart from the period between the coming into force of the first order, which was on April 23, 1973, and the date of the grant of the injunction. Alternatively, the plaintiffs doubtless reckoned that, if the Department were unwilling to give the usual cross-undertaking in damages, no injunction would be granted and they would be free to restore their prices to the pre-order level.

Accordingly, by a letter dated June 25, 1973, to the Department, the plaintiffs served notice that, in effect, unless a suitable cross-undertaking was forthcoming without litigation on this issue, they would no longer obey the terms of the order. On the same day they commenced an action against the Secretary of State for Trade and Industry for the relief in relation to the report of the Monopolies Commission and the various orders that I have outlined above and finally for damages against the Secretary of State.

Since there is some doubt whether a defendant in an action can make an ex parte motion (I would personally have no doubt at all that in a proper case this can certainly be done, without deciding whether or not the present case is a proper one) proceedings were launched by the Department of Trade and Industry on June 28, 1973, claiming an injunction restraining the plaintiffs and each of them, by their directors, officers, servants or agents or otherwise during the currency of the No. 3 order from charging, or from causing or permitting any body corporate (wherever incorporated) in which they have or any of them has a controlling interest for the purposes of the order to charge prices for the pharmaceutical preparations known as Librium, Valium, Brontrium, Libraxin, Pentrium and Limbritol or any of them on the sale thereof in the United Kingdom (other than on a sale of goods which are to be exported from the United Kingdom) in excess of the relevant prices specified in the order and from doing any other act declared to be unlawful by the order; further or other relief, and costs. On the same day the Department issued a notice of motion claiming the main relief by way of injunction until judgment in the action or further order.

Apart from one matter, the situation would appear to be simple. The No. 3 order, until declared to be void, is part of the law of the land, nobody can be allowed to defy the law of the land with impunity, and, an injunction being specially pointed out as the correct course of procedure

to be adopted for the purpose of enforcing such orders, an injunction would go in such circumstances virtually as of course.

But - and here arises the whole nub of the present case - there ought clearly to be an undertaking by the Department in damages. For the situation might otherwise be that at the end of the day the plaintiffs could succeed in their action and yet be unable to recover damages from anybody for the fact of the invalid order having been made and enforced, partly bevause their claim for damages against the Minister is clearly dubious in any event, and more particularly because, if an injunction were granted, the plaintiffs could be said to be keeping their prices down in obedience to the order of the court, not in obedience to the terms of the No. 3 order. If, as Mr. Jupp put it, "the plaintiffs must play the game and abide by the order until they show it to be wrong," so equally the Crown should stick to the rules, and not seek to put the plaintiffs in an impossible position which might be colloquially put as: Heads I win, tails you lose.

The Department refuses to give any undertaking. Its apparent reluctance so to do stems, I gather, in part at any rate, from a wish to preserve its negotiating position vis-à-vis the plaintiffs in that it has claims against them which although not legal, it considers of great moral weight, in regard to alleged overcharging. I do not consider, however, that that is a circumstance which can legitimately be taken into account. Nor do I consider a promise by the Department to negotiate with the plaintiffs in that event in relation to the loss which they will have suffered to afford them sufficient protection. Doubtless this would put the Department in a strong negotiating position and may be in the national interest considered in that light. But Mr. Yorke, subscribing pro hac vice to the Calvinistic tenets of the plaintiffs' proprietors, refusing to put his trust in princes, puts his trust in Ministers of State still less; and he is obviously right so to do. Nobody should be asked to surrender what should be an equitable right in exchange for an undertaking to negotiate, be the negotiator never so exalted.

Now, there can be no doubt at this time of day as to its being the universal practice, in a dispute between subject and subject, for the court to insist upon the giving by an applicant for an interim injunction of a cross-undertaking in damages in case at the end of the day he should be found to have caused the party injuncted unwarranted harm for which he ought to recompense him: see the history of the matter in Smith v. Day (1882) 21 Ch.D. 421. This is not to say that the requirement of such an undertaking is a rigid requirement; circumstances alter cases, and there may well be exceptional cases where it is not required. But they are completely exceptional.

Such an undertaking cannot, of course, be imposed by the court upon any applicant for an injunction; he must offer it, or be willing to submit to it. Be his case never so strong, if he is unwilling to proffer such an undertaking then he will not, in general, obtain his injunction.

Mr. Jupp, for the Department, echoing the words of Kaye J. in Attorney-General v. South Eastern Railway Co. (1882) (unreported, but see [1896] 2 Ch. 701), says simply "The Crown does not undertake," and it

is accepted that this proposition, if correct, applies also to the Department of Trade and Industry.

What, in all the circumstances, is the meaning and effect of this submission? For, quite clearly, as I have already noted, the court can never force, and never attempt to force, anyone to give the usual cross-undertaking in damages; that must be given voluntarily; all that the court does is to refuse (in general) to grant an interim injunction unless the undertaking is given. So that, if the phrase "the Crown does not undertake" is to be understood as anything more than a statement of policy in the sense that anybody is free to announce that he does not undertake, it can only mean that the Crown is entitled to obtain an injunction in any case in which a private litigant could, without being called upon to give a cross-undertaking in damages, and that entitlement must be as of right. This, indeed, was the very way in which P. O. Lawrence J. put it in Secretary of State for War v. Cope [1919] 2 Ch. 339, 341:

"The Crown has the privilege (which is denied to the subject) of being able to obtain an interlocutory injunction without being required to give an undertaking in damages."

If it were not "as of right" then, quite clearly, there could be no basis for the Crown's claim. It is in this sense that I think that Mr. Jupp was quite right to claim that the right, if it exists, is a privilege of the Crown.

Consider for a moment what is involved. The Crown is in dispute with a neighbouring landowner who, having obtained planning permission, is building a house which the Crown thinks will interfere with some right of light which it owns. It accordingly makes an application to the court for an injunction, which, if granted, will prevent the erection of the building for possibly up to two years, causing the adjoining owner very great hardship and financial loss; and yet there is to be no cross-undertaking in damages. At the end of the day, if the Crown loses its case, all it will have to do is to pay the costs.

Such a result is so startling that, unless compelled thereto by authority binding upon me, I should not deem it to be the law for one moment. Nor do I think that it is in fact the law.

I think I can go straight to the case which is really the locus classicus of this suggested doctrine, Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, a decision of the Court of Appeal, which is binding upon me. North J. (whose judgment was approved) said, at p. 702:

"In considering whether an interlocutory injunction should be granted or not, at a time when the case is only in an early stage of development, the court aims at keeping matters in status quo, as far as possible, without prejudicing the rights of the parties; and it is often induced to make in favour of a plaintiff, in the belief that the defendant will be sufficiently protected against the damage by the undertaking, an order which the court would not have made if the defendant had been left without such a protection and there was a reasonable probability that he might sustain serious damage if the injunction should be ultimately discharged. This is a risk which a plaintiff who refuses to give an undertaking must run, and even the Crown may find an injunction refused by the court when the defendant might

be exposed to serious injury if the interlocutory injunction was granted, but not made perpetual, and no protection against that injury was forthcoming."

Lindley L.J. said, at p. 703:

"The question then raised before us is this: Is it in accordance with the practice to compel the Attorney-General, on obtaining an interlocutory injunction, to submit to the condition of giving an undertaking as to damages? The practice is, in my opinion, settled in the negative. Of course, if the case presented to the court on the motion for injunction were doubtful, the court might say, even to the Attorney-General, 'We shall not grant you an injunction'; and if the case were very near the line, the court might say, 'If you like to give an undertaking, or find somebody to do so, we will then grant an injunction.' That is possible. But if the case for an injunction is sufficiently plain, as, in my opinion, this is, the practice is entirely against imposing any such condition. This condition was imposed in ex parte cases long before my time; but I never heard of such a condition being imposed upon the Attorney-General in the case of an ex parte injunction. In my time the practice was extended to interim injunctions on notice. I recollect the introduction of the practice myself some 35 or 36 years ago; but still the condition has never been imposed on the Attorney-General. If the Crown's case is too doubtful, the Attorney-General is not entitled to an injunction at all: that is the answer to the defendants' contention. I think the appeal must be dismissed, and dismissed with costs."

Lopes L.J. said, at p. 704:

"I am of the same opinion. If this were an ordinary lessor, having regard to the circumstances of the case, I cannot for a moment doubt that an injunction would have been granted; and it would have been granted, as has been said, with the usual undertaking in damages. In this case the party asking for the injunction is Her Majesty by her law officer, the Attorney-General, and a question arises whether an undertaking can be required in a case of this kind. Now it seems to me, according to the cases brought to our notice, that the inveterate practice has been not to direct such an undertaking: certainly, in my own experience, I never heard of an undertaking of that kind given when the Queen sues by her Attorney-General."

Now, I can well understand that the settled practice is that, in all cases when no injustice or no practical injustice will be caused, the Attorney-General, or any other emanation of the Crown, will not, on obtaining an interim injunction, be required to give an undertaking, even though a private individual in the same position would undoubtedly be required to do so. But all that that means is that the court will, in such cases, inquire into the question whether an undertaking ought properly to be given or not, an inquiry which it will normally not make in the case of an ordinary individual. It is only by reading the decision in this sense that I can make any sense of the opinions expressed in that case, because otherwise what is the meaning of North J.'s statement, at p. 702:

"... even the Crown may find an injunction refused by the court when the defendant might be exposed to serious injury if the interlocutory injunction was granted, but not made perpetual, ..."

and of Lindley L.J.'s statement, at p. 703:

"if the case were very near the line, the court might say, 'If you like to give an undertaking, or find somebody to do so, we will then grant an injunction'."

For, whatever meaning be given to those words, it is plain therefrom that cases will arise in which the court will say to the Crown that if it requires an interim injunction which would be given to a private individual then it must give an undertaking. Such dicta are accordingly completely destructive of there being any right in the Crown to claim an injunction which would otherwise be available to an ordinary person without giving an undertaking. Moreover, this squares with the meticulous investigation by North J. in the Albany Hotel case [1896] 2 Ch. 696 of the facts, an investigation which would otherwise have been totally otiose.

Thus, in my view, at the end of the day it is established that the Crown has no such privilege as it claims, but that the practice is only to require an undertaking from the Crown as the price of granting an injunction where there is really good reason so to do. Having regard to the dignity of the Crown, the normal practice as between subject and subject is not followed, but the matter is left to depend upon the circumstances of each particular case.

In my view, in so far as Attorney-General v. Moore [1893] 1 Ch. 676 and Secretary of State for War v. Cope [1919] 2 Ch. 339 suggest to the contrary, they are in conflict with the Albany Hotel case [1896] 2 Ch. 696 and do not represent the law. I by no means intend to say that the actual decisions in those cases were wrong; quite the reverse. Neither of the decisions, when considered in the light of their respective facts, is in any way inconsistent with what I believe to be the true principle.

Now, quite clearly, one of the most important of all considerations in deciding whether the Crown ought or ought not to be required to give or procure to be given an undertaking must be the strength of the plaintiffs' case. For this purpose I have had an excellent short debate between Mr. Jupp and Mr. Yorke indicating the various difficult points - some of them completely novel - which are bound to arise when the main action is tried. It would not be right for me at this stage to express any opinion upon the various points made, nor, of course, could I in any event possibly begin to express any opinion upon the basic fact which lies at the heart of the plaintiffs' case, namely, the invalidity of the Monopolies Commission's report. However, I do not think that I need do more than say that, from such debate, it emerges that, if only the plaintiffs can make good their central factual position as to the invalidity of the report, there is much to debate. There are certainly no short cuts available which would enable me to say that their case could not possibly succeed, or, alternatively, that the likelihood of its succeeding is so remote that I could extend the customary courtesy extended to the Crown in such situations.

Accordingly, my first provisional conclusion is that the Department is only entitled to its injunction upon providing the usual cross-undertaking.

But Mr. Jupp, on behalf of the Department, resolutely refuses to give a cross-undertaking; and, of course, nobody can make him. What, then, is to be done? If it were a simple choice between granting an injunction even without an undertaking and refusing an injunction tout court (which would present this court with a very invidious choice indeed, since the adoption of either course could then lead to possible injustice at the conclusion of the case) I think I would probably at the end of the day have decided that the sanctity of the apparent law must prevail, and that the injunction should go, there being no other real remedy for this apparent defiance of the terms of the order.

However, I am taken out of that dilemma, because Mr. Yorke for the plaintiffs is quite willing to give an undertaking that a sum equal to the difference between the actual sales and the order prices shall be paid into a separate account until judgment in the action against the Secretary of State, and to adopt such procedure as will enable purchasers of the two drugs in question to be traced for the purposes of making refunds to such purchasers or their assigns at the end of the day if the court should so order.

I should call attention to the fact that the sum will, it is anticipated, be very considerable indeed. It is estimated by the plaintiffs at approximately £8,000,000 over a period of two years, and this figure is uncontradicted. Considering that the reduction in price effected by the order is of the general size of 60 per cent, this indicates that the total amount which it is expected will be expended by or on behalf of the inhabitants of the United Kingdom on these two tranquillising drugs in each of the next two years is some £6,500,000. Considering that I was informed that each tablet costs less than a branded aspirin, these are disturbing and distressing figures. But comment thereon is for the social historian rather than for the lawyer.

So far, then, as I am concerned, if at the end of the day the order is declared invalid, the money can be returned to the plaintiffs who will not have suffered in any way except that they will have been out of their money for a period of possibly up to two years. So far as the action against the Secretary of State for Trade and Industry is concerned, this will have the side effect that any claim for damages as against him will be reduced to a mere claim for loss of interest, and, as I intend that the money should be paid into a deposit account, even this should only be of minimal proportions. I do not, of course, intend in any way to fetter the judge who tries the action. He will be free to dispose of the fund as justice requires.

I must mention, in order to demonstrate that I have not forgotten their existence or importance, the difficulties which this decision will cause in relation to the mode of reimbursement of chemists supplying drugs under the National Health Service scheme. It is clearly quite unthinkable that they should have to purchase their supplies at what for the moment I will term the open market price and be reimbursed only at the order price. Whilst I do not minimise the administrative difficulties which any problem of this nature must entail, I should have thought that the position could have been set right as a practical matter by a circular to all concerned, explaining that,

the order having been challenged on serious grounds and the court having refused to grant an injunction (the only remedy available) and the plaintiffs having given an undertaking which would enable the position to be satisfactorily adjusted retrospectively if, in the event, the order is (as the Secretary of State is confident and has been advised it is) valid, the prices payable for these two drugs would be whatever they are in the meantime.

But even if that is not sufficient, and the difficulties in the way of dealing sensibly with the matter are greater than I have appreciated, I still do not think that they would justify granting an injunction in a form which might well, on a far from impossible hypothesis, lead to serious injustice to the plaintiffs.

Accordingly, on Mr. Yorke's undertaking, the terms of which I shall have to discuss further with counsel, I dismiss the motion.

Solicitors: Treasury Solicitor; Herbert Smith & Co.

By notice of appeal dated July 17, 1973, the Secretary of State for Trade and Industry appealed on the grounds (1) that the judge gave insufficient weight to section 11 (2) of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948; (2) that the injunction should have been granted to prevent breaches threatened by the plaintiffs of the order which the judge held to be part of the law of the land until declared void; (3) that the judge erred in law and wrongly exercised his discretion in taking into account and accepting the plaintiffs' undertaking; (4) that the Crown had the privilege of being able to obtain an interlocutory injunction without being required to give an undertaking in damages or, alternatively, the Crown had such a privilege in every case except those where its case for an injunction was doubtful; (5) that the decision of the judge was inconsistent with Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696 and with Secretary of State for War v. Cope [1919] 2 Ch. 339 and with the settled practice of the court for more than 100 years; and (6) that to require the Crown to give a cross-undertaking in damages was to allow the plaintiffs to obtain a benefit from their own wrongdoing.

The plaintiffs gave notice that the order of Walton J. should be affirmed on the additional grounds (1) that the basis of any special practice, since 1860, in relation to requiring undertakings in damages from the Crown, was that the Crown was not then subject to the jurisdiction of the courts, which basis no longer existed; (2) that a claim to exercise a privilege of the sort claimed was inconsistent with the "absolute fairness" with which Ministers of both Houses of Parliament had said that the plaintiffs would be treated; (3) that the Secretary of State's inflexible refusal to give any assurance of fair compensation in the event of the plaintiffs succeeding had forced the plaintiffs into the only course open to them to avoid irrecoverable loss; (4) that an injunction was an unnecessary remedy pending trial because departure from the order was capable of precise quantification; and (5) that the Secretary of State had made out no case for an interlocutory injunction where the validity of the order was in issue.

Sir Peter Rawlinson Q.C., A.-G., Kenneth Jupp Q.C. and Peter Gibsonfor the Secretary of State for Trade and Industry. Where the law provides for its enforcement by civil proceedings for injunction and the Crown takes such proceedings to enforce the law and protect the public interest it should not be put on terms. It is accepted that in very rare circumstances, such as when the Crown is seeking to enforce some proprietary right, the Crown could be required to give an undertaking as the price of an injunction. Even in such cases only two undertakings have ever been given by the Crown.

In considering the principle at issue the court should not be influenced by the fact that the primary beneficiary under an injunction would in the present case be a department of State.

Attorney-General v. Harris [1961] 1 Q.B. 74, 83, 86, 88, 90, 91, 95 demonstrates the Attorney-General's special position with regard to the enforcement of the law and his superior interest which exists in ensuring that the law is not flouted. Attorney-General v. Chaudry [1971] 1 W.L.R. 1614, 1623, 1624 again shows that the Attorney-General and the court should not sit by and permit the law to be flouted. Although the plaintiffs are, indeed, attacking the validity of the law which it is sought to enforce, the situation would be impossible if by making some allegation of unfairness against the Monopolies Commission a person could excuse himself, pending trial, from obeying the law. It is of greater public interest that the law should be enforced. The plaintiffs' challenge to the law making process is at the present stage irrelevant to what the Crown is seeking to do. The law must be accepted and the court should not require the Crown to be put on terms on the basis that the law might be ultra vires: Smith v. East Elloe Rural District Council [1956] A.C. 736, 769 summarises this. If an order is made by a court the person against whom it is made must obey the order until it is reversed by an appellate tribunal.

The history of the undertaking starts with Smith v. Day (1882) 21 Ch.D. 421 and Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696. Secretary of State for War v. Cope [1919] 2 Ch. 339 shows that the attitude of the court at that time was not to require an undertaking from the Crown as a matter of privilege even in a case involving a proprietary right, though it is accepted that since the Crown Proceedings Act 1947 an undertaking might be appropriate in such a case. That Act can, however, only have removed the privilege with regard to proprietary cases. [Reference was made to Halsbury's Laws of England, 3rd ed., vol. 11 (1955), p. 16; vol. 21 (1957), p. 423; Robertson, Civil Proceedings by and against the Crown (1908), p. 607; Spry, Equitable Remedies (1971), p. 437; Bickford-Smith on Crown Privilege, pp. 19, 42.] However, Snell's Principles of Equity, 26th ed. (1966), p. 111; Glanville Williams, Crown Proceedings (1948) and S.A. de Smith, Judicial Review of Administrative Action, 2nd ed. (1968), p. 463, do suggest that the rule rested on the Crown's exemption in tort and that it might have gone with the Act of 1947.

If the plaintiffs got an undertaking they would be able to convert a very dubious claim into a reality. Thus, by threatening to break the law they are seeking to get for themselves, if they succeed, a tangible benefit, namely, a positive recompense.

Jupp Q.C. following. In Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, 703, Lindley L.J. was saying that in a sufficiently plain case the Attorney-General as a matter of practice was not asked to undertake but that in a doubtful case or one near the line if he did not give an undertaking he would not get his injunction. Walton J., having extracted that principle from the case, then departed from it.

It is beneath the dignity of the law to enforce it by a scheme involving something like trading stamps, quite apart from the complexity of unscrambling the situation which that would create. The public have the right to have the law, which must remain law until upset, enforced, and it is the duty of the Attorney-General to enforce it. If the law did not remain good until set aside anyone with tenacity would have a means of injecting possibly a two year delay into the coming into effect of the law.

Pickin v. British Railways Board [1973] Q.B. 219 shows that the court is very loath to investigate Acts of Parliament. Also, in Maxwell v. Department of Trade and Industry (unreported), December 20, 1972, after the matter had been taken to the Court of Appeal, Wien J. decided that the proceedings complained of had been perfectly fair. The present order is a statutory instrument of the highest rank, having been approved by both Houses of Parliament. A declaration that the Monopolies Commission report was in certain aspects unfair would be something which the Secretary of State could not ignore, but it would not mean that the order itself was invalid. This is not an action by the Secretary of State to uphold the validity of the order. There are two actions in one: the plaintiffs' action impugning the validity of the order and the Crown's action to enforce the law.

The court cannot inquire into the validity of an Act of Parliament, or of an order which has the full force of an Act: see Pickin v. British Railways Board [1973] Q.B. 219, 229 and Wicks v. Director of Public Prosecutions [1947] A.C. 362.

The words quoted by Walton J. as mine, ante, p. 303C, actually come from Fenner v. Wilson [1893] 2 Ch. 656.

The injunction sought by the Crown is not the ordinary type of interim injunction: it is open only to the Crown under the specific section providing therefor.

Richard Yorke Q.C., Anthony Barrowclough and Genevra Caws for the plaintiffs. The plaintiffs are not seeking to make one penny out of the proceedings unless at the end of the day they are completely successful by showing the Monopolies Commission report to be wrong and the order invalid.

When there is a conflict between the rules of law and equity the rules of equity should prevail. The Attorney-General is saying that they should not.

The Attorney-General has said that the matter is one for Parliament and not for the courts, but that is contrary to the approach of the Court of Appeal in Dyson v. Attorney-General [1911] 1 K.B. 410, where the Solicitor-General's submission that there was no precedent for the form of action there initiated and that it would be very inconvenient was rejected and continued to be rejected for the next 60 years. If the Secretary of State refuses to give the undertaking the plaintiffs will never get their

money back from Parliament, for there is no fund for meeting moral obligations. There is no English authority for an action claiming losses in respect of an order later held to be invalid, though there is in the Commonwealth and in the United States. The plaintiffs do not, however, put their trust in the Crown or Parliament but in the courts where such an action might lie. The courts are the subject's only refuge against Parliament.

The proviso to section 3 (4) of the Monopolies and Mergers Act 1965 provides that prices shall not be regulated under paragraph (c) "unless it appears ... on the facts found by the commission as stated in the report that the prices charged ... are ... against the public interest." Accordingly, if the report goes, there will have been no facts on which the order could have been made.

In granting interlocutory injunctions there is no general proposition applicable to all cases; the court should look at the particular facts of each case. Where, as in the present case, there is a fundamental challenge to the validity of the order, the undertaking ought to be given if the injunction is granted. As for saying that it is not within the dignity of the Crown to give an undertaking it is necessary to look at the coronation oath (see Halsbury's Laws of England, 3rd ed., vol. 7 (1954), p. 208), which states as one of the Crown's constitutional duties: "(2) To cause law and justice in mercy to be executed in all judgments."

The refusal to give the undertaking has nothing to do with law and order. The plaintiffs have been obeying the law, though they say it is a nullity. No case cited supports the proposition that a party to interlocutory proceedings can be granted an injunction without an undertaking when there is a challenge to the validity of the law itself. The Attorney-General's submissions based on Crown privilege seek to create a completely new type of Crown privilege by saying that the Crown should not be put on terms when it is performing a public duty and enforcing the law. [Reference was made to Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, 697; S.A. de Smith, Judicial Review of Administrative Action, 2nd ed.; Glanville Williams, Crown Proceedings; Snell's Principles of Equity, 27th ed. (1973), p. 640.]

In the relator action of Attorney-General v. Bastow [1957] 1 Q.B. 514, 520, Devlin J. said, on an application for a final injunction, that the ordinary equitable principles permitted the court to refuse an injunction. In interlocutory applications the argument is even stronger. The court has a discretion which it will exercise having regard to all the circumstances of the case: see Preston v. Luck (1884) 27 Ch.D. 497, showing that the object of an injunction is to maintain the status quo. If the Crown is able to enforce an invalid order without giving an undertaking a field of abuse of powers by the Crown in relation to regulation of prices will be opened up. Orders could be made which, however well intended, were ultra vires.

The court should consider the grounds for granting interlocutory injunctions in three recent cases: Hubbard v. Vosper [1972] 2 Q.B. 84, 96; Evans Marshall & Co. Ltd. v. Bertola S.A. [1973] 1 W.L.R. 349; and Hill v. C. A. Parsons & Co. Ltd. [1972] Ch. 305. [Reference was also made to Attorney-General v. Harris [1961] 1 Q.B. 74 and In re Pergamon Press Ltd. [1971] Ch. 388.]

It is submitted: (1) The courts do have power to inquire into the validity

of subordinate legislation as opposed to Acts of Parliament: see S.A. de Smith, Judicial Review of Administrative Action, 2nd ed., p. 484; Craies on Statute Law, 7th ed. (1971), pp. 307-310. The validity of the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973 is challenged because, being made under section 3 (4) (c) of the Act of 1965, it should have been directed not against the plaintiffs alone but against anyone supplying the drugs with which it was concerned. It is discriminatory against the plaintiffs: see section 10 of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948.

(2) Even express words cannot exclude the power of the courts when the question of ultra vires is raised: see Craies on Statute Law, pp. 311-313, and Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147, 170, where Lord Reid said that "a provision ousting the ordinary jurisdiction of the court must be construed strictly." In the present case there are not even ousting words, so, a fortiori, the power of the courts should not be excluded. There are no degrees of nullity: see per Lord Wilberforce in Anisminic, at p. 208. If the report is as if it "has never been of any effect," in the words of Lord Upjohn in Durayappah v. Fernando [1967] 2 A.C. 337, 354, it could not be acted upon. Suppose the report had been forged, what is the difference between a forgery and a nullity? A nullity is something that never was.

(3) Approval by both Houses of Parliament has no effect on the power of the courts in this regard. Resolutions of Parliament can have no effect on a nullity. This point was specifically reserved in Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171.

(4) When considering an administrative act at the suit of the person aggrieved, want of natural justice results in a nullity ab initio.

In Durayappah v. Fernando [1967] 2 A.C. 337 the Privy Council said that proceedings to quash a decision or order by reason of a breach of natural justice could be brought only by a person who had the entire interest in having it set aside. Here the order was aimed at the plaintiffs, who are, therefore, entitled to claim the declaration which they do claim. In Durayappah v. Fernando the order was not a nullity but voidable only at the instance of the council, and had the council complained the order would have been a nullity; the outcome depends on who is complaining: see perLord Upjohn, at p. 352.

Great injustice could be done by such orders as the present if they are later declared void; the minister's power should be exercised with much greater care. The courts are increasingly controlling what ministers can do. Lord Radcliffe in Smith v. East Elloe Rural District Council [1956] A.C. 736, 769 is not inconsistent with the Privy Council in Durayappah v. Fernando [1967] 2 A.C. 337. What Bankes L.J. said in Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171, 190-191, though only obiter, is highly persuasive. All three Lords Justices expressly reserved their opinions as to whether an order passed by resolutions of both Houses of Parliament which was outside the powers of the enabling Act would still have statutory force, as submitted by the Attorney-General, and doubted very much whether the Attorney-General's argument was right: see pp. 207-208, 212.

Injunctions are a wholly discretionary remedy; a fortiori where the injunction is interlocutory; each case therefore depends on its own facts. The court will not as a matter of equity do an injustice even at the suit of the Attorney-General.

To grant the injunction without the undertaking in the present case will have an effect which is precisely opposite to the object of an interlocutory injunction, i.e. to preserve the status quo so that the successful party will not find his judgment worthless. The Secretary of State's approach means that he will keep the money whoever wins the action. Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696 involved a novel claim to which, the Attorney-General here must say, there are no exceptions however much injustice is done. It is not necessary to weigh up the chances of the plaintiffs succeeding: the question is whether great damage will have been done to the plaintiffs if they do win. If the court accedes to the Secretary of State's request the courts will no longer be the only defence of the liberty of the subject against departmental oppression.

Sir Peter Rawlinson Q.C., A.-G. in reply. It is not said that this is not a novel claim, and it has been cut down from its original form so as to exclude its application to cases concerning the Crown's enforcement of its proprietary rights.

What the plaintiffs claim is a denial of natural justice by the Monopolies Commission, but they have to be able successfully to challenge the order and any minister receiving a report such as that of the commission in the present case would have been criticised if he had not immediately laid an order before Parliament.

The plaintiffs' submission (1) is accepted, but only in so far as it relates to errors which appear on the face of the order: see Craies on Statute Law,p. 380. (2) is not relevant to the present case. As to (3), the courts have left this matter open: see Sparks v. Edward Ash Ltd. [1943] K.B. 223, 229, per Scott L.J., and Harper v. Secretary of State for the Home Department [1955] Ch. 238, 252. It would be a very grave step for the court to say that what Parliament has said, by a legislative order after debate by both Houses, should be done need not be done.

In McEldowney v. Forde [1971] A.C. 632 an order made by the Northern Ireland Parliament was challenged: see per Lord Hodson, at p. 645; per Lord Guest, at pp. 649-650; per Lord Pearce, at pp. 652-653; per Lord Pearson, at p. 655; and per Lord Diplock, dissenting, at pp. 658-659. The House of Lords was saying that when all the Parliamentary forms had been gone through it was very difficult to upset statutory regulations. A statutory instrument is the law as enacted, and if on its face there is no conflict between what it provides and the statute providing for its enactment it is not challengeable. [Reference was made to Maxwell v. Department of Trade and Industry (unreported), December 20, 1972.]

As to the plaintiffs' point relating to section 10 (3) of the Act of 1948, section 3 (3) of the Act of 1965 provides for the powers of the Department of Trade and Industry with regard to a monopoly situation, and "arrangements or agreements" in that subsection clearly refers back to the Act of 1948. Section 10 (3) of the Act of 1948 provides that "persons" in general may be caught by an order, whereas section 10 (1) (e) refers only to the "parties concerned" in the report. It is said that section 10 (3) deals only

with orders which declare something to be unlawful and that the present order was not a "declaration" but a regulation of prices, but that, in any event, does not apply with regard to a regulation of prices order falling within section 10 (1) (c).

It is the duty of the Crown to look to the courts for support in seeing that the law is carried out. Therefore, the Crown is seeking an injunction in the present case. It is not a novel privilege which the Crown seeks to establish in saying that it should never be put on terms: the authorities and most textbooks accept a rule that the Crown does not undertake. There is an essential and absolute duty to obey the law, and a potential lawbreaker cannot agree to obey the law only if the Crown agrees to do something. Enforcement of the law must be the superior public interest.

July 30. LORD DENNING M.R. The plaintiff group of companies are based in Switzerland. They make and supply drugs all over the world. They spend vast sums in research. They have done a great good for mankind. We are concerned here with two of their products which have special merit as tranquillisers. Their brand names are Librium and Valium. They are marketed in capsules which bear the distinctive colours of black and green. The plaintiffs have patented these drugs in the United Kingdom. Those patents have been in force for many years. They are due to expire in 1975 and 1976; but meanwhile the plaintiffs have done all they can to maintain a monopoly in them. They do not grant voluntary licences. They resist the grant of compulsory licences; though two have recently been granted in spite of their opposition. There are some other countries, such as Italy, which do not grant patents or allow monopolies in medical drugs of this kind. These self-same drugs can be and are manufactured in Italy by other firms without any need for a licence from the plaintiffs. On occasions these Italian makes have been imported into England and sought to be sold here. They have, or should have, the same beneficial qualities as Librium and Valium. Whenever such imports are discovered, the plaintiffs have invoked the law of this country to stop them being marketed here. In this court we have had actions by the plaintiffs for infringement of patents, and we have granted injunctions: see F. Hoffmann-La Roche & Co. A.G. v. Inter-Continental Pharmaceuticals Ltd. [1965] Ch. 795. We have had actions for passing off. We have restrained others from using the black and green combination. In addition, the law of this country enables the plaintiffs to prescribe and fix the prices for the drugs, and to enforce those prices right down the chain of supply from manufacturer to wholesaler, and from wholesaler to retailer, and from retailer to customer; because these "ethical drugs," as they are called, are exempt from the prohibition on resale price maintenance: see In re Medicaments Reference (No. 2) [1970] 1 W.L.R. 1339.

So the plaintiffs have been given great privileges by our English law. In addition, the market for drugs in England places them in a specially favourable position. These drugs cannot be supplied by a chemist except under a doctor's prescription. Most patients are on the National Health Service. They do not pay for the drugs (except for a small flat rate

prescription charge). The doctor does not pay for the drugs. The chemist does not incur any cost himself because he is indemnified by the National Health Service. So none of them need worry about the price of the drugs. It all comes on to the National Health Service. Once the doctors are persuaded of the value of Librium and Valium, all is well. The doctor prescribes. The National Health Service pays. There are a few private patients who can pay for their own drugs, but they are usually so concerned for their own well-being that they do not worry about the cost.

The present case arises because the National Health Service have thought for some years that the prices charged by the plaintiffs were excessive. They felt that the plaintiffs were making too much profit out of them. From 1967 to 1969 the National Health Service made representations to the plaintiffs and got them to make substantial payments back to them. They paid back £200,000 for the year ending June 1967; £500,000 for the year ended June 1968; and £900,000 for the 18 months ending December 1969. But thereafter the plaintiffs declined to make any payments back. One of the reasons for this was because two other concerns (which apparently did not do so much research) applied for compulsory licences and got them in 1970 and 1971. The plaintiffs felt that this would lead to increased competition. They could not forecast the result, and so declined to make any further repayments.

The National Health Service were still aggrieved about the higher prices being charged for Librium and Valium. So they made approaches to another government department, the Department of Trade and Industry. In consequence, on September 14, 1971, the Secretary of State referred the matter to the Monopolies Commission for investigation and report. Shortly stated, he asked the Monopolies Commission to determine the level of profits made by the plaintiffs for Librium and Valium, and to find out whether or not it operated against the public interest.

Now, the Monopolies Commission is an independent body set up by Parliament especially to inquire whether things done by a monopoly are operating against the public interest. It is composed of members of much distinction. Seven of them sat to inquire into Librium and Valium. The chairman was Sir Ashton Roskill Q.C. The others were Professor Barna, Professor of Economics at Sussex University; Sir Roger Falk, an eminent management consultant; Professor Hart, Professor of Jurisprudence at Oxford; Mr. Richardson, a fellow of St. John's College, Oxford, a specialist in economics; Mr. L. H. Williams, a former deputy chairman of I.C.I.; and Mr. Noble, vice-chairman of the Co-operative Wholesale Society, a specialist in management and financial subjects.

The Monopolies Commission took 17 months over their task. They made many investigations in many quarters and particularly of the plaintiffs. They paid tribute to the assistance given to them by Roche Products Ltd., but they were disappointed in some respects with the replies of the plaintiff group of companies. They recorded that the group was "not prepared to give for publication details of its world-wide expenditure on research" (paragraph 44). They said in paragraph 156:

"We asked for (i) the value of world-wide sales of ethical products; (ii) the value of world-wide research costs for ethical products;

(iii) the world-wide sales of Librium and Valium respectively by value; (iv) the world-wide sales of Librium and Valium respectively by weight. The group refused to supply us with this information."

In addition, the Monopolies Commission held a hearing on the question of public interest, at which the plaintiffs were represented and made such submissions as they wished.

On February 13, 1973, the Monopolies Commission made their report to the Secretary of State. They found that the plaintiffs had made excessive profits at the expense of the National Health Service, and they recommended that the prices should be greatly reduced. They found, to use their words:

"... the Roche group has already obtained from the sale of these drugs in this country profits far in excess of what is justifiable. ... The excessive prices charged up to the present have already produced excessive profits on a very large scale."

They considered that the prices should be greatly reduced; and in assessing the future price they said significantly in paragraph 236:

"No future price which it is practicable to recommend for the reference drugs could take full account of the excessive profits which have been made on them at the expense of the National Health Service in the past and will continue to be made until the prices are reduced. This damage could be remedied by the repayment of large sums to the Department of Health."

They concluded with the important recommendation in paragraph 237 that the prices charged by Roche Products Ltd. should be reduced (i) as regards Librium to not more than 40 per cent. of the selling prices in 1970, and (ii) as regards Valium, to not more than 25 per cent. of the selling price in 1970.

The Secretary of State received that report on February 13, 1973. He considered it for two months. It was made public on April 11, 1973. The very next day he made a statutory order by which he ordered in effect that the plaintiffs should reduce their prices of Librium by 60 per cent. and of Valium by 75 per cent. as from April 23, 1973.

The statutory orders

The Secretary of State acted under the powers conferred on him by section 3 of the Monopolies and Mergers Act 1965. By that section he was empowered to make orders regulating the prices to be charged for the drugs. Any such order was to be laid before Parliament and was effective for 28 days. It would then cease to have effect unless it was approved by resolution of each House. If so approved within 28 days, it was of full force and effect thereafter until modified or varied or rescinded.

In this case the Secretary of State made three orders in succession, each of which lasted for 28 days. The plaintiffs sought to prevent them being approved by Parliament. To this end, on May 1, 1973, they made a petition against the first order to the House of Lords. They asked that "the order may not be approved and that they may be heard" on it.

Their petition was referred to a special orders committee of the House of Lords. A committee of seven peers sat to hear it. They heard counsel for the plaintiffs and for the Secretary of State. It took five days. They studied all the documentary evidence. Then they came to a decision by a majority of four to three. This decision was of a very limited nature. They reported that there should be a further inquiry by a select committee, but that such inquiry should be limited to the question whether the price reductions were too great. Put simply, they wanted a select committee to inquire into these questions: did the prices, as reduced by the order, make adequate provision for research and development? Ought there to be an upward adjustment on this account? It is apparent that if there was to be a further inquiry of this nature, it might be very prolonged.

On June 22, 1973, the House of Lords considered the report of the special committee. A motion was made that it be agreed to. An amendment was proposed rejecting it. There was a full debate. The report of the special committee was rejected by a majority of 43 to 23. This meant that the way was clear for the orders of the Secretary of State to be considered by both Houses of Parliament. On July 4, 1973, the House of Commons held a full debate. They approved the orders without a division. On July 5, 1973, the House of Lords held a full debate and likewise approved the orders without a division. It is noteworthy that in each House the case for the plaintiffs was put eloquently and strongly by speakers on their behalf. They criticised the proceedings of the Monopolies Commission. They stressed the value of the expenditure on research and development. Nevertheless, each House approved the resolutions. Thereupon the order made by the Secretary of State became the law of the land.

The legal proceedings

This turn of events upset the plaintiffs greatly. On June 25, 1973, their solicitors wrote a letter to the Secretary of State complaining that the plaintiffs "appear to have been cheated of the opportunity of having the recommendations of the Monopolies Commission considered on their merits." They said that "the commission's report was vitiated by its failure to observe the requirements of fairness and natural justice" and that "the three successive orders were and are ultra vires." They said they were not going to obey the orders. They were going to raise the prices so as to restore them to the level obtaining before the first order was made. But they would pay the difference into a bank account to await a decision on the validity of the orders.

On the same day, June 25, 1973, the plaintiffs issued a writ against the Secretary of State. They claimed a declaration that the procedures adopted by the Monopolies Commission were unfair and contrary to the rules of natural justice; and that the orders were ultra vires, invalid and of no effect.

Three days later, on June 28, 1973, the Department of Trade and Industry launched a counter attack. That Department issued a writ against the plaintiffs. They claimed an injunction to restrain the plaintiffs from charging any prices in excess of the prices specified in the order. A few days later the Department applied to the court for an interim injunction.

It came on in due course before Walton J. The plaintiffs were prepared to submit to an interim injunction - keeping the prices to the low price - provided that the Department gave an undertaking in damages so as to recompense the plaintiffs if the orders were afterwards held to be invalid. In short, if at the trial the plaintiffs won all along the line, they wanted to be assured of receiving the full price throughout, without any reduction at all. The trial would not take place for two or three years. So that this undertaking, if given, would ensure them their full prices till the expiry of the patents.

But the Department was not willing to give such an undertaking. In addition, the plaintiffs themselves told the judge that, if they were allowed to charge the high prices, they would keep the difference in a joint banking account in the names of the two solicitors, and would take measures to ensure that it reached the proper destination according to the ultimate decision. On the plaintiffs giving an undertaking to that effect, the judge refused to grant an interim injunction against them. If his order stands, it means that the plaintiffs are absolved by the court from obeying the statutory order pending the final decision of the case. If they win, they will keep the high price throughout. If they lose, they will pay back the excess. The unscrambling may be difficult and incomplete, but still they will do it as best they can.

The Secretary of State appeals to this court. The Attorney-General himself came and put the case before us.

The position as to undertakings

In the case of an ordinary litigant who applies for an interlocutory injunction, it is the usual practice not to grant it unless the plaintiff gives a cross-undertaking in damages. The reason is because the proceeding is interlocutory only. The issues have not been finally determined. The injunction is granted so as to preserve the status quo until their determination. So that, in case the plaintiff should eventually fail, it is only just that he should undertake to recompense the defendant for any damage that he may suffer by reason of the injunction having been granted. This was the view of Cotton L.J. in Smith v. Day (1882) 21 Ch.D. 421, 429. It was approved in Griffith v. Blake (1884) 27 Ch.D. 474.

It has been said that, when the Crown seeks an interlocutory injunction, the court will not require it to give an undertaking in damages: in Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, 704 Lopes L.J. said: "the inveterate practice has been not to direct such an undertaking." In Secretary of State for War v. Cope [1919] 2 Ch. 339, 341, it was regarded as "established practice." If such was the practice before the Crown Proceedings Act 1947 I do not think it should be followed now. I can envisage many a case in which a government department might properly be asked to give an undertaking in damages just as a subject. Section 21 of the Act of 1947 shows that the courts can make all such orders against the Crown as it can against subjects.

The Attorney-General, however, submitted that this was not such a case for an undertaking; and I agree with him. When the Crown comes to the court to enforce the law, it is in a different position from an ordinary

litigant: see Attorney-General v. Bastow [1957], 1 Q.B. 514, 521; Attorney-General v. Harris [1961] 1 Q.B. 74 and Attorney-General v. Chaudry [1971] 1 W.L.R. 1614. Usually the Crown appears by the Attorney-General. He is the first law officer of the Crown; and, as such, he is primarily responsible for the enforcement of the law. He represents the interest which the public at large have in seeing that the law is obeyed. If the law is transgressed or threatened to be transgressed, it is the duty of the Attorney-General to take the necessary steps to enforce it. It was in pursuance of that duty that he came before us earlier this year in the case about the Warhol film: see Attorney-General ex rel. McWhirter v. Independent Broadcasting Authority [1973] Q.B. 629; and in the case of the article in The Sunday Times about the thalidomide children, where his action has been vindicated by the House of Lords: see Attorney-General v. Times Newspapers Ltd. [1973] Q.B. 710. It is in pursuance of that duty that he comes before us now. No doubt he is appearing nominally on behalf of a government department; but he is in truth appearing on behalf of the Crown so as to enforce the law. As such, in my opinion, the Crown cannot and should not be required to give an undertaking. A relator no doubt can be required to give an undertaking in damages, but not the Attorney-General, nor the Crown. The offender must obey the law; he cannot demand an undertaking as the price of his obedience. The offender may argue that the law is invalid, but that does him no good: he must obey first and argue afterwards. So here under the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 compliance with the order is expressly made "enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief": see section 11 (2). When the Crown seeks an injunction in pursuance of this enactment, it is simply seeking to enforce the law. It brings the case before the court for its consideration. It is not to be put on terms as the price of the enforcement of the law.

The submission of the plaintiffs

As against all this, however, the plaintiffs submit that the order made by the Secretary of State is invalid, or, at all events, that they have an arguable case that it is invalid. They say that the Monopolies Commission treated them unfairly: that the commission acted contrary to the rules of natural justice; and that the order of the Secretary of State discriminated unlawfully against them; and on this account they say that the report of the Monopolies Commission was void and the statutory order based on it was a nullity.

I will assume for present purposes that the Monopolies Commission did act contrary to the rules of natural justice - though I would not wish to imply that it was in fact the case. Mr. Yorke says that their report would be void. He referred us to passages from Ridge v. Baldwin [1964] A.C. 40, 80; Durayappah v. Fernando [1967] 2 A.C. 337, 355 and Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147, 171.

I have always understood the word "void" to mean that the transaction in question is absolutely void - a nullity incapable of any legal consequences - not only bad but incurably bad - so much so that all the world can ignore it and that nothing can be founded on it: see MacFoy v. United Africa Co. Ltd. [1962] A.C. 152, 160.

If the word "void" is used in that sense, the report of the Monopolies Commission was certainly not void. A failure to observe the rules of natural justice does not render a decision or order or report absolutely void in the sense that it is a nullity. The legal consequences are best told by recounting the remedies available in respect of it. A person who has been unfairly treated (by reason of the breach of natural justice) can go to the courts and ask for the decision or order or report, or whatever it is, to be quashed, or for a declaration that it is invalid, that it has not and never has had any effect as against him. But it is a personal remedy, personal to him. If he does not choose himself to query it and seek a remedy, no one else can do so: see Durayappah v. Fernando [1967] 2 A.C. 337, 353. But it is within the discretion of the court whether to grant him such a remedy or not. He may be debarred from relief if he has acquiesced in the invalidity or has waived it. If he does not come with due diligence and ask for it to be set aside, he may be sent away with nothing: see Reg. v. Aston University Senate, Ex parte Roffey [1969] 2 Q.B. 538. If his conduct has been disgraceful and he has in fact suffered no injustice, he may be refused relief: see Glynn v. Keele University [1971] 1 W.L.R. 487 and Ward v. Bradford Corpn. (1971) 70 L.G.R. 27. If it is a decision or order or report which affects many other persons besides him, the court may not think it right to declare it invalid at his instance alone: see Maxwell v. Department of Trade and Industry (unreported), December 20, 1972, a decision of Wien J., of which we were supplied with a transcript. Moreover, pending a decision by the courts as to its validity, other persons may be justified in acting on the footing that it is valid. If the decision or order or report is good on the face of it, and there is no good reason for supposing it to be invalid, other persons can treat it as valid. To it I would apply the words of Lord Radcliffe in Smith v. East Elloe Rural District Council [1956] A.C. 736, 769-770:

"An order, ... is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders."

So here, the report of the Monopolies Commission, even if it was made in breach of the rules of natural justice, is still capable of legal consequence. The question, therefore, is of what legal consequences is it capable? In my opinion, when the Secretary of State received the report of the Monopolies Commission, he was entitled to treat it as valid and to act as he did on the faith of it. It was perfectly good on the face of it. Under the statute he was authorised to make an order if it appeared to him "on the facts found by the commission as stated in the report" that the prices charged were such as "to operate, against the public interest": see section 3 (4) (c) of the Act of 1965. Applying that provision, the Secretary of State was entitled to go by the facts stated in the report. He was entitled to make the statutory order so as to compel the plaintiffs to reduce their prices. Likewise when the Secretary of State laid the order before Parliament, each House was entitled to treat the order as valid. When each

House passed a resolution, as they did, approving the order, it became the law of the land as effective as a statute itself.

Mr. Yorke drew our attention to Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171, where the court intervened before a scheme was presented to Parliament. No doubt it was open to the court at that stage to prohibit further steps being taken in regard to a scheme which was ultra vires. But I do not myself think it is open to the court to declare invalid a statutory order, which is good on the face of it, and which has been approved by both Houses of Parliament. If the court should find, at the trial of this action, that the report of the Monopolies Commission was vitiated for want of natural justice, the court could report it to Parliament, but it could not set aside the statutory order which has been approved by both Houses of Parliament. Parliament alone could correct it. Parliament could do what was just in the circumstances. It is not for the court to overthrow it. Otherwise we would get an insupportable conflict between the courts and Parliament. The statutory order may be unjust, but the courts cannot amend it. As is said in Erskine May's Parliamentary Practice, 17th ed. (1964), p. 28:

"The constitution has assigned no limits to the authority of Parliament over all matters and persons within its jurisdiction. A law may be unjust and contrary to sound principles of government; but Parliament is not controlled in its discretion, and when it errs, its errors can only be corrected by itself."

See also Lee v. Bude and Torrington Junction Railway Co. (1871) L.R. 6 C.P. 576, 582, quoted in Pickin v. British Railways Board [1973] Q.B. 219, 229.

In my opinion, therefore, even if the plaintiffs do show that the report of the Monopolies Commission was invalid, they have no remedy in the courts. So be it. They must appeal to Parliament. Their plea may fall on deaf ears. So be it. Parliament is a better judge of moral claims than we are.

A suggestion was made that there was unlawful discrimination. I understand that Buckley L.J. is going to deal with that suggestion and I will leave it there.

Conclusion

This case has evoked much discussion. There are distinguished protagonists on each side. The plaintiffs are commended on all hands for the benefits they have conferred on mankind by their expenditure on research and development. Their profits, they say, are nearly all expended for this purpose. So it is unfair to cut down the prices which they charge for their products. On the other hand, the Monopolies Commission, after a long and careful investigation, have found that the plaintiffs have charged excessive prices which have produced excessive profits on a very large scale. Between those rival views the courts have no concern. The Secretary of State has made, under the authority of Parliament, an order which compels the plaintiffs to reduce their prices greatly. That order has been approved,

after full debate, by both Houses of Parliament. So long as that order stands, it is the law of the land. When the courts are asked to enforce it, they must do so. Nor can the plaintiffs justly complain. It is only by our law that they have been able to make these profits. It is our law of patents and of passing off that has given them a virtual monopoly. It is our constitution of the National Health Service which has put them in a favourable marketing position. Now that Parliament has approved a statutory order which goes against them they must obey it. Just as they invoked the law when it was in their favour, so they must obey it when it turns against them. They argue that the law is invalid; but unless and until these courts declare it to be so, they must obey it. They cannot stipulate for an undertaking as the price of their obedience. They must obey first and argue afterwards.

I would allow the appeal and grant the injunction as asked without requiring any undertaking from the Crown in damages.

BUCKLEY L.J. The three Regulation of Prices (Tranquillising Drugs) Orders which have been made in this case have all been made in purported exercise of statutory powers contained in section 3 (3) and (4) of the Monopolies and Mergers Act 1965 and section 10 (3) of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948. Those powers are exerciseable in the circumstances set out in section 10 (1) of the latter Act. Those circumstances all existed in this case when the orders were made. The appropriate government department had referred the matter to the Monopolies Commission under the Acts for investigation and report. That reference was not framed so as to limit the investigation and report to the facts. The commission had reported and its report had been laid before Parliament. According to that report (a) such conditions prevail in this case as are described in section 4 of the Act of 1948 (see paragraph 195 of the report); and (b) those conditions, or things done by the parties concerned as a result of, or for the purpose of preserving, those conditions, operate or may be expected to operate against the public interest: see paragraph 217.

Accordingly, subject to the point which has been forcefully argued before us by Mr. Yorke for the plaintiffs about the validity of the commission's report, the conditions for the exercise of the order-making power were all satisfied and the Secretary of State, in whom that power is now vested, was free and competent to make such order or orders under section 3 (3) to (7) of the Act of 1965 as he might think fit for the purpose of remedying or preventing any mischiefs which in his opinion resulted or might be expected to result from those conditions or things.

Upon its face each of the orders was regularly made in exercise of those statutory powers. Upon its face each of them was a valid and effective legislative act as binding as an Act of Parliament.

In Smith v. East Elloe Rural District Council [1956] A.C. 736, Lord Radcliffe, speaking of compulsory purchase orders, said. at pp. 769-770:

"An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the

cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders."

Just so in the present case, as it seems to me, unless and until the No. 3 order, which alone now remains in force, is in some way given a quietus, it has operative effect as part of the legislative law of the land.

The main submission of the plaintiffs has been that the Monopolies Commission failed to observe the requirements of natural justice and that consequently their report is a nullity. I will not pause to consider whether the Monopolies Commission is a body whose activities are subject to considerations of natural justice, for I am very ready to assume that this is the case, and the contrary has not been suggested; but what is the consequence if the commission fails to conduct itself in accordance with the requirements of natural justice? Mr. Yorke says that in such a case the commission's report is a nullity and that it is as if the report had never been made, with the result that the price orders must be taken to have been made ultra vires. I find difficulty in understanding this concept. A report is a matter of fact. There can be no doubt that in the present case the commission did report. Nor can there be any dispute about what that report contains, nor that it reports those findings of the commission which were necessary to empower the Secretary of State to make the orders. If it be the fact that the commission was in default in regard to natural justice, the plaintiffs may be entitled to say that some or all of those findings are so suspect that they should be disregarded altogether, that is, treated as though they had never been made; but even so, the fact would remain that the commission did report to the Secretary of State in the terms in which they did.

I will accept for the purposes of this judgment that, if the Monopolies Commission can be shown to have acted in breach of natural justice in arriving at the findings contained in their report, the commission should be treated as having never made those findings. In these circumstances, says Mr. Yorke, the report should be held to be a nullity and the validity of the orders must be considered upon the assumption that the report was never made. In this connection he relies on Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147, and in particular upon the speech of Lord Reid. The House of Lords was concerned in that case with the validity of a certain determination or purported determination of the Foreign Compensation Commission. If they had made a determination within the meaning of the Foreign Compensation Act 1950, section 4 (4), that subsection provided that such determination should not be called in question in any court of law. The determination there under consideration was attacked on the ground that the commission had misconstrued the statutory provisions which conferred their jurisdiction. It was held that they had done so and so had made a determination which they had no power to make. They had consequently, as it was held, made no "determination" within the terms of section 4 (4) of the Act, so that the courts were not precluded by that section from considering the validity of what the commission had done. In the Anisminic case the House was concerned with the powers of the Foreign Compensation Commission

only and with whether their purported determination was within those powers or not. In the present case the court is concerned primarily with the powers of the Secretary of State to make the prices orders. It is concerned with the powers and conduct of the Monopolies Commission in relation to their investigation of the affairs of the plaintiffs only in a secondary way and to the extent that these can be shown to affect the powers of the Secretary of State. The circumstance, assuming it to be established, that the Monopolies Commission must be treated as never having determined that the prices charged by the plaintiffs for their products operate or may be expected to operate against the public interest does not alter the fact that the commission has reported to the Secretary of State that those prices do so operate or may be expected to do so.

Mr. Yorke has contended that the separation of the functions of the commission and of the Secretary of State is irrelevant and that we should regard the situation as though all the operations were conducted by the Secretary of State. I cannot agree. The functions of the commission are of an inquisitorial and quasi-judicial character. The function of the Secretary of State is of a purely legislative or administrative character. They are quite distinct and Parliament has elected to place them in different hands. It cannot, I think, have been the intention of Parliament that the Secretary of State should have to consider in each case whether the commission had properly conducted itself in the performance of its functions before he should act on its report.

I reach the provisional conclusion, therefore, that, if at the trial the plaintiffs succeed in making good their claim that the commission has failed in its inquiry into their affairs to pay proper regard to natural justice, it will not follow that the orders must be regarded as having been a nullity: but the plaintiffs might obtain some declaratory relief which would give them strong grounds for seeking the revocation of the No. 3 order or, possibly, to have that order quashed. At the present stage, however, we must, in my opinion. treat the No. 3 order as being in force as an effective part of the law, having statutory effect.

If this is right, it must, I think, be the duty of the Secretary of State to enforce or to attempt to enforce, compliance with the order. Section 11 (2) of the Act of 1948 provides that compliance with any such order shall be enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief. The Secretary of State moved for an injunction. Walton J. refused to grant one because (a) the Secretary of State refused to give any undertaking in damages, but (b) the plaintiffs offered to accumulate in a bank account the excess of all prices charged by them for their products over the order prices pending final judgment, thus preserving a fund which could be used to adjust the position appropriately when the issues had been decided.

The plaintiffs assert that, if until the action is finally disposed of, which they suggest may not be for some two years, they supply their products in this country at not more than the order prices, and if it is subsequently established that the prices orders ought not to have been made and that they, the plaintiffs, should have been permitted throughout to fix their own prices, they will have lost a very large sum - a figure of £8,000,000 has been mentioned (most of which they say would have been

devoted to research and development of other valuable drugs) - which sum they would have no means of recovering; and, moreover, their patent protection will then have come to an end by exhaustion of the terms of the patents. This is a powerful plea, which is reinforced by the consideration, which appears to me to be true, that that undertaking by the Secretary of State in damages would not operate unless the plaintiffs were completely successful in the action, so that they established that the prices orders should be treated as having never had any effect.

The granting of an interlocutory injunction is, of course, a discretionary remedy, which should not be granted if there is a danger that it may work an injustice, and indeed the device of an undertaking in damages has been developed and used precisely as a means of meeting this risk. I can see no reason why in what may be called ordinary litigation - that is, not concerned with law enforcement or the protection of public rights - these considerations should not be applicable to the Crown as to a subject. Even where proceedings are taken by the Crown to enforce the law, I am not prepared to say that there might not be cases in which interlocutory relief would operate so harshly against a defendant, if he were ultimately to succeed at the trial, that interlocutory relief should be refused or should only be given with the protection of an undertaking in damages. Every case must depend on its facts, and I do not think that there is, or ought to be, any special privilege accorded to the Crown entirely exempting it from the liability of being asked to give an undertaking in damages as a condition of the grant of an interlocutory injunction. In the past, however, the courts have been very disinclined to impose such a condition on the Crown. In Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696, 703, Lindley L.J. went so far as to say that there was an established practice not to require the Attorney-General to give such an undertaking, and Lopes L.J., at p. 704, agreed with him. In Secretary of State for War v. Cope [1919] 2 Ch. 339, 341, P. O. Lawrence J. treated this as an established rule. But since those times the Crown Proceedings Act 1947 has in great measure assimilated the position of the Crown in litigation with that of a subject, and although I do not think that that Act can have any direct effect on requiring an undertaking in damages, I think that the courts should nowadays be more ready to consider imposing a condition of such an undertaking in a case in which the Crown seeks an interlocutory injunction.

It is considerations of this kind which have led me to devote some time to the subject of the present status of the prices orders in the present case.

If a plaintiff obtains an interlocutory injunction to restrain an alleged breach of contract, and at the trial it is determined that the forbidden act would in fact not be a breach of contract but is of a kind which the defendant is entitled to do, the defendant may have suffered damage in consequence of the injunction by having been prevented from doing what he could legally have done. If he has suffered damage it is just that he should be recompensed. The same would be true if the forbidden act were an alleged tort or an alleged breach of a statutory duty. In all these cases, if the defendant is eventually successful, he will have established that he was entitled to do the act which he has been restrained from doing.

In the present case the position appears to me to be different. If, as I think, the No. 3 order is valid and effective at the present time, the plaintiffs cannot today sell their products here at prices higher than the order prices without breaking the law. No one can be injured by being restrained from breaking the law. Unless there is a real prospect that the plaintiffs may succeed at the trial in establishing that the orders should be treated as having been void ab initio, there is no real risk that an injunction restraining them until judgment or further order from committing breaches of the orders will prevent them doing anything which they are legally entitled to do. There will be nothing for which they should be compensated. For reasons which I have already explained, I have not been satisfied that there is any reasonable prospect of the plaintiffs establishing that these orders were void ab initio. In these circumstances I think that the court's duty is to enforce the law by granting this injunction, and the case is not, in my judgment, one in which it would be proper to require the Secretary of State to give an undertaking in damages.

In saying this I would not wish to suggest that if the plaintiffs were to make good their claim that the Monopolies Commission have been guilty of material breaches of natural justice, and if hereafter it were to be determined on some further inquiry that the prices charged by the plaintiffs before the orders were made were not contrary to the public interest, so that everything has proceeded on a fundamentally false basis of fact, the plaintiffs would not have a very strong case for compensation on an ex gratia basis.

There remains for consideration a separate point relating to section 10 (3) of the Act of 1948 which is in these terms:

"An order of a competent authority under this section declaring a thing to be unlawful may declare it to be unlawful either for all persons or for such persons as may be specified or described in the order."

The prices orders in this case are expressed to apply only to the plaintiff companies and any other corporate body in which any of them has a controlling interest. Mr. Yorke complains that this is discriminatory. and that section 10 (3) does not authorise such discrimination because, as he submits, that subsection does not apply to an order regulating prices but only to orders under section 3 (3) (a) (c) (d) and (4) (a) of the Act of 1965 which refer in terms to declaring certain matters to be unlawful. The prices orders provide that the prices charged for the relevant products shall not exceed stated amounts. In my judgment, within the meaning of section 10 (3) of the Act of 1948, the orders declare it to be unlawful to sell in excess of those amounts. I think that section 10 (3) is applicable in such a case. The suggested discriminatory effect of the orders does not seem to me to be very realistic. If anyone in the position of the plaintiffs, having a very large preponderance of a particular market, is restricted to selling a commodity at or below a certain price, it seems highly unlikely that a competitor will succeed in selling that commodity at a higher price, or, if lie does so, will succeed in increasing his share of the market.

I would accordingly allow this appeal.

LAWTON L.J. The plaintiffs did not like the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973, which had been made by the Secretary of State on the facts found by the Monopolies Commission and approved affirmatively after debate by both Houses of Parliament. Instead of obeying it pending judgment in such proceedings as they were advised to take to obtain a declaration that it was ultra vires and of no effect, they decided to disregard it and to carry on their business as if it had never been made by the Secretary of State and approved by Parliament. In my judgment, their decision called for action by the Crown. The Secretary of State asked the court to restrain the plaintiffs by interlocutory injunction from acting in defiance of a statutory instrument which had the appearance of validity and which he and Parliament believed to be valid. Establishing invalidity, on the plaintiffs' own estimate, would take about two years. During this period they claimed that they should be allowed to go on charging in the United Kingdom prices for their drugs Librium and Valium which the Monopolies Commission, a body established by statute, had reported were excessive unless the Secretary of State was prepared to give an undertaking that he would pay any damages they sustained as a result of complying with the terms of the statutory instrument pending the outcome of legal proceedings in which they said they were confident of success. The Secretary of State refused to give any such undertaking. In my judgment, he was right to do so.

The reason why the Secretary of State was right to refuse does not arise from any privilege of the Crown but from the policy of the law. The body politic must discipline itself and its members. Government would be impossible if every citizen could exercise his private judgment as to which laws were to be obeyed or to what extent they were to be obeyed. This has long been recognised in relation to statutes: no one, and this includes the Crown, can challenge their validity. Statutory instruments are devolved from statutes and take effect as such; but unlike statutes, a challenge can be made to their legislative paternity, as they may have been conceived by a Minister outside the enabling Act. Just as in our family law the legitimacy of a child is preserved until the contrary is shown, so must the validity of a statutory instrument. In the case of the child the presumption is necessary in the interests of the family and society: in the case of a statutory instrument it is necessary in the interests of good government. This is shown by the way in which statutory instruments have been used in the past century. Government has had to concern itself both in times of war and peace with the regulation of the economic life of the realm. As the regulator often has to be used quickly because of rapidly changing circumstances, or in a limited area of industrial or commercial activity, Parliament in numerous statutes has authorised Ministers to regulate by means of statutory instruments. Often Ministers consult trade associations and committees which they themselves have formed as advisory bodies before making an order. The whole purpose of government by regulating statutory instruments would be defeated if by issuing a writ alleging ultra vires because of insufficient or discriminatory consultation, or some unfairness in the way they are treated by a government department, individuals could excuse themselves pending trial from

the operation of the regulator. Such writs would not gag government: they would garrotte it.

The plaintiffs in the argument before this court accepted that there was need for discipline in the state, but submitted that there was need for justice too. If they complied with the order pending trial and were successful in establishing that it was invalid, they would have been deprived of profits which they would otherwise have earned. They are in much the same position as a man who has been charged with burglary, remanded in custody and then acquitted: he has been deprived of his liberty by an ill-founded accusation: he gets no compensation as of right. If he can show that his prosecution was malicious and without reasonable care, he can get damages from the prosecutor; if he has been harshly and unfairly treated by the police or prison authorities, he can petition the Home Secretary for compensation; and if he does not get what he wants from that source, he can enlist the help of a sympathetic Member of Parliament to raise in the House of Commons the injustice done to him. The reason for this limitation of remedy, which bears heavily, and some think unjustly, on those wrongly accused of crime, is the need in the public interest to ensure that those who have the duty of prosecuting shall not be deterred from doing what they should by consideration of the consequences to them of an acquittal. In my judgment, the same considerations apply to the Secretary of State as a law enforcement authority. The Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 provides by section 11 (2) that orders made under the Act "shall be enforceable by civil proceedings for an injunction."

On the hearing of the application in this case for an interlocutory injunction the Secretary of State produced his order. It bore no brand of invalidity upon its forehead: see Smith v. East Elloe Rural District Council [1956] A.C. 736, per Lord Radcliffe at p. 769. The Secretary of State had acted on the facts found by the Monopolies Commission. He had done what the Act said he should do. The order has the appearance of being intra vires. The plaintiffs were clearly defying it, as they had declared in writing by letter dated June 25, 1973, they intended to do. Their submission to Walton J. that they were entitled to an undertaking as to damages amounts to an attempt by them to deter the Secretary of State from performing his statutory duty to enforce his order by injunction. Persons wrongly accused of crime have no right to submit to magistrates that they should not be remanded in custody unless the prosecution undertakes to pay them compensation if they are acquitted. I can see no difference in principle between them and the plaintiffs. I have not overlooked the fact that if the plaintiffs are right about the alleged validity of the order they will have lost a very large amount of money: they estimate it at £8,000,000. In my judgment, they must seek their remedy in Parliament. When this was suggested to Mr. Yorke, their counsel, in the course of the argument, he said that a political remedy was no remedy at all, because a large multi-national organisation such as the plaintiffs' was unlikely to have any friends in Parliament. I think he has misjudged Parliament. If the plaintiffs do prove that they have been treated so unfairly by the Monopolies Commission that the order should be quashed, I feel confident that there will be no difficulty in finding Members of Parliament

who will urge their brethren to put right whatever wrong has been done to them.

In my judgment, it is irrelevant that on the facts of this case the plaintiffs' loss will be largely, but not wholly, the gain of the National Health Service. Orders made under the Act of 1948 will normally benefit directly the public at large.

On this ground alone I would allow the appeal, grant the injunction as asked and without requiring any undertaking from the Secretary of State.

Solicitors: Treasury Solicitor; Herbert Smith & Co.

C. N.

The plaintiffs appealed. Subsequently to the hearing in the Court of Appeal summonses were taken out by the Secretary of State to strike out the plaintiffs' proceedings on the ground that they showed no reasonable cause of action. Nothing substantive was done pursuant to the summonses pending the decision of the House of Lords.

R. A. MacCrindle Q.C., Richard Yorke Q.C., Anthony Barrowcloughand Genevra Caws for the plaintiffs. The plaintiffs are disposed to accept that this is a proper case for the granting of an interlocutory injunction. The point is whether it should be granted on the usual terms, that is, against an undertaking by the Secretary of State that if unsuccessful at the trial he will pay such damages, if any, as the court considers to be just. By this the plaintiffs mean those which flow from the need to obey the injunction; it has nothing to do with any moral obligation.

The plaintiffs accept that an undertaking cannot be imposed on the Crown; the order can only be made on terms that the injunction will go only if an undertaking is forthcoming. That, however, has been the practice in the Chancery Division for over 100 years. If at the trial of these proceedings the plaintiffs turn out to be successful and it is held that the order is invalid, then in the absence of an undertaking the plaintiffs will have suffered irreparable harm and huge losses. These losses would probably, in law, be irretrievable. If because he chooses not to under take no injunction is ordered, no harm will be done to anyone should the plaintiffs succeed at the trial; while in that situation should the Secretary of State succeed problems about adjustment of the joint account proposed before Walton J. would not be insuperable.

It is said that the injunction should go without an undertaking on the usual terms since the order is in the form of a statutory instrument and has been approved by a resolution of both Houses. It is said that it is as effective as a statute and cannot be challenged. If it were a statute, it is accepted that it could not be challenged. But it is not, and being merely

an order it is void if ultra vires. Secondly, it is said that the Crown does not undertake, though that is perhaps no longer said in absolute terms. The Crown says: "Well, the Crown sometimes undertakes, and it is sometimes proper that it should, but this is not a proper case because it is concerned with the enforcement of law." This begs the question: the whole issue in the action is whether the order is law.

The Crown has not made use of its powers under either section 46 of the Patents Act 1949 or the Emergency Laws (Re-enactments and Repeals) Act 1964. [Reference was made to the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948, ss. 2 (a), 3 (1), 6 (1) (2) (6), 7, 8, 9, 10 (1).] The requirements of section 10 (1) (a) to (e) (i) have been satisfied on the face of it, but this is concerned with a report which is, against the plaintiffs, ineffective. By the time the Secretary of State came to make the order which is challenged in these proceedings he was aware of the plaintiffs' contentions in the sense that they had been made public. He must have been aware when he made that third order that the purpose which would be achieved by it was not permitted by the Act, in other words, it was a purpose which would penalise the plaintiffs in respect of the past as opposed to merely remedying current mischiefs in that the prices included in the order would involve the plaintiffs selling at a loss unless they cut their research costs actually being incurred. The relevant power is that under section 3 (4) (c) of the Act of 1965. It is a power which the Secretary of State exercises pursuant to section 3 (1), which makes it clear that he can only do so in the circumstances described in section 3 (1) and for the purpose defined in section 3 (1). That is the purpose of remedying or preventing existing or future mischiefs and not of compensating for past mischiefs. The purpose of the commission was to punish the collection of past large profits, and the prima facie inference is that that was the Secretary of State's purpose too. The point that the commission acted beyond their powers because they made recommendations on a basis which was outside the Act is additional to the point that they acted otherwise than in good faith and did not observe natural justice. The essential conclusions of the report, or perhaps the whole report, were either null or at least bad as against the plaintiffs. Accordingly, the essential condition precedent to the Secretary of State's power to legislate was not present. The conditions upon which and the situation in which the Secretary of State is entitled to make an order as set out in section 10 (1) of the Act of 1948 assume that as against the person affected by the order the report will be a valid report in all its essential conclusions; it will not do, to take an extreme example, that there is a document in the form of a report which has been procured by bribery or something of that sort. Secondly and additionally, both the commission and the Secretary of State proceeded in relation to the recommended prices by reference to a purpose which was not a permitted purpose, either to the commission or to the Secretary of State. Both these points involve in part an investigation of the facts - and in part a question of law. [Reference was made to the Act of 1948, ss. 8, 10 (3), 11 and 20 (1); Monopolies and Mergers Act 1965, s. 3 (1) (3) (4) (11), Sch. 1, Part III, para. 9 (1) (2) (6) (7) and (9); Smith v. Day (1882) 21 Ch.D. 421.]

"Damages," in the context of an undertaking in damages, has the wider

meaning of loss. It is to prevent the plaintiff from turning round and saying: "It is only a moral claim; I am sorry, I am not going to do anything about it" that the undertaking was invented. Smith v. Day, 21 Ch.D. 421 shows that if the defendant succeeds and shows that he has suffered loss he does not have an automatic right to claim it from the plaintiff. He must apply to the court for an inquiry, and on that inquiry the court will consider all the facts. It will consider the justice of the case; for example, whether the plaintiff had notice that the loss was likely to occur, whether the application was made timeously and so on. Thus all that the plaintiffs ask is that if the Secretary of State wishes this interlocutory relief he should get it only on terms that he undertakes to pay if the court later considers it just that he should do so.

On the "natural justice" point, see section 10 of the Act of 1948: the fact that the commission are told to make a report does not in any way detract from the fact that their function is to report their conclusions: see, e.g., condition (e) (i) of section 10 (1) and section 7 (1). It is the duty of the commission to include in their report a determination on the question whether the things done operate against the public interest. In arriving at that determination, it is their duty to act fairly. If their conclusion is not arrived at fairly it is not in law a determination or conclusion or finding at all. Whether it is a nullity or totally void or merely voidable ab initio by the party aggrieved is a difficult question. It does not matter, however, here because if the plaintiffs are successful the determination or conclusion will be held at least as against them not to be a conclusion at all: it will not, therefore, be embodied in the report and the Secretary of State will not have been empowered to act. [Reference was made to Ridge v. Baldwin [1964] A.C. 40.] The commission's breach of natural justice lay both in their finding facts without giving the plaintiffs an opportunity of meeting adequately the case against them and in their drawing a conclusion from the facts without allowing the plaintiffs to put their views; their conclusion, in loose terms, being that the prices charged by the plaintiffs were against the public interest because they gave too high a measure of profit. As to what fairness requires in a case of this kind, see In re Pergamon Press Ltd. [1971] Ch. 388, per Lord Denning M.R., at pp. 399-400. The commission must have adopted some view as to how much should be allowed for research. They did not put that view to the plaintiffs; they did not examine the plaintiffs' research: the plaintiffs did not deal with it. I Reference was made to Furnell v. Whangarei High Schools Board [1973] A.C. 660.]

If at the end of the day the plaintiffs have not shown that the case that there was here injustice or unfairness is strong, the injunction should still go only against an undertaking, because the undertaking will do no harm and may be the only means of securing justice if the plaintiffs are shown to be right when the facts are investigated at the trial. Indeed, the less of a prima facie case there is, the less harm there will be done. It cannot be right that the court simply has to decide whether the plaintiffs' case is strikeable out. The prospects of the defendant's ultimate success are irrelevant: in many cases of applications for interlocutory injunctions the defendant is not present. It cannot be right that he should be in a worse position by turning up and outlining one or two of his points

than if he does not turn up at all. [Reference was made to Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147.] Durayappah v. Fernando [1967] 2 A.C. 337 was misapplied by Lord Denning M.R. in the present case. He was disposed to accept that, if the commission failed to act fairly, their conclusions would be void, and approached the matter on that footing, but he said, referring to Durayappah v. Fernando, that a third party such as the Secretary of State was perfectly entitled to act on them. That was the reverse of what was said in Durayappah v. Fernando: there it was made very clear that in any issue as against the person aggrieved the matter was either totally void or void ab initio. Here, the plaintiffs are persons aggrieved.

The argument that the Secretary of State is not empowered to make any order under section 3 unless it is an order directed to the purpose of remedying a current mischief or an expected future mischief overlaps the concept of ultra vires. That is, taking into account matters which ought not to be taken into account renders the act void. Whether the Secretary of State legislates for an impermissible purpose can be a subjective or an objective question. To make any valid order under section 3 (4) of the Act of 1965 the circumstances described in section 10 (1) must be present. The Secretary of State must, however, also fall within the remaining words of section 3 (1), and these refer to the formation by him of an opinion, which is related to whether mischiefs result or may be expected to result. The Secretary of State's opinion on that is conclusive in a narrow sense; that is to say, his opinion is the one that matters but it is subject to bona fides and so forth. As to "remedying," there is nothing to remedy about what has happened in the past, and, on the true construction of the Act, "remedying" is not dealing with something which has already occurred. Sydney Municipal Council v. Campbell [1925] A.C. 338, 338-339 shows that if the permitted purpose is departed from the order in question is invalid and that whether it is departed from or not is a question of fact to be gone into on the evidence; there are many other cases to the same effect. The dictum of Lord Radcliffe in Smith v. East Elloe Rural District Council [1956] A.C. 736, 769, to the effect that the order "bears no brand of invalidity upon its forehead" so that, in effect, there is nothing much that one can do about it, has been misapplied: Lord Radcliffe really said nothing of the sort in respect of an attack made on an order, such as that made here, on the basis that the legislative purpose has been departed from. What he was saying was that unless one could attack the order it would stand and that there was in that case an exclusion provision saying that one could not attack it: he was not intending to say that, had it been open to attack, it could not have been avoided ab initio; see also per Lord Somervell. The present proceeding is not a summons to strike out, and it is enough to say that there is a plausible argument for saying that this order, though it bears no brand of invalidity on its forehead, is open to attack by showing that the Secretary of State has used it for a purpose which is not a permitted purpose. For the purpose of the order, the purpose must be one which exists at the time of making the order. For the purpose of the commission's recommendation under section 7 (2) of the Act of 1948 the purpose must exist at the time of their report. The Secretary of State cannot say: "It is true that at the last moment you have got your prices down to a reasonable

amount; I am but going to do something to recoup the past inequities." One does not remedy the fact that people paid unfairly high prices in the past by undercharging others now.

The Secretary of State need not follow the commission's recommendation, but in fact, significantly, he does, absolutely. It is a reasonable inference that he must have done so for their reasons: cf. Padfield v. Minister of Agriculture, Fisheries and Food [1968] A.C. 997. [Reference was made to Webb v. Minister of Housing and Local Government [1965] 1 W.L.R. 755.]

The plaintiffs here have a prima facie case on many points, and this is sufficient to make it right that this undertaking should be given. It is not appropriate to investigate and form a judgment at this early stage upon whether the many pleas in the statement of claim are good or not. This is so even where there is a pending application to strike out the statement of claim; irreparable harm could be done to the plaintiffs in the meantime whereas the undertaking could do the Secretary of State no harm. It is a matter for the court's discretion what is the machinery which at the end of the day is likely to balance the considerations of justice and convenience.

As to whether there is a difference between litigating about private rights on the one hand and defiance of what is for the moment of the law of the land on the other, it begs the question to say that one should not be able to flout the law. The proposition of the Secretary of State must rather be that one cannot flout that which bears no mark of invalidity on its forehead but which turns out not to be the law. There is no difference between defying private rights and defying the law. Such cases as there are, and they are unsatisfactory, which suggest that the Crown has some sort of privilege not to give undertakings are cases on private rights. There are no cases in which it has been suggested that because an apparent law was being enforced there should be no undertaking. Nor are there any cases where the Crown has sought an injunction to enforce the law and given an undertaking. The practice in relator actions is for the relator to give an undertaking. It is true that if a final injunction is given and then the Court of Appeal says that it ought never to have been made the defendant will have no redress against any damage which he may in the meantime have suffered. It is not the practice in the majority of cases that the undertaking is continued pending appeal provided notice of appeal is lodged within a specified time. There are, however, many cases in which one may suffer irreparable harm by abiding by a decision of a court which is subsequently found to be wrong. It has become automatic to require an undertaking when an interlocutory injunction is sought. This is an equitable remedy which has been moulded by the courts with a view to seeing that the minimum of injustice is done. It makes no difference to that that the Crown is the party seeking the injunction. Nor would it make any difference if the Crown itself had no financial interest in the result of the case. The Crown would probably accept that in many cases it would be appropriate for it to be put on an undertaking when it is asking for an interlocutory injunction. [Reference was made to Graham v. Campbell (1878) 7 Ch.D. 490, 494-495; Seton's Judgments and Orders, 7th ed. (1912), vol. I, 509, and Halsbury's Laws of England, 3rd ed., vol. 21 (1957), para. 775, pp. 369-370, paras. 887, 888, 890. pp. 422-423, vol. 11 (1955), para. 25, p. 16.] Howard v. Press Printers Ltd. (1904) 74 L.J.Ch. 100 shows that the reason

for the desirability of attaching the undertaking is to retain in the court the power to do justice at the end of the day. The Crown here is arguing that it should not undertake to pay even what the court may ultimately consider to be just. At the end of the day the Crown, even if it turns out to be wrong, would still be entitled, having given an undertaking, to argue that it was reasonable for it to take the line which it did take in order to enforce what it thought was the law and that it should not, accordingly, have to pay damages: see Graham v. Campbell, 7 Ch.D. 490. At the present stage, however, one does not know, and cannot know, whether the line which the Secretary of State is taking is reasonable. The Crown here is seeking to make a big saving by turning out to be wrong. The plaintiffs ought to be entitled to be recompensed by the Crown for all that they may lose even though the Crown makes no profit. But the present case is particularly striking because if the Crown gets an injunction without having to undertake but thereafter fails in the action it is the Crown itself which will have made a great and undeserved pecuniary gain at the expense of those who will have been precluded from doing that which ex hypothesi it was really their legal right to do.

Even a final injunction is a discretionary remedy. Even if section 11 of the Crown Proceedings Act 1948 makes a difference to the position in the case of the Crown, that does not affect the position on an interlocutory application. The provisions of section 11 (2) are not apposite in relation to an application for interlocutory relief: cf. Post office v. Estuary Radio Ltd. [1967] 1 W.L.R. 847; [1968] 2 Q.B. 740.

The point raised by Lord Denning M.R. that this order, having been approved by both Houses, is an effective as a statute would probably be conclusive of the case if it were right, but it is not. It would be a point of the highest constitutional importance if it were. Rex v. Electricity Commissioners, Ex parte London Electricity Joint Committee Co. (1920) Ltd. [1924] 1 K.B. 171 shows that a mere resolution of both Houses cannot validate an order which the enabling Act itself gives no power to make or which represents an abuse of the power given by the enabling Act. Nothing is as effective as a statute; the only sovereign power is Parliament in the constitutional sense. [Reference was made to S. A. de Smith, Judicial Review of Administrative Action, 3rd ed. (1973), pp. 416-417; Allen, Law in the Making, 7th ed. (1964), p. 563.]

The Crown has always been able, even without a relator, to proceed of its own motion for an injunction where it is seeking to say that it is claiming to enforce law as a matter of public interest.

The technically correct position is that a judge, in granting an interlocutory injunction, does not grant it against breaking a contract or the law; he grants it against doing certain acts. Certainly that would be the position ex parte before the defendant is heard. [Reference was made to Rigby v. Great Western Railway Co. (1846) 2 Ph. 44 and Sanxter v. Foster (1841) Cr. & Ph. 302.]

It is the voluntary litigant who brings the action, not the involuntary litigant who is hauled before the court, who should pay if the former is held at the trial to be wrong.

Sir Peter Rawlinson Q.C., Kenneth Jupp Q.C., Gordon Slynn and Peter Gibson for the Secretary of State. The Secretary of State's submissions are

made in the context of the unique character of the present litigation. The plaintiffs are challenging the right of the Crown to enforce the law except on terms with which they demand the Crown should comply. What they do today, others may do tomorrow. There is no other way in which the Crown can enforce this law. Nor should the world-wide operations of the Roche Group be overlooked. Talk of the loss of £8,000,000 which the plaintiffs might suffer if this injunction were granted should be seen in this context: such a loss would not be disastrous for a group of this size.

It is accepted that the Department of Health and Social Security has no legal claim in respect of the £11,000,000 which the commission thought ought to be repaid. For the purposes of this appeal only, the Secretary of State accepts that there is a duty on the commission to be fair. The commission is not a party to this appeal, and might take a different view.

Where a person is defying what would appear to be the law, and argues that it is not the law and that he has been treated unfairly, it is only right that the court should look to see whether there is any validity in the submission. There was no breach of natural justice here. The special statutory procedure in this case never contemplated the giving of an undertaking as a condition of being able to enforce the law pursuant to it. First, the statute excludes undertakings; secondly, and alternatively, whereas in ordinary litigation there is a strong presumption in favour of an undertaking, in a case such as the present there is a strong presumption against it.

The cases over a long period show that no undertaking has been required from the Crown generally. Secondly, when the Crown is enforcing the law, especially law which provides only for a particular form of enforcement and excludes criminal proceedings, certainly no undertaking is required, even if some breach of the Crown is saved money in the result. Indeed, there will be no case in which some branch of the Crown will not be saved money. Alternatively, one can have regard to the weakness of the defendants' case. [Reference was made to Maxwell v. Department of Trade and Industry [1974] Q.B. 523.]

What the plaintiffs allege here in relation to "illegitimate purposes" is not quite the same as having an ulterior motive or purpose. The commission are entitled and obliged to look to the past to see whether there exists a current mischief, and to see, in the manufacturer's own interests, whether he in the early years of marketing provided sufficient to recover the costs of development and research for the particular product. This is what the commission here did: they were not trying to remedy past mischiefs, but to prevent excessive future prices.

For over 100 years the cases show that no undertaking has been required from the Crown, though in one it was said that there might be circumstances in which that might be done. It may be that in matters of proprietary right the principle that "the Crown does not undertake" is no longer compatible with the present philosophy of the law in relation to the Crown. Where, however, the Crown is enforcing the law, certainly no undertaking is required, and, indeed, it may be that no undertaking could be given by any Minister of the Crown. The philosophy behind this is that the Crown is in a position different from that of the ordinary litigant; it is acting in the public interest. The "rule" does not appear to be a mere relic of the Middle Ages in that in only two cases since 1947 has there been an undertaking

taking taken from the Crown, one of those instances being through the mistake of a registrar. It may be that in certain circumstances when seeking to enforce a proprietary right the Crown might be required to give an undertaking, but never when seeking to enforce the law. It would be wrong and impracticable for the Crown, when seeking to enforce the law, to be put on terms.

[LORD CROSS OF CHELSEA. The procedure under section 11 of the Crown Proceedings Act 1947 might be invoked and an interim injunction asked for when there was no question of the law being invalid but the defendant simply said that on the true construction of the order what he was doing was not a breach of it. Why, in that case, if the Crown wants an interim injunction, should not an undertaking be given?]

The Crown might then never enforce the law, and there would be no one else to do it. The Crown would probably not ask for an injunction in a case where there was a question of construction. The proper rule for the Crown in a case of this sort is to seek an injunction rather than take criminal proceedings, which may not be an adequate remedy. [Reference was made to Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696.] The Crown should use its discretion before seeking an injunction which might put a person in a position in which he would lose money. There could also be a speedy trial. The view taken in the Albany Hotel case may have been that the Crown should not in an uncertain case get an injunction, but it either gets an injunction or it does not, as Walton J. said in the present case. [Reference was made to Secretary of State for War v. Cope [1919] 2 Ch. 339.]

[LORD REID. The probability is that this rule goes back to the days when it was regarded as unseemly that the Sovereign should appear before his own court and be dealt with as if he were a subject.]

That is doubtful: it is more likely to be a question of enforcing the law.

[LORD REID. The distinction now sought to be drawn between proprietary rights and law enforcement appears to be a complete innovation.]

That may be. [Reference was made to The Supreme Court Practice1973, p. 455, note 29/1/20 and to the Annual Practice (1902), vol. 1, pp. 680-681, Ord. 50, r. 6, note.] That the Crown does not undertake is the reason for the express provision in section 21 (1) of the Crown Proceedings Act 1947 that one cannot get an injunction against the Crown, only a declaration. The remedy for breach of an injunction, as for breach of an undertaking, would be proceedings for contempt of court, and the Crown could not be liable to such proceedings. [Reference was made to section 21 of the Crown Proceedings Act 1947; to Spry, Equitable Remedies (1971), pp. 436-437; and to Reg. v. Kent Justices, Ex parte Lye [1967] 2 Q.B. 153.] In providing for the sort of enforcement procedure laid down by the Acts of 1948 and 1965 in the present case, Parliament must have had in mind the procedure laid down for nearly 100 years in respect of the Crown. That procedure should not be altered now. The Secretary of State does not support the view of Lord Denning M.R. in the present case that the effect of the two resolutions was that the court had no power to declare invalid an order which on the face of it appeared to be good, but when an order does appear to be good then the court will enforce it until it has pronounced on whether it is void or voidable. For the court to require an undertaking

from the Crown it would certainly be necessary that the order or the report leading to it should be demonstrably invalid on the face of it in some identifiable way.

If the Secretary of State were to agree to the "Green Shield stamps" idea approved by Walton J., ante, p. 307C-D, he would be conniving at breaking the law. It might be wiser simply to give the undertaking. There would be practical difficulties. [Reference was made to Rigby v. Great Western Railway Co., 2 Ph. 44 and Harper v. Secretary of Stale for the Home Department [1955] Ch. 238.] When considering this matter in justice and equity one is entitled to bear in mind that the machinery preceding the order afforded the opportunity of control by Parliament. This reflects on the weight which courts should give to a defence which challenges the whole basis of the validity of the order.

In summary: (1) For more than 100 years the courts have not required this undertaking by the Crown. This was the procedure which was in effect at the time when Parliament laid down the method of law enforcement against monopolies in order to cure this particular public mischief. The propriety of the courts changing that is open to question. Parliament would have been presumed to have taken this procedure into account. (2) lf it is right that no general rule applies, excluding those cases in which the Crown has a proprietary right akin to the right of the ordinary citizen seeking an interim injunction in pursuance of a proprietary right, as a matter of principle where law enforcement is limited to this method and it is impracticable to distinguish between cases in which the Crown has a direct interest and those in which it has an indirect interest, the Crown should not be called on to give an undertaking. (3) If an undertaking can be asked of the Crown even when enforcing the law, and if it is a case where a speedy trial is not practicable, the court is entitled to look at the nature of the defence in exercising its discretion whether or not to grant an injunction and to call for an undertaking by the Crown. Where the defence impugns the validity of the order, bearing in mind the statutory provisions which must necessarily precede the making of such an order, the court can take into account the fact that the order has in fact been considered by both Houses of Parliament and in such circumstances would refuse to accede to any demand for an undertaking.

Principally, however, this is a matter of law enforcement. No public officer in performing such a public duty such as that in the present case should be put on terms and conditions at any time.

MacCrindle Q.C. in reply. It is a fallacy to say that in this case the Crown is seeking to enforce the law. The present application concerns what is done pending the trial of this ease when it will be decided whether the order is the law. It is contrary to principle to proceed on the assumption that the claim of the plaintiffs will fail. The starting point here is section 45 of the Supreme Court of Judicature (Consolidation) Act 1925 and section 21 (1) of the Crown Proceedings Act 1947. On the face of it, by virtue of those two provisions the court can approach the present case as it would approach any ordinary case: it should look at the facts and the issues and impose such terms, if any, as it thinks just.

There is no possible reason for the Crown io resist the giving of this undertaking other than that it does not want to have to pay if it is wrong.

To say that the prospect of having to pay would deter it from its duty to enforce the law would apply equally to costs: the Crown, if unsuccessful, would say: "If you ask us to pay the costs it will act as a deterrent in future against doing our public duty." A relator is also seeking to enforce the law, but he has to give an undertaking and pay costs if he loses. It is not conceded that the Crown has any duty to enforce the law other than on the usual terms. Nor can it matter what the nature of the defence is, if there is an arguable defence. If in the end the defence succeeded it would make no difference what its nature was. Nor can it matter whether the plaintiff's case is reasonable. It might be argued that it depends on the strength of the defence, but this would be extraordinarily difficult to assess at the interlocutory stage.

Equally, the concept that the Crown is under a duty to ask for this relief, that is, this type of interim relief, is very strained. At most, it is under a duty to ask for the injunction on terms that may be just. It is a little hard to say that the plaintiffs are flouting the law when they put their prices down the day the order was published. An interim injunction cannot be given in this case on terms that are just unless there is some sort of undertaking to protect their position if they turn out to be wrong.

If there is to be no undertaking here, there should be a speedy trial.

It would be wrong to say that the "Green Shield stamps" arrangement would be a connivance by the Crown at a breach of the law. The just order in this case is that made by Walton J., but at all events some order is cried out for if the injunction is to ensure that at the end of the day an illicit gain is not made by the Crown and an irreparable loss is not suffered by the plaintiffs.

Their Lordships took time for consideration.

July 3. LORD REID. My Lords, in recent years a number of very successful new drugs have been discovered and put on the market. The discovery of a new drug is generally unpredictable. Several large international companies have engaged in extensive research. Most of it is unproductive but occasionally a valuable discovery is made. The practice of these companies is to recover the cost of their unproductive research by increasing the selling price of their successful products. No one objects to that system in principle but obviously there is room for much difference of opinion as to how far it can fairly be carried. And there is also the question of what is a fair profit on such sales.

The appellants are related companies some of which spend very large sums on such research. They discovered and have marketed since about 1963 two new tranquillisers which they sell under the names Librium and Valium. These drugs are obtainable from chemists on doctors' prescriptions. They became very popular and we are informed that before the proceedings to which I shall later refer sales in this country brought in some £10,000 per day.

A very large proportion of these sales are under the National Health Service. The patient is only charged a small fee by the chemist and the chemist recovers from the Department of Health and Social Security the balance out of which he has to pay for the drugs plus his profit. So if the manufacturer overcharges for his drugs the department is the loser.

For years before 1971 the department thought the selling price of these drugs much too high but they were unsuccessful in getting a sufficient reduction. So the machinery of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 and the Monopolies and Mergers Act 1965 was set in motion. There was a reference to the Monopolies Commission in September 1971, and after long inquiries the commission reported in February 1973. In paragraph 217 of their report the commission say:

"We conclude, therefore, that the determination of the level of prices at which chlordiazepoxide and diazepam^* are supplied (which we have found in paragraph 205 to be a thing done by Roche Products as a result of, and for the purpose of preserving, the conditions) operates and may be expected to operate against the public interest."

In paragraph 235 they say:

"Among the points we bear in mind in reaching a conclusion on the appropriate level of prices in future are the following: (a) Even if we could accept the cost figures in appendix 5, table 2. fair prices based upon these costs might have been lower than those actually charged in 1970 by at least 40 per cent. for Librium and at least 50 per cent. for Valium (paragraph 230). (b) For reasons we have given in detail (paragraphs 219-227) we are satisfied that some of the cost figures referred to - in particular those for research and promotion costs - grossly exceed the levels that should be taken into account to arrive at fair prices. It follows that fair prices should in any case be substantially below the levels indicated in (a). (c) There are no grounds for maintaining the particular price differential between Valium and Librium which existed in 1970 (paragraph 228). (d) The excessive prices charged up to the present have already produced excessive profits on a very large scale (paragraph 234). Although we have made a number of calculations in an attempt to quantify the effects of (b) and (c) above, none has proved entirely satisfactory having regard to our incomplete knowledge of the business of the Roche Group. But in the event this scarcely matters in the light of (d)."

In paragraph 237 they say:

"We recommend that Roche Products' selling prices for the reference drugs should be reduced (i) as regards Librium, to not more than 40 per cent. of the selling prices in 1970, (ii) as regards Valium, to not more than 25 per cent. of the selling prices in 1970, (iii) as regards other drugs covered by the reference, by corresponding proportions as may be determined by [the Department of Health and Social Security]."

The Acts provide for orders being made consequent on a report of the Monopolies Commission and accordingly the Regulation of Prices (Tranquillising Drugs) Order 1973 (S.I. 1973 No. 720) was made and came into operation on April 23, 1973. By virtue of provisions in the Acts such an order ceases to have effect after 28 days unless there have been affirmative resolutions of both Houses of Parliament. The order was sent to the

* Marketed by the appellants under the trade names Librium and Valium.

Special Orders Committee of this House and the appellants were heard at some length. So the order ceased to have effect for want of an affirmative resolution in due time and so did a second order [Regulation of Prices (Tranquillising Drugs) (No. 2) Order 1973 (S.I. 1973 No. 925)]. But a third order, the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973 (S.I. 1973 No. 1093), which came into operation on June 25, 1973, was duly approved by both Houses.

The No. 3 order narrated, as did the earlier orders, that it appeared to the Secretary of State on the facts found by the Monopolies Commission that the prices charged were or had been such as to operate against the public interest. It then adopted the recommendation of the Monopolies Commission and prohibited the appellants from charging more than the prices set out in the Schedule.

On June 25, 1973, the appellants brought the present action against the respondent claiming declarations that the Monopolies Commission bad proceeded unfairly and in a way contrary to natural justice, that the findings, conclusions and recommendations in their report were invalid and of no effect and that the order to which I have referred was ultra vires, invalid and of no effect.

On June 28, 1973, the respondent sought an injunction restraining the appellants from charging prices in excess of those specified in the No. 3 Order and also sought an interim injunction. Walton J. on an undertaking given by the appellants refused to grant an interim injunction but the Court of Appeal allowed an appeal by the respondent.

Section 11 of the Act of 1948 provides for the enforcement of orders made under this legislation:

"(1) No criminal proceedings shall lie against any person by virtue of the making of any order under the last preceding section on the ground that he has committed, or aided, abetted, counselled or procured the commission of, or conspired or attempted to commit, or incited others to commit, any contravention of the order. (2) Nothing in subsection (1) of this section shall limit any right of any person to bring civil proceedings in respect of any contravention or apprehended contravention of any such order, and, without prejudice to the generality of the preceding words, compliance with any such order shall be enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief. ..."

It will be seen that there is no reference in this section to interim injunction, but it is not disputed that the court has power to grant interim injunctions. The question in this appeal is in what terms such an injunction should be granted.

An interim injunction against a party to a litigation may cause him great loss if in the end he is successful. In the present case it is common ground that a long time - it may be years - will elapse before a decision can be given. During that period if an interim injunction is granted the appellants will only be able to make the charges permitted by the order. So if in the end the order is annulled that loss will be the difference between those charges and those which they could have made if the order had never been made. And they may not be able to recover any part of that

loss from anyone. It is said that the loss might amount to £8m. The appellants' case is that justice requires that such an injunction should not be granted without an undertaking by the respondent to make good that loss to them if they are ultimately successful.

The respondent's first answer is that when an interim injunction is granted to the Crown no undertaking can be required as a condition of granting it. It is not in doubt that in an ordinary litigation the general rule has long been that no interim injunction likely to cause loss to a party will be granted unless the party seeking the injunction undertakes to make good that loss if in the end it appears that the injunction was unwarranted. He cannot be compelled to give an undertaking but if he will not give it he will not get the injunction.

But there is much authority to show that the Crown was in a different position. In general no undertaking was required of it. But whatever justification there may have been for that before 1947 I agree with your Lordships that the old rule or practice cannot be justified since the passing of the Crown Proceedings Act of that year. So if this had been a case where the Crown were asserting a proprietary right I would hold that the ordinary rule should apply and there should be no interlocutory injunction unless the Crown chose to give the usual undertaking.

But this is a case in a different and novel field. No doubt it was thought that criminal penalties were inappropriate as a means of enforcing orders of this kind, and the only method of enforcement is by injunction. Dealing with alleged breaches of the law is a function of the Crown (or of a department of the executive) entirely different in character from its function in protecting its proprietary right. It has more resemblance to the function of prosecuting those who are alleged to have committed an offence. A person who is prosecuted and found not guilty may have suffered serious loss by reason of the prosecution but in general he has no legal claim against the prosecutor. In the absence of special circumstances I see no reason why the Crown in seeking to enforce orders of this kind should have to incur legal liability to the person alleged to be in breach of the order.

It must be borne in mind that an order made under statutory authority is as much the law of the land as an Act of Parliament unless and until it has been found to be ultra vires. No doubt procedure by way of injunction is more flexible than procedure by prosecution and there may well be cases when a court ought to refuse an interim injunction or only to grant it on terms. But I think that it is for the person against whom the interim injunction is sought to show special reason why justice requires that the injunction should not be granted or should only be granted on terms.

The present case has a special feature which requires anxious consideration. As I have already indicated, the Crown has a very large financial interest in obtaining an interim injunction. The Department of Health will reap a large immediate benefit from the lower prices set out in the order at the expense of the appellants. If in the end it were decided that the order was ultra vires those prices ought never to have been enforced, the department ought never to have had that benefit and the appellants would have suffered a large loss. So why should the respondent not be

required to give the undertaking which the appellants seek as a condition of getting the interim injunction?

But, on the other hand, the order which the appellants seek to annul is the law at present and if an interim injunction is refused that means that the law is not to be enforced and the appellants are to be at liberty to disregard it by charging forbidden prices. And the matter does not stop there. Doctors will continue to prescribe these drugs. Chemists will have to pay the forbidden prices if the public are to be provided with drugs which doctors think they ought to have. And chemists cannot be expected to pay the appellants' prices unless the department is willing to reimburse them. So the department will have to acquiesce in and indeed aid and abet the appellants' breaches of the law if the medical profession and the public are to get what they are entitled to.

It is true that the appellants have proposed an ingenious scheme which they would undertake to operate if an interim injunction is refused. The effect of it would be that they would continue to charge the forbidden prices but that if the order were ultimately held to be intra vires they would repay the difference between the forbidden charges which they had made and the lower charges which they ought to have made. The scheme would involve considerable practical difficulties and would probably not be fully effective, but I shall not discuss those difficulties because the serious objection would remain that the law laid down in the order is to be disregarded until the case is decided.

My Lords, if I thought that the appellants had a strong case on the merits I would try to stretch a point in their favour to protect them from obvious injustice though I would find difficulty in doing so. It is true that although we heard a good deal of argument on the merits we are not in a position to express any firm opinion as to the appellants' prospects of success. But if it is for them to show us at this stage that their case is so strong that they are entitled to some special consideration, I can say that they have completely failed to convince me that they have a strong prima facie case.

I would therefore dismiss this appeal.

LORD MORRIS OF BORTH-Y-GEST. My Lords, we are concerned in this case with an application which was made by the Crown for an injunction to enforce an order made by the Secretary of State which recited that it had been made in the exercise of statutory powers vested in him. The order was one which had received the approval by resolution of each House of Parliament. Contravention of the order did not attract criminal proceedings but civil proceedings could be brought by any person in respect of a contravention or apprehended contravention of the order. In particular, as was provided by statute, the order was enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief.

The order which the Crown sought to enforce made it unlawful to sell certain goods at prices exceeding those laid down. The order was made because it appeared to the Secretary of State (on the basis of certain facts found) that the prices previously charged for the goods had been such as to operate against the public interest. The Secretary of State made the

order with a view to remedying or preventing certain mischiefs. They were the mischiefs which "in his opinion" resulted or might be expected to result "from the things" which according to a report of the Monopolies Commission operated or might be expected to operate against the public interest.

The function of the Secretary of State was to promote the public interest by dealing with the mischiefs which may arise if there are conditions of monopoly or restriction. The plan adopted by Parliament was to set up machinery to inquire whether such conditions existed. If the supply of certain goods (or the application of processes) is considerably under the control of one person there is the risk that prices may be charged which exceed those which purchasers or others ought fairly to be expected to pay. Such a state of things may operate against the public interest.

The legislative scheme adopted by Parliament to deal with the "mischiefs" which may arise from monopoly conditions resulted in the passing of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 and of the Monopolies and Mergers Act 1965. The first of these, under which the Monopolies and Restrictive Practices Commission was constituted, was an Act

"to make provision for inquiry into the existence and effects of, and for dealing with mischiefs resulting from, or arising in connection with, any conditions of monopoly or restriction or other analogous conditions prevailing as respects the supply of, or the application of any process to, goods, buildings or structures, or as respects exports."

The Act of 1965 made further provision with regard to the constitution and proceedings of the Monopolies Commission and with regard to matters dealt with in the Act of 1948 and furthermore made provision for preventing or remedying "mischiefs" which may result from mergers of businesses or similar transactions.

The Act of 1948 laid down the meaning of the phrase "conditions to which this Act applies." Section 3 laid down its meaning in relation to supply, section 4 in relation to processing and section 5 in relation to exports. Under section 2 (1) if it appeared to the Board of Trade that it was or might be the fact that the "conditions" prevailed, there could be a reference to the commission. Section 6 dealt with the scope of references to the commission and section 7 with the duties of the commission on a reference. The opening words of section 9 provide as follows:

"When the commission report to the Board of Trade on any matter referred to them under the preceding provisions of this Act for investigation and report, the board may, and, unless the reference was so framed as to limit the investigation and report to the facts, shall, lay the report before each House of Parliament: ..."

The powers of the competent authority thereafter to make orders derive from various provisions in section 10 of the Act of 1948 and section 3 of the Act of 1965.

For an appreciation of the issues raised in the appeal it will be helpful to refer to the sequence of dates and events which preceded the making of the order compliance with which the Crown sought to enforce. The order

is S.I. 1973 No. 1093. It is the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973.

The reference to the Monopolies Commission to which this case relates was made on September 14, 1971. It was made in exercise of the powers given by section 2 (1) of the Act of 1948. It referred to the commission for investigation and report the supply in the United Kingdom of two descriptions of goods, which consisted of tranquillising drugs. The drugs in question were manufactured by the Roche Organisation and were sold under the trade marks "Librium" and "Valium." The active ingredients of these are manufactured by Roche Group companies outside the United Kingdom. The ingredients are imported in bulk by Roche Products Ltd. who make them up into tablets or capsules or in some other suitable form. The drugs are protected in this country by United Kingdom patents which expire in one case in 1975 and in the other in 1976.

The drugs are only obtainable upon a doctor's prescription. As most people in this country (over 90 per cent.) are within the National Health Service, the result is that retail chemists who buy from wholesalers are reimbursed by the Department of Health and Social Security. It is not necessary to set out the precise details of the arrangements but it is apparent that if excessive prices have been charged in the past that will have been to the detriment of that department and that if for the remainder of the patent periods and for the future the prices are very considerably reduced the result will be to the benefit of that department.

The reference directed the commission to investigate and report whether the "conditions" (see in particular section 3 of the Act of 1948) in fact prevailed. Section 3 (1) of the Act of 1948 is in the following terms:

"Conditions to which this Act applies shall be deemed for the purposes of this Act to prevail as respects the supply of goods of any description if either - (a) at least one-third of all the goods of that description which are supplied in the United Kingdom or any substantial part thereof are supplied by or to any one person, or by or to any two or more persons, being inter-connected bodies corporate, or by or to any such two or more persons as are described in subsection (2) of this section; or ..."

If the commission found that such conditions did so prevail they were instructed thereafter to confine their investigations to the question whether and to what extent "the following thing" was done by the parties concerned as a result of or for the purposes of preserving the "conditions" [Report, Introduction, para. 1]. "The following thing" was defined as being "... the determination of the level of the prices at which each of the two descriptions of goods hereinbefore specified are supplied, ..."

If the commission so held they were to consider whether "such thing" operated or might be expected to operate against the public interest.

Shortly and broadly stated it appears, therefore, that the commission in the reference now in question were directed to report (after investigation) as to three questions, viz. (a) did what might be called monopoly conditions prevail in regard to the supply of the drugs in question? (b) if so, were the price levels on the supply of the drugs determined as a result of or for the purposes of preserving the monopoly conditions? and (c) if so, did that operate against the public interest or might it be expected so to operate?

It is to be observed that if the commission answered those questions affirmatively they were under no obligation to make recommendations as to how a Minister should deal with the situation. If they made recommendations the Minister was in no way obliged to accept them. It would be entirely for the Minister to form his own opinion as to what course to follow.

Section 8 of the Act of 1948 deals with the procedure and powers of the commission on references. Section 8 (1) is in the following terms:

"The procedure of the commission in carrying out any investigation where a matter has been referred to them under the preceding provisions of this Act for investigation and report shall be such as the commission may determine, and in particular the commission shall have power to determine the extent, if any, to which persons interested or claiming to be interested in the subject matter of the reference are allowed to be present or to be heard, either by themselves or by their representatives, or to cross-examine witnesses or otherwise take part in the investigation of the commission, and the extent, if any, to which the sittings of the commission are held in public: Provided that where any person appearing to the commission to be substantially interested, or any body appearing to the commission to represent substantial numbers of persons substantially interested, submits to the commission any representations relating to the subject matter of the reference, the commission shall consider those representations and shall, unless in all the circumstances they consider that it is not reasonably necessary or is not reasonably practicable so to do, permit that person or body to be heard orally by the commission or by a member of the commission nominated by the commission for that purpose."

Seven members of the commission (including the chairman) discharged the functions of the commission in relation to the investigations under the reference. No suggestion has been made that the commission was not properly constituted.

The report of the commission in its introduction records as follows:

"3. We received written and oral evidence from Roche Products Ltd. Written and oral evidence was also given by the Department of Health and Social Security, Berk Pharmaceuticals Ltd. and D.D.S.A. Pharmaceuticals Ltd. We received written evidence from the Association of the British Pharmaceutical Industry and several other witnesses."

The introduction further records that on May 19, 1972, the commission informed Roche Products Ltd. of their provisional conclusion that conditions to which the Act of 1948 (as amended) applied prevailed in respect of the supply in the United Kingdom of the drugs in question. They informed the company of the issues that required consideration in deciding whether and to what extent the determination of the level of prices was a thing done as a result of, or for the purposes of preserving the conditions, and if so, whether it operated or might be expected to operate against the public interest. With the letter of May 19, 1972, there were three annexes extending in all to over 20 pages: the first contained a summary of the facts which might be relevant concerning Roche Products Ltd. and the

reference goods; the second set out points for consideration arising out of annex 1; the third set out a list of complaints and criticisms which might be taken into account by the commission. Roche Products Ltd. made certain representations in writing to the commission. The report also records that later (i.e., in October 1972) representatives of that company and the Roche Group attended a hearing for the purpose of discussing those matters The company was also represented by counsel at that meeting. At the meeting the chairman of the commission called attention to and specified various considerations of which account would have to be taken.

The report of the Monopolies Commission (in a document of some 80 pages of print) was signed in the following year. It was signed on February 13, 1973. To each of the three questions which I have summarised above the commission gave an affirmative answer. Thus in regard to (a) they reported (in paragraph 195) as follows:

"We conclude, therefore, that conditions to which the Act applies prevail as respects the supply of (i) chlordiazepoxide and salts thereof, and (ii) diazepam and salts thereof, because Roche Products supplies at least one third of the reference goods of each of these two classes which are supplied in the United Kingdom."

In regard to (b) they reported (in paragraph 205) as follows:

"We therefore conclude that the determination of the level of prices at which chlordiazepoxide and diazepam are supplied is a thing done by Roche Products as a result of, and for the purpose of preserving, the conditions which we have found to prevail as respects the supply of each of these products."

In regard to (c) they reported (in paragraph 217) as follows:

"We conclude, therefore, that the determination of the level of prices at which chlordiazepoxide and diazepam are supplied (which we have found in paragraph 205 to be a thing done by Roche Products as a result of, and for the purpose of preserving, the conditions) operates and may be expected to operate against the public interest."

Having set out that their principal reason for finding that the determination of price levels by Roche Products was against the public interest was that prices for some years had been "manifestly too high" (paragraph 218), they said that the principal remedy for consideration was one which would establish fair maximum price levels. They recorded that the problems involved in such consideration were threefold. The first was concerned with the questions as to what costs should be taken into account. They examined costs such as those involved in sales promotion and those referable to central overheads and in particular they examined and gave consideration to research costs. Their conclusion in regard to research costs was that they were substantially higher than could be accepted as reasonable in relation to fair selling prices: and that the group's current research expenditure had been inflated by the use of excess profits to a point at which it ceased to be reasonable to regard the expenditure as fully recoverable from current sales. The second problem was concerned with the level of profit that could be regarded as reasonable if the commission

were determining what should have been fair prices up to the date of the investigation. The third problem was concerned with the extent to which the excessive prices thitherto charged must be brought into the reckoning. In regard to the last of these they said that it could only be a matter of judgment as to what was the stage when undue exploitation of success could be said to begin. They had no doubt that such stage had long been passed.

Having considered all these matters they recommended that the selling prices for the reference drugs should be very considerably reduced: in one case to not more than 40 per cent. of the selling price in 1970 and in another case to not more than 25 per cent. of the selling price in 1970. In making these recommendations they said (paragraph 236):

"No future price which it is practicable to recommend for the reference drugs could take full account of the excessive profits which have been made on them at the expense of the NHS [National Health Service] in the past and will continue to be made until the prices are reduced. This damage could be remedied by the repayment of large sums to DHSS [the Department of Health and Social Security]. Such repayment could be made as a result of negotiations between DHSS and the Roche Group and we think it desirable that negotiations to this end should take place. The prices we are recommending could be considered more than adequate in the light of the facts revealed in our report and particularly so were there to be no repayment of past profits. We certainly see no room for argument that in recommending what may appear to be drastic reductions we are being unduly severe."

The commission having reported on February 13, 1973, it became a matter for the Minister to form his opinions. It became a matter for him to decide whether to take any action that was within his powers. Under section 3 (1) of the Act of 1965 it is provided that if there are the circumstances described in section 10 (1) of the Act of 1948 (as amended) then

"... the Board of Trade, for the purpose of remedying or preventing any mischiefs which in their opinion result or may be expected to result from the conditions or things which, according to the report of the commission as laid before Parliament, operate or may be expected to operate against the public interest, may by order (whatever the recommendation, if any, made by the commission) exercise all or any of the powers conferred by subsections (3) to (7) below."

It seems to me to be clear that it was for the Board of Trade to form opinions and to make decisions.

The report of the commission was laid before Parliament on April 11, 1973. The circumstances described in section 10 (1) of the Act of 1948 (as amended) applied. There had been a reference to the commission for investigation and report, the reference was not so framed as to limit the investigation and report to the facts; the report had been laid before Parliament; according to that report conditions prevailed to which the Act of 1948 applied; according to the report those conditions operated or might be expected to operate against the public interest. So it was open to the

Minister to form his opinions and to decide whether to exercise any of his powers one of which (see section 3 (4) (c) of the Act of 1965) was to regulate the prices to be charged for goods. That power was, however, not to be exercised "... unless it appears to the board on the facts found by the commission as stated in the report" that prices charged had been such as to operate or to be expected to operate against the public interest.

An order was made on April 12, 1973 (S.I. 1973 No. 720). The opinion formed by the Minister is set out in the opening paragraphs of the order which read:

"Whereas it appears to the Secretary of State on the facts found by the Monopolies Commission as stated in their report entitled 'A report on the supply of chlordiazepoxide and diazepam' that the prices charged in the case of goods of the classes to which the report relates, being goods to which this order applies, are or have been such as to operate against the public interest: Now, therefore, the Secretary of State in exercise of the powers conferred by section 3 (3) (a), (b) and (d) and (4) (c) of the Monopolies and Mergers Act 1965 and section 10 (3) of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 and now in him vested and of all other powers enabling him in that behalf and with a view to remedying or preventing mischiefs which in his opinion result or may be expected to result from the things which according to the said report as laid before Parliament on April 11, 1973, operate or may be expected to operate against the public interest hereby orders as follows:- ..."

The order regulated the prices to be charged. The limitations were in fact in accord with the recommendations which the commission had made. The order was laid before Parliament on April 12 and came into operation on April 23, 1973. Pursuant to the provision contained in section 3 (11) (b) of the Act of 1965 the order would cease to have effect if not approved by resolution of each House of Parliament within 28 days.

The order was approved by an affirmative resolution of the House of Commons on May 3.

The appellants, to whom the terms of the commission report and of the order came as a disappointment, presented (on May 1) a petition to the House of Lords asking that the order should not be approved but should be referred to a select committee for a further inquiry. That petition was referred to the Special Orders Committee of the House of Lords. Written representations were received by the committee and the committee heard oral arguments from counsel on May 14, 15, 21, 29 and 30, 1973. Meanwhile a second order (in the terms of that of April 12) was laid before Parliament on May 18. That order was made because of the statutory provision to which I have referred (see section 3 (11) (b) of the Act of 1965) pursuant to which an order would lapse if not approved within 28 days. The Special Orders Committee of the House of Lords, having reserved its decision, announced (on June 8) that it recommended that there ought to be a further inquiry by a select committee limited to the issue whether in the prices recommended by the Monopolies Commission adequate provision was made for a proper allocation of group research

and development expenditure in the sales of the drugs and if not what (if any) upward adjustment should be made.

After a debate in the House of Lords the recommendation of the Special Orders Committee was on June 22 rejected. A third order (again in terms of the first) was made on June 21 and was laid before Parliament on June 22. It was made for the reason previously mentioned. On July 4 that order was approved by affirmative resolution of the House of Commons On July 5 it was approved by affirmative resolution of the House of Lords.

The order then undoubtedly had the force of law. Obedience to it was just as obligatory as would be obedience to an Act of Parliament. There was only the difference that whereas the courts of law could not declare that an Act of Parliament was ultra vires it might be possible for the courts of law to declare that the making of the order (even though affirmatively approved by Parliament) was not warranted within the terms of the statutory enactments from which it purported to derive its validity. In the statutes to which I have referred Parliament gave the power to the executive to make certain orders: any order made must, however, be within the mandate given by Parliament.

The appellants then (by letter to the Secretary of State dated June 25, 1973) stated that they claimed that the successive orders had been ultra vires and were invalid and that they felt obliged to adopt what they called "a posture of apparent defiance." While threatening to continue to charge prices as before they stated that they were commencing proceedings and would seek a declaration that the orders were invalid: if they did charge the higher prices they would set aside in a bank account the difference between the higher prices and the prices permitted by the order: if an injunction were sought against them they would contend that only on the giving of a satisfactory undertaking in damages ought an injunction to be granted, The grounds of their discontent were broadly stated to have been (a) that the commission's report was vitiated by a failure to observe the requirements of natural justice with the result that there was no valid report which was a prerequisite to the exercise of powers by the Secretary of State and (b) that the orders were ultra vires and invalid because the price levels which were fixed were arbitrary and penalising.

The writ of the appellants of June 25, 1973, was followed by the writ against them on June 28, 1973 and the matter came before the court in July 1973 on the application for an injunction against the appellants to restrain them from charging prices above those permitted by the order. The appellants had been informed that the Secretary of State was not in a position to give any undertaking of the nature suggested by the appellants.

Questions as to the methods of enforcing the law are for Parliament to decide. In the sphere with which we are now concerned the decision of Parliament was embodied in section 11 of the Act of 1948. Parliament decided that enforcement was not to be by the sanction of the criminal law (see subsection (1)). It was laid down in subsection (2) as follows:

"Nothing in subsection (1) of this section shall limit any right of any person to bring civil proceedings in respect of any contravention or apprehended contravention of any such order, and, without prejudice to the generality of the preceding words, compliance with any such

order shall be enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief."

On the application for an injunction the position was that there was an order made on June 21, 1973, after all the procedures which I have described which followed upon the investigation and report of the statutory commission which had been directed in September 1971. The order had effectively the full force of law unless and until it could be shown to be ultra vires. It is in the public interest that the law should be obeyed. It is in the public interest that resistance to it should be suppressed. Unless some very good reason could be shown a court would, therefore, accede to an application to enforce the law and to enforce it in the way in which Parliament had prescribed as the appropriate way. So in the present case the question which, in my view, arises is whether there was any valid and sufficient reason why an injunction should not have been granted.

The reason suggested was that the order was to be attacked as being ultra vires and, furthermore, that the lower prices laid down by the order would result in a very considerable saving of money for one branch of the public service (the Department of Health and Social Security). So it was urged that unless means were found to enable the appellants to be recouped (to the extent of the difference between the former prices and the lower prices) in the event of their succeeding in setting aside the order, the court ought not to insist upon the observance of the law pending the trial.

It is to be observed that there has been no suggestion that the seeking of an injunction was inspired by any improper motive. What has been said is that if the appellants succeed at a later date in showing that the order was ultra vires they will in the meantime have been prevented from receiving sums which they would have been entitled to receive and that in the absence of an undertaking in suitable form the court would be justified in refusing to give an injunction.

The invidious position that would arise if a court of law declined to enforce a law in the manner directed by Parliament was fully in the mind of Walton J. He said [1973] 3 W.L.R. 805, 815:

"If it were a simple choice between granting an injunction even without an undertaking and refusing an injunction tout court (which would present this court with a very invidious choice indeed, since the adoption of either course could then lead to possible injustice at the conclusion of the case) I think I would probably at the end of the day have decided that the sanctity of the apparent law must prevail, and that the injunction should go, there being no other real remedy for this apparent defiance of the terms of the order."

One question which arises is whether the way out of the dilemma which appealed to Walton J. was appropriate.

The High Court has power to grant an injunction (see section 45 of the Supreme Court of Judicature (Consolidation) Act 1925) by an interlocutory order in all cases in which it appears to the court to be just or convenient to do so. An injunction may, of course, be granted either unconditionally or on such terms and conditions as the court

thinks just. In cases where a plaintiff considers that a defendant is doing or is threatening to do something which he ought not to do, a plaintiff may be able to persuade a court that it is just or convenient to compel the defendant to desist pending a decision whether the plaintiff has the law on his side. But if the plaintiff proves to have been wrong the defendant may have suffered loss by having been ordered to desist. In disputes between private parties a plaintiff in ordinary circumstances would only secure the order which he sought if in suitable form he gave an undertaking to the court that he would abide by any order as to damages which the court might take in case the court should afterwards be of opinion that the defendant had sustained damage by reason of the order and which damage was damage for which the plaintiff ought to pay. Matters would be left on that footing until the rights of the parties were determined.

The position of the Crown, in times before the Crown Proceedings Act 1947, may be illustrated by a study of the report of Attorney-General v. Albany Hotel Co. [1896] 2 Ch. 696. In circumstances in which had the litigation been between two citizens (e.g., as between a lessor and lessee) it would have been virtually a matter of course to require an undertaking as the condition of the granting of an injunction, the general practice appears to have been not to expect or to require such an undertaking from the Crown. That was probably for the reason that the Crown was not liable in damages in the ordinary way and that relief against the Crown could only be obtained by a petition of right. Today, if the Crown as lessor or in some proprietary capacity were seeking interlocutory relief there would seem to be no reason for any differentiation from what would be the position if relief were being sought by an ordinary plaintiff litigant. But even in 1896 the Crown was not placed in an isolated position of privilege. North J. in Attorney-General v. Albany Hotel Co. said, at p. 702:

"... and even the Crown may find an injunction refused by the court when the defendant might be exposed to serious injury if the interlocutory injunction was granted, but not made perpetual, and no protection against that injury was forthcoming."

In the same case in the Court of Appeal, Lindley L.J. said. at p. 703:

"Of course, if the case presented to the court on the motion for injunction were doubtful, the court might say, even to the Attorney-General, 'We shall not grant you an injunction'; and if the case were very near the line, the court might say, 'If you like to give an undertaking, or find somebody to do so, we will then grant an injunction.' That is possible. But if the case for an injunction is sufficiently plain, as, in my opinion, this is, the practice is entirely against imposing any such condition."

The above passages show that in such a case as Attorney-General v. Albany Hotel Co. the court would be obliged even at the stage of an application for an interlocutory injunction to consider whether the case for an injunction was "doubtful" or whether it was "sufficiently plain." In the present case, we are concerned with law enforcement and with law

enforcement by the one and only method decreed by Parliament. The proceedings do not in any way lose the character of being law enforcement proceedings merely because the law to be enforced will result in a reduction of sums to be paid by one limb of the public service. What the court is asked to enforce is a statutory instrument which each House of Parliament has had the opportunity to reject but which each House has positively affirmed. Accepting for present purposes that in certain events the court could declare that what had been laid before Parliament was something which was laid before it in excess of a Minister's powers it must remain true that unless and until that is shown the statutory instrument is part of the law of the land. The approach of the court must be that the law is to be enforced.

It is not suggested that the court can compel the Crown to give an undertaking though it is open to the court to say that unless one is given there will be no injunction. In the present case the Crown has stated that it does not propose to give an undertaking. The reasons for this standpoint seem to be twofold. In the first place, there is the consideration that where an injunction is being sought as the statutory method of law enforcement it is in the nature of things inapposite to expect that an undertaking will be given. In the second place, there is the consideration that it is purely fortuitous that in the present case there will be a very considerable saving of money for one limb of the public service by reason of the operation of the order; that there will be other cases in which the enforcement of some order prohibiting sales at above certain prices may have far less or even minimal effect upon the public purse and may primarily and extensively concern many private purses; and that the general approach of the court in enforcing the law should be the same whatever may be the divergent benefits or detriments resulting from the making of an order.

In the present case the court had to accept the fact that no undertaking was forthcoming. The reasons why no undertaking would be given were reasons which the Crown regarded as reasonable and adequate. It was, in the first place, for the advisers of the Crown and not for the court to consider them and to decide as to them. The problem for the court was to decide whether, there being no question of the giving of an undertaking, an injunction should be refused in a case in which the law was being deliberately challenged. By this I do not mean that there was any contumacious attitude but rather that the validity of what was prima facie the law was being questioned.

From my brief review of the statutory provisions it will have been seen that it was for the Minister to form certain opinions and for the Minister to decide what, if any, action to take. Questions of policy were for him subject to the control of Parliament. Matters of judgment were matters for his judgment subject to the control of Parliament. The only questions for a court are those based on suggestions that he acted unlawfully because he exceeded his powers or lacked powers.

On an application for an interlocutory injunction the court must consider whether it is just or expedient to accede to the application. All considerations appertaining to the justice of the matter become within the purview of the court. All the circumstances of the case must be weighed.