VIP Communications Ltd (In Liquidation), R (on the application of) v Secretary of State for the Home Department [2023] UKSC 10

VIP Communications challenged a direction by the Secretary of State under section 5 of the Communications Act 2003, which instructed Ofcom not to exempt commercial multi-user GSM gateways from licensing requirements. The Supreme Court held the Secretary of State had power to give such directions on national security grounds, reversing the Court of Appeal.

Facts

VIP Communications Ltd (in liquidation) challenged a direction issued by the Secretary of State for the Home Department under section 5(2) of the Communications Act 2003 (CA 2003). The direction instructed Ofcom not to exempt commercial multi-user GSM gateways (COMUGs) from the wireless telegraphy licensing requirements under section 8 of the Wireless Telegraphy Act 2006 (WTA 2006). COMUGs are telecommunications equipment that can mask communications data, raising national security and public safety concerns. Ofcom had previously indicated its intention to make exemption regulations after being satisfied that the technical conditions in section 8(5) were met.

Background

Under section 8(4) of the WTA 2006, Ofcom is under a duty to make exemption regulations if satisfied that certain conditions in section 8(5) are met. Under section 5(2) of the CA 2003, Ofcom must carry out its functions in accordance with directions given by the Secretary of State on limited grounds including national security and public safety. The Secretary of State issued the direction in September 2017 due to serious national security concerns about COMUGs masking caller identification data.

Issues

The central issue was whether Ofcom’s duty under section 8(4) of the WTA 2006 to make exemption regulations is qualified by its duty under section 5(2) of the CA 2003 to comply with directions from the Secretary of State. Specifically, whether the Secretary of State had power to direct Ofcom not to make exemption regulations on national security grounds.

Judgment

The Supreme Court (Lord Richards, with whom Lord Reed, Lord Lloyd-Jones, Lord Sales and Lord Stephens agreed) allowed the Secretary of State’s appeal and dismissed VIP’s application for judicial review.

Key Reasoning

Lord Richards rejected the Court of Appeal’s finding that there was a general principle of statutory construction requiring clear words before a power to give directions could extend to directing non-compliance with statutory duties:

In my judgment, there is no such general principle of statutory construction. It will of course be relevant to the assessment of rival interpretations of a provision that, on one view, it would permit a direction to be given that has the effect of precluding the performance of what would otherwise be a statutory duty, but that is no more than one of the factors which will need to be considered in arriving at the proper construction of the provision.

The Court held that section 5 of the CA 2003 and section 8 of the WTA 2006 form part of a single regulatory scheme and should be construed together. Parliament’s purpose in enacting section 5 was to ensure the Government retained responsibility for national security matters:

It is beyond argument that Parliament’s purpose in enacting section 5 was that, notwithstanding the extensive changes made to the regime for the control of wireless telegraphy, the Government should continue to be responsible for national security and the other matters listed in section 5(3) of the CA 2003.

Lord Richards found it implausible that Parliament intended exemption regulations must not be made if they would prejudice regional cohesion, but must be made notwithstanding prejudice to national security.

Implications

This decision clarifies the relationship between regulatory duties and ministerial direction powers in the telecommunications regulatory framework. It confirms that the Secretary of State’s powers under section 5 of the CA 2003 extend to directing Ofcom to refrain from making exemption regulations where national security concerns exist. The judgment emphasises that matters of national security are core governmental functions reserved to the Secretary of State, and regulators like Ofcom are not equipped to have responsibility for such matters.

Verdict: Appeal allowed. The Secretary of State’s direction under section 5(2) of the Communications Act 2003 was held to be within the statutory power. VIP Communications Ltd’s application for judicial review was dismissed.

Source: VIP Communications Ltd (In Liquidation), R (on the application of) v Secretary of State for the Home Department [2023] UKSC 10