Re B and G (Minors) (Custody) Family Division [1985] 1 FLR 134, [1985] Fam Law 58 HEARING-DATES: 20, 21, 22, 25, 27, 28, 29 June, 2, 3, 4, 5, 23 July 1984 23 July 1984 CATCHWORDS: Children -- Custody -- Parents members of cult of scientology -- Divorce -- Mother agreeing that father should have custody of children -- Mother subsequently leaving scientology and seeking custody after 5 1/2 years -- Father and stepmother committed scientologists -- Nature of cult of scientology -- Both parents loving and able to offer good home -- Whether nature of scientology justified taking children from the care of the father HEADNOTE: The parents, both committed scientologists, were married in 1973. They had two children, a boy aged 10 and a girl aged 8. After the marriage the parents settled in East Grinstead where the headquarters of scientology was situated and where there was a community of scientologists. In November 1978 the parents separated and each of them went to live with a new partner who were also scientologists. In March 1979 the father began divorce proceedings on the ground of the mother's admitted adultery. In September 1979 a decree nisi was pronounced and it was made absolute in November. Both parties subsequently remarried their respective new partners. Although the mother had wanted custody of the children and wished to invoke custody proceedings she was unable to do so because scientology forbade recourse to the law courts save in special circumstances with permission. She had recluctantly signed two agreements in December 1978 and January 1979 that the father should have custody and that she should have access to the children due to pressure from the father and the scientologists concerned with the case. In May 1980 the scientology 'chaplains court' ruled that custody should remain with the father. In 1982 the mother and stepfather left scientology and they decided that it was better for the children to live with them. In June 1983 she brought custody proceedings. She contended that the children should be committed to her care because if they remained in the father's care they would be brought up as scientologists and would be seriously damaged. It was the father's case that the status quo should not be disturbed and that the children should continue to remain in his care in their close family home and school in East Grinstead where they had been happily settled for the past 5 1/2 years. At the hearing, expert evidence on the cult of scientology and unchallenged scientology documents were adduced as part of the mother's case. It was common ground that both parents were caring and loving parents who had equally good homes to offer the children and that the children loved both parents and their step-parents. HELD -- (1) Scientology was both immoral and socially obnoxious. It was corrupt, sinister and dangerous. It was corrupt because it was based on lies and deceit and had as its real objective money and power for the leaders. It was sinister because it indulged in infamous practices both to its adherents who did not conform unquestioningly and to outsiders who criticized or opposed it. It was dangerous because it was out to capture people, especially children and impressionable young persons, and indoctrinate and brainwash them so that they became the unquestioning captives and tools of the cult, withdrawn from ordinary thought, living, and relationships with others. (2) Both parents loved the children and each could offer a warm, close, and stable home. The children had lived with their father and stepmother for 5 1/2 years. A change in custody would be an upheaval and the children would be leaving their real home and family circle. Such a move would be confusing and probably distressing for the children. If the scientology factor did not exist, it would have been in the better interest of the children for them to remain in the care and control of the father with ample access to the mother. However, the scientology factor was such that, as the father and stepmother were committed scientologists, the children would be gravely at risk if they remained in the father's care. Therefore the children would be committed to the care and control of the mother with ample access, subject to conditions, to the father. CASES-REF-TO: T(Minors) (Custody: Religious Upbringing), Re (1981) 2 FLR 239 COUNSEL: Michael Kennedy QC and David Hart for the mother; Robert Johnson QC and Martin Russell for the father. JUDGMENT-READ: Cur adv vult PANEL: Latey J JUDGMENTBY-1: LATEY J JUDGMENT-1: LATEY J: These proceedings concern two children, who are wards of court: a boy aged 10 -- I will call him B -- and a girl aged 8 -- I will call her G. The decision called for is whether they should remain in their father's care or be transferred into their mother's care. The mother has been but no longer is a scientologist. The father is a scientologist. At the heart of the mother's case is the contention that if the children remain in the care of the father they will be brought up as scientologists and will be seriously damaged. This the father denies: that is to say, he denies that will all its flaws scientology will damage the children. And he says that he intends to bring the children up outside scientology until they are old enough to make their own free choice. This judgment is being given in open court because it raises matters of some general public moment. In giving it I have tried to ensure that the children concerned and their family circles should not be identified. Inevitabley, scientologists in and around East Grinstead know who they are. So do scientologists in other parts of the world, as has emerged in the evidence. But it could have serious amd damaging effects on these children as they grow up if there were publicity in a wider circle identifying them. From experience over the years I know that the press can be relied on to help in avoiding this where children are involved. As in every case involving important decisions about children there is a plurality of factors to be weighed, and this is no exception. Scientology and its part in these children's lives now and in the future is one of the factors and an important one. But it is not the only one. It is important, indeed essential, to stress from the start that this is neither an action against scientology nor a prosecution of it. But willy-nilly scientology is at the centre of the dispute of what is best for the children. The father and his counsel have stressed that they are not here to defend scientology. That is true in the strict sense that the 'church' of scientology is not a party to the proceedings. But they have known from the start what the mother's case is. It is plainly set out in the affidavits. If there remained any doubt it was dispelled by Mr Kennedy for the mother at a hearing for directions in January 1984. The father's solicitor is a scientologist. He has been in communication with the solicitors who act for scientology. There has been ample time and opportunity to assemble and adduce documents and evidence in refutation of the mother's allegations. None has been adduced. Why? Because the mother's case is based largely on scientology's own documents and as the father's counsel, Mr Johnson, candidly, albeit plaintively, said: 'What can we do to refute what is stated in scientology's own documents?' The hearing has occupied 3 weeks. Most of it has been focused on scientology, what it is and what are its methods and processes. Knowing virtually nothing about it before this hearing, I was at first surprised at the ambit of the inquiry. I no longer am surprised. It is a very serious matter so far as these children are concerned and the time spent on it has not been excessive. The parents were married in 1973 and late that year B was born. G was born in December 1975. The parents separated in November 1978. In December 1978 and January 1979 the parents signed agreements by virtue of which the father had custody of the children and the mother access. The mother lived with the step-father and the father lived with the step-mother. All four of them were scientologists. In March 1979 the father filed a petition for divorce on the ground of the mother's admitted adultery with the step-father. In September 1979 a decree nisi was pronounced and, by agreement, custody was committed to the father. The divorce was made absolute in November 1979. The father and step-mother married. The mother and step-father also went through a ceremony of marriage believing that they were free to do so. In fact, the step-father's divorce had not gone through. Their union is a stable and happy one, they have a child, a little girl -- A I will call her -- aged 4, and will marry when these proceedings are concluded and when the step-father's parents can be with them for the wedding. The mother and step-father have made their home in a Commonwealth country and they ask that the children live with them there. The father and step-mother's marriage is happy and stable. The step-mother has a child, J, by her previous marriage. He is close in age to B. They are very fond of each other. The father and step-mother have a child, S, aged 3 and they are expecting another baby in October. In May 1980 there began a hearing by the scientology 'chaplin's court' concerning the custody of the children. The decision, inaccurately described as an 'agreement', was that the custody should remain with the father. In the summer of 1982 when the children were staying with their mother and step-father the mother decided to keep them. She and the step-father had left scientology and she instructed solicitors who wrote to the father. The father went to the mother's country. The mother took the children to the United States. An order was made for the return of the children to the father and the father went to the United States and recovered them in November 1982. In June 1983 the mother issued her application for care and control. In June 1984 the mother and step-father came to England, bought a house in East Grinstead and have been seeing the children regularly. Those are the bare bones of the history. Some elaboration is called for. After their marriage the father and mother lived in East Grinstead. This is where the headquarters of scientology in this country is situated at Saint Hill Manor. It was until recently the headquarters worldwide. There are many scientologists in the area, some working on the staff, others not on the staff but working for scientology and all under going processing, that is to say auditing and training courses if they can afford it. As to the separation in 1978, the father said in his affidavit that this was caused by the mother's relationship with the step-father. In his oral evidence the father accepted that he had drawn up what in scientology language is described as a 'doubt formula' in which he said that he considered himself the mother's intellectual superior, that he had doubts about the wisdom of the marriage and that separation had been discussed on a number of occasions. This, of course, puts a somewhat different complexion on the matter. It is scarcely surprising that with a husband who so regarded her, she became attached to a man who held her in full regard and affection. As to the custody agreements in 1978 and 1979: the father naturally attaches much weight to them. The mother says that throughout she wanted the children and believed that it would be better for them to be with her. She was a committed scientologist at the time. Scientology forbids recourse to the law courts of the country save in special circumstances with permission. The ordinary courts are described in the language of scientology as the 'wog courts', an expression invented by L Ron Hubbard, the founder of the cult. The mother says that she agreed to the father having custody because of the pressure brought to bear on her by the father and the scientologists concerned. The father accepts that she agreed very reluctantly. He accepts that she is a good, loving mother and that the children love her. At the time of the separation B was aged just 5 and G not quite 3. Had the dispute come to court one cannot be sure, of course, what the decision would have been, but it is not unlikely that children so young would have been put in the care of a good and devoted mother as this one is and always has been. BNut the question today 5 1/2 years later is what is better for the children in the circumstances as they are now and are likely to be. The mother agrees that the father loves the children. The children love both their parents and are fond of both step-parents and get on well with them. As to the 'chaplin's' decision: there were written submissions and some oral hearings. It is noteworthy that from start to finish the father's submission is couched in scientology terminology and stresses all he and step-mother have done for scientology, how correctly they have complied with scientology 'ethics' and how the mother has offended against those 'ethics'. The chaplin, of course, was a scientology official. Both the mother and step-father wanted to come to court and in about May 1980 she was given permission to do so by the 'assistant guardian' -- of scientology -- on condition that scientology would not be involved. But the father intervened with the guardian and the permission was withdrawn. It is also to be observed that from March 1979 the mother had been trying to get a hearing before the 'chaplin's court' in the United States. It was refused. It is plain that from first to last the mother wanted the children. She should have gone to the court. As a scientologist then she could not. As to what happened in the summer of 1982: the father immediately on arrival applied to the courts of the country concerned. The mother's solicitor was instructed. This was on the Friday. On the Saturday the father saw the children at the mother's home. The step-father more than the mother was in touch with the solicitor. On the Saturday the mother took the children to the United States. She did so because she was in fear of losing them. She was cross-examined at some length about whether she did this knowing that an interim order had been made restraining her from removing the children. It does not affect the question I have to decide. It goes to credibility. On the balance of probabilities she was told. Whether and to what extent she grasped it is another matter. As a result of the father's arrival she was in a state of shock. She knew that he had come to get the children if he could and was in great fear that he would succeed. It is understandable that she did not absorb the niceties. She impressed me throughout as a wholly honest person. None the less, she should not have done what she did do. It was done in panic. It was not in the better interest of the children. Nor was it right not to keep the father informed of the children's well-being. Apart from this one matter, so far as I can recall, her credibility has not been impugned. So today the mother asks that the children be committed to her care to live with her and the step-father and their small daughter in the country where they have settled. The children have stayed there happily for three lengthy periods. The mother and step-father have bought the house in East Grinstead as a temporary measure to be near the children and see them pending this case. The father asks that they continue to live with him and the step-mother and the other children in their home in East Grinstead where they are happy and well cared for and at the school where they have been for some time. If those alone were the factors I think that the scales would probably come down in favour of not disturbing the status quo. Indeed, were it not for the scientology factor, the mother painfully recognizes that she would not now attempt to disturb the status quo and she herself and her counsel have made that plain from the start. What then is the scientology factor and what weight should be attached to it? 'Horrendous'. 'Sinister'. 'A lot of rotten apples in it'. Those words are not mine. They are the father's own words describing practices of the cult and what it does to people inside and outside it. 'A lot of villains in it'. 'Dreadful things have been done in the name of scientology'. Those words are not mine. They are the words of the father's counsel. The father at one stage said he thought that these evils had largely been eradicated in 1980. In the light of the evidence not surprisingly that suggesstion was not pursued in counsel's final address. What is scientology? It is a word invented by L Ron Hubbard, the founder of the cult. The concept, stated very briefly, is that from the beginning of time everyone is reincarnated. Inside each of us is a spiritual being whom Hubbard calls a 'thetan'. This entity is there to help improve one through the millenia. But in each incarnation we are handicapped or the thetan is handicapped by the existence in us of 'engrams' as Hubbard calls them -- bad thoughts or past misdeeds in the present and previous incarnations. Those engrams have to be removed or 'cleared' by certain processes invented by Hubbard. Until they are removed the thetan cannot operate and the scientologist is known as a 'pre-clear'. After they are removed, the scientologist is 'clear' and becomes an 'operative thetan' (OT). From there on he gets 'case gain' -- improvement mentally, physically and spiritually and begins his passage 'up the bridge'. If he transgresses he goes back to the beginning and is reprocessed. Some might regard this as an extension of the entertaining science fiction which Hubbard used to write before he invented and founded the cult which now in this country and some others is called the 'church of scientology', though in Australia, for example, it calls itself the 'church of the new faith'. But in an open society such as ours people can believe what they want to and band together and promulgate their beliefs. If people believe that the earth is flat there is nothing to stop them believing so, saying so and joining together to try to persuade others. Some of the public proclamations of scientology are unexceptionable, such, for example, that scientologists should obey the law of the land. When one looks at the reality behind the public facade the matter is very different, as will appear. What are 'dianetics'? This is another Hubbard-invented word to describe the processes whereby the aims of scientology are furthered. Those processes are 'auditing' and training courses. 'Auditing' 'Auditing is a simple, thoroughly designed means of concentrating the mind to the state of a controlled trance. The aim and result is progressively to enforce loyalty to and identification with scientology to the detriment of one's natural awareness of divergent ways of thinking and outside cultural influences. Love and allegiance are more and more given exclusively to scientology and L Ron Hubbard.' That is the description of it given by Dr John Gordon Clark. Dr Clark is a Doctor of Medicine of Harvard Medical School and a qualified psychiatrist and neurologist. He holds high appointments. Among others he is Assistant Clinical Professor of Psychiatry at Harvard Medical School and Consultant in Psychiatry at Massachusetts General Hospital. He is a practising psychiatrist. He has made a study of various cults and taught and lectured in various countries on the medical-psychiatric aspects of forced conversions and kindred topics. He was cross-examined at considerable length. His evidence was wholly convincing. His description of the aims and effects of auditing is supported by a mass of other evidence and refuted by none (save for the subjective but conditioned views of some of the scientologists who have given evidence) and is supported by documents of scientology, to some of which I shall refer later. His description is accurate. In blunt language, 'auditing' is a process of conditioning, brainwashing and indoctrination. Dr Clark was asked about other scientology cases in which he has given evidence to the same effect. I am not quite sure what the point was unless it was to show that he had become obsessive. If that was the point I can only say that he impressed me as objective, balanced, very careful and fair. What is the fact is that it has called for very real courage to speak out as he has. I will come later to the various methods used by the 'church' of scientology as a matter of deliberate settled policy to discredit Dr Clark and any others who criticize it or, indeed, others who the 'church' thinks may in the future criticize it. The mother complains about the cult and its practices and says that it is pernicious. Her principal complaints and my findings about them are these. The founder: L Ron Hubbard To promote himself and the cult he has made the following other false claims: That he was a much decorated war hero. He was not. That he commanded a corvette squadron. He did not. That he was awarded the Purple Heart, a gallantry decoration for those wounded in action. He was not wounded and was not so decorated. That he was crippled and blinded in the war and cured himself with dianetics techniques. He was not crippled and was not blinded. That he was sent by US naval intelligence to break up a black magic ring in California. He was not. He was himself a member of that occult group and practised ritual sexual magic in it. That he was a graduate of George Washington University and an atomic physicist. The facts are that he completed only 1 year of college and failed the one course in nuclear physics in which he enrolled. There is no dispute about any of this. The evidence is unchallenged. Hubbard, in a course called 'purification rundown' (a course which the father and step-mother recently attended, paying a high price for it), claims that it will increase the body's resistance to radioactivity. Shown this, the psychologist who gave evidence on behalf of the father described it as 'balderdash'. Shown Hubbard's writings about psychiatry and psychologists he agreed that it was 'bunkum'. Hubbard has described himself as 'Dr Hubbard'. The only doctorate he has held is a self-bestowed 'doctorate' in scientology. The use of false, spurious descriptions extends downwards. The deputy principal of the school where the children are at present being educated is a scientologist. At various times he has worn clerical garb and described himself as 'reverend'. And at other times as 'professor'. He did this, he accepts, for promotional reasons. Mr Hubbard went into hiding in 1980. Attempts have been made to secure his attendance at various hearings in the courts of the United States. They have all failed because he cannot be found and served. The evidence is clear and conclusive: Mr Hubbard is a charlatan and worse, as are his wife Mary Sue Hubbard (she has been convicted of criminal offences in the United States in connection with scientology and imprisoned) and the clique at the top privy to the cult's activities. Recruiting Various promotional campaigns are carried out. A favoured method is to offer a free 'personal efficiency' test. When that has been carried out the subject is invariably advised that he or she is in need of scientology and dianetics. With the crude cynicism which informs the reality of scientology in contrast to its cosmetic appearances, potential recruits are described as 'raw meat'. The objective for adherents is to 'get the meat off the street'. Locking them in Once the fish is on the hook scientologists must go to all and any lengths to stop it wriggling free. L Ron Hubbard writes this (HCO Bulletin -- HCO stands for 'Hubbard Communictions Office' -- 29 September 1959): 'The whole dream of a PE (personal efficiency) foundation is to get the people in fast get them invoiced in a congress type assembly line, no waiting, give them hot, excited positive service and boot them on through to their HAS' [HAS is a Hubbard apprentice scientologist] 'and then worry about doing something else with them. And never let a student leave or quit -- introvert him like a bullet and get him to get audited. If he gets no reality don't let him wander out. If he walks in that door for a free PE, that's it. He doesn't get out except into an individual auditor's hands in the real tough cases, until he's an HAS.' One of the most sinister aspects of auditing, one that shocked the father himself, is the corrupt, indeed criminal, use of the confessions made to the auditor. Hubbard has emphasized repeatedly that everything said during auditing is abolutely confidential. That assurance is given by the auditor to the person being audited. What happens is that that person communicates to the auditor his inner-most thoughts and relates any criminal offences or transgressions of any kind, any incidents from his life which are embarrassing or for which he could be blackmailed. These statements are written down by the auditor including time, place, and a detailed description of each incident as well as who were present and knew about the incident. Contrary to the assurance of confidentiality, all 'auditing' files are available to scientology's intelligence and enforcement bureaux and are used, if necessary to control and extort obedience from the person who was audited. If a person seeks to escape from scientology his auditing files are taken by the intelligence bureau and used, if wished, to pressure him into silence. They are often so used and uncontroverted evidence of this has been given at this hearing. Closely connected with this is the duty of scientologists to inform on each other. This is done by means of 'knowledge reports' to 'ethics', the department responsible for discipline. Very recently (this year, 1984) one such report was sent to ethics by the step-mother about one of her closest friends; and one such report was sent by the principal of the children's school about a part-time member of the staff and the parent of a child there. Thus is built up a very complete dossier on every scientologist for use if need be for the purposes I have mentioned. Dated 22 December 1972 a top priority internal security project was circulated: 'This is a top priority internal security project. The information I want is to be obtained from ethics files, pc' [that is pre-clear] 'files, personnel files and interviews. It may be that you will only have to, for example, look into a personnel file. If, however, you exhaust the file check, an interview will have to be done. This action can be done by your MAA [that is master at arms]. All persons on your staff who have ever been employed by a government agency; this would include a person working as an informer to any of these groups, are to be reported to me. Also, include city government, such as police departments. Add a description of the particular post said person held, with the time and connections. This is to be done quickly and quietly.' It is no surprise that to escape from the clutches of scientology calls for great courage and resolution. The stranglehold is tight and unrelenting and the discipline ruthless. And of course there is the anguish of conscience in the escaper after usually many years of commitment to scientology. The mother and stepfather have come through it as have others who have given evidence. Recently some of the scientologists in East Grinstead are half way to escaping. They describe themselves as independent scientologists. They still espouse the concepts of scientology but they are in rebellion against the 'church's' practices and have left the 'church'. There are, it seems, a fair number of them and it may be that for them there is safety in numbers. I do not know. Apostasy is a 'high crime'. High crimes are the gravest in the scientology calendar. I will come later to the punitive methods adopted to deal with apostate and others who incur the church's displeasure. Teaching students to lie Scientology has its own intelligence branch. One of its activities is to obtain information by falsehood and deception. Newly joined agents are trained in this and the method is described as follows. I quote verbatim: Intelligence specialist training routine -- TR-1 Purpose: To train the student to give a false statement with good TR-1. To train the student to outflow false data effectively. Position: Same as TR-1. Commands: Part 1: "Tell me a lie". Command given by coach. Part 2 interview type 2 WC by coach. Training Stress: In Part 1 coach gives command, student originates a falsehood . Coach flunks for out TR 1 or TR 0. In Part 2 coach asks questions of a student on his background or a subject. Student gives untrue data of a plausible sort that the student backs up with further explanatory data upon the coach further questions. The coach flunks for out TR 0 and TR 1, and for students fumbling on question answers. The student should be coached on a gradient until he/she can lie facily' [meaning, I suppose, 'facilely']. 'Short example: Coach: Where do you come from? Student: I come from the housewives committee on drug abuse. Coach: But you said earlier that you were single. Student: Well, actually I was married but am divorced. I have two kids in the surburbs where I am a housewife, in fact I'm a member of the PTA. Coach: What town is it that you live in? Student: West Brighton. Coach: But there is no public school in West Brighton. Student: I know. I send my children to school in Brighton, and that's where I'm a PTA member. Coach: Oh, and who is the Chairman there? etc.' Intelligence gathering and its uses Hubbard proclaims in his public writings that the law of the country must be obeyed and no illegal activities undertaken. The following scientology directives and extracts show the hidden reality and show that what Hubbard professes is a cynical lie: '. . . Hubbard Communications Office Saint Hill Manor, East Grinstead, Sussex HCO policy letter of 20 May 1970 Guardian Public Relationships The guardian's office handles certain publics which are its sole responsibility. These publics are as follows: press relations government relations special guardian's group relations opposition group relations troublesome relations. In press relations are included relations with the press, radio, television and magazines. Although the public divisions may place news releases, appear on radio or television or write stories for magazines, all such is done in co-ordination with and approved by the public relations bureau of the guardian's office. Any reporter calling the organization is routed to the guardian public relations bureau. All relationships with governmental agencies and government officials are handled by the guardian's office or are cleared through the guardian's office. The legal bureau receives and then handles or approves all correspondence to and from government officials acting in an official capacity; and whether such are local, county, district (state) or national, all are handled by the legal bureau. The public relations bureau handles visiting government officials, all lobbying actions and carries out all public relations programmes involved with the government. There are specialized groups which are either established by the guardian's office or with which the guardian's office is co-acting towards mutual goals. These fall under the purview of the public relations bureau. Opposition group relations are in the sphere of the guardian's office. These opposition groups are those which are acting against scientology or against the goals of scientology. Troublesome relations is a catchall to include all those relations which the organization has not handled with its various publics and which then wind up on guardian lines. Into this category fall business firms which sue the organization, threatening former scientologists expelled by the church, non-authorized squirrel groups, hostile members of the immediate community and so on. Mary Sue Hubbard Controller for L Ron Hubbard Founder . . .' Next:'. . . HCO policy letter of 15 August 1960 In the fact of danger for govts or courts there are only two errors one can make: (a) do nothing and (b) defend. The right things to do with any threat are to (1) find out if we want to play the offered game or not, (2) if not, to derail the offered game with a feint or attack upon the most vulnerable point which can be disclosed in the enemy ranks. (3) Make enough threat or clamor to cause the enemy to quail. (4) Don't try to get any money out of it. (5) Make every attack on us also sell scientology and (6) win. If attacked on some vulnerable point by anyone or anything or any organization, always find or manufacture enough threat against them to cause them to sue for peace. Peace is bought with an exchange of advantage, so make the advantage and then settle. Don't ever defend. Always attack. Don't ever do nothing. Unexpected attacks in the rear of the enemy's front ranks work best. The goal of the department is to bring the government and hostile philosophies or societies into a state of complete compliance with the goals of scientology. This is done by high level ability to control and in its absence by low level ability to overwhelm. Introvert such agencies' [that is their word for 'infiltrate'] 'control such agencies. Scientology is the only game on earth where everybody wins. There is no overt in bringing good order . . .' 'Overt' is a wrong-doing against scientology. Then on 9 March 1970 this letter: 'The following is a list of the successful and unsuccessful action used by intelligence. Successful Prosecuting Traitors' [that means traitors to scientology] '1. In the United States finding evidence of a crime and handing it over to the police or vice-squad. This is any crime. 2. In the United Kingdom -- finding evidence of a crime against the org' [that means 'organization'] 'and having a representaion of the church press charges for a prosecution. Regularly getting out files and reading through them. Especially any files or cases that were handled prior to your coming on post. If reading through files brings out a connection you were not aware of, or had forgotten, chase it up and get out the other files pertinent to the area. All these are the files which Hubbard says are absolutely confidential. 'Use the files regularly and continuously referring to them as often as possible. Cross-filing should not only be done under names of people but under groups and organizations as well. Also under subjects. In other words thorough cross-filing. Use of telephoning to get simple information such as addresses, etc,rather than a personal visit. Contacting the secretary or aide of the person you are interested in and chatting them up. Note this is very successful in getting tricky information that is not available in other areas. Is Dr so and so on his vacation now. Where is he? How long will he be gone? Invent letterhead of some organization that is spurious, ie have it printed up and use it to make queries. Use some fairly safe address but don't be over-cautious. If you have a letterhead nobody seems to bother checking it. Examples: "Ford Foto Features" or "The Council for Human Relations in Industry". If you have a letterhead of any sort you will get answers to your questions most of the time. Of these, using a phoney news agency is the most successful. Using 2D' [that means 'second dynamics', and it means sexual relations or relationships or family relationships] 'on someone high in the government to seduce them over to our side. This particular action was not started as an intelligence action but was more personal. It did however move into 2D activity. Infiltrating an enemy group with the end of getting documents. These can either be about their own plans or what they have on us. Convert third partying with forged or phoney signatures. Anonymous third partying. Particularly the internal revenue service appears to follow up every tip off they get. Getting information out of files. This is of course only vital files, not just any files. Direct theft of documents . . .' 'Third partying' in scientology jargon is character assassination. Next, 25 March 1977: 'RE: Red Box. Dear all, This is to introduce into BIUS the complete red box system. Most of you have heard of this earlier -- I will now explain it in detail. First of all, all data that is red box material is attached. Secondly, you must ensure that none of your juniors (for those of you who have them) have red box data in their areas. All the red box material from your areas must be centrally located, together and in a moveable container (ideally a briefcase), locked, and marked. When this is done in each area, we will divide up the amounts and deputize persons in the area to be responsible for its removal from the premises in the case of a raid. This procedure will be drilled. This procedure will stay in at the new location. Please have all this data sorted and located in proper container by Monday night March 28. I will then divide up removal duties, and we will drill it Tuesday night just before the all hands. Now this is the red box data. 1. What is red box data? (a) Proof that a scientologist is involved in criminal activities. (b) Anything illegal that implicates MSH (Mary Sue Hubbard, that is), LRH (L Ron Hubbard). (c) Large amounts of non-FOI documents. (d) Operations against any government group or persons. (e) All operations that contain illegal activities. (f) Evidence of incriminating activities. (g) Names and details of confidential financial accounts . . .' Those directives speak for themselves. Comment from me is unnecessary. In 1983 those at Saint Hill, East Grinstead, tried to improve the public reputation of scientology and invited the press to look round Saint Hill Manor. A short article appeared in The Times of 17 August 1983 by its religious correspondent. One wonders whether he was shown the red box data or told of its existence or, indeed, of any other of the material which I have been quoting. I doubt it. Training courses Courses are held on a very large number of scientology topics both in the United Kingdom and in the United States of America at 'Flag', that is the headquarters of 'Sea Org', which is the high command. They become more advanced as one advances 'across or up the bridge'. These courses, or some of them, include auditing as part of them, as I understand it. They can be very dangerous to the mental health of the trainee and evidence has been given of instances of mental breakdown during the course of them or as the result of them. Discipline Discipline is ruthless and obedience has to be unquestioning. Scientologist working on the staff are required to work inordinately long hours for their keep and a pittance. The purpose, as Mr Armstrong describes it, pursuant to L Ron Hubbard's orders is to keep individuals impoverished so that they become completely dependent on the organization for their basic needs on a daily basis. Mr Armstrong was a scientologist for 13 years from 1969. For several of them he worked on Hubbard's personal staff and was privy to what went on in the innermost circles. A catch-phrase constantly recurring is 'the greatest good for the greatest number of dynamics'. The step-father and his first wife were ordered to leave their little daughter full time with a baby-minder so as to put in maximum hours to 'clear the planet', this being 'for the greatest good for the greatest number of dynamics'. For several months they saw their daughter only on weekends. When he insisted on leaving earlier to bring the child home during the weekdays he was threatened with 'ethics condition', that is to say disciplinary action. On another occasion in 1976 his wife received special permission to visit a doctor because of a recurring abdominal complaint. She telephoned to say she had to go to hospital immediately. He asked if he could leave to see her. He was told 'get your stats up and you can leave at 4.30, not before'. 'Get your stats up' means 'meet your performance or productivity quota'. Scientology must come first before family and friends. Much evidence has been given and not disputed of how it leads to alienation of one spouse from another, of alienation from children and from friends. Another witness, Mrs B was a scientologist from 1972 and rose quickly in the organisation. She had a 3-year daughter. None the less, for a period of months she was required to work from 8.30 in the morning to 1 am the following day. She was allowed only 15 minutes daily to put her daughter to bed. On one occasion when the child broke her arm and she took her to the doctor she was directed to work all night as a penalty. In January 1982 Mrs B was made commanding officer of the organization, Saint Hill United Kingdom Foundation. At around this time the commodore's messenger's org (that is, top management) in the United States were originating an increasing number of international directives which seemed to her to be wrong and bad. She wrote a report addressing it to L Ron Hubbard. Eight days later, in November 1982, she was removed from her post and assigned to the 'RPF' (that is, rehabilitation project force). She was refused counselling, required to do at least 12 hours physical work a day (shifting bricks, emptying bins, etc) and to communicate with no one, except to receive orders. The work aggravated a chronic back condition. When she protested she was threatened with being declared a 'suppressive person' (a high crime -- see below). Her time with her children was limited to one half hour per day. Another witness worked at 'Flag' and became an 'L Ron Hubbard public relations officer', one of only three in the world and a high appointment. In 1977 she declined to undertake a mission that would cause her to leave her young daughter for at least 2 months. She was shouted at and abused because she put the care of her child first. She was subjected to a committee of evidence (that is, a disciplinary tribunal): she left 'Flag'. Those are a few of many illustrations, proved in evidence, of the ruthless and inhuman disciplinary measures. Suppressive acts (SA), Suppressive persons (SP), Potential trouble sources (PTS), and Disconnection A 'suppressive act' is any act which seniors consider to be against the interests of scientology. A 'suppressive person' is a scientologist who does a suppressive act. A 'potential trouble source' is anyone outside scientology who is opposed to the cult or anyone inside it who has been declared a suppressive person. A scientologist who is connected with a potential trouble source -- spouse, affianced, relative, friend or business associate -- is ordered to disconnect from that person and, if that is not done, the scientologist will himself or herself be declared a suppressive person. Very many examples have been given and proved in evidence. Two will suffice as examples. Mrs F was a scientologist and until recently a senior staff member of the 'church' of scientology at Saint Hill Manor until -- and I quote her own words -- 'I resigned because its practices were dishonest, degrading and oppressive'. She and the deputy principal (also a scientologist as mentioned earlier) were in love and planned marriage when his divorce came through. She had been ordered to disconnect from a close woman friend. She discussed this and her disenchantment with scientology with her fiance. He was subjected to an 'ethics interview' at Saint Hill and the school. He wrote her a letter dated 16 January 1984: Dear [so and so], I have done conditions and decided that I am a scientologist before all and do not wish to have any opposition to the church on my lines. I agree with the disconnection of technology when a person commits a suppressive act, to assist them to confront and handle their behaviour. I believe that outnesses or disagreements can be handled on church lines. I believe there is no survival off these lines. I believe that I must not compromise my position and that your only hope lies in resolving your problems with the terminals here at Saint Hill. I believe that you should take advantage of the help offered to get any false data corrected and any out-ethics handled. I believe I have not been firm in cutting entheta lines and so have allowed a dwindling spiral for us both. I believe you are a remarkable being who I wanted to share an ethical future with. Please listen to me, sweetheart, See the RTC mission and hear their data. Let's live within the church's protection. If you will not do this for me and you, then I must disconnect, as I cannot believe you are acting for our survival. It's not a connection of "your integrity", it's a question of survival along all dynamics . . .' The father had a business associate and close friend. He incurred the church's disfavour -- he was declared a suppressive person, I think -- and he and the father fell apart and had a business dispute. The father wrote him this letter dated 6 April 1983 with copies to the 'justice chief international' and the 'special unit world wide': Dear [so and so], You have since your return in January behaved in a destructive and suppressive way towards me and my company. In his recent Journal 37, LRH says that any suppressive person seeking to dissuade or invalidate one deals only in lies. And that truth blows the lies away. You are dealing in lies. Your non confront, unwillingness to communicate, not-is-ness and lies have added complexity to the situation: 1. You proceeded contrary to our agreement, to enter into a carpet supply business using the same comm lines as the cleaning company. This without any reference to me. 2. You have attempted to hold me to a "connection" with you as a declared SP knowing that such connection would prevent me from progressing in scientology. You have done this by refusing direct communication between us on to the two outstanding matters of taxation and the valuation of the companies. 3. Rather than communication and confront of these subjects you have interjected a firm of solicitors, two of whom are declared SP's again with the knowledge of the difficulty this would create. You have apparently instructed these solicitors to act against me based on lies. 4. You have been obstructive, suppressively so, in the matter of your vacating the premises, and to my idea of the workable solution of the partition. 5. You have taken up with Ron Hopkins, a declared and expelled SP and thereby introduced another suppressive element into the premises and thus onto my lines. I have thought long and hard about you of late. I have recently done a very thorough PTS C/S 1 course at AOSH' [that is Saint Hill]. 'Your actions, attitudes and intentions are compatible with those of LRH data on SP's. What you are now doing in setting yourself against the church is not only very suppressive but also non-survival for you, your family and any group you are associated with. My advice to you would be to stop your suppressive actions and drop all your SP connections and get yourself to IJC' [that is international justice chief] 'and get this scene handled now. I have regretably no illusions about your accepting this . . .' Punishment and persecution I have already mentiioned some of the forms of punishment and examples of their use. There is more where the 'church's' enemies are concerned -- suppressive persons and critics. 'Fair game policy' In his HCO policy letter of 18 October 1967, L Ron Hubbard, founder, directed: 'Penalties for lower condition (applies both orgs and sea org). Liability -- suspension of pay and a dirty grey rag on left arm and day and night confinement to org premises. Treason' [that means to say, treason against scientology] -- 'suspension of pay and deprivation of all uniforms and insignia, a black mark on left cheek and confinement on org premises or dismissal from post and debarment from premises. Doubt -- debarment from premises. Not to be employed. Payment of fine amounting to any sum may have cost org. Not to be trained or processed. Not to be communicated or argued with. Enemy -- SP order. Fair game. May be deprived of property or injured by means of any scientologist without any discipline of the scientologist. May be tricked, sued or lied to or destroyed. L Ron Hubbard Founder. . .' In his HCO policy letter of 21 October 1968, Hubbard directed: 'Cancellation of fair game. The practice of declaring people fair game will cease. Fair game may not appear on any ethics order. It causes bad public relations. This PL' [that is policy letter] 'does not cancel any policy on the treatment or handling of an SP. L Ron Hubbard Founder. . .' It was suggested, but not pursued, that this did cancel the fair game treatment. It did nothing of the kind as the last sentence shows. It was cosmetic only for public consumption. Deprival of property, injury by any means, trickery, suing, lying or destruction have been pursued throughout and to this day with the fullest possible vigour. To give two illustrations: Beginning in 1977 the church of scientology have conducted a compaign of persecution against Dr Clark. They wrote letters to the Dean at the Harvard Medical School and to the Director of the Massachusetts General Hospital. But they refused to gag him. Their agents tracked down and telephoned several of his patients and interviewed his neighbours looking for evidence to impugn his private or personal actions. They submitted a critical report to a committee of the Massachusetts State Senate. On three occasions during the last 5 years a scientology 'front' called the Citizens' Commission on Human Rights have brought complaints against him to the Massachusetts Medical Board of Registration alleging improper professional conduct. In 1980 he was declared a 'number one enemy' and in 1981 they brought two law suits against him (summarily dismissed, but costly and worrying). They distributed leaflets at the Massachusetts General Hospital offering a $25,000 reward to employees for evidence which would lead to his conviction on any charge of criminal activity. They stole his employment record from another Boston hospital. They convened press conferences calculated to ruin his professional reputation. It all failed, but that is of minor importance to scientology. 'Throw enough mud and some will stick'. It has caused him heavy cost in time and money and anxiety. Mr Armstrong points out that the claim that 'fair game' has been cancelled is untrue. He was declared 'fair game'. They disseminated stories internationally, falsely accusing him of theft, hired paid bullies to harass him and his wife day and night for over a month, they threatened his life, they assaulted him and they hit him with a car. Black Propaganda By HCO policy letter of 11 May 1971 Hubbard directed: 'Black PR. About the most involved employment of PR is its covert use in destroying the repute of individuals and groups. More correctly this is technically called black propaganda.' Use of the courts 'Level 'O' checksheet by L Ron Hubbard: The purpose of the suit is to harass and discourage rather than to win. The law can be used very easily to harass, and enough harassment on somebody who is simply on the thin edge anyway, well knowing that he is not authorized, will generally be sufficient to cause his professional decease.' And then this directive concludes with these words: 'If possible, of course, ruin him utterly.' Some of the scientology jargon in its own documents, which I have been citing, may not be clear to someone who has not had to undergo the task of having them explained over the weeks. But their meaning is clear and they show out of the cult's own mouth the frightening, digraceful and illegal lengths to which it is prepared to go and does go. There has been harassment of the mother and step-father in this case. The father sent the documents in the case to the 'church' who in turn sent them with directions to the head of their guardian's office in the town where the mother and step-father lived. They tried to persuade them to discontinue the proceedings. If they did not they would be interfering with the 'spiritual progress' of the children and would be expelled from the 'church'. They refused. Soon afterwards one of the step-father's company's employees, a scientologist, resigned his job. He told the step-father that this was because he was 'engaging in suppressive acts'. He said that he had not wished to leave the company but had been ordered to do so by the 'church'. I was informed of this at the hearing for directions in January 1984. I warned that any continuance or repetition would be severely dealt with and it is right to say that there has been none. Now at the end of this case I repeat publicly what I said then: The powers of this court are wide and its arm is long. If there is any intimidation or harassment of any description of anyone connected wih this case it will be dealt with with the utmost severity. Money The cost of 'services' The prices charged by scientology for auditing or courses are very high, often running into thousands of pounds. A scientologist, although 'clear' is required to go on being audited and taking courses to advance up the bridge for all of which he has to pay. Over the period of 15 months before the chaplain's court in May 1980, the father and step-mother paid into scientology L8,000 at Saint Hill and L6,500 at 'Flag', a total of L14,500. They have continued throughout the years to go on courses and being audited and have paid large sums of money. They plan to go on doing so and, indeed, will be subjected to harsh disciplinary methods if they do not. No recruit or scientologist can have these services without the paying for them. There is no tempering of the wind to a shorn lamb. Scientology claimed recently that they would 'clear the planet' within 5 years. Herein is a paradox. How can they clear all pre-clears when the majority cannot possibly hope to pay? But, I suppose, it is swallowed by the adherents just as everything else is. Their reasoning powers have been blocked out. Apparatus and materials There is a very long list of these and scientologists are expected to buy at heavy costs. An example is the 'E meter'. Hubbard in his book Scientology: The Fundamentals of Thought describes it as follows: 'The Hubbard electrometer is a religious artifact used in the church confessional. It, in itself, does nothing, and is used by ministers only to assist parishioners in locating areas of spiritual distress or travail.' 'Ministers' are auditors. 'Parishioners' are people being audited. That is the description of it for public consumption. Privately it is used as a means of intimidation (see the US Mission Holders Conference below). Dr Clark described it as a crude lie-detector. The psychologist, already mentioned, describes it as a psychogalvanometer, costing L28.50. The father and step-mother have one in their house which they bought some years ago. It cost them about L400. 'Regging' This is the word used to describe extorting money. Examples proved in evidence and not challenged are: Two people were persuaded to sell their respective houses. Proceeds were used to pay for scientologist services. Both were left with virtually no assets. A man was persuaded to pay the entirety of his worker's compensation payment, approximately $18,000, towards 'services'. A man was persuaded to pay $52,000 out of a settlement awarded to him for permanent injuries from a motorcycle accident. A married couple were persuaded to pay $105,000 by selling off a large part of the wife's inherited stocks and shares. A man undergoing chemotherapy for terminal lymphatic cancer was persuaded to pay $24,000. These are examples only. The US Mission Holders' Conference, San Francisco 1982 Missioners are those in charge of scientology missions whose function it is to proselytize and get people into scientology. They were summoned to a 'conference' in San Francisco to be addressed by 'top officials of the sea organization'. These persons ae given the appellations of naval ranks. Hubbard is the 'commodore'. The top officials were a 'captain' and two 'commanders'. They took it in turns to harangue the unfortunate missioners. Present were scientology's own police and 'masters at arms' (MAAs). The whole burden of the harangue was get more money in or else. They had to double their quota of recruits. They had to pay $15,000 a day for investigators. They had to get rid of certain publications and buy others. Each one had to buy a projector for $2,000 and so on. If they did not comply they were going to be punished and 'you'll be meter-tested' or 'get the E meter'. For those of us old enough to remember, it is grimly reminiscent of the ranting and bullying of Hitler and his henchmen. It gives the flavour of the reality of what scientology is and does. I include the transcript of the mission holders' conference as an appendix to this judgment. Counsel were agreed that the first 30 pages are irrelevant and these are not included. 'Make more money' In HCO policy letter of 9 March 1972, Hubbard directed: 'Governing policy The governing policy of finance is to: A. Make money B. Buy more money made with allocations for expense (bean theory). C. Do not commit expense beyond future ability to pay. D. Don't ever borrow. E. Know different types or orgs and what they do. F. Understand money flow lines not only in an org but org to org as customers flow upward.' [I think customers flowing upwards means scientologists advancing up the bridge.] G. Understand exchange of valuables or service for money . . .' [and there is a reference to policy letter Exec Series 3 and 4]. H. Know the correct money pools for any given activity. I. Police all lines constantly. J. Make money. K. Make more money. L. Make other people produce so as to make money.' What happens to the money? Mr Armstrong is in a better position than most to know where the money goes. His evidence, together with other evidence, shows that most of it goes into the pocket of Hubbard and he has described how it is 'laundered'. The children's school It is the mother's case that the school is under the control of the 'church' of scientology in East Grinstead. The father's case is that it is entirely independent of scientology. It is not disputed that of 89 pupils all but 7 or 8 are the children of scientologists; save for 2 or 3 temporary or part-time staff, the principal, deputy principal and all the staff are scientologists. The governors or managers are the board of trustees. All of them are scientologists, one of them being the father. Scientology as such is not taught as a subject. But all the ambiance is of scientology, and it is plain that the 'church' exercises a strong influence if not, indeed, control. A pupil wrote a letter which the principal circulated as a 'success story'. It reflects scientology language and notions. I have alredy mentioned the 'knowledge report' sent to the 'church' by the principal about a parent. Another scientology parent who had fallen foul of the 'church' and was not 'in good standing' was ordered to remove her children. The principal was called to account by 'ethics' for allowing a scientologist who had incurred the 'church's' displeasure to attend the school fair. The school pays money annually to scientology. The facts speak for themselves. Scientology's indoctrination of children The objective of scientology is to capture the child and its mind. The auditing -- the processing -- begins at an early age. In child Dianetics 1968 edn, Hubbard writes: 'It is possible to process a child at any age level beyond the point when he learns to speak. However, no serious processing should be undertaken until the child is at least 5. Extensive dianetic processing is not encouraged, except in very unusual circumstances, until the child is at least 8 years of age.' In The Second Dymanic 1982 edn, under the heading 'Children's Confessional Ages 6-12' is a 'processing check for use on children'. It is a very long and rigorous interrogation. Dr Clark says this: 'Among children's many development needs is the capacity to deal with strangers and diverse interests. A child brought up strictly within the closed system of scientology would tend not to develop these capacities and instead look upon the non "cleared" outside world as a totally alien culture. The "technical processes" used by scientology to educate children are mind-focusing, hypnotic and anaesthetic. Such states of mind, which are induced in order to secure lifetime allegiance of scientology, can mask real disease. Children need human nurturance from human -- that is to say fallible -- models in order to become autonomous and adaptive over a lifetime. The experience of stressful and manipulative scientology training not only consumes a great deal of time unconstructively, but it favours identification with the process rather then with human, parental authorities.' In Booklet 2 of the Professional Court (1982) Hubbard writes: 'A very effective thought control technique could also be worked out from scientology which could be used to make individuals into willing slaves.' In my judgment that technique has been worked out and is operated. I agree with Dr Clark that 'scientology training is training for slavery'. Dr Clark adds: 'Children also become damaged pawns in family conflicts as the result of scientology policy which teaches people how to manipulate others. One sees the untoward effects of this policy within the family home when the groups work to alienate a child from a spouse who has incurred the "church's" disapproval and who must be shunned by any means available. A prescribed tactic often used to this effect is called "third-partying" by which a child can be subtly alienated from a parent who may not be acceptable to the "church" of scientology by blaming problems and conflicts on the non-conforming spouse or other close family members. Apart from direct psychic damage, a most significant result of this process is that the child loses half of his parental nurturance.' There is a large, a very large, body of evidence, most of it undisputed, in this case supporting Dr Clark's analysis and I am left in no doubt that he is right. A sad episode during the hearing was the evidence of a young man. He is greatly gifted and did exceptionally well at school and university. His parents are scientologists as are his brother and sister. They are all totally committed. He did his first simple course at the age of 6 and a further basic course, 'The Hubbard qualified scientologist course', 2 years later. Since then he has continued with course after course. He was cross-examined gently by Mr Kennedy. It became apparent that he simply could not accept that there was or could be anything wrong with scientology. The part of his mind which would otherwise have been capable of weighing objectively the criticism of scientology had been blocked out by the processing. He has indeed been enslaved. Mr Kennedy coined an accurate shorthand phrase to describe this: 'scientology blindness'. Is there a good side to scientology? Lifting the ban Some reliance is placed by the father on the lifting of 'the ban'. In July 1968 the then Government imposed immigration restrictions on non-British students of scientology. In July 1980 the ban was lifted. The Home Secretary announced this in a written answer (No 123) in these terms. 'Yes, this policy which applies to scientology alone was announced in 1968 by the then Minister of Health who stated that scientology was socially harmful and that its methods could be a serious danger to the health of those submitted to them. My Right Hon Friend the Secretary of State for Social Services is not satisfied that there is clear and sufficient evidence for continuing the existing policy with regard to scientologists on medical grounds alone. I have accordingly decided that the ban be lifted.' The inference, it is suggested, is that scientology is not harmful. Well, the Home Secretary's answer is in very guarded terms. I do not know what material the Department of Social Services had. It did not consult the views of Dr Clark and his like-minded colleagues. I doubt whether it had the documents which have been proved in this case. I cannot properly attach any weight to it. It followed intensive propaganda by the 'church' and lobbying of MPs and others in which the father played a very active and time-consuming part. Narconon This is a compaign against drug abuse participated in by scientology. It seems to have had some success and has been much publicized as such by scientology. Crdit for it is somewhat diminished by the evidence of Mrs B, who was in a position to know and who says that part of the funds raised for it were syphoned off to Hubbard. 'A religion' Scientology approached a large number of theologians and other savants on the question whether scientology is a religion. These have been put in evidence. The definitions vary. Some of them would embrace such cults as satanism or devil-worship. Their purpose was to try to obtain acknowledgement that scientology was a 'religion' within the meaning of certain fiscal enactments and so obtain tax immunity. They succeeded in Australia on appeal to the High Court of Australia from the decision of the Full Court of the Supreme Court of Victoria. The question whether scientology is or is not a 'religion' for tax purposes seems to me to have nothing to do with the issues I have to decide. If all this material was put in evidence to suggest that the courts of Australia have been satisfied as to the rectitude of scientology no such suggestion is warranted. In the courts of Victoria it was found to be a 'sham'. The High Court of Australia neither affirmed nor dissented from that desciption. Adopting the definition of 'religion' that it did, it was not necessary to do so. The question, in the view of the High Court, was not whether Mr Hubbard and the persons in ultimate command were charlatans, but whether the adherents believed in them and their ideas, observances and practices. The adherents accord 'blind reverence', said the High Court of Australia, to the written works of Mr Hubbard and so there was a 'religion' for the purposes of the legislation in question. I have searched and searched carefully for anything good, some redeeming feature, in scientology. I can find nothing, unless it be such participation as there has been in the anti-drug abuse campaign. Conclusion as to scientology In Re T (Minors)(1981) 2 FLR 239 (decided in 1975) the Court of Appeal was concerned with children one of whose parents was a member of another and very different sect. In the course of his judgment at p 244H Scarman LJ (as he then was) stressed that: 'It is conceded that there is nothing immoral or socially obnoxious in the beliefs and practices of this sect.' Scientology is both immoral and socially obnoxious. Mr Kennedy did not exaggerate when he termed it 'pernicious'. In my judgment it is corrupt, sinister and dangerous. It is corrupt because it is based on lies and deceit and has as its real objective money and power for Mr Hubbard, his wife and those close to him at the top. It is sinister because it indulges in infamous practices both to its adherents who do not toe the line unquestioningly and to those outside who criticize or oppose it. It is dangerous because it is out to capture people, especially children and impressionable young people, and indoctrinate and brainwash them so that they become the unquestioning captives and tools of the cult, withdrawn from ordinary thought, living and relationships with others. The future of B and G To summarize first what counsel have conveniently described as the conventional factors, B and G have been with their father and step-mother for 5 1/2 years and with their step-brother, J, and half-brother. They are cherished by their paternal grandparents and by their step-mother's parents. It is a warm close family circle in which they are well cared for and thriving. They love them all and are loved by them all. The mother loves them and has kept in close, regular contact with them in England and the country in which she has settled with the step-father and to which they wish to return. They love her and are fond of the step-father. She too has a close family circle waiting for them, sisters with children whom B and G already know. And there is their half-sister A. The mother impressed me as a very nice sensible and honest young lady. The step-father too left an altogether favourable impression. The father and step-mother also impressed me as a very nice couple save in those parts where they are poisoned by scientology. A couple who are not scientologists gave evidence. They are not close. They are more acquaintances than friends. The link is their daughter's friendship with G. They speak of the father and step-mother as a nice, normal couple with a happy family life with the children. The family doctor gave evidence to the same effect. She did say that she has seen little of them and the children. She is not herself a scientologist but has scientologists among her patients in East Grinstead. She said that her scientologist patients consult her less often that do the others. This is not surprising. Hubbard is opposed to orthodox medicine in general, proclaiming that his own methods are better, and strictly, a scientologist has to obtain permission to seek orthodox medical treatment. Their previous doctor was a scientologist in East Grinstead. But he has recently led a campaign against the 'church' methods and practices and especially its exorbitant charges for auditing and courses. He is no longer 'in good standing' with the 'church' and is no longer the family's doctor. But I am confident that the children's physical health is not neglected especially by the step-mother who appears to me, rightly or wrongly to be less fanatically dedicated to scientology than the father. It is, of course, the children's personalities and individualities and their freedom of choice and to grow up as normal young people which is the cause for concern. If the children were to go into their mother's care they would not, of course, be going to strangers or to an institution. None the less, they would be leaving what has been their real home and family circle. It would be an upheaval. It would certainly be confusing and, I think, probably seriously distressing for them for a time. Although there are factors on both sides, if the matter rested there I would judge that it would be in the better interest of the children for there to be no upheaval while ensuring very ample access to their mother. Does the scientology factor tip the scales the other way? Both the father and the step-mother have been scientologists for many years. They are totally committed, as they agree. They have continously been audited and undergone courses. They have paid very large sums of money. Mr Kennedy suggested that the father has lied when it has suited himself or scientology. Mr Kennedy certainly cannot be criticized as making that suggestion groundlessly. Two example out of several are these: The father in the witness-box professed respect for British justice as the best in the world. In his submission to the chaplain's court he said, and I quote: 'There was no similarity between wog law and justice'. In his affidavit sworn on 14 June the father deposed: '. . . there is no effort or attempt on my part to indoctrinate the children with the beliefs of scientology, although there must be a natural "rubbing-off" on them of certain facets of my beliefs'. [And] '. . . it is my belief that all my children should be free to make up their own minds about scientology and whether to pursue it, when they are old enough to make a decision. I have no intention of forcing any of my children to become scientologists, to take scientology courses or to be audited.' That is not true. There is more than one way of 'forcing'. In his submission to the chaplain's court he said: 'I really wanted to keep the children with me as a prosurvival urge for them and me to bring them up as worthwhile intelligent fulfilled beings using scientology tech' ['tech' means 'technique'] . . . 'It is our intention to raise the children as intelligent worthwhile people using scientology tech and policy. This is being achieved.' He has audited B and J. The children have been taught 'contact assists' and 'touch assists', two allegedly healing techniques. The two boys have had two sessions of a form of training or auditing which involved sitting facing each other for half-an-hour. They have been removed from their previous schools and put into the scientology-controlled school. They have been taken to 'Flag' in the United States. With one or two exceptions all their friends are the children of scientologists. All this has begun to make its mark on the children. Recently B asked the mother whether he could have a certain friend to stay for the weekend when with her 'because he's the only one whose parents will let him to come to your house'. Recently G asked her mother why she was not a scientologist. Her mother pointed out that people could be good people without being scientologists and observed that two widely respected personages in whom G is interested were not scientologists. To this G replied 'they would be better if they were'. If they were to remain with the father and step-mother without conditions the process would go on with all the consequences to the children earlier described including, inevitably an ultimately, alienation from their mother. It would be nothing short of disastrous for them. At the end of the hearing Mr Johnson suggested that what is best of the status quo (that is to say living with and being cared for by the father and step-mother with the other children) could be preserved while being cut off from scientology until they are grown up and can make their own minds up. He acknowledged that this would mean that the father and step-mother would have to sever any connection with scientology, the family would have to move from East Grinstead, and the children removed from their school. It was not mentioned, but in fact it would mean a similar cutting off of J and S. And I was left wondering whether the full implications had been thought about and grasped by the father and step-mother. Mr Johnson told me that consideration had been given to seeking some appropriate dispensation from the 'church' but it was not thought that this would be forthcoming. That is not surprising. What is proposed is the ultimate heresy -- a 'high crime'. Would what is now proposed be the most advantageous of the options for the children? I do not think so. The father and step-mother remain totally committed to scientology. After much of the evidence had been given and they had read the written material (mainly consisting of scientology's own documents) I hoped that their eyes might be opened and said that if that happened they should feel free to tell their advisers and the court. They did not. They did say that they 'might stand back' from scientology while the children are growing up. I am afraid that that did not carry conviction. They remain afflicted by ' scientology blindness'. The father said that he would seek to correct the evils disclosed during the hearing. But what could he do against the power of the 'church'? Nothing. The result would be that he would be declared a suppressive person with all that that would entail for him and his family. Apart from the upheaval, new environment, new home, new school, new friends, the pressures of the 'church' and of their own beliefs and consciences would be far too much for them. And to cut themselves and all the children off from scientology would have traumatic and emotional consequences on them and through them on the children. The balefule influence of the 'church' would in reality still be there and the children would remain gravely at risk. One cannot, alas, attribute so many ounces or pounds to this factor and so much to that and so much to the other and then do the resulting adding and subtracting. Weighing up all the factors, including the scientology one, I have reached the conclusion that in the interests of the children now and in the future the scales come down in favour of them making their home with their mother and come down that way decisively. Accordingly, they will be committed to the care and control of their mother with leave to take them out of the jurisdiction to live in the country in which she and the step-father have settled and where, I should add, I am satisfied that the material and educational facilities are satisfactory. This does not mean that they will be cut off from their father and the rest of his family. That would indeed seriously upset them. They love him as he does them. They will stay with him regularly. There will probably have to be conditions but they should be easy to observe and not interrupt his wife, himself and their other children in the practice of their beliefs. This has been a very lengthy judgment mainly because of many verbatim recitals of scientology's own documents whose authenticity is not disputed. I have taken that course deliberately. The 'church' resorts to lies and deceit whenever it thinks it will profit it to do so. It will, I think, find it less easy to gull and dupe others in the face of its own documents and, so far as its practices, methods and objectives are concerned, there will be less scope to counter this decision about these children on any factual basis. DISPOSITION: Children cmmitted to care and control of the mother. SOLICITORS: Tweedie & Prideaux for the mother: Stephen M Bird & Co for the father. APPENDIX: Extract from transcript of the US mission holders' conference at San Francisco in 1982 (see [1985] FLR p 152). Cmdr David Miscavige: One thing the Executive Director International went over that's needed from the missions is Book One auditing, as a major action from missions: Getting new public in and getting them on Book One. Aside from the quota or whatever, that's what's needed. Book One auditing. That's the bottom of the bridge, lots of Book One auditing. Doesn't take a lot of resources to deliver it, you all know that. So Book 1 is needed from missions and in a big way. Next person that's going to be speaking is Commander Wendell Reynolds. He is the International Finance Dictator. And he's also going to be talking about the promotion for this Book One Campaign and the upcoming Book One promotion. Mr Reynolds. Audience: (Applause.) Cmdr Wendell Reynolds, International Finance Dictator: All right now, collectively you guys are in some weird lower condition. By association if no other reason you have allowed the missions to go squirrel and I mean squirrel. Now, I don't know if you're aware of this but the Finance Network has recently been beefed up and we have an FBO and Deputy FBO on post in just about every org on the planet. The Deputy FBO's job is to drive public in on the orgs and the FBO's job is to get those pubic serviced. Now, right now you guys are CI on my lines, maybe one exception in this room, but I doubt it, because you guys are sitting on public, you're ripping off the orgs, you're doing all manner of crazy things. Now, we are going in on the orgs and we're finding this stuff. The $250,000 that Stevens Creek has regged from people who had already gone Clear over the last few months -- somebody's already paid for it and there are some more dues to be paid on that one. I'm not going to have this stuff. Now some of these guys you see standing around here are International Finance Police and their job is to go out and find this stuff and if you guys are guilty of it, you've just had it! So, are we talking the same language here, now? Anybody have any doubts about this one? (Pause) Okay. The old routine here was you got Scientology justice procedures applied to you when you did something wrong. Well you guys are a separate corporation from the Church and when you rip-off or steal from the org, or bribe people it's a corporate crime and you can be real sure that you're going to all end up in the slammer. Now, I figure that you guys owe these orgs, I don't know how many millions of dollars, how many hundreds of thousands of pcs from the rip-offs, collectively speaking. And I say collectively because you guys by association are taking on the condition that you failed to assign. And if you read the policy 'How to Assign Conditions' you will see that the condition that you fail to assign you will take on. And there are people in this audience, right now, who are wholesale ripping off orgs. Anyone want to volunteer that they're doing it? Nobody here will volunteer? COSMOD San Francisco here? Are you COSMOD San Francisco? Is COSMOD San Francico here? Is that you? Do you agree? I'm going to put you on the meter later on if you say no. Someone in the audience: Me? Cmdr Wendell Reynolds: No, him. Okay? I want some dues paid on this and I don't want these public coming into these orgs on these quotas to be the guys you're giving back having ripped them off. These are new people. Anybody ripping off comes back just as they went off the lines. No ifs, ands or buts. No walking into the org, take the pc folders and take them up to the missions, none of that stuff. You guys are a flow up, not a flow down and not a holding action. Now, this convention is costing the Church money. You're all paying 75 bucks a head for the joy of listening to this whole thing so you get put into proper reality. You're all going to sign your 5% minimum CGI donation to this DMSMH Campaign. Do you realize if the missions paid for the compaign as a whole it would take you guys some 200 weeks of you current payment level? Four years. You could never afford to do it and yet just having in the phone book "Dianetics" and "Scientology" is going to get you a bundle of public in. You're not getting more information cards from the orgs, nothing! You're gonna get Dianetics and Scientology as a household word. And even the top PR experts available to us, who've been planning this whole thing out with targets and so forth so this thing is going to fly. And if you look at it Battlefield Earth has been released on the same pattern as the early 1950s when LRH was a popular writer with DMSMH released right, right on the heels of it and that put it right on the best-seller list. And right now Battlefield Earth is selling out and selling out and selling out again. So we got a tremendous popularity thing going and you guys are getting a gift at 5% of CGI -- it's a total gift. So if I hear one person in this room who is not coughing up 5% as a minimum you've got an investigation coming your way because you got other crimes in your mission. Questions of that? Do you guys have an unreality on the rip-offs that are going from orgs? Do you have some unreality about Academics being delivered in missions? Academy Levels? Any unreality about people who have gone Clear being kept or re-reged in the mission? There's one example of a person being reged for 52 intensives after going Clear in a mission. Do you have any idea about the penalties for taking public off the orgs' lines -- it's $10,000 a head per policy. If you rip-off a staff member or have a staff member working in your mission at the same time he's employed by an org you pay for the entirety of his training processing plus a $2,000 fine. And that will all be enforced in addition on the mission in addition to any individual penalties leveled in a criminal nature. Is that all real clear? Okay. We're talking PT now. Whatever you had going in the past is whatever you had going in the past. Lines drawn right here and right now. You guys are going to all write up your O/Ws tonight. Before you leave and you'll get meter checked. And I want everybody straight -- on yourselves and anybody else that you know. And if you don't come clean and I find out something later on that P/L is enforced. You are guilty of anything that you didn't report on. Right per that P/L. We talk the same language? Audience: Uh-huh. Cmdr Wendell Reynolds: Any questions? Anyone want to leave? Okay. If we will pull this thing together and get all these nuts off the line and actually do Dianetics and Scientology you can go anyplace you want to go. Right now there is so much crimiality floating through this mission network I don't want to hear about it. IF you come clean we'll work out some reparations for all the rip-offs that you've done in the past and straighten the record. If you don't want to come clean, forget it. If you've done stuff in the past and you come clean now we'll give you the benefit of the doubt. We'll assume that you weren't hatted or you were misdirected or something else. You don't come clean tonight and I find out something after this, man, you've had it. That's all I have to say. Audience: (Applause.) Cmdr David Miscavige: Just a recap on everybody, because that was actually the last speaker. As you basically see we have a new corporate structure, have a new organization. There's flowlines. There's new management. The infiltration days are over, the bribe days are over, the anything-goes days are over. What goes is standard policy. What goes is people flowing through the bottom of the bridge up the bridge. What goes is no rip-offs. I was in San Francisco Org today and a Mission Holder from Seattle came in to get an org pc. Well that person's paying $10,000 and her mission status is being reviewed. Now I don't want to close down a bunch of missions. But I will tell you something -- somebody who's going to rip-off orgs and not apply policy then obviously they're not about to apply Scientology tech either. So therefore I don't trust them and we're better off without them. Just so you know where we stand. Now we can all get along easily if policy is applied. We're not talking about anything else. We're not giving any whimsical rules. Because of all out-ethics that's gone on in the last two years specific things like the Mission Holders "Mutiny". That's just not going to go on anymore. That hurts everybody and it's at an end. So we had to get real tough and we've gotten tough. Our organization will not be violated. Neither legally or ecclesiastically. Standard Tech, Standard Policy, that's the name of the game. And because we mean business we're going to go legal. We will prosecute. If you take a look at it any person who starts to take rip-offs, should've been getting more people into the mission or into the orgs and by actually getting a lot of missions and orgs functioning and everybody would be prosperous. The rip-off artist makes everone suffer and work harder. It's an everybody loses situation. So what we've done is set up everything so it's an everybody wins situation. The rule of the game are laid out. There's nothing else, there are no arbitraries. But as I stated, there will be no rip-offs or out-tech tolerated. Those are the rules. And they will be stuck to. There's no more "do whatever you want", "we don't care as long as your stats are up". That's nuts. And in every case we investigated where these upstats were going on in the face of out-tech and off-policy, we find that they were false stats. So apply policy, apply tech, apply the flowlines of the bridge and there's policy on that for missions, and we all win. Okay? Next thing is we have some MAAs over here; they're going to pass out some paper -- as Mr Reynolds pointed out, we're going to have O/W write-ups and the $75 collection to pay for this convention and Knowledge Reports. Standard Knowledge Reports. So right now is the time to come clean and get a fresh start. Everybody in agreement? Audience: Yup (agrees). Cmdr David Miscavige: Okay. Pass them out. (Sounds of paper shuffling and talking in the audience. Break for O/W write-ups and Knowledge Reports.) (Recommencement of conference.) Cmdr Wendell Reynolds: Now the procedure which we have worked out for how to square the books on this whole thing is that we are going to record every point of inflow from organizations into missions. And you will do that by returning to your missions and require O W write ups and knowledge reports from all your staff to fully document all the points of inflow into the mission from orgs. And that will be pcs, students, staff, mailing lists, people reged for mission services beyond the point they should have gone to a higher org. Academy levels, anything else which has been delivered in violation of the intention of missions and that is intended to represent accurately the entire overt on orgs of the mission since the day it started. And we are going to start with the COSMOD Mission: and the Stevens Creek and we are going to send teams in who will be doing meter checks at the end of all the write-ups and verifying the estimation. Do you have a question of this, do you get what I am saying? (Person raises hand.) Cmdr Wendell Reynolds: Yeah? Person: I don't quite understand what you mean about, I understand but I'm not quite getting the outflow, inflow into the missions from the org. Cmdr Wendell Reynolds: Inflow to the missions from the orgs. Person: From the orgs. Cmdr Wendell Reynolds: Yeah. The flow, the flow from missions is up the Bridge to orgs. OK. Everything which flows from the org down to the mission is an overt of the flow on the Bridge. Person: I got it. Cmdr Wendell Reynolds: And that is essentially what we are addressing here. What we are trying to do is erase an engram which has been in place for some time and that is going to take more than just cleaning up your own universe. It is going to take some physical universe action.

Person: Right. Cmdr Wendell Reynolds: There's factually a liability condition that exists. And in some cases, some of the mission it is going to appear perhaps insurmountable and yet you will find that by actually handling the overt you will then unleash the potential of the mission to start to flow up the Bridge. If we don't handle that, as an overt and as an engram we are going to be stuck with the wrong condition on the Bridge and it will not flow. So the intention is, all the backlog off the line. Clean the slate and once we've got the full estimation we will work out with the individual Mission Holder how that's going to be repaid to the orgs. Because in some cases it is going to be in the millions of dollars like COSMOD, it is going to be in the millions margin. Stevens Creek, we already know: it is quarter of a million over the last couple of months of people who were reged after they went Dianetic Clear. That is all overt. That's all going to get cleaned up. On the teams that will be going in: will be to verify by meter check the accuracy of what's going on and to do physical universe inspections of the actual records, the past files, the pc folders and so forth of the org. I mean I'm sorry for the mission. And we will get all that as straight as it can be gotten. And we will reorient these flows up the line. So that is the basic orientation. We will start with those two, which are the biggest chains and then we are going to go around the rest of the US and then we are going to go to the NON US. We are just going to end this whole game once and for good and even the score. And then from there, it is all up line. My postulate is that everybody comes fully clean, if you have mission staff. Like some of the Mission Holders said that they don't know what went on in the mission. Well that is inexcusable. You are still responsible for what went on there and it will be treated in that vein. So, you are to go back and find out from your staff what actually has been going on and the entirety of what has been going on all the way back to day one of the mission. I want to just clean that up. So we will send in some teams who are outside and won't have mutual rudiments with the mission to assist on the meter checks on that. And if you have staff that won't come clear they will be ordered to Flag for sec check either at the mission expense or at their own expense at preferential rates. And they will get a full sec check until the actual scene is broughten out. Brought out into the open. You will probably find that you have attracted certain staff who are there for the wrong reasons, who will have to be sorted out and that is just the way it goes. But that is the basic game plan and that is the basic way that we can win on this thing. So, do I have your agreement on that? Audience: Yes. Cmdr Wendell Reynolds: Okay, All your knowledge reports and so forth are to be sent to Int Finance Ethics Officer at Flag and you should keep a copy of everything in the mission so that when the mission comes in to do the verifications and meter checks and so forth they will have the raw data as well as having a full data bank at Flag. And I am sure we will get various and sundry things to be cleaned up and the intention here is to clean it up. We don't necessarily like to declare people or handle ethics except where it is necessary for the "greatest good for the greatest number of dynamics", in which case we do it wholeheartedly. And you can just tell your mission staff and I am sure that you have got the message by now yourselves, that we are not goofing around. That this planet is a mud bowl and it is going to stay that way unless we fix it. And the determination I believe is appearing in this room to make that actually happen on the organizational pattern as laid out by LRH. So having your full support on that will be of assistance. If we don't have it it is going to be too bad for you. So go back and give that message to your Mission staff and let's get this thing straightened out and moving. What you say? Audience: Yes! Cmdr Wendell Reynolds: Okay. Thank you. Audience: (Applause). Capt Guillaume Lesevre: All right. So you've got your quotas. You guys all written down your quotas? Audience: Yes. Capt Guillaume Lesevre: Pcs and students to orgs. Very good. Now. Now you've got to double those quotas of new people you are going to start on services. Just take those quotas, double them for the week on people you are going to start in the mission for the first time on services. Because I tell you something. I've told it to you before, you are going to have to start to reaching out for the new public. All right. Now on those quotas, the public, the people you are going to send back to the orgs that belong there. You know. People are gotten there this year starting in the orgs that you are going to have to, this week, re-send back to the orgs. They don't count on those quotas. Is that clear?' Audience: Yes. Capt Guillaume Lesevre: The pcs and students that you are going to send those orgs have never seen them. All right. Now, reading some of these O/Ws, we see that we've got a whole bunch of cycles. You know. You've got a lot of cycles to handle now. To clean up that stuff. You know, Academy levels sold, ah, people over-reged after Dianetic Clear and things like that. You are going to have to start to handle that tomorrow. Right away. You should, when you go back, you should make a list, you know, and write down all those cycles to start cleaning them up and ending them. I mean, those teams that are going to come to the Missions you know, your missions are going to be paying for it. Now if you start to handle your own scene, you know, fast, this week, you will be saving some money as well. Cmdr Wendell Reynolds: The price for the missions coming in to do the verifications will be $15,000 a day. You can save yourselves a lot of time and expense if you just get your whole act together. You can either meter-check your staff in advance if you want to, whatever you want to do. So the missions can come in and just verify the whole thing and as much preps as you do is the faster it is going to happen. If they are there for a long time, it will be expensive. If they're not it won't be as expensive. They'll be paid at the start of each day that they are there. Capt Guillaume Lesevre: Good. If I were you, I'd start getting going on that right tomorrow, okay? Audience: Yes. Capt Guillaume Lesevre: The other thing I want to say is, I want to stress again -- this is the moment when we're going to find out who is with us and who is not with us. I can tell you something. I had so much trouble with missions in the past that in one country in Europe I forbad that there were any missions. It was forbidden in that country. That was Italy. Now that country is a country that is expanding the most, where scientology expanded the fastest on the whole planet. No missions, not one. I'm not saying that there shouldn't be missions. That is just to show we don't owe anything to the world. We don't have to have anybody. Is that clear? Audience: Yes. Capt Guillaume Lesevre: Okay. Now you have double quotas on the pcs and students that you are going to send to orgs of new people you are going to start on basic services, right? Now when you come back, I suggest definitely that you get rid of all those Ruth Minshull and Peter Gillnam and other publications and you just get on LRH books. Just go down in your reception in your bookstore and just get those other books out of there. Because what do you want to do? You want to get on Source and you want to have a stand out intro line. Really stand out intro line. Now in order to do that, you got to get the projector. You got to show the LRH Film, like the Freedom Film and then you got to deliver your Book One auditing and train Book One auditors. hat is what is needed and wanted. And that is how you are going to do it. All right. Now before you leave, outside they have this table with two persons from the Golden Era Studio and each one of you is going to get a projector. It is $2,000. Each one of you is going to get a projector. How many of you guys have got a projector in his mission now? Okay. Those that don't have a projector, get a projector before you leave from here. Then you are going to get the Freedom Film and you are going to start showing that. Okay. We are going to get that whole scene completely stand (stamped) out and on policy and on Source. Every single last bit of it. Okay? Audience: Right. Great. Capt Guillaume Lesevre: Very good. Anyone of you here been using a thing called the Counsellor Ad? Audience: Yes. Capt Guillaume Lesevre: Who has been using that? Audience: (Raise of hands.) Capt Guillaume Lesevre: All right. That ad shouldn't be used. Okay? It has been misused. And it is misleading. Okay? People come in. They come for a certain reason, and then they find out that is not what is being offered to them. Don't use that ad. Getting standard new public procurement actions. You can Body routing. You distribute fliers, FSMs. Show them films, Intro Lectures, Book One auditing. Cancel that ad now. Cancel it. Its no good. SMI will be giving you a new ad to put up. But in the meanwhile don't wait for it. Cancel that ad right now an get on all the other procurement actions. Okay? Audience: Okay. Yeah. Capt Guillaume Lesevre: All right. Audience: (Applause.) Cmdr David Miscavige: Okay. The last two things. One is, I don't know, I guess you guys will be talking to other Mission Holders once you leave. Correct? Audience: Right. Cmdr David Miscavige: I believe all the Mission Holders in the US were called to come to this meeting and several didn't. You might want to just tell them one thing. Just a message. They will be getting the message anyway, but you will probably be quicker, I know how fast the rumor lines or the phone lines are. We have run across something recently whereby there's a little technique of make wrong when someone tries to put in ethics. It's actually a suppressive make wrong. It goes 'If you put in ethics, we're going to crash our stats to show you that you can't put our ethics in and that is a wrong indication'. Tell them we don't buy it. If it happens they will get a mission. A Sea Org mission to their mission. Okay? Just a little message. Last thing I wanted to mention is, now is the chance to straighten out everything. It really is a chance to start on a new road up, fresh. It is only going to happen with all these cycles which Mr Reynolds and the ED Int spoke about and if you do that, you are on the winning team. We are winning legally. We are winning statistically. And scientology is going up. I just want to let you know that because that is the plus point of it all. And we will win in the end. Okay? Audience: Right. Church of Scientology of California v Customs and Excise Commissioners COURT OF APPEAL, CIVIL DIVISION [1981] 1 All ER 1035, [1981] STC 65 HEARING-DATES: 22 APRIL 1980 16 JULY 1980 16 JULY 1980 CATCHWORDS: Value added tax - Supply of goods or services - Supply in the course of a business - Business - Body incorporated to propagate religion or religious philosophy - Courses provided to further that aim - Sale of books and other merchandise relating to the religious philosophy - Whether goods and services supplied in the course of a business carried on by the taxpayer - Finance Act 1972, s 2(2). European Economic Community - Reference to Court of Justice of the European Communities - Findings of fact - Relevant findings required before reference - EEC Treaty, art 177. HEADNOTE: The taxpayer was incorporated in California with the object of propagating 'the religious faith of Scientology' and pursued that object in the United Kingdom from premises at East Grinstead by providing 'auditing' and 'training' courses and by selling books, Emeters and other merchandise relating to Scientology. The taxpayer was assessed to value added tax under s 2(2) a of the Finance Act 1972 for the period of five months ending on 31st August 1973 on the basis that it was carrying on business in the United Kingdom and was making taxable supplies of goods and services in the course of that business. The taxpayer appealed to a value added tax tribunal contending (i) that the courses provided by it were education of a kind provided by a university otherwise than for profit within Sch. 5, Group 6, item 1 (b) b of the 1972 Act and accordingly there was no taxable supply within s 2(2)(a) of the Act and (ii) that it was not carrying on any business and accordingly the goods and services supplied by it were not in the course of a business carried on by it within s 2(2)(b) of the Act. The tribunal dismissed the taxpayer's appeal holding that the overall activity of the taxpayer was one indivisible business consisting of the propagation of scientology as a commodity and that throughout the relevant period the provision of the training and auditing courses in scientology and the sales of books and other merchandise relating to scientology amounted to taxable supplies in the course of such business. On appeal, the judge ([1979] STC 297) affirmed the decision of the tribunal ([1977] VATTR 278) holding that as a matter of law there was no reason why a body which propagated a religion or a religious philosophy could not be regarded in so doing as carrying on a 'business' within s 2(2) of the Act. The taxpayer appealed against that decision to the Court of Appeal, but prior to the hearing of the appeal, by motion, sought a reference by the Court of Appeal under art 177 c of the EEC Treaty of the Court of Justice of the European Communities for a preliminary ruling under the Second Council Directive of the European Economic Community of 11th April 1967 (Dir 67/228/EEC), arts 4 and 6(2) or under s 2(2)(b) of the 1972 Act construed in the light of the EEC regulations, whether a body propagating a religion or religious philosophy could, as a matter of law, be regarded as carrying on a business so as to be treated as a taxable person. The Court of Appeal deferred the hearing of the motion until the hearing of the appeal on the ground that there was no relevant finding of fact on which a reference could be based. At the hearing of the appeal the taxpayer, on an amended notice of appeal, sought to raise an argument, not advanced before the tribunal or before Neill J, that the Second Council Directive of the European Community of 11th April 1967, arts 4 and 6(2) had the effect that a non-profit making religious body was not to be regarded as carrying on a business, and that that directive, intended to produce uniformity throughout the community as regards value added tax, took precedence over local legislation, and asked the Court of Appeal to remit the case to the tribunal to determine whether or not the taxpayer was a religious or philosophical body. a Section 2(2), so far as material, provides: 'Tax on the supply of goods or services shall be charged only where -- (a) the supply is a taxable supply; and (b) the goods or services are supplied by a taxable person in the course of a business carried on by him...' b Schedule 5, Group 6, item 1(b) exempts -- 'The provision of education if... (b) it is of a kind provided by a school or university and is provided otherwise than for profit.' c Article 177, so far as material, provides: 'The Court of Justice shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of this Treaty; (b) the validity and interpretation of acts of the institutions of the Community; (c) the interpretation of the statutes of bodies established by an act of the Council, where those statutes so provide. Where such a question is raised before any court or tribunal or a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon...' Held - (i) (On the motion) The case would not be remitted to the tribunal to make a finding of fact whether or not the taxpayer was a religious or philosophical body as it would involve the inconvenience of a complete rehearing of the case. In the absence of such a finding and since the matter had not been argued before the tribunal or the judge, it was not possible to frame a submission to the European Court. The motion would, therefore, be dismissed (see p 71 d e, post). (ii) (On the appeal) Since it was essential to the taxpayer's case to obtain a ruling by the European Court in its favour, and as the motion seeking a reference to the European Court had been dismissed, the appeal would also be dismissed (see p 70 g and p 71 d e, post). Decision of Neill J [1979] STC 297 affirmed. NOTES: For the definition of 'business', see De Voil: Value Added Tax A4.101. For references to the European Court of Justice, see 12 Halsbury's Laws (4th Edn) para 505, note 4. For the Finance Act 1972, s 2, see 42 Halsbury's Statutes (3rd Edn) 164. Section 2 of the 1972 Act was replaced by the Finance Act 1977, s 14 and Sch 6, para 1, with effect from 1st January 1978. For the Finance Act 1972, Sch 5, Group 6, item 1, see ibid 223. Group 6 was replaced by the Value Added Tax (Consolidation) Order 1978 (SI 1978 No 1064) with effect from 4th September 1978. For the EEC Treaty, art 177, see 42A Halsbury's Statutes 436. For the Second Council Directive of the European Economic Community of 11th April 1967 (Dir 67/228/EEC), arts 4, 6, see ibid 733, 734. INTRODUCTION: Appeal and motion. The Church of Scientology of California ('the taxpayer') appealed against an order of Neill J ([1979] STC 297) made on 12th January 1979 whereby he dismissed an appeal by the taxpayer against a decision of the London Value Added Tax Tribunal (chairman Lord Grantchester QC) ([1977] VATTR 278) that the taxpayer was carrying on a business for the purposes of value added tax within s 2(2)(b) of the Finance Act 1972. Before the hearing of the appeal the taxpayer sought, by notice of motion, a reference by the Court of Appeal to the Court of Justice of the European Communities under art 177 of the EEC Treaty requiring a preliminary ruling whether, having regard to the adherance of the United Kingdom to the European Economic Community and to the incorporation of Community law into the law of the United Kingdom, arts 4 and 6 of the Second Council Directive of 11th April 1967 (Dir 67/228/EEC) applied to exclude from turnover taxes the supply of goods and services provided by a non-profit making religious or philosophical body. The facts are set out in the judgments of Brightman LJ and Oliver LJ. Appeal. The taxpayer appealed to the Court of Appeal. COUNSEL: Louis Blom-Cooper QC and Philip Lawton for the taxpayer. Patrick Medd QC and Simon D Brown for the Crown. Louis Blom-Cooper QC and Philip Lawton for the taxpayer. Patrick Medd QC and Simon D Brown for the Crown. JUDGMENT-READ: 22nd April. 16th July. PANEL: STEPHENSON, BRIGHTMAN LJJ AND DAME ELIZABETH LANE STEPHENSON, OLIVER LJJ AND SIR JOHN RAMSAY WILLIS JUDGMENTBY-1: BRIGHTMAN LJ JUDGMENT-1: BRIGHTMAN LJ delivered the first judgment at the invitation of Stephenson LJ. This is a motion by the Church of Scientology of California ('the taxpayer') for an order that the questions set out in the schedule to the notice of motion relating to the value added tax regulations of the European Economic Community be referred to the Court of Justice of the European Communities for a preliminary ruling under art 177 of the EEC treaty. Under that article this court has a discretion to make such a reference if it considers that a decision on the questions, or any of them, is necessary to enable the court to give judgment. The questions scheduled to the notice of motion, five in number, have been informally superseded by three proposed questions handed to us by counsel for the taxpayer during the course of the argument as preferred alternatives, and I need only deal with the revised version. The facts, shortly, are as follows. The motion was launched by the taxpayer pending the hearing of an appeal concerning an assessment to value added tax. The taxpayer was incorporated in California in 1954. It was conducting its activities in the United Kingdom at the time when the value added tax system of taxation came into operation in this country, 1st April 1973, and I understand that the taxpayer is still so engaged. The Commissioners of Customs and Excise, the respondents to the motion and to the appeal, took the view that the taxpayer has liable to be registered as a taxable person and made an assessment on the taxpayer for the first period, 1st April 1973 to 31st August 1973. That assessment was made in 1974 and was appealed. Assessments for subsequent periods will probably depend on the outcome of this appeal and the fate of the first assessment. To summarise the position under the Finance Act 1972, the liability of a person to pay value added tax depends on his being a taxable person and registrable accordingly under the Act. A taxable person is one who makes, or intends to make, taxable supplies of goods or services in the course of a business carried on by him. 'Business' is defined in s 45 as including any trade, profession or vocation. The taxpayer is engaged in the propagation of scientology. Scientology is said, in the report of the proceedings before the London Value Added Tax Tribunal ([1977] VATTR 278 at 282), to be the discovery of a Mr Hubbard and it claims to be 'a religion or a religious philosophy containing spiritual counselling procedures intended to assist an individual to attain spiritual freedom'. The assessment was appealed before the London Tribunal which dismissed the appeal on 29th November 1977. The tribunal considered (at 297) that it ought to regard scientology 'as if it were a commodity consisting of the training and auditing courses and the books on Scientology, E-Meters and Sundry Merchandise sold by the UK Branch'. The tribunal found that there were sufficient hallmarks of a business or commercial activity to compel it to hold that the taxpayer was carrying on a business for value added tax purposes, namely the business of propagating scientology. The taxpayer appealed to the High Court and that appeal was dismissed on 12th January 1979 ([1979] STC 297). The taxpayer now seeks to pray in aid the EEC regulations which require member states to introduce a common system of value added tax. The requirement is contained in the First Council Directive of 11th April 1967 (Dir 67/227/EEC) on the 'harmonisation of legislation of Member States concerning turn-over taxes'. The Second Council Directive (Dir 67/228/EEC) of the same date is concerned with the structure and procedures for application of that common system. Article 4 of the Second Directive, read with Annex A, contains a definition of taxable person which, as a matter of phraseology, is not identical with that subsequently adopted by the legislation of this country, namely the Finance Act 1972 to which I have already made reference. Article 4 and the relevant part of Annex A reads as follows: '"Taxable person" means any person who independently and habitually engages in transactions pertaining to the activities of producers, traders or persons providing services, whether or not for gain. 'The expression "activities of producers, traders, or persons providing services" is to be understood in a wide sense and to cover all economic activities, including, therefore, activities of the extractive industries, agriculture and the professions.' The submission of the taxpayer on the motion is that (i) under the EEC regulations, or alternatively (ii) under the Finance Act 1972, construed in the light of the EEC regulations, it is arguable that as a matter of law a body propagating a religion or religious philosophy is not to be regarded as carrying on a business so as to be treated as a taxable person, and that this arguable question is one which this court ought, in its discretion, to refer to the European Court for a preliminary ruling prior to the appeal. The taxpayer moves this court for a reference accordingly. Speaking for myself, I take the view that a decision on the motion ought to be deferred until the arguments on the appeal have been presented. This court can then see whether a reference to the European Court is necessary, or desirable, and in particular what precise form the questions, if any, ought to take. One of the two difficulties I feel in adopting the course sought by counsel for the taxpayer is that both the effective questions are framed on the assumption that the taxpayer is a non-profit making religious or philosophical body. I see however no clear finding to that effect in the decision of the tribunal. There is a statement at the beginning of the decision that Scientology is, or claims to be, a religion or religious philosophy ([1977] VATTR 278 at 282), but that clearly is not a finding that the taxpayer is such a body. There is also a statement, which I think can properly, be treated as a finding of fact, that the Internal Revenue Service of the United States of America treats the Church as a tax exempt, religious, non-profit making organisation. But that is not a finding of fact by the tribunal which reflects its own conclusion that the taxpayer is a religious, or philosophical body. Counsel for the taxpayer also sought to rely on such statement as a ground for saying that the burden of proof as to its status was shifted from the taxpayer to the commissioners. I cannot myself take that view at all. There is a reference (at 295) to the dissemination of the religious philosophy of scientology which earlier (at 293) had been described by the tribunal as the 'religious philosophy of Mr Hubbard'. Later (at 295) there is, to my mind, the only important passage on this topic which I will read: 'The final matter for our consideration is whether the [taxpayer] provided the training and auditing courses at Saint Hill Manor and the Books, E-Meters and Sundry Merchandise relating to Scientology "in the course of a business" carried on by it, so as to become liable to account for tax on such supplies. On this aspect we do not accept the submission by [counsel for the taxpayer] that, as Scientology is to be regarded as a religion or a religious philosophy, the establishment at Saint Hill Manor is to be compared with a religious teaching foundation, and such a foundation would not normally be described as carrying on a business, even though it charged fees to its students. In our opinion an establishment can provide the study of a religion or a religious philosophy as a business in the same way as a study of a language or any other branch of knowledge.' I have this comment on the passages that I have read, that, if it was essential to the taxpayer's case that it should be recognised by the tribunal as a religious or philosophical body, it is surprising that there was no direct finding by the tribunal to that effect, or any record in the tribunal's decision that this fact was conceded by the commissioners. In my view the observations quoted above may merely have reflected the view of the tribunal that, even if (without so deciding) the taxpayer could be described as a religious or philosophical body, nevertheless it would be a taxable person within the meaning of the Finance Act 1972. As at present advised, I would not feel justified in treating the decision of the tribunal as containing expressly or by necessary implication an actual finding of fact that the taxpayer is a religious or philosophical body. As a general rule, no question should in my view be submitted to the European Court based on an assumption would does not coincide with the facts which have been found or agreed. A somewhat similar point arises in relation to the subsidiary assumption in question 2, namely that the goods and services of the taxpayer are not supplied in competition with any commercial profit making concern. I doubt whether that assumption coincides with any finding of the tribunal, having regard to the statement (at 297) which reads as follows: 'In the "auditing" courses the UK branch was competing with trained and partly-trained psychologists and psychiatrists who operated professionally.' That statement was made in the context of the view held by the tribunal that the operations of the taxpayer in the United Kingdom were partly of a therapeutic nature. My other difficulty is this. It is important that the questions, if any are to be submitted to the European Court, should be framed in a manner appropriate to the particular circumstances of the case before the member state. Until the arguments on the appeal have been presented, so that I really understand all that we are talking about, I feel a complete lack of confidence in my own ability to frame questions that will be found exactly to meet the circumstances of the case. No question falling short of that standard ought, in my view, to be submitted to the European Court. I think that the instant case is one in which the need for, and scope of, any reference to the European Court will be more readily discernible when the appeal has been argued than before it has been argued. For the reasons which I have stated, I myself would wish the motion to stand over pending argument on the appeal, with a view to the motion being restored at such time, if any, as the need for a reference becomes apparent to the court. It is a matter for the discretion of the court and that is how I would like to see the discretion exercised. I therefore, propose that the motion be stood over for the time being. JUDGMENTBY-2: DAME ELIZABETH LANE. JUDGMENT-2: DAME ELIZABETH LANE. I entirely agree with what Brightman LJ has said and with the reasons he has given for the view he holds and which I share, that this motion should be stood over until the time he suggests. JUDGMENTBY-3: STEPHENSON LJ. JUDGMENT-3: STEPHENSON LJ. I also agree with the reasoning and the result of Brightman LJ's judgment and have nothing to add. JUDGMENTBY-4: OLIVER LJ JUDGMENT-4: OLIVER LJ delivered the first judgment at the invitation of Stephenson LJ. This is an appeal by the Church of Scientology of California from a decision of Neill J ([1979] STC 297), delivered on 12th January 1979 in which he dismissed the taxpayer's appeal from a previous decision of the London Value Added Tax Tribunal ([1977] VATTR 278) given on 29th November 1977, upholding the assessment of the taxpayer to value added tax under s 2 of the Finance Act 1972 in respect of services provided and merchandise sold between April 1973 and August 1973. The sum involved is something of the order ofL21,000. The taxpayer's contentions before the value added tax tribunal were that the taxpayer was, first of all, an exempted person as defined by the statute, in that it was engaged in the provision of education of the kind provided by a university; secondly that the supply of services and goods was not in the course of the business carried on by the supplier; and thirdly, that the services and goods were not supplied for profit. All those contentions were rejected. Contentions 1 and 3 were not pursued before the learned judge and the main argument before him appears to have centred on contention 2 and summarising it in its broadest possible terms it was that, inasmuch as the taxpayer was a religious or philosophical body and that they were seeking to do nothing more than to expound and communicate the tenets of their religion or philosophy that (a) was not a business, and, (b) could not be a business. The learned judge rejected those contentions. The notice of appeal from his decision was given on 20th March 1979. That notice specified various grounds of appeal on which it was urged that the learned judge had erred in law. Counsel for the taxpayer does not seek to support those grounds in their original form, and there is, as I understand it, no question but that, so far as this assessment is concerned (I say nothing of any other assessments), this appeal must be dismissed unless the grounds can be expanded in the manner envisaged in an amended notice of appeal which was dated 6th February 1980. By that amendment the taxpayer sought to raise an entirely new ground of argument which was not advanced before the tribunal, nor before Neill J, and I state it in the most general terms because it has not been fully developed before us. But in summary it amounts to this, that the Second Council Directive of the European Economic Community of 11th April 1967, arts 4 and 6(2) and Annex B as interpreted by the jurisprudence of the Community have the effect that a body which is a religious body is not to be regarded as a carrying on a business, that that directive, having been intended to produce uniformity as regards value added tax throughout the Community, overrides or takes precedence over local legislation and that the effect of the directive is to confer a right on individual subjects of the member states so that the taxpayer is able to resist the assessments made. That is probably a great oversimplification of the argument, but as I understand it that is broadly what it comes to and I think it is sufficient for the present purposes. The amended notice having been given, the taxpayer came before this court on 22nd April 1980 on a motion by which they sought an order referring to the European Court certain questions which it was thought would provide an authoritative answer and which would enable this court to determine the appeal. That motion was adjourned to come on with the present appeal because this court considered that until the hearing of the appeal the court did not have sufficient facts before it to enable it to see what, if any, questions required to be formulated, and it was thought that that could not be done pending the hearing of the appeal. The matter now comes before us on the substantive appeal and counsel for the taxpayer concedes that this European Community point, if I may so express it, is crucial to his success. He asks us to remit the case to the value added tax tribunal because, although that tribunal apparently made an underlying assumption, and indeed it appears that counsel were content to accept it for the purpose of the points then being argued, that the Church of Scientology was a religious or philosophical body, there was no finding to that effect. There was considerable evidence of what the activity of the body consisted of, but that was directed to the questions which were then being canvassed, namely whether the body was providing a university style education and whether it was carrying on a business. The choices before us are, as it seems to me, threefold. Firstly, to remit the case to the value added tax tribunal, as counsel for the taxpayer asks us to; secondly, to listen to and give judgment on an argument which counsel for the Crown is prepared to put before us that in any event, this is not a case in which there should be any referral to the European Court and that the matter is in fact so clear that there is nothing in the European point of counsel for the taxpayer at all; and, thirdly, to dismiss the appeal. As regards the first of those possible courses, counsel for the taxpayer has asked us to remit the matter to the value added tax tribunal to find, on the evidence as it was before them, whether the taxpayer was genuinely a religious or philosophical body because that is, in effect, a sine qua non for his success. But that does not seem to me to be a course which we could possibly take. The evidence called before the value added tax tribunal is directed to the issues then being argued, and the cross-examination of witnesses was no doubt, also directed to those issues as they then stood. In my judgment it would be quite unreal to ask the tribunal to determine that matter without reopening the whole of the evidence and if necessary giving both sides an opportunity to call further evidence. Equally, I do not feel that it would be right that we should proceed to determine the matter on the basis that this court decides once and for all whether there is a question to be referred in the absence of any finding of fact which would necessarily make that question relevant. There would be only one or two effects of that if we did it. Firstly, if we came to the conclusion that there was a question for reference, the matter would still not be able to go on for want of the appropriate finding of facts.If we concluded that there was no case for reference, as counsel for the Crown would persuade us, then the taxpayer might proceed to the House of Lords and counsel might persuade them that there was indeed a case for reference, and the same difficulty would arise. So that does not seem to me to be a convenient course. The choice therefore, as it seems to me, is between referring the matter back to the value added tax tribunal with a direction to open the whole matter again, or to dismiss this appeal and leave it to the taxpayer to ventilate the point which they want to raise in entirely fresh proceedings relating to one or other of the very numerous other subsequent assessments which are outstanding. Having regard to what seems to me to be the manifest inconvenience of remitting the matter to the tribunal for a complete reopening and reargument and to the fact this was a point which was never argued below and was raised for the first time on the amended notice of appeal in February of this year, I feel compelled to the conclusion that the appropriate course would be the last one which I have mentioned, and I would accordingly dismiss the appeal. JUDGMENTBY-5: STEPHENSON LJ. JUDGMENT-5: STEPHENSON LJ. I agree and have nothing to add. JUDGMENTBY-6: SIR JOHN RAMSAY WILLIS. JUDGMENT-6: SIR JOHN RAMSAY WILLIS. I agree and have nothing to add. DISPOSITION: Motion stood over for the hearing of the appeal. Costs reserved. Appeal and motion dismissed with costs. SOLICITORS: Stephen M Bird, East Grinstead (for the taxpayer); Solicitor for the Customs and Excise. R v Governor of Pentonville Prison, ex parte Budlong and another QUEEN'S BENCH DIVISION [1980] 1 All ER 701, [1980] 1 WLR 1110, 144 JP 185 HEARING-DATES: 12, 13, 14, 15, 16, 19, 30 NOVEMBER 1979 30 NOVEMBER 1979 CATCHWORDS: Extradition - Committal Evidence - Formal documents - Whether formal document setting out particulars of offence required to be put before magistrate - Whether Minister's order or foreign warrant of arrest required to give particulars of offence - Extradition Act 1870, s 20, Sch 2. Extradition - Committal - Extradition crime - Double criminality - Definition of crime in foreign country not identical with definition of English crime - Burglary - Trespass essential ingredient of English crime of burglary but not of foreign crime of burglary - Whether if foreign crime substantially similar to English crime principle of double criminality satisfied - Extradition Act 1870, s 26. Extradition - Restrictions on surrender - Political offence - What constitutes political offence - Unlawful entry into US government offices by members of Church of Scientology - Allegation that entry effected to obtain information for purpose of changing US government policy towards church - Whether the unlawful entry a political offence or simply extraditable offence of burglary. Extradition - Restrictions on surrender - Right of national of member country of EEC to move freely between EEC countries - Whether extradition unlawfully restricting that right - EEC Treaty, arts 48, 234. HEADNOTE: The two applicants, an English national and a United States national, were senior members of the Church of Scientology resident in England. The United States government requested their extradition to stand trial in the United States on charges of burglary. The evidence placed before the metropolitan magistrate dealing with the issue of committal warrants for the two applicants showed that members of the church, acting on the applicants' written instruction, had unlawfully entered certain government offices in the United States as trespassers, and taken photocopies of the contents of confidential government files relating to the church's affairs. The magistrate was satisfied that burglary was an extraditable offence and that a prima facie case of burglary had been made out against the applicants under both American and English law (i e s 9 a of the Theft Act 1968). Accordingly he issued committal warrants pending the applicants' extradition to America. Although trespass was an essential ingredient of burglary under s 9 of the 1968 Act it was not an essential ingredient under American law b. The applicants applied for writs of habeas corpus on the grounds, inter alia, that (i) the magistrate did not have before him a formal document giving particulars of the crime alleged, since both the Secretary of State's order made under s 7 c of, and in the form set out in Sch 2 to, the Extradition Act 1870, and the American warrants of arrest merely referred to the crime of burglary without giving particulars, (ii) it would be against the principle of double criminality to extradite the applicants because the crime of burglary was not identical under English and American law, (iii) the offences were political in character, and therefore by virtue of s 7 not extraditable, since the Church of Scientology was engaged in protracted litigation with various United States Government departments and the applicants had organised entry into United States Government offices as part of an attempt to change government policy towards the church, (iv) the extradition was merely a means of indirectly enforcing a foreign public law, namely the United States Freedom of Information Act which the applicants had breached in organising the burglary, and (v) in respect of the applicant who was a United Kingdom national, the extradition would be a restriction on her right to move freely between countries within the EEC, as guaranteed by art 48 d of the Treaty of Rome. a Section 9, so far as material, provides: '(1) A person is guilty of burglary if -- (a) he enters any building or part of a building as a trespasser and with intent to commit any such offence as is mentioned in subsection (2) below; or (b) having entered any building or part of a building as a trespasser steals... anything in the building or that part of it... '(2) The offences referred to in subsection (1)(a) above are offences of stealing anything in the building or part of a building in question.' b Ie § 1801(b) of Title 22, District of Columbia Code which, so far as material, provides: '... whosoever shall, either in the night or in the daytime, break and enter, or enter without breaking any dwelling... or other building or any apartment or room, whether at the time occupied or not... with intent to break and carry away any part thereof... or to commit any criminal offense, shall be guilty of burglary in the second degree...,' and § 105 of Title 22 which, so far as material, provides: 'In prosecutions for any criminal offense all persons advising, inciting or conniving at the offense, or aiding or abetting the principal offender, shall be charged as principals... ' c Section 7 is set out at p 705 f g, post d Article 48, so far as material, provides: '1.Freedom of movement for workers shall be secured within the Community... 3. It shall entail the right, subject to limitations justified on grounds of public policy... (b) to move freely within the territory of Member States...' Held - The applications for habeas corpus would be refused for the following reasons -- (i) In extradition proceedings the only formal documents required to be put before the magistrate were the Minister's order under s 7 of the 1870 Act and the foreign warrant of arrest, neither of which were required to set out particulars of the offence. By virtue of s 20 and Sch 2 to the 1870 Act, all that was required to be specified in the Minister's order under s 7 was a general description of the crime. Furthermore, in assessing whether there were sufficient facts established to constitute an offence against English law the magistrate was required to look at the evidence, rather than the documents, put before him (see p 706 b to f, p 708 b to g and p 717 f, post); dicta of Stephen J in R v Jacobi and Hillier (1881) 46 LT at 597 and of Cave J in Re Bellencontre [1891] 2 QB at 136 applied; R v Governor of Brixton Prison, ex parte Gardner [1968] 1 All ER 636 distinguished and doubted. (ii) An 'extradition crime' within the definition in s 26 e of the 1870 Act referred merely to an act or omission which would have amounted to the commission of an extraditable crime if it had been done in England, and the definition of the crime in the foreign country was not required to be identical with the definition of the English crime, although the crime had to be substantially similar in concept in both countries. Since the crime for which extradition of the applicants was requested was substantially similar to the extraditable English crime of burglary, and since there was prima facie evidence that the conduct in question amounted to commission of the English crime of burglary, it followed that the principle of double criminality had not been breached and that the committal orders were properly made, notwithstanding that the definitions of burglary in English and American law were not identical (see p 712 d to h and p 717 f, post); dicta of Cockburn CJ and of Blackburn J in Re Windsor (1865) 6 B & S at 528 and 530, of Wills J in Re Bellencontre [1891] 2 QB at 140-141, of Lord Russell CJ in Re Arton (No 2) [1896] 1 QB at 517 and of Darling J in R v Dix (1902) 18 TLR at 232 applied. e Section 26, so far as material, is set out at p 712 bc, post (iii) The offences were not political in character for the purposes of s 7 of the 1870 Act because the burglaries were not carried out to challenge the political control or government of the United States but merely to further the interests of the church. Nor could it be contended that the real purpose of the extradition was to punish the applicants for breach of a foreign public law, because under the extradition treaty the United States had undertaken not to try the applicants for any offence other than that for which they were extradited and to entertain their allegation would be to impute bad faith to the United States Government (see p 714 d to f and h to p 715 c and p 717 f, post); Re Arton [1896] 1 QB 108, Re Kolczynski [1955] 1 All ER 31 and dictum of Viscount Radcliffe in Schtraks v Government of Israel [1962] 3 All ER at 540 applied. (iv) For reasons of common sense, art 48 of the Treaty of Rome was to be interpreted as not applying to the exercise by a member state of its power to extradite an accused person under an extradition treaty (see p 717 e f, post). NOTES: For extradition crimes, see 18 Halsbury's Laws (4th Edn) paras 213-214 and for cases on the subject, see 24 Digest (Repl) 991-994, 21-39, and for cases on proceedings before the magistrate, see ibid, 998-1004, 60-109. For political crimes, see 18 Halsbury's Laws (4th Edn) para 217. For the Extradition Act 1870, ss 7, 20, 26, Sch 2, see 13 Halsbury's Statutes (3rd Edn) 254, 264, 265, 267. For the EEC Treaty, arts 48, 234, see 42A ibid 751, 328. CASES-REF-TO: Arton, Re [1896] 1 QB 108, 65 LJMC 23, 73 LT 687, DC, 24 Digest (Repl) 995, 43. Arton, Re, (No 2) [1896] 1 QB 509, 65 LJMC 50, 74 LT 249, 60 JP 132, 18 Cox CC 177, DC, 24 Digest (Repl) 991, 21. Bellencontre, Re [1891] 2 QB 122, 60 LJMC 83, 64 LT 461, 55 JP 694, 17 Cox CC 253, DC, 24 Digest (Repl) 997, 52. Bulmer (HP) Ltd v J Bollinger SA [1974] 2 All ER 1226, [1974] Ch 401, [1974] 3 WLR 202, [1974] CMLR 91, Digest (Cont Vol D) 316, 1. Castione, Re [1891] 1 QB 419, [1886-90] All ER Rep 640, 60 LJMC 22, 64 LT 344, 55 JP 328, 17 Cox CC 225, DC, 24 Digest (Repl) 993, 36. Factor v Laubenheimer (1933) 290 US 276. Knoors v Secretary of State for Economic Affairs [1979] 2 CMLR 357, ECJ. Kolzynski, Re [1955] 1 All ER 31, sub nom R v Brixton Prison (Governor), ex parte Kolczynski [1955] 1 QB 540, [1955] 2 WLR 116, 119 JP 68, DC, 24 Digest (Repl) 993, 37. R v Bouchereau [1978] QB 732, [1978] 2 WLR 250, [1978] ECR 1999, 66 Cr App R 202, ECJ. R v Dix (1902) 18 TLR 231, DC, 24 Digest (Repl) 991, 27. R v Governor of Brixton Prison, ex parte Gardner [1968] 1 All ER 636, [1968] 2 QB 399, [1968] 2 WLR 512, 132 JP 187, DC, Digest (Cont Vol C) 370, 158b. R v Jacobi and Hillier (1881) 46 LT 595, DC, 24 Digest (Repl) 997, 50. R v Pentonville Prison (Governor), ex parte Ecke [1974] Crim LR 102, DC. R v Pentonville Prison (Governor), ex parte Myers (6th December 1972) unreported, DC. R v Saunders [1979] 2 All ER 267. [1979] 3 WLR 359, [1979] 2 CMLR 216, ECJ. Schtraks v Government of Israel [1962] 3 All ER 529, [1964] AC 556, [1962] 3 WLR 1013, HL; affg sub nom Re Shalom Schtraks [1962] 2 All ER 176, sub nom R v Brixton Prison Governor, ex parte Shtraks [1963] 1 QB 55, [1962] 2 WLR 976, DC, Digest (Cont Vol A) 575, 4a. Shapiro v Ferrandina (1973) 478 F 2d 894. Tzu-Tsai Cheng v Governor of Pentonville Prison [1973] 2 All ER 204, [1973] AC 931, [1973] 2 WLR 746, sub nom R v Pentonville Prison Governor, ex parte Cheng 137 JP 422, HL, Digest (Cont Vol D) 338, 39b. Windsor, Re (1865) 6 B & S 522, 5 New Rep 96, 34 LJMC 163, 12 LT 307, 29 JP 327, 11 Jur NS 807, 10 Cox CC 118, 112 ER 1288, 24 Digest (Repl) 991, 24. Wright v Henkel (1902) 190 US 40. CASES-CITED: Government of India, Ministry of Finance (Revenue Division) v Taylor [1955] 1 All ER 292, [1955] AC 49, HL. Huntingdon v Attrill [1893] AC 150, PC. Kakis v Government of the Republic of Cyprus [1978] 2 All ER 634, [1978] 1 WLR 779, HL. Malone v Metropolitan Police Comr [1979] 2 All ER 620, [1979] Ch 344. R v Brixton Prison (Governor), ex parte Soblen [1962] 3 All ER 641, [1963] 2 QB 243, CA. R v Chief Immigration Officer, Heathrow Airport, ex parte Salamat Bibi [1976] 3 All ER 843, [1976] 1 WLR 979, CA. R v Governor of Winson Green Prison, Birmingham, ex parte Littlejohn [1975] 3 All ER 208, [1975] 1 WLR 893, DC. R v Thompson (1979) 69 Cr App R 22, [1979] 1 CMLR 390; on appeal [1979] 1 CMLR 47, ECJ. Schemmer v Property Resources Ltd [1974] 3 All ER 451, [1975] Ch 273. Van Duyn v Home Office (No 2) [1975] 3 All ER 190, [1975] Ch 358, ECJ. Wyatt v McLoughlan [1974] IR 378. INTRODUCTION: Motions for habeas corpus. The applicants, Mr Morrison Budlong and Mrs Jane Kember, members of the Church of Scientology, moved for writs of habeas corpus ad subjiciendum, under s 11 of the Extradition Act 1870, directed, in the case of Mr Budlong, to the governor of Pentonville Prison and, in the case of Mrs Kember, to the governor of Holloway Prison, to which the applicants had respectively been committed under committal warrants issued on 25th May 1979 under s 10 of the 1870 Act by Mr W E C Robins, the metropolitan magistrate of Bow Street Magistrates' Court, sitting at Wells Street Magistrates' Court, pending their extradition to the United States of America for trial on ten charges of burglary alleged to have been committed there. The applicants contended that the warrants were unlawful. The facts are set out in the judgment of Griffiths J. COUNSEL: William Denny QC and Anthony Hooper for the applicant Mr Budlong. Louis Blom-Cooper QC, Alan Newman and Hannah Burton for the applicant Mrs Kember. D W Tudor Price and Colin Nicholls for the United States Government. Nicolas Bratza as amicus curiae. JUDGMENT-READ: Cur adv vult. 30th November. The following judgments were read. PANEL: LORD WIDGERY CJ AND GRIFFITHS J JUDGMENTBY-1: GRIFFITHS J JUDGMENT-1: GRIFFITHS J (delivering the first judgment at the invitation of Lord Widgery CJ). In these proceedings the applicants move for writs of habeas corpus on the ground that the extradition warrants issued by the metropolitan magistrate dated 25th May 1979 and on which they are held pending extradition to the United States of America are unlawful. The Government of the United States seeks the extradition of the applicants to face ten charges of burglary committed between January and May 1976 and for which they were indicted by a grand jury on 15th August 1978. The evidence placed before the magistrate revealed the following facts. Between January and May of 1976 members of the Church of Scientology unlawfully as trespassers entered various offices of the United States Internal Revenue Service and the United States Department of Justice in the District of Columbia and therein, making use of government property, took photocopies of the contents of confidential government files relating to the affairs of the Church of Scientology and its adherents. They replaced the original documents in the files but stole the photocopies. Eventually the actual burglars were caught red-handed and they then revealed that they were acting on the written instructions of the applicants who are senior members in the hierarchy of the Church of Scientology residing in this country. The magistrate, being satisfied that the facts revealed a prima facie case of burglary against the applicants, both according to the relevant law of the United States, namely §§ 1801(b) and 105 of Title 22, District of Columbia Code, and according to English law and that burglary was an extraditable crime within the extradition treaty made between the Government of the United Kingdom and the Government of the United States of America, he issued warrants committing the applicants to prison to await extradition. They have in fact both since been allowed bail pending the outcome of these proceedings. In this court the magistrate's warrants have been attacked on a variety of grounds, but there has been no suggestion that the evidence before the magistrate did not establish a prima facie case of burglary against the applicants both according to American and English law. The pleading point The first ground of attack was conveniently described by counsel for the applicants as the pleading point. His complaint is that there was no formal document before the magistrate that contained sufficient particulars of the applicants' offence to show that it constituted the crime of burglary according to English law. It is submitted that before the magistrate can begin to consider the evidence in support of the application for an extradition warrant he must have all the necessary ingredients to establish the English offence formally set out in some document; and as there was no formal document in this case that alleged the burglars entered 'as trespassers' the magistrate should have refused to consider the matter further because trespass is an essential element of the English crime of burglary (see s 9 of the Theft Act 1968). In order to examine this submission it is necessary to consider the steps by which extradition is obtained to see what formal documents are required to be placed before the magistrate. The first step is the request for extradition. This is made through diplomatic channels and the material that must accompany the request is set out in Article VII of the extradition treaty between the two governments, given statutory force by Order in Council n1. n1 SI 1976 No 2144, Sch 1 This is the material on which the legal advisers in the Home Office will consider whether they should advise the Secretary of State to take the next step in the extradition procedure, which is to refer the request to a metropolitan magistrate pursuant to s 7 of the Extradition Act 1870, which provides: 'A requisition for the surrender of a fugitive criminal of any foreign state, who is in or suspected of being in the United Kingdom, shall be made to a Secretary of State by some person recognised by the Secretary of State as a diplomatic representative of that foreign state. A Secretary of State may, by order under his hand and seal, signify to a police magistrate that such a requisition has been made, and require him to issue his warrant for the apprehension of the fugitive criminal. If the Secretary of State is of opinion that the offence is one of a political character, he may, if he think fit, refuse to send any such order, and may also at any time order a fugitive criminal accused or convicted of such offence to be discharged from custody.' When the magistrate receives the order from the Secretary of State, it is his duty to enquire into the evidence and, if sufficient, to issue his warrant, as plainly appears from the terms of ss 8 and 10. Section 8 provides: 'A warrant for the apprehension of a fugitive criminal, whether accused or convicted of crime, who is in or suspected of being in the United Kingdom, may be issued -- 1. By a police magistrate on the receipt of the said order of the Secretary of State, and on such evidence as would in his opinion justify the issue of the warrant if the crime had been committed or the criminal convicted in England.' Section 10 provides: 'In the case of a fugitive criminal accused of an extradition crime, if the foreign warrant authorising the arrest of such criminal is duly authenticated, and such evidence is produced as (subject to the provisions of this Act) would, according to the law of England, justify the committal for trial of the prisoner if the crime of which he is accused had been committed in England, the police magistrate shall commit him to prison, but otherwise shall order him to be discharged.' The form of the Secretary of State's order is prescribed by s 20 which provides: 'The forms set forth in the second schedule to this Act, or forms as near thereto as circumstances admit, may be used in all matters to which such forms refer, and in the case of a British possession may be so used, mutatis mutandis, and when used shall be deemed to be valid and sufficient in law.' The 'Form of Order of Secretary of State to the Police Magistrate' contained in Sch 2 requires the Secretary of State to do no more than insert the name of the crime for which extradition is asked. The order in the present case is in the form prescribed by Sch 2 and names the crime as burglary. As such it is deemed to be valid and sufficient in law by s 20. The only other document of a formal nature that is required to be before the magistrate is the foreign warrant authorising the arrest of the criminal. It cannot have been intended that this foreign warrant should set out all the ingredients of the English offence for, as Stephen J said in R v Jacobi and Hiller n1 "if it were necessary for the warrant to set forth precisely the crime... every magistrate [in a foreign country] who issued a warrant... would have to be acquainted with the law of England'. Such an oppressive requirement would, of course, make extradition unworkable. There is nothing in the treaty that requires any other formal document to be before the magistrate and no authority has been cited to show that extradition has ever been refused on this ground. I am quite satisfied that in extradition proceedings there is no requirement for any formal documents to be before the magistrate other than the order of the Secretary of State and the warrant of arrest, neither of which, for the reasons I have given, are required to set out all the particulars of the English offence. It is to the evidence that the magistrate is directed to look to see whether there are sufficient facts established to constitute an offence contrary to English law and not to any formal document. I am glad to find that this is so, for it would be deplorable if the technicalities of English procedure were introduced to thwart an otherwise proper request for extradition. n1 (1881) 46 LT 595 at 597 In support of his submission, counsel for Mr Budlong relied on the decision of this court in R v Governor of Brixton Prison, ex parte Gardner n2, followed in this court in R v Governor of Pentonville Prison, ex parte Myers n3. Gardner's case n2 is a decision under the Fugitive Offenders Act 1967, as was Myers's case n3, which Act provides for the return from the United Kingdom of persons who have committed crimes in the Commonwealth. n2 [1968] 1 All ER 636, [1968] 2 QB 399 n3 (6th December 1972) unreported The facts of Gardner's case n2 were that warrants had been issued in New Zealand alleging against Gardner the offence of obtaining by false pretences. Because the warrants only disclosed a pretence as to future conduct they did not at that date disclose any offence according to English law. The 1967 Act makes provision for the arrest and return of persons accused in a Commonwealth country of a 'relevant offence'. A relevant offence is defined in the terms in s 3(1) of the Act: n2 [1968] 1 All ER 636, [1968] 2 QB 399 'For the purposes of this Act an offence of which a person is accused or has been convicted in a designated Commonwealth country or United Kingdom dependency is a relevant offence if -- (a) in the case of an offence against the law of a designated Commonwealth country, it is an offence which, however described in that law, falls within any of the descriptions set out in Schedule 1 to this Act, and is punishable under that law with imprisonment for a term of twelve months or any greater punishment; (b) in the case of an offence against the law of a United Kingdom dependency, it is punishable under that law, on conviction by or before a superior court, with imprisonment for a term of twelve months or any greater punishment; and (c) in any case, the act or omission constituting the offence, or the equivalent act or omission, would constitute an offence against the law of the United Kingdom if it took place within the United Kingdom or, in the case of an extra-territorial offence, in corresponding circumstances outside the United Kingdom.' Section 5(2) requires the requesting country to furnish the Secretary of State with the following information: '(a) in the case of a person accused of an offence, a warrant for his arrest issued in that country... together... with particulars of the person whose return is requested and of the facts upon which and the law under which he is accused or was convicted, and evidence sufficient to justify the issue of a warrant for his arrest under section 6 of this Act.' Section 5(3) provides: 'On receipt of such a request the Secretary of State may issue an authority to proceed unless it appears to him than an order for the return of the person concerned could not lawfully be made, or would not in fact be made, in accordance with the provisions of this Act.' Section 6 then provides that a magistrate on receipt of the authority to proceed may issue a warrant of arrest and s 7 provides for the committal if, after hearing evidence, the court is satisfied that the offence in respect of which the authority to proceed has been issued is a relevant offence and that the evidence discloses a prima facie case. Nowhere in the Act is there any requirement as to the form in which the authority to proceed should be drawn. This is, as I have already illustrated, in contrast to the Extradition Act 1870 which does prescribe the form in which the order of the Secretary of State should be drawn. Lord Parker CJ, having considered the general framework of the 1967 Act, concluded that the authority to proceed had to be drawn with sufficient particularity to disclose all the ingredients of a relevant offence. He said n1: n1 [1968] 1 All ER 636 at 641, [1968] 2 QB 399 at 415 'It seems to me that what is clearly contemplated here is that a request coming forward to the Secretary of State must set out in some form, and no doubt the most usual form is the warrant or warrants of arrest, the offence of offences of which the fugitive is accused, in this case in New Zealand. Not only must it supply a general description which will fulfil the provisions of s. 3(1)(a), but it must condescend to sufficient detail to enable the matter to be considered under s. 3(1)(c) . Similarly, as it seems to me, it is contemplated that the Secretary of State, in giving his authority to proceed under s. 5(1) should again set out the offences to which his authority is to relate in sufficient detail for the matter to be considered again not only under para. (a) but also under para. (c) of s. 3(1).' The authority to proceed in Gardner's case n2 stated: n2 [1968] 1 All ER 636 at 640, [1968] 2 QB 399 at 413 'A request having been made to the Secretary of State by or on behalf of the Government of New Zealand for the return to that country of [the applicant] who is accused of the offences of obtaining money by false pretences; attempting to obtain money by false pretences... the Secretary of State hereby orders that a metropolitan stipendiary magistrate proceed with the case in accordance with the provisions of the Fugitive Offenders Act, 1967.' Lord Parker CJ continued n1: n1 [1968] 1 All ER 636 at 641, [1968] 2 QB 399 at 415 'So far as this case is concerned, as I have said, the authority to proceed was in perfectly general terms, and this court naturally has not seen and could not look at the request from the Commonwealth power. But it seems to me, however, perfectly plain that this authority to proceed, albeit in general terms, must be taken as relating to the offences of which the applicant was accused in New Zealand, and on which the request was made for his return.' As those offences did not disclose an offence known to English law which is an essential element of a 'relevant offence', it was held that the authority to proceed was not in respect of a relevant offence and the application succeeded. I can see no reason why these decisions should be applied to proceedings under the 1870 Act. They turn on the construction of the Fugitive Offenders Act 1967, the shape and provisions of which are not in any way on all fours with the 1870 Act. However, the applicants submit that because art III of the treaty requires similar information to be submitted to the Secretary of State by the country requesting extradition to that required to be submitted by a Commonwealth country under s 3 of the 1967 Act, it follows that the Secretary of State's order under the 1870 Act shall contain the same particulars as, pursuant to Gardner's case n1, are required to be set out in the authority to proceed under the 1967 Act. I cannot see why that result should necessarily follow, but the conclusive answer to the submission is to be found in the terms of s 20 of the 1870 Act which expressly provides that the order shall be valid if it follows the form prescribed in Sch 2, which form does not require the order to do other than state the general description of the crime for which extradition is asked. The point is also covered by authority. In Re Bellencontre n2, Cave J said: n2 [1891] 2 QB 122 at 136 'The duty of the Secretary of State is to call the attention of the police magistrate to what he is required to do under the Extradition Treaty, and it is enough if he draws attention to the particular crime under the 3rd article of the Extradition Treaty, and that is fraud by a bailee, which expresses in general terms what is expressed rather more specifically in the French warrant.' Because, in my view, the Gardner n1 and Myers n3 cases do not support the applicants' argument, it is not necessary to consider if they were correctly decided. But I would not wish anything I have said to be taken as expressing my own endorsement of the decisions. It seems to me that they lead to the surprising conclusion that the success or failure of a Commonwealth country to extradite a criminal who has offended against their laws may depend on the drafting of particulars in a document, namely the authority to proceed, for which they are not responsible. n1 [1968] 1 All ER 636, [1968] 2 QB 399 n3 (6th December 1972) unreported For the reasons I have given pleading point fails. Double criminality The second submission is founded on the fact that under the relevant American law, § 1801(b) of Title 22 District of Columbia Code, entry as a trespasser is not an essential element of the crime of burglary whereas under English law trespass is an essential element of the crime (see the Theft Act 1968, s 9). It is admitted that the facts of this case show that the burglars obtained entry to the various government offices as trespassers, but it is argued that because the applicants, when they are tried in America could be convicted without proof that the entry involved a trespass, they are thereby placed in peril of being convicted of a crime in America for which they could not be convicted in this country. The applicants submit that this offends against the principle of double criminality under which a criminal is only to be extradited for the commission of a crime punishable by the laws of both countries. The prosecution submit that the true rule is that a criminal is to be extradited if his crime falls within the general description of a crime specified in the extradition treaty and the facts of the offence, that is the conduct complained of, show it to be a criminal offence punishable by the laws of both countries. As the facts of these offences show a prima pacie case of burglary against both the laws of the District of Columbia and this country, the prosecution submit that extradition should be ordered. The law of extradition depends not on any common law principles, but on statute. Ultimately the question before this court has to be solved by deciding whether on their true construction the extradition treaty and the 1870 Act, which by art 3 of the United States of America (Extradition) Order 1976 n1 is applied to the treaty, permit extradition in this case. None of the authorities that have been cited bear directly on the question we have to decide, but I believe they provide valuable guidance to the correct approach to the construction of the statutory provisions. n1 SI 1976 No 2144, Sch 1 In Re Windsor n2 extradition to the United States was demanded under a treaty making forgery an extraditable offence. The facts alleged against a bankteller revealed that he had made a false entry in a bank book for fraudulent purposes which would amount to forgery under the definition in the New York statute; they did not, however, constitute the offence of forgery in English law.The principal ground given for refusing extradition was that the local statute of New York did not make the offence forgery by the general law of the United States, and, hence, the crime of forgery had not been committed in either country.This ground has been disapproved by the Supreme Court of the United States (see Wright v Henkel n3), and is not relied on in this case. There are, however, two short passages in Re Windsor n4 dealing with the concept of double criminality. Cockburn CJ said: 'the true construction of [the Extradition Act 1843] is, that its terms, specifying the offences for which persons may be given up, must be understood to apply to offences which have some common element in the legislation of both countries.' Blackburn J said n5: 'Forgery is one of the crimes specified, and that must be understood to mean any crimes recognised throughout the United States and England as being in the nature of forgery.' From the two expressions 'some common element' and 'in the nature of' it is apparent that the court was not looking for the crime to be defined in identical terms in both countries. n2 (1865) 6 B & S 522, 122 ER 1288 n3 (1902) 190 US 90 n4 (1865) 6 B & S 522 at 528, 122 ER 1288 at 1291 n5 6 B & S 522 at 530, 122 ER 1288 at 1291 In Re Bellencontre n6 the French authorities demanded extradition of a French subject accused in France of 19 separate charges of embezzling or misappropriating money delivered to him as a notary. The court found that as to 15 of the charges the evidence disclosed no crime punishable by English law, but that in the case of the four remaining charges the evidence did show an offence contrary to the French Penal Code and English law within the extradition treaty and that extradition ought to be granted in respect of those four charges. n6 [1891] 2 QB 122 In the course of the judgment Wills J said n7: n7 [1891] 2 QB 122 at 140-141 'The substance of the Extradition Act, 33 & 34 Vict. c. 52, seems to me to require that the person whose extradition is sought should have been accused in a foreign country of something which is a crime by English law, and that there should be a prima facie case made out that he is guilty of a crime under the foreign law, and also of a crime under English law. If those conditions are satisfied, the extradition ought to be granted. We cannot expect that the definitions of description of the crime when translated into the language of the two countries respectively, should exactly correspond. The definitions may have grown up under widely different circumstances in the two countries; and if an exact correspondence were required in mere matter of definition, probably there would be great difficulty in laying down what crimes could be made the subjects of extradition. Now this difficulty has been met, as it seems to me by the first schedule to the Extradition Act, 1870 (33 & 34 Vict. c. 52), which describes what are the various extradition crimes. In this case, the man has been accused of a number of things which clearly fall within article 408 of the French Code, and therefore are crimes in France, and crimes which clearly fall under number 18 in the French part of the Treaty of Extradition. One looks, then, to see whether in the corresponding English section, No. 18 of article 3, there is a crime described by English law which crime has been made out by the evidence. It seems to me that there is no difficulty in saying which of the definitions it falls under.' This passage clearly indicates that in considering extradition it is the actual facts of the offence which are all important rather than the definition of the crime in the foreign law. In Re Arton (No 2) n1, extradition was demanded for 'faux' which is the French equivalent of forgery. The facts did not disclose the offence of forgery according to English law, but did disclose the offence of falsification of accounts, which is an extradition crime and within the French and English treaties. Lord Russell CJ said n2: n1 [1896] 1 QB 509 n2 [1896] 1 QB 509 at 517 'Is extradition to be refused in respect of acts covered by the treaty, and gravely criminal according to the law of both countries, because in the particular case the falsification of accounts is not forgery according to English law, but falls under that head according to French law? I think not. To decide so would be to hinder the working and narrow the operation of most salutary international arrangements.' Here again the emphasis is placed not on the definition of the crime but on the acts that constitute the criminal conduct. In a later passage he continued n2: n2 [1896] 1 QB 509 at 517 'We are here dealing with a crime alleged to have been committed against the law of France; and if we find, as I hold that we do, that such a crime is a crime against the law of both countries, and is, in substance, to be found in each version of the treaty, although under different heads, we are bound to give effect to the claim for extradition.' Here, too, it is the substance of the two offences that must correspond, not their precise definitions. R v. Dix n3 is another case in which the description of the crime was different in the two countries, but the facts revealed criminal acts punishable under the laws of both countries and within the extradition treaty. The accused was charged with larceny by embezzlement according to American law. It was held that as the evidence showed fraud by a bailee banker under the Larceny Act, an offence within the treaty, the accused could be extradited. Darling J said n4: '... the essential thing was to see whether what the evidence showed prima facie that the prisoner had done was a crime in both countries and within the treaty'. Once more the court is looking to the actual criminal conduct to decide if extradition should be granted. n3 (1902) 18 TLR 231 n4 (1902) 18 TLR 231 at 232 The case most comparable to the present facts is the unreported decision of this court in R v Governor of Pentonville Prison, ex parte Ecke n5 decided on 3rd December 1973. The German Government asked that the accused should be extradited on a number of charges of fraudulent trading, the dishonesty alleged being a false representation as to a future intention and not as to an existing fact. The date of the treaty n6 was 1960 at which date a false representation as to a future intention was not a criminal offence in England. Article 2 of the treaty provided: 'Extradition shall be reciprocally granted for the following crimes, provided that the crime charged constitutes an extradition crime according to the laws of the territory from which and to which extradition is desired.' The list of crimes included in the English version under para 17 are: 'Fraud by a bailee, banker, agent, factor or trustee, or by a director, member or public officer of any company; fraudulent conversion; or obtaining money, valuables, security, or goods by false pretences.' In the German version para 17 consisted of two words meaning, in English, 'Fraud'. It was submitted that an offence could not be an extraditable offence within the meaning of the treaty unless it was an offence with all its English constituents, and that as a false pretence as to a future event was not an English offence in 1960, when the treaty was made, it was not an extradition crime under the treaty. The fact that since the Theft Act 1968, a misrepresentation as to a future event will found a criminal charge was said to be beside the point for to accept it as now coming within the treaty would be to amend the treaty unilaterally. This argument was rejected: the court held that the words descriptive of the offence in the treaty were to be given their general meaning, general to the lawyer and layman alike, their ordinary international meaning, and not a particular meaning they may have attracted in England. Giving the words a liberal meaning, treating them not as words of art but as words of general description, the accused's activities came within both the English and German versions of art 17. The court pointed out that the requirement that the facts alleged must amount to an offence in English law would have protected him from extradition if his offences had been committed before 1968. n5 [1974] Crim LR 102 n6 See Federal Republic of Germany (Extradition) Order 1960, SI 1960 No 1375, Sch 1 It was helpful to have citation of three American authorities, two decisions of the Supreme Court (Wright v Henkel n1 and Factor v Laubenheimer n2), and one decision of the Court of Appeal of the second circuit (Shapiro v Ferrandina n3). None of them bear directly on the problem in this case, but they show no difference in their general approach to extradition to that adopted by the courts in this country. I will do no more than cite briefly from the opinion of the court in Wright v Henkel n4: n1 (1902) 190 US 40 n2 (1933) 290 US 276 n3 (1973) 478 F 2d 894 n4 (1902) 190 US 40 at 57-58 per Fuller CJ 'Treaties must receive a fair interpretation, according to the intention of the contracting parties, and so as to carry out their manifest purpose. The ordinary technicalities of criminal proceedings are applicable to proceedings in extradition only to a limited extent... The general principle of international law is that in all cases of extradition the act done on account of which extradition is demanded must be considered a crime by both parties...' Finally, in reference to the definition of the crime under the American and British statutes n5: 'Absolute identity is not required. The essential character of the transaction is the same, and made criminal by both statutes.' n5 (1902) 190 US 40 at 58 With the guidance of these authorities I turn back to the statutory provisions. Article III of the treaty provides: '(1) Extradition shall be granted for an act or omission the facts of which disclose an offence within any of the descriptions listed in the Schedule annexed to this Treaty, which is an integral part of the Treaty, or any other offence, if: (a) the offence is punishable under the laws of both Parties by imprisonment or other form of detention for more than one year or by the death penalty; (b) the offence is extraditable under the relevant law, being the law of the United Kingdom or other territory to which this Treaty applies by virtue of sub-paragraph (1)(a) of Article II; and (c) the offence constitutes a felony under the law of the United States of America.' The first requirement is satisfied: burglary is in the schedule. The facts do disclose acts that would be recognised by layman and lawyer alike as falling within the concept of burglary, and it matters not that the two crimes are not identically defined. Sub-paras (a) and (c) also are satisfied. Burglary in both countries is punishable by imprisonment for more than one year and it is a felony under American law. I turn to sub-para (b). For the offence to be extraditable under the law of the United Kingdom it must be an extradition crime as defined by s 26 of the Extradition Acts 1870, for it is only in respect of an extradition crime that the magistrate has power to commit an accused person under s 8. The definition in s 26 reads: 'The term "extradition crime" means a crime which, if committed in England or within English jurisdiction, would be one of the crimes described in the first schedule to this Act.' Now I come to what I consider to be the nub of the case. Is this definition to be construed as meaning that the crime as defined in the foreign law must contain all the essential ingredients of one of the English crimes described in the schedule, in which case the applicants' submission succeeds because the American definition of burglary does not require trespass as an essential element? Alternatively, does the definition mean that an 'extradition crime' has been committed if that which the accused has done would have amounted to the commission of one of the crimes in the schedule if it had been done in England? If this is the true meaning of the definition, the applicants fail for the evidence shows that they committed the crime of burglary according to English law. In my judgment, the second construction is to be preferred. The first construction would give rise to all the difficulties inherent in attempting to apply extradition on the unlikely foundation that foreign definitions of crimes, often in different languages and operating in very different legal systems, will accord with English definitions. The authorities show that the courts do not expect or look for such identity of definition. On the other hand, an English court should have no difficulty in deciding whether a given set of facts does or does not constitute a crime according to English law. The authorities that have been cited stress the importance that the facts of the case should disclose an offence against the law of both countries and appear to me to lean heavily towards this interpretation of the definition. I appreciate that this construction may in theory result in the possibility of conviction in a foreign country which would not occur here. Although a theoretical possibility, it is I think a very unlikely result and, certainly so far as I can see, there is not a remote chance of it in the present case. This construction still leaves the accused with the protection that he is only to be extradited for a crime that is substantially similar in concept in both countries and I do not believe that this will result in any injustice. I therefore summarise by saying that double criminality in our law of extradition is satisfied if it is shown: (1) that the crime for which extradition is demanded would be recognised as substantially similar in both countries, and (2) that there is a prima facie case that the conduct of the accused amounted to the commission of the crime according to English law. I therefore conclude that double criminality does not have the meaning contended for by the applicants and their objection fails. Are the offences of a political character? Extradition will not be granted if the offence with which the accused is charged is of a political character. An offence of a political character is an elusive concept and probably defies any completely satisfactory definition. It is probably not desirable to attempt one because, as Lord Radcliffe said in Schtraks v Government of Israel n1, it is virtually impossible to find one that does not cover too wide a range. It is submitted that the offences were of a political character because the applicants were engaged in an attempt to change the policy of the United States Government towards the Church of Scientology and that the burglaries were committed to further this end. The applicants rely on passages in the opinions in Schraks v Government of Israel n1 per Lord Reid, and Tzu Tsai Cheng v Governor of Pentonville Prison n2 per Lord Diplock, which refer to an offence of a political character being one aimed at changing the policy of the foreign government. But these words of their Lordships must be read in the full context of their speeches which make it clear that they were considering offences committed in the course of a struggle against a foreign government for which the accused had sought asylum in this country. As society becomes more sophisticated, and populations increase, so the scope of government increases with the inevitable result that the policies of government affect the everyday life of the individual over an ever widening range of his daily activities. n1 [1962] 3 All ER 529 at 539, [1964] AC 556 at 589 n1 [1962] 3 All ER 529 at 535, [1964] AC 556 at 583 n[1973] 2 All ER 204 at 209, [1973] AC 931 at 945 In respect of any government policy there will probably be a substantial number of people who disagree with it and would wish to change it, but it should not be thought that if they commit a crime to achieve their ends it necessarily becomes an offence of a political character. In only two of the reported cases have our courts held that the offence was of a political character: in Re Castioni n3 in which the accused had killed a member of the government in the course of an armed uprising that overthrew the government, and in Re Kolczynski n4 in which a number of Polish seamen mutinied and sailed their vessel to England where they sought asylum for they feared prosecution for their political opinions if they should be returned to Poland. The idea underlying an offence of a political character is expressed by Lord Radcliffe in Schtraks v Government of Israel n5 in the following language: n3 [1891] 1 QB 419 n4 [1955] 1 All ER 31, [1955] 1 QB 540 n5 [1962] 3 All ER 529 at 540, [1964] AC 556 at 591 'In my opinion the idea that lies behind the phrase "offence of a political character" is that the fugitive is at odds with the state that applies for his extradition on some issue connected with the political control or government of the country. The analogy of "political" in this context is with "political" in such phrases as "political refugee," "political asylum" or "political prisoner."' Counsel for Mrs Kember has taken the court through a great deal of evidence in the course of his submission on this aspect of the case. The evidence reveals that the church of Scientology has been engaged in a protracted struggle with the Internal Revenue Services Department of the United States to secure exemption from taxes on the grounds that it is a religious foundation, and that it has also fought another long battle through the courts against the Food and Drugs Administration to establish that they were entitled to use a device known as an E-Meter as a part of their religious practice.It is also apparent from the documents that the Internal Revenue Services Department and the Food and Drugs Administration entertained grave doubts about the bona fides of the Scientologists and that they had received a number of reports suggesting various forms of criminal activity and chicanery on the part of the church and its members. The material before us also shows that these departments of the United States Government were not alone in their distrust of Scientology and its practices. The State of Victoria passed legislation against it and this country has refused to permit entry to those wishing to enter the employment of the Church of Scientology. It should, however, be stated that the Church of Scientology has achieved a substantial degree of success in the American litigation; the Internal Revenue Service in June and July 1975 finally conceded exempt status for tax purposes to all but one of its churches in the United States, and subject to certain safeguards the courts have permitted the use of the E-Meter. Counsel for Mrs Kember submitted that the burglaries were planned in order to gain access to the information that had been collected by the Internal Revenue Service and Department of Justice so that the Church of Scientology could inform themselves as to the false reports circulating about it between government departments, and identify and deal with the particular persons within the departments who were hostile to the church. I am prepared to accept that this was one motive for the burglaries. Guardian order 1361 dated 21st Doctober 1974, which seems to be the seminal document that initiated the break-ins, does refer to employees of the government departments concerned as, I quote, 'suppressive psychotics utilising the IRS as a substitute for standard justice procedures on scientology' and later it refers to the 'suppressive psychotics being identified and handled'. We were not told just how it was proposed to handle them. But this was only one of the guardian orders put in evidence, and it is manifest from the terms of others that a very important purpose of the burglaries was to obtain information that would help in the litigation. By way of examples only, I quote from the guardian order dated 5th December 1975: 'Place an agent in the US Attorneys Office DC as a first action as the office should cover all Federal agencies that we are in litigation with or may be in the litigation with', and the guardian order dated 27th March 1976: 'An excellent B1 success over the last year was the obtaining of non-FOI [non-Freedom of Information Act] data that resulted in aiding our overall strategy to get the CofS tax exemptions.' I am unable to accept that organising burglaries either for the purpose of identifying persons in government offices hostile to the Scientologists, or for the purpose of gaining an advantage in litigation, or even for the wider purpose of refuting false allegations thus enabling a better image of the Church of Scientology to be projected to the public, comes anywhere near being an offence of a political character within the meaning of the Extradition Act 1870. The applicants did not order these burglaries to take place in order to challenge the political control or government of the United States; they did so to further the interests of the Church of Scientology and its members, and in particular the interest of Ron L Hubbard, the founder of Scientology. In my view, it would be ridiculous to regard the applicants as political refugees seeking asylum in this country, and I reject the Submission that these were offences of a political character. The public law argument It is a well established rule that our courts will not enforce a foreign revenue, penal or public law. This means that our courts will not try and either punish or give a remedy for the breach of such a law committed in a foreign country. Counsel for Mrs Kember submits that the United States Government is attempting by indirect means to enforce a public law of the United States, namely the Freedom of Information Act. He says the real purpose behind the request for extradition is to punish the applicants not for burglary but for stealing confidential government information protected by the Freedom of Information Act. This could not be achieved by extradition proceedings because a breach of that Act is not an extradition crime, and so, it is said, resort is had to the offence of burglary. Although in the course of his argument counsel for Mrs Kember said he was not suggesting any bad faith on the part of the Government of the United States, it seems to me that bad faith is necessarily implicit in this submission. Under the treaty the United States give their undertaking that the accused will not be tried for any offence other than that for which they are extradited; if in the face of this undertaking they were ostensibly tried for burglary but in fact punished for the commission of a different offence, I should regard that as flagrant bad faith. When the offence has not been shown to be of a political character our courts will not entertain allegations of bad faith on the part of the requesting country: see Re Arton n1 and R v Governor of Brixton Prison, ex parte Kolczynski n2. n1 [1896] 1 QB 108 n2 [1955] 1 All ER 31, [1955] 1 QB 540 This is sufficient to dispose of the submission, but there is in fact a further ground for rejecting it. In the course of the proceedings in the United States, Judge Richey has given the following ruling: 'The government will not be permitted to rely on any alleged conversion of government information for a violation of section 641 in this case. However the government may proceed on the theory that copies made from government resources are owned by the government.' This makes it doubly unthinkable that their punishment will not be for burglary but for stealing confidential information. This objection therefore fails. The construction of s 3(1) of the Extradition Act 1870 Section 3(1) provides: 'A fugitive criminal shall not be surrendered if the offence in respect of which his surrender is demanded is one of a political character, or if he proves to the satisfaction of the police magistrate or the court before whom he is brought on habeas corpus, or to the Secretary of State, that the requisition for his surrender has in fact been made with a view to try or punish him for an offence of a political character.' Counsel for Mrs Kember addressed an argument to the court on the construction of s 3(1). He submitted that stealing confidential information was a political act and that the requisition for surrender was made with a view to punishing the applicants for this offence, and that they were thus protected by the second limb of s 3(1). For the reasons I have already given this submission would fail on the facts, but it is also bound to fail on the construction of the section. It is submitted that, even if the crime for which extradition is asked is not an offence of a political character within the first limb of the section, the second limb allows the fugitive criminal to show that the requesting country intends to try or punish him for some other political offence. This was the construction of the section adopted by Lord Russell CJ in Re Arton n1. But since that date the section has been construed in two modern authorities: by Lord Goddard CJ in Re Kolczynski n2, and by Lord Parker CJ n3 in the Divisional Court and by Lord Radcliffe n4, Lord Reid n5 and Lord Evershed n6 in the House of Lords in the Schtraks case n7. They have all rejected Lord Russell CJ's construction and held that the second limb of the section does no more than permit the accused to show by evidence that the offence of which extradition is asked is in truth of a political character, although it might not appear to be so from the evidence produced by the country requesting extradition. In my judgment, this court is bound by that weight of authority to apply this construction. n1 [1896] 1 QB 108 n2 [1955] 1 All ER 31 at 35-38, [1955] 1 QB 540 at 549-553 n3 [1962] 2 All ER 176 at 187-192, [1963] 1 QB 55 at 81-89 n4 [1962] 3 All ER 529 at 538-541, [1964] AC 556 at 587-592 n5 [1962] 3 All ER 529 at 533-536, [1964] AC 556 at 580-585 n6 [1962] 3 All ER 529 at 545, [1964] AC 556 at 599 n7 [1962] 3 All ER 529, [1964] AC 556 The law of the European Economic Community The final submission is made on behalf of Mrs Kember only and by virtue of her status as a national of the United Kingdom. It is submitted that the order of committal to await extradition is a restriction on her right to move freely between countries within the community guaranteed by art 48 of the Treaty of Rome and can only be justified on grounds of public policy under art 48(3), and in accordance with the provisions of Council Directive 64/221/EEC of 25th February 1964. The basis of this submission is that extradition is closely analogous to deportation. In R v Bouchereau n8 the European Court of Justice on a reference from the Marlborough Street Magistrates' court held that a recommendation for deportation made by a criminal court in this country was a measure within the meaning of art 3(1) and (2) of EEC Directive 64/221 and could only be made on grounds of public policy. The case concerned a French national convicted of the unlawful possession of drugs and it was accepted that a deportation order would constitute a restriction on his freedom of movement within art 48. Directive 64/221 applies only to foreign nationals and therefore has no direct application to the facts of the present case; it is concerned with the behaviour of member states towards foreign nationals in relation to entry to or expulsion from their territory. However, it has been argued that a member state is under a duty to treat its own nationals no less favourably than foreign nationals, for which the authority of Knoors v Secretary of State for Economic Affairs n1 was cited, and that as extradition is equivalent to deportation a member state can only extradite one of its own nationals if it applies the same criteria as it is required to apply by Directive 64/221 in the case of foreign nationals. n8 [1978] QB 732 n1 [1979] 2 CMLR 357 If this submission is right, it will impose a formidable fetter on extradition. It will mean that extradition can only be ordered on grounds of public policy based exclusively on the personal conduct of the individual concerned (see art 3 of the Directive). In R v Bouchereau n2 the European Court said in the course of their judgment: n2 [1978] QB 732 at 759 '27. The existence of a previous conviction can... only be taken into account in so far as the circumstances which gave rise to that conviction are evidence of personal conduct constituting a present threat to the requirements of public policy. '28. Although, in general, a finding that such a threat exists implies the existence in the individual concerned of a propensity to act in the same way in the future, it is possible that past conduct alone may constitute such a threat for the requirements of public policy.' This concept is easily understood in the case of deportation. A man should not be banished for a crime for which he has been punished unless he remains a present threat to society. But how do you apply it to extradition? The whole basis of extradition is that the accused has offended against society in another country; in all probability he is no threat to our society. Does that then mean he is not to be extradited to face justice where he has committed the crime? I cannot believe that it can have been the intention of those who drew the Treaty of Rome that it should have the effect of so emasculating the process of extradition. It is submitted by counsel who appeared as amicus curiae that the restrictions on the freedom of an individual imposed by extradition are unaffected by art 48. In R v Saunders n3 the European Court of Justice held that art 48 did not aim to restrict the power of member states to lay down restrictions within their own territory on the freedom of movement of all persons subject to their jurisdiction in implementation of domestic criminal law. I regard extradition as far more closely analogous to the implementation of domestic criminal law than to deportation. It is in no true sense a banishment from our shores as is deportation; indeed s 3(2) of the Extradition Act 1870 specifically provides that there will be no extradition unless the foreign state undertakes to allow the accused to return to this country after he has been dealt with for the extradition crime. Extradition is no more than a step that assists in the implementation of the domestic criminal law of the foreign state. This country has extradition treaties with other member states entered into before the Treaty of Rome. n3 [1979] 2 All ER 267, [1979] 3 WLR 359 Article 234 the treaty provides: 'The rights and obligations arising from agreements concluded before the entry into force of this Treaty between one or more Member states on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty.' It would be a curious result if extradition could be granted on generally accepted principles between member states who had entered into extradition treaties before the Treaty of Rome but on very different principles, introducing the concept of public policy already discussed, between member states who made or, I suppose, amended, extradition treaties after the Treaty of Rome. Again I cannot think that this result can have been intended. Counsel for Mrs Kember wishes us to refer to the European Court of Justice the following question: 'Whether a Member-State, in considering an application for the extradition (whether to another Member-State or to a Third party) of a worker who is a national of that first Member-State, must have regard to the provisions of Article 48(3) of the Treaty establishing the E.E.C.' Article 48(3) requires the justification to be on grounds of public policy. If we did refer this question we should undoutedly have to refer a number of supplementary questions to elucidate how the concept of public policy was to be applied to extradition. Lord Denning MR, in H P Bulmer Ltd v Bollinger SA n1 laid down guidelines to assist the courts in deciding whether to refer a question to the European Courts of Justice. The court should refer the point unless it considers it to be reasonably clear and free from doubt. n1 [1974] 2 All ER 1226, [1974] Ch 401 I have come to the clear conclusion that, borrowing the words of Advocate-General Warner in his opinion in R v Saunders n2, it is common sense that dictates that art 48 should be interpreted as manifestly not intended to apply to the exercise of the power of this country to extradite an accused person to the United States of America. Accordingly I would not make any reference to the European Court of Justice. n2 [1979] 2 All ER 267 at 276, [1979] 3 WLR 359 at 366 For the reasons I have given I would refuse the writ of habeas corpus to these applicants. JUDGMENTBY-2: LORD WIDGERY CJ. JUDGMENT-2: LORD WIDGERY CJ. I agree with the judgment which has just been delivered. DISPOSITION: Applications refused. Leave to appeal to the House of Lords refused. SOLICITORS: Stephen M Bird, East Grinstead (for the applicants); Director of Public Prosecutions (for the United States Government); Treasury Solicitor. Church of Scientology of California v Customs and Excise Commissioners and another QUEEN'S BENCH DIVISION [1979] STC 297 HEARING-DATES: 27, 28, 29 NOVEMBER 1978, 12 JANUARY 1979 12 JANUARY 1979 CATCHWORDS: Value added tax - Supply of goods or services - Supply in the course of a business - Business - Body incorporated to propagate religion or religious philosophy - Courses provided to further that aim - Fee-paying students - Surplus money from fees paying for other activities propagating aim of corporation - Whether services supplied 'in the course of a business carried on by' the corporation - Finance Act 1972, s 2(2)(b). HEADNOTE: In 1954 the Church of Scientology of California ('the taxpayer') was incorporated in California with the object of propagating 'the religious faith of Scientology'. In 1966 it acquired premises at East Grinstead, Sussex, and filed with the registrar of companies the documents required by s 407 of the Companies Act 1948 to be delivered to him by an overseas company carrying on business in this country. It ran 32 courses at East Grinstead, 17 of which were described as training courses and 14 as auditing courses (i e courses in which a supervisor listened to the person taking the course and guided him). Fees were charged for the courses. Persons interested in Scientology were encouraged to learn about it and to progress as Scientologists by taking the courses, and, if they were unable immediately to attend courses, to make payments which could later be applied wholly or partly for a course. Those payments were described as 'donations' or 'contributions'. Field service ministers and volunteer ministers who were able to persuade members of the public to take an interest in Scientology were entitled to receive a 10% commission. The taxpayer's employees at East Grinstead were paid small salaries but they could take courses at reduced rates or receive training in the higher grade courses as part of the staff training. At East Grinstead the taxpayer sold books on Scientology in connection with the courses, E-meters (which were used for the auditing courses) and sundry merchandise connected with Scientology. The accounts for 1973 showed that L 484,225 was received or receivable as contributions for the training and auditing courses and L 44,242 in respect of the sale of the books etc. The Commissioners of Customs and Excise assessed the taxpayer for value added tax under s 2 a of the Finance Act 1972 on the basis that those sums were the consideration for taxable supplies of goods and services provided by the taxpayer in the United Kingdom in the course of a business carried on by it. The taxpayer appealed against the assessment contending, inter alia, that it was not carrying on a business and therefore the supply of the goods and services was not 'in the course of a business carried on by [it]', within s 2(2)(b). A value added tax tribunal found, inter alia, that the taxpayer was not competing in the United Kingdom with any other person or concern offering courses or books etc on Scientology, that only part of the donations or contributions received were applied in paying for courses, that the taxpayer budgeted for a surplus from the money paid for the courses in order to meet the expenses of its other activities, which included the establishment and support of Scientology establishments and missions, the maintenance of a number of leading Scientologists and the creation of reserve funds, and that the taxpayer's East Grinstead branch prepared and filed accounts and employed persons to manage its establishment there in an efficient and businesslike manner. The tribunal held that the overall activity of the taxpayer was one indivisible business consisting of the propagation of Scientology as a commodity, that the relevant supplies were provided as a commercial and economic activity and that the taxpayer was, throughout the period covered by the 1973 accounts, carrying on a business in the United Kingdom, through its East Grinstead branch, within s 2(2)(b). The taxpayer appealed under s 13 b of the Tribunal and Inquiries Act 1971, contending that the essentially religious nature of its principal activity meant that it could not as a matter of law be regarded as carrying on a business, within s 2(2)(b). a Section 2, so far as material, is set out at p 299 j, post b Section 13, so far as material, is set out at p 301 b c, post Held - As a matter of law there was no reason why a body which propagated a religion or religious philosophy could not be regarded in doing so as 'carrying on a business' for the purposes of s 2(2)(b). The tribunal had not erred in law in finding that the propagation of Scientology was carried on as a business by the taxpayer, since the tribunal was entitled to look at the facts to see how the taxpayer company organised its activities and could not be criticised for regarding the activities of the taxpayer as a whole. Accordingly there were no grounds for interfering with the tribunal's decision (see p 310 g to p 311 a, post). Customs and Excise Comrs v Morrison's Academy Boarding Houses Association [1978] STC 1 applied. NOTES: For the definition of 'business', see De Voil: Value Added Tax A4.101. For the Finance Act 1972, s 2, see 42 Halsbury's Statutes (3rd Edn) 164. For the Companies Act 1948, s 407, see 5 Halsbury's Statutes (3rd Edn) 404. For the Tribunals and Inquiries Act 1971, s 13, see 41 Halsbury's Statutes (3rd Edn) 258. Section 2 of the 1972 Act was replaced by the Finance Act 1977, s 14 and Sch 6, with effect from 1st January 1978. CASES-REF-TO: Buchler v Buchler [1947] 1 All ER 319, [1947] P 25, [1947] LJR 820, 176 LT 341, 111 JP 179, 45 LGR 442, CA, 27(1) Digest (Reissue) 451, 3285. Customs and Excise Comrs v Morrison's Academy Boarding Houses Association [1978] STC 1, 1977 SLT 197, CS. Edwards (Inspector of Taxes) v Bairstow [1955] 3 All ER 48, [1956] AC 14, [1955] 3 WLR 410, 36 Tax Cas 207, [1955] TR 209, 34 ATC 198, 48 R & IT 534, HL, 28(1) Digest (Reissue) 566, 2089. Green v Minister of Housing and Local Government [1966] 3 All ER 942, [1967] 2 QB 606, [1967] 2 WLR 192, DC, Digest (Cont Vol B) 693, 111a. Inland Revenue Comrs v Marine Steam Turbine Co Ltd [1920] 1 KB 193, 89 LJKB 49, 12 Tax Cas 174, 121 LT 368, 28(1) Digest (Reissue) 585, 2169. National Water Council v Customs and Excise Comrs [1979] STC 157. Rael-Brook Ltd v Ministry of Housing [1967] 1 All ER 262, [1967] 2 QB 65, [1967] 2 WLR 604, 131 JP 237, 65 LGR 239, 18 P & CR 290, DC, Digest (Cont Vol C) 161, 30 l. Ransom (Inspector of Taxes) v Higgs [1974] 3 All ER 949, [1974] 1 WLR 1594, [1974] STC 539, 50 Tax Cas 1, [1974] TR 281, 53 ATC 285, HL, Digest (Cont Vol C) 444, 295a. Retarded Children's Aid Society Ltd v Day [1978] 1 WLR 763, [1978] ICR 437, CA. Town Investments Ltd v Department of the Environment [1977] 1 All ER 813, [1978] AC 359, [1977] 2 WLR 450, HL. CASES-CITED: American Leaf Blending Co Sdn Bhd v Director-General of Inland Revenue [1978] STC 561, PC. Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 3 All ER 371, [1965] 1 WLR 1320, CA. Bramwell v Lacy (1879) 10 Ch D 691. British Railways Board v Customs and Excise Comrs [1977] 2 All ER 873, [1977] 1 WLR 588, [1977] STC 221, CA. Customs and Excise Comrs v Glassborow [1974] 1 All ER 1041, [1975] 1 QB 465, [1974] ST 142. Doe d Bish v Keeling (1813) 1 M & S 95, 105 ER 36. Fothergill v Monarch Airlines Ltd [1977] 3 All ER 616, [1977] 3 WLR 885. Glasgow Corpn v Lord Advocate 1959 SC 203. Global Plant Ltd v Secretary of State for Health and Social Security [1971] 3 All ER 385, [1972] 1 QB 139. Hinton (Inspector of Taxes) v Maden and Ireland Ltd [1959] 3 All ER 356, 38 Tax Cas 391, HL. Inland Revenue Comrs v Korean Syndicate Ltd [1921] 3 KB 258, 12 Tax Cas 181, CA. Inland Revenue Comrs v Westleigh Estates Co Ltd [1924] 1 KB 390, 12 Tax Cas 657, CA. Leeds Kashrut Commission and Bethdin Administration Committee v Customs and Excise Comrs (20th October 1977), unreported. Religious Tract and Book Society of Scotland v Forbes (Surveyor of Taxes) (1896) 3 Tax Cas 415. Rolls v Miller (1884) 27 Ch D 71, [1881-5] All ER Rep 915, CA. INTRODUCTION: Appeal. This was an appeal by the Church of Scientology of California against a decision of the London Value Added Tax Tribunal (chairman Lord Grantchester QC), dated 29th November 1977, whereby the tribunal dismissed an appeal by the appellant against an assessment for value added tax in the sum of L 20,661.96 for the period of five months ended 31st August 1973. The first respondents were the Commissioners of Customs and Excise and the second respondent was the value added tax tribunal. The facts are set out in the judgment. COUNSEL: Peter Whiteman QC, Philip Lawton and T R Mowschenson for the appellant. Patrick Medd QC, Harry Woolf and P I F Vallance for the respondents. JUDGMENT-READ: Cur adv vult. 12th January. PANEL: NEILL J JUDGMENTBY-1: NEILL J JUDGMENT-1: NEILL J read the following judgment: This is an appeal by the Church of Scientology of California ('the taxpayer') against the decision by the London value added tax tribunal dated 29th November 1977. By its decision the tribunal, under the chairmanship of Lord Grantchester QC, dismissed, subject to a possible further hearing as to the precise amount of the tax payable, an appeal by the taxpayer against an assessment whereby the Commissioners of Customs and Excise assessed the appellant for value added tax in a sum of L 20,661.96 for the period of five months ended 31st August 1973. The assessment was dated 2nd April 1974. The basis on which the assessment was made by the commissioners was that the taxpayer, by its branch in the United Kingdom, was carrying on a business and was supplying goods and services in the course of that business so that value added tax became payable in accordance with s 2 of the Finance Act 1972, which I shall call the 1972 Act. Section 2 of the 1972 Act is in these terms: 'Except as otherwise provided by this Part of this Act the tax shall be charged and payable as follows'; and then sub-s (2), which is the important subsection: 'Tax on the supply of goods or services shall be charged only where -- (a) the supply is a taxable supply; and (b) the goods or services are supplied by a taxable person in the course of a business carried on by him; and shall be payable by the person supplying the goods or services.' I need not read sub-s (3), but sub-s (4) provides: 'Any reference in the following provisions of this Part of this Act to the supply by any person of goods or services is a reference to such a supply in the United Kingdom... in the course of a business carried on by him.' I shall have to refer later in some detail to the relevant activities carried on by the taxpayer. At this stage it is sufficient to say that the assessment related to the supply by the taxpayer of the following goods and services: (a) the provision by the taxpayer of various courses at its premises at Saint Hill Manor, East Grinstead, West Sussex; and (b) the sale by the taxpayer of books, E-meters and sundry merchandise connected with Scientology. The taxpayer appealed against that assessment, and against a further assessment, with which this court is not concerned, for the period of three months ended on 30th November 1973, and put forward two main contentions. These two contentions were directed to showing that neither of the conditions laid down in s 2(2) of the 1972 Act was satisfied. Thus that subsection provides that: 'Tax on the supply of goods or services shall be charged only where -- (a) the supply is a taxable supply; and (b) the goods or services are supplied by a taxable person in the course of a business carried on by him...' The first contention was directed to the condition in s 2(2)(a) which requires the supply to be a taxable supply. The contention proceeded on the following lines. (1) Section 46(1) of the 1972 Act provides that: '"taxable supply" means any supply of goods or services in the United Kingdom... other than an exempt supply'. (2) Section 13(1) provides that: 'A supply of goods or services is an exempt supply if it is of a description for the time being specified in Schedule 5.' (3) Group 6 in Sch 5 includes in item 1(b): 'The provision of education if... of a kind provided by a... university and is provided otherwise than for profit.' (4) The provision of the courses by the taxpayer was the provision of education of a kind provided by a university and was provided otherwise than for profit. (5) The supply of the courses was, therefore, an exempt supply and accordingly was not chargeable with tax. This contention failed. The tribunal held that the taxpayer was not providing education of a kind provided by a university and was not providing the courses otherwise than for profit. It is unnecessary, however, for me to examine this contention any further, because it has not been pursued in argument in this court. Moreover, the notice of motion has been reamended so as to exclude any issue involving an exempt supply. The further contention before the tribunal was directed to the condition in para (b) in s 2(2). This condition requires the supply to be in the course of a business carried on by the supplier. It was argued that the taxpayer was not carrying on any business and that therefore the supply of these goods and services was not in the course of a business carried on by the taxpayer. This contention also was rejected by the tribunal. In its decision the tribunal said: '... we have no hesitation in holding that [the taxpayer] by its UK branch in the United Kingdom was carrying on a business throughout the period of the 1973 Accounts... the provision of the training and auditing courses in Scientology at Saint Hill Manor, and the sales of books on Scientology, E-Meters and Sundry Merchandise amounted, in our judgment, to taxable supplies in the course of such business.' It is with this part of the decision of the tribunal that the appeal in this court has been concerned. The grounds of appeal, as set out in the reamended notice of motion, were in these terms: (1) that the tribunal erred in law in that it decided that the overall activity of the taxpayer was one indivisible business consisting of the propagation of Scientology as a commodity without considering the essential religious nature of that activity; (2) that the tribunal erred in law in failing to consider the essential religious nature of the activity of the taxpayer in coming to the conclusion that particular activities of the taxpayer constituted supplies made in the course of a business. These grounds of appeal were developed in argument by counsel for the taxpayer, and I shall return to consider his arguments later. First I should say something about the nature of the court's function on the hearing of this appeal. The Tribunals and Inquiries (Value Added Tax Tribunals) Order 1972 n1 came into force in September 1972. By cl 3 of that order it was provided that s 13 of the Tribunals and Inquiries Act 1971 should apply to value added tax tribunals. Section 13 of that Act is in these terms: n1 SI 1972 No 1210 '(1) If any party to proceedings before any such tribunal as is specified [and then various paragraphs in Sch 1 to the 1971 Act are set out] is dissatisfied in point of law with a decision of the tribunal he may, according as rules of court may provide, either appeal therefrom to the High Court or require the tribunal to state and sign a case for the opinion of the High Court...' Then it is unnecessary for me to read sub-s (2), but sub-s (3) provides: 'In relation to proceedings in the High Court or the Court of Appeal brought by virtue of this section the power to make rules of court shall include power to make rules prescribing the powers of the High Court or the Court of Appeal with respect to -- (a) the giving of any decision which might have been given by the tribunal; (b) the remitting of the matter with the opinion or direction of the court for re-hearing and determination by the tribunal; (c) the giving of directions to the tribunal; and different provisions may be made for different tribunals.' The relevant rules of court are contained in RSC Ord 55, because the matter with which I am concerned is not an appeal by way of case stated. Order 55, r 1, provides as follows: '(1) Subject to paragraphs (2), (3) and (4), this Order shall apply to every appeal which by or under any enactment lies to the High Court from any court, tribunal or person. '(2) This Order shall not apply to an appeal by case stated...' I have already said this is not such an appeal. It is unnecessary for me to read any other of the provisions of RSC Ord 55, r 1, except for para (4), which is in these terms: 'The following rules of this Order shall, in relation to an appeal to which this Order applies, have effect subject to any provision made in relation to that appeal by any other provision of these rules or by or under any enactment.' The powers of the court hearing the appeal are set out in RSC Ord 55, r 7, and I should read paras (2), (3) and (5) of that rule: '(2) The Court shall have power to receive further evidence on questions of fact, and the evidence may be given in such manner as the Court may direct either by oral examination in court, by affidavit, by deposition taken before an examiner or in some other manner. '(3) The Court shall have power to draw any inferences of fact which might have been drawn in the proceedings out of which the appeal arose... '(5) The Court may give any judgment or decision or make any order which ought to have been given or made by the court, tribunal or person and make such further or other order as the case may require or may remit the matter with the opinion of the Court for rehearing and determination by it or him.' I have been referred by counsel to RSC Ord 55 and to these rules, and also to several decisions in which appellate courts have been concerned with appeals on points of law. In particular I have been referred to the well-known decision of the House of Lords in Edwards (Inspector of Taxes) v Bairstow n2 which was an appeal by way of case stated, and to the decision of the Divisional Court in Green v Ministry of Housing and Local Government n1. n2 [1955] 3 All ER 48, [1956] AC 14 n1 [1966] 3 All ER 942, [1967] 2 QB 606 From these authorities I obtain the following guidance: (i) The proper construction of the words in a statute is a question of law. In general, however, the law does not supply a detailed set of rules showing how the statutory words are to be applied to a particular type of case. The tribunal of fact, therefore, is likely to have a substantial area within which to operate in applying the statutory words to the facts before it. I would refer in this context to the speech of Lord Radcliffe in Edwards (Inspector of Taxes) v Bairstow n2 where he said this: n2 [1955] 3 All ER 48 at 55-56, [1956] AC 14 at 33, 36 Tax Cas 207 at 227 'My Lords, I think that it is a question of law what meaning is to be given to the words of the Income Tax Act "trade, manufacture, adventure or concern in the nature of trade" and for that matter what constitute "profits or gains" arising from it. Here we have a statutory phrase involving a charge of tax, and it is for the courts to interpret its meaning, having regard to the context in which it occurs and to the principles which they bring to bear on the meaning of income. But, that being said, the law does not supply a precise definition of the word "trade"; much less does it prescribe a detailed or exhaustive set of rules for application to any particular set of circumstances. In effect, it lays down the limits within which it would be permissible to say that a "trade" as interpreted by s. 237 of the Act, does, or does not, exist. The field so marked out is a wide one, and there are many combinations of circumstances in which it could not be said to be wrong to arrive at a conclusion one way or the other. If the facts of any particular case are fairly capable of being so described, it seems to me that it necessarily follows that the determination of the commissioners, special or general, to the effect that a trade does or does not exist is not "erroneous in point of law"; and, if a determination cannot be shown to be erroneous in point of law, the statute does not admit of its being upset by the court of appeal. I except the occasions when the commissioners, although dealing with a set of facts which would warrant a decision either way, show by some reason they give or statement they make in the body of the Case that they have misunderstood the law in some relevant particular. All these cases in which the facts warrant a determination either way can be described as questions of degree and therefore as questions of fact.' I have also obtained assistance from the speech of Lord Simon of Glaisdale in Ransom (Inspector of Taxes) v Higgs n3. Lord Simon referred n4 to the judgment of Asquith LJ in Buchler v Buchler n5 on the meaning of desertion and constructive desertion in proceedings for divorce and to the words used by Asquith LJ, where he said this: n3 [1974] 3 All ER 949, [1974] 1 WLR 1594, [1974] STC 539 n4 [1974] 3 All ER 949 at 971, [1974] 1 WLR 1594 at 1618, [1974] STC 539 at 561 n5 [1947] 1 All ER 319 at 326, [1947] P 25 at 46 'It is, I think, possible to say of certain courses of conduct that they could not amount to constructive desertion, and of certain other courses that they could not fail to do so. This would appear to be a question of law, involving, as it does, the issue whether there was any or no evidence to support the judge's conclusion. But between the extremes indicated there is obviously a no man's land where the issue is one of fact. This does not debar an appellate tribunal from disturbing the judge's findings if, in the view of that tribunal, they are plainly wrong.' Lord Simon then added this by way of the first of two riders n6: n6 [1974] 3 All ER 949 at 971, [1974] 1 WLR 1594 at 1619, [1974] STC 539 at 561 '... where an appeal lies only on a point of law, the appellate tribunal ought only to interfere with a decision falling within "the no man's land" of fact and degree if a plain error shows that the first instance tribunal must have misdirected itself in law.' In addition, I have been reminded of what was said recently by the Court of Appeal as to the function of the Employment Appeals Tribunal: see Retarded Children's Aid Society v Day n1. n1 [1978] 1 WLR 763 (ii) Notwithstanding the terms of RSC Ord 55, r 7, paras (2) and (3), the appellate court cannot embark on a rehearing relating to the primary facts of the case. This emerges clearly from the decision of the Divisional Court of the Queen's Bench Division in Green v Ministry of Housing and Local Government n2 and in particular from the judgment of Widgery J. It does seem clear, however, that the appellate court can draw inferences from the primary facts found by the court or tribunal from whom the appeal is brought. n2 [1966] 3 All ER 942 at 946, [1967] 2 QB 606 at 615 I return to the present case. The crucial matter raised in this appeal can be stated as follows: was the tribunal wrong in law in holding that the taxpayer was carrying on business so that the goods and services which it supplied were taxable supplies made in the course of a business? To deal with this matter it is necessary to consider first the activities of the taxpayer in the relevant period and then the question: in the light of those activities, was the taxpayer carrying on a business within the meaning of s 2(2) of the 1972 Act? I should make it clear that in this question the words 'a business' mean a single overall business viewing the taxpayer's activities as a whole. As I shall mention a little later, counsel for the taxpayer was finally prepared to concede that two minor activities of the taxpayer were business activities, and that goods supplied in the course of those activities were supplied in the course of a business or perhaps businesses. The activities of the taxpayer I think it is right that I should refer in detail to the findings of the tribunal as set out in its decision. I should also draw attention to the fact that the tribunal heard evidence and argument extending over eight or nine days between 1st November and 11th November 1977. In addition to hearing oral evidence from a number of witnesses the tribunal had the opportunity of seeing a quantity of documents, including the accounts of the taxpayer for the period of a little more than a year between 29th December 1972 and 3rd January 1974, a period which was called 'the period of the 1973 Accounts'. I turn to the decision. The tribunal said this: 'The [taxpayer] was incorporated under the laws of the State of California in the United States of America on the 18th February 1954. Its main and primary purposes, as set out in its Articles of Incorporation, include the following: "(a) To accept and adopt the aims, purposes, principles and creed of The Mother Church, 'THE CHURCH OF AMERICAN SCIENCE' of Camden, New Jersey, with the powers objectives and duties as herein defined and enumerated. (b) To train and indoctrinate ministers and brothers and sisters in the principles and teachings of the Church of American Science. (c) To prepare them and ordain them to carry forward the work of the Church of American Science, and to conduct churches and minister to and conduct congregations. (d) To resolve the travail and difficulties of members of congregations, as they may appertain to the spirit. (e) To instruct in spiritual healing acts and other matters within the Creed of the Church of American Science. (f) To conduct seminaries and instruction groups. (g) To create congregations and have other powers similar to those of the Church of American Science. (h) The propagation of the religious faith known as SCIENTOLOGY. Believing that Man's best evidence of God is the God he finds within himself, and trusting with Enduring Faith that The Author of this Universe intended Life to thrive within it, the Church of Scientology is formed to espouse such evidence of the Supreme Being and Spirit as may be knowable to Man and by their use the Church of Scientology hopes to bring a greater tranquility to the State and better order and survival to Man upon this planet." [Then the tribunal referred to, but did not set out, the other purposes of the articles. The decision continued:] Further according to its Articles of Incorporation, "the principal office for the transaction of the business of the corporation is to be located" in the County of Los Angeles, [the taxpayer] has no shares and is "a non-profit religious, charitable, social, fraternal, educational, welfare, protective, research, membership corporation". The Articles provide that it is to have three trustees in whom are vested, according to its bye-laws, the powers of [the taxpayer] and "authority to control, regulate, oversee and manage its activities and affairs, business, funds and property". On the 22nd March 1966 [I think that date should in fact be the 29th March from the document I have seen] [the taxpayer] filed with the registrar of companies the documents required, pursuant to section 407 of the Companies Act 1948, to be filed by a company which, being incorporated outside Great Britain, establishes a place of business within Great Britain. At about the same time [the taxpayer] acquired certain assets in England including a property known as Saint Hill Manor, East Grinstead, Sussex, all the issued shares of four United Kingdom companies and just over fifty per cent of the issued shares of a fifth such company. In acquiring such assets or in connection therewith [the taxpayer] undertook substantial liabilities including the payment of L 37,452 to the Hubbard Association of Scientologists International Inc, another American corporation. Since such acquisitions the activities of [the taxpayer] in the United Kingdom have been carried on as its "UK Branch" under the direction of a "Board of Directors"...' and then the names of the board at the relevant time were set out. None of the members of that board of directors was a trustee of the taxpayer. The tribunal then turned to the period covered by the 1973 accounts. It said this: 'During the period of virtually a year from the 29th December 1972 down to the 3rd January 1974 ("the period of the 1973 Accounts") the amounts received and receivable by the UK Branch of [the taxpayer] as "Contributions from Member Scientologists for Pastoral Counselling and Training less Refunds" totalled L 484,225 and for "Books, Meters and Sundry Merchandise" totalled L 44,242. A substantial proportion of both such sums is referable to the five month period covered by the first assessment. The Commissioners are contending that such sums were the consideration for taxable supplies made by [the taxpayer] in the United Kingdom in the course of a business carried on by it. As a result the Commissioners made the first assessment contending that [the taxpayer] is liable to be registered as a taxable person... [and then the tribunal set out what the rival contentions were before it. The decision continued as follows:] Scientology is the "invention" or "discovery" of a Mr Ron L Hubbard and is, or claims to be, a religion or "a religious philosophy" containing spiritual counselling procedures intended to assist an individual to attain "spiritual freedom". We understand that it has evolved from, or is a development of, "Dianetics". "Dianetics" is, or claims to be, "an organised science of thought built on definite axioms to reveal the existence of natural laws by which behaviour can uniformly be predicated in the unit organisms of society". It offers, or claims to offer, a "therapeutic technique" by which "inorganic mental and organic psychosomatic ills" can be treated... During the period of the 1973 Accounts the sum of L 484,225 was the amount brought into the accounts of the UK Branch for courses in Scientology at Saint Hill Manor aforesaid given during the period of the 1973 Accounts.' The tribunal then set out in its decision the 32 types of courses available at Saint Hill Manor. As emerges from a passage in the decision, 17 of those courses were described as training courses, 14 as auditing courses, and the remaining course as a cramming course; and in the decision the title of the various courses and the cost of them was set out. The tribunal referred to these courses and then proceeded: 'Persons becoming interested in Scientology are encouraged to learn about it and to progress as Scientologists by taking such courses and, if unable immediately to attend for a course or courses, are encouraged to make payments which may be in round sums and which can later be applied wholly or in part by way of payment for a course. Such payments are sometimes termed "donations" and sometimes "contributions" and courses are sometimes lermed "services". The courses and their contents are arranged to enable a person to progress through them fomr an elementary introduction to Scientology (the Student Hat Course) to technical perfection (on completion of a Class XII Course not available at Saint Hill Manor). All courses are what might be termed "Scientology-orientated"; the Basic Grammar Course appears to be designed to give the person taking it an introduction to the rudiments of grammar and practice in using a dictionary to enable him or her to embark on the Student Hat Course in which he or she will encounter the "language" of Scientology.' The tribunal then proceeded to give details of the number of employees of the taxpayer at its United Kingdom branch, some 67 of whom were stated as living at Saint Hill Manor. It was said: 'Employees were not paid large salaries but had the advantage of themselves taking courses at reduced rates or receiving training in the higher grade courses as part of the staff training to which we shall have to refer later. Courses at Saint Hill Manor fell into two main groups, training courses and "auditing" courses. A person desiring to take a course or courses at Saint Hill Manor is first assessed for suitability and directed to the course considered to be most suitable for him or her. For training courses a check sheet prepared and approved by Mr Hubbard is provided which sets out the matters to be learnt and which also contains exhortations and instructions to the person supervising the course. The person taking a training course rads books written in the main by Mr Hubbard and listens to tape recordings made by him... The person taking the course is assisted by a supervisor present while he or she is working. [The tribunal then described the auditing courses:] In "auditing" courses a supervisor (termed the Auditor) listens to the person taking the course (termed the Pre-clear) having directed certain predetermined questions to him or her, the aim being to guide the person taking the course "to think for himself or herself and to achieve spiritual awareness". The process of auditing is a fundamental practice of Scientology and is often described as "pastoral counselling". It can involve the use by the supervisor of an instrument termed an "E-Meter", a modern adaptation of the Wheatstone Bridge designed to measure physical responses to mental stimuli. An "E-Meter" is said to reveal "engrams" in the person taking the course, an "engram" being said to be "a mental image picture which is a recording of a time of physical pain and unconsciousness" which must be "8cleared" to enable the individual to become free from all psychoses, neuroses, compulsions and repressions... The provision of the Scientology training and auditing courses at Saint Hill Manor constituted the principal activity of the UK Branch of [the taxpayer] during the relevant period. Some of the "Faculty" staff of 23 had obtained University degrees and this staff included many regarded as well qualified in Scientology. Those who received the courses can be divided into three main categories. First, there were the "seekers after truth" who formed the largest number. Secondly, there were those who thought that Scientology might help them in their chosen careers. Thirdly, there were those with problems who came to try to overcome or solve them.' The tribunal then made reference to an arrangement whereby ministers who were able to persuade members of the public to take an interest in Scientology were entitled to receive a 10% commission. It was said that during the period of the 1973 accounts commissions averaged L 49.50 per minister and were regarded as reimbursement of the expenses of travelling, telephone, postage and the like expenses incurred in obtaining the donations or contributions. Then the tribunal considered the supply of goods. It was said: 'Also in connection with the courses [the taxpayer] at its UK Branch bought and sold Books, E-Meters and Sundry Merchandise. The Books were almost exclusively books written by Mr Hubbard which [the taxpayer] bought from... a Danish Company... and sold to Scientologists and others.' Then the figures for the various stocks and so on were set out. There then followed, and I am not concerned with the detail of this, a careful examination and anlysis of the 1973 accounts, and I can turn next to that part of the decision. The tribunal having set out the figures and having made detailed reference to the way in which the accounts for the 1973 period were displayed, went on as follows: 'Mr M J Greenberg, an American Certified Public Accountant who has been for some years concerned with the finances and taxation liabilities of [the taxpayer] in the United States of America, was called as a witness and commented on the financial position of [the taxpayer] in 1973. He stated that, in 1973, [the taxpayer], excluding the UK Branch (and excluding other Scientology associations in the United States of America and elsewhere) had a deficit amounting to u,166,811 US dollars (which at 2.32 US dollars to L 1 sterling is equal to L 502,935). He indicated that [the taxpayer] operated on a much larger scale than, but in the same way as, the UK Branch (including the building up of a large account in the nature of an accumulating revenue reserve) and that [the taxpayer] (excluding the UK Branch and all other Scientology associations) had an annual income in the region of 15 million US dollars. He said that in the year 1973 [the taxpayer] in the United States of America had paid Mr Hubbard 15,000 US dollars which the United States federal tax authorities accepted to be "reasonable and necessary compensation for services to [the taxpayer] in America".' Then they refer to the names of the trustees. The tribunal then turned to consider the arguments relating to whether or not the supply by the taxpayer was an exempt supply as being the supply of education of a kind provided by a university. The tribunal rejected the taxpayer's contention that the supply was an exempt supply, but found that in providing the training course the taxpayer was providing education. In regard to the auditing courses the tribunal said this: 'But we consider that the giving of the auditing courses, that is to say, the courses numbered 18 to 31 in the list set out above, did not amount to the provision of education. Auditing is, and is claimed by Mr Hubbard in his book " Dianetics, The Modern Science Of Mental Health" to be, a therapy. It is claimed that Dianetics releases all the physical pain and painful emotion from the life of an individual and "demonstrates the single source of all insanities, psychoses, neuroses, compulsions, repressions, social derangements and psychosomatic ills". Auditing was frequently referred to by the witnesses for [the taxpayer] as "pastoral counselling". We consider that, as the aforesaid, it is more closely allied to psychiatry and psychotherapy than to eduction, and that the courses are designed to treat rather than to teach. In this regard we refer to the evidence of three of the expert witnesses called for [the taxpayer] who commented on this aspect...' and then they went on to explain in detail the view they took of the evidence given by those witnesses. Finally on this aspect of the matter I should refer to certain later passages in the decision relating to the accounts. As I have already said, I am not concerned with the question of exempt supplies or the wording of Sch 5 to the 1972 Act, but nevertheless in my judgment the financial arrangements made by the taxpayer, which were investigated in detail by the tribunal, throw light on the matter which I have to consider. The decision continued: 'But no direct evidence was adduced to establish how the amounts charged for courses were fixed. Mr Oaks, a Chartered Accountant employed to inspect the Accounts of the UK branch for the period of the 1973 Accounts for the purposes of these hearings, stated that the UK Branch budgeted annually to cover its estimated expenditures out of the anticipated income from "contributions". Otherwise the only other evidence on this point is the statement in the Report of the Directors of the UK branch attached to such Accounts as follows [and there is then a citation from the report]. Since 1973 the fees charged for courses at Saint Hill Manor have been considerably increased. Accordingly from all the foregoing we infer that the fees chargeable for courses at Saint Hill Manor are fixed from time to time at such amounts as, after bringing into account all (if any) other anticipated receipts, will produce sufficient income to meet all the expected expenditures of the UK branch. [Then the tribunal went on to deal with the accounts again, and said this:] The 1973 Accounts of the UK Branch reveal a deficiency for the period of the 1973 Accounts of L 18,361 and an accumulated deficit to the end of that period of L 121,168. [The taxpayer], excluding the UK Branch, was said by Mr Greenberg to have had an accumulated deficit of 1,166,811 United States dollars by the end of 1973. However, we take the view that the 1973 Accounts of the UK Branch could equally well have shown a substantial profit or surplus. First, the whole of the outstanding cost of technical services at L 285,016 was brought into the 1973 Accounts as part of the Expenditures notwithstanding that about L 193,355 of it was referable to previous years.' And then they dealt with the way in which 'write-offs' had been dealt with in the accounts. The decision continued: 'Having regard to the foregoing, and on the basis of the 1973 Accounts and the Accounts of the UK Branch of [the taxpayer] for previous years and for 1974, we are firmly of the opinion that [the taxpayer] and its UK Branch fixed the fees for courses at Saint Hill Manor to produce in 1973 a sufficient income to cover both the costs of providing such courses and other matters. In our opinion such other matters included the dissemination of the religious philosophy of Scientology amongst members and others, and the establishment and support of Scientology establishments and missions such as the missions in London and Plymouth. In our opinion such other matters also included, through the "cost of technical services", a proportion of the upkeep of the Flagship Apollo upon which Mr Hubbard and other highly qualified Scientologists resided, and the creation of reserve funds for, or with a view to, the expansion of Scientology organisations. Less than one third of the 257 employees of the UK Branch appear to have been directly concerned with the courses at Saint Hill Manor and the giving of such courses. Whilst we fully appreciate that propagation and expansion of Scientology must be a meritorious aim and object to a Scientologist, we consider that, for tax purposes, the requirement now under consideration relating to education as contained in item 1(b) aforesaid was not satisfied in relation to the courses provided at Saint Hill Manor.' I have, of course, already drawn attention to the fact that I am not concerned in this appeal with the question whether the supply of these courses amounted to an exempt supply as constituting education of a kind supplied by a university, but nevertheless these passages are, in my judgment, relevant to the consideration whether it was admissible for the tribunal to come to the conclusion that the taxpayer was carrying on an overall business. With this outline of the facts and these citations from the decision of the tribunal, I can now return to the question which I posed earlier. In the light of these activities, was the taxpayer carrying on, in relation to these activities viewed as a whole, a business within the meaning of s 2(2) of the 1972 Act? The tribunal, it will be remembered, described that overall business as 'the propagation of Scientology'. Counsel's main argument for the taxpayer was that where a religious body is merely seeking to expound and communicate its tenets to its followers or prospective followers it does not carry on a business within the meaning of the word business in s 2(2) of the 1972 Act. He accepted that a religious body may carry on a business or businesses in relation to one or more of its ancillary activities, and he gave, by way of example, the case of a church school. Moreover, in the course of his reply he said that for the purposes of this case he was prepared to concede that the supply by the taxpayer of books and sundry merchandise constituted a business activity, and that the supply of these goods therefore amounted to a supply in the course of a business. But he made it quite clear that in making this concession he was in no way derogating from his main argument that the propagation of scientology could not be regarded as a business activity. The tribunal erred in law, said counsel for the taxpayer, in holding that the overall activity of the taxpayer was a business and one indivisible business. Counsel for the taxpayer referred me to the definition of business in s 45(1) of the 1972 Act, and to the deeming provisions in the four lettered paragraphs in that subsection. I should read s 45(1): 'In this Part of this Act "business" includes any trade, profession or vocation; and (a) the provision by the Independent Broadcasting Authority of broadcasting services; and (b) the provision by a club or by an association to which this paragraph applies of the facilities available to its members; and (c) the provision by an organisation to which this paragraph applies of the advantages of membership; and (d) the admission, for a consideration, of persons to any premises; shall be deemed to be the carrying on of a business.' In addition, he referred me to the other two sub-paragraphs of that section. He also drew my attention to the sections dealing with the activities of the Crown and local authorities (see ss 19 and 20 of the 1972 Act), and to the refund provisions in s 15 and, in relation to the Government of Northern Ireland, in s 51 of the 1972 Act. I had occasion to consider these sections recently in National Water Council v Customs and Excise Comrs n1. n1 [1979] STC 157 I am satisfied that counsel for the taxpayer is quite correct in saying that the word 'business' is not used in its widest sense in the 1972 Act. The word has been described by Lord Diplock as an etymological chameleon which suits its meaning to the context in which it is found: see Town Investments Ltd v Department of the Environment n2. But this is not a case where I am concerned to see, for example, whether the activities were carried on on a sufficiently wide scale or over a sufficiently long period to constitute a business. The provision of the classes at Saint Hill Manor plainly amounted to 'an active occupation or profession continuously carried on' to use the words of Rowlatt J in Inland Revenue Comrs v Marine Steam Turbine Co n3, and was 'a serious undertaking earnestly pursued' in the words of £widgery J in Rael-Brook Ltd v Minister of Housing and Local Government n4. n2 [1977] 1 All ER 813 at 819, [1978] AC 359 at 383 n3 [1920] 1 KB 193 at 203 n4 [1967] 1 All ER 262 at 266, [1967] 2 QB 67 at 76 The kernel of counsel's case for the taxpayer was that the essentially religious nature of the taxpayer's principal activities, that is, the provision of the training and auditing courses, meant that, as a matter of law, these activities could not be regarded as business activities. In order to emphasise this point, counsel for the taxpayer produced a transcript of those parts of the evidence where the religious nature of the taxpayer's work was mentioned, and he also showed me a publication of the taxpayer entitled 'The Scientology Religion'. Counsel for the taxpayer referred me to the passages in the decision of the tribunal where the tribunal gave its reasons for rejecting the taxpayer's contention that it was not carrying on a business. I should, therefore, read some of those passages. The tribunal said this: 'The final matter for our consideration is whether [the taxpayer] provided the training and auditing courses at Saint Hill Manor and the Books, E-Meters and Sundry Merchandise relating to Scientology "in the course of a business" carried on by it, so as to become liable to account for tax on such supplies. On this aspect we do not accept the submission by Mr Gray [who then appeared for the taxpayer] that, as Scientology is to be regarded as a religion or a religious philosophy, the establishment at Saint Hill Manor is to be compared with a religious teaching foundation, and such a foundation would not normally be described as carrying on a business, even though it charged fees to its students. In our opinion an establishment can provide the study of a religion or a religious philosophy as a business in the same way as the study of a language or any other branch of knowledge.' The tribunal then referred to the decision of the Court of Session in Scotland in Customs and Excise Comrs v Morrison's Academy Boarding Houses Association n1. The tribunal referred to a passage in the judgment of the Lord President in the Court of Session in that case, where the Lord President said this n2: n1 [1978] STC 1 n2 [1978] STC 1 at 6 'In my opinion it will never be possible or desirable to define exhaustively "business" within the meaning of s 2(2)(b). What one must do is to discover what are the activities of the taxable person in course of which taxable supplies are made. If these activities are, as in this case, predominantly concerned with the making of taxable supplies to consumers for a consideration it seems to me to require no straining of the language of s 2(2)(b) to enable one to conclude that the taxable person is in the "business" of making taxable supplies, and that taxable supplies which he makes are supplies made in the course of carrying on that business, especially if, as in this case, the supplies are of a kind which, subject to differences of detail, are made commercially by those who seek to profit by them.' 'A similar opinion', said the tribunal, 'was given by Lord Cameron.' The tribunal then added what I regard as an important qualification: 'However in our view, in considering s 2(2)(b) of the [1972] Act, some meaning should be given to the requirement that supplies, to attract a liability for tax, must be made "in the course of a business". A person who makes supplies of goods or services for a consideration cannot have been intended, merely by so doing, to be accountable for tax thereon as such a construction of s 2(2)(b) would render the requirement that, to be taxable, he must do so "in the course of a business" wholly otiose. Earlier tribunals in England, in holding that "business" in the Act connoted "an occupation carried on as a commercial activity" had founded themselves on the words "economic activities" in paragraph 1 of Annex A to the Second Council Directive of the European Economic Community.' The tribunal then referred to a passage in Lord Cameron's opinion n3 on which counsel had laid great stress before them, and continued: n3 [1978] STC 1 at 10 'As [counsel] has pointed out, most of the marks of a business activity mentioned by Lord Cameron in that passage are missing in relation to the activities of the UK Branch of [the taxpayer] in the United Kingdom. In particular, [the taxpayer] by its UK Branch is not competing in the United Kingdom with any other person or concern offering courses on Scientology or a religious philosophy or books on Scientology, E-Meters and Scientology crosses and lapel badges. It can be said to be competing with Churches and other religious establishments only for adherents to its doctrines. [The tribunal then said:] For the purpose of this decision we accept the opinions given in the Court of Session in the appeal to which we have referred in the context in which they were given. But, by way of extension thereto, we consider that, for the purposes of this appeal, we must regard Scientology as if it were a commodity consisting of the training and auditing courses and the books on Scientology, E-Meters and Sundry Merchandise sold by the UK Branch. We must then, in our view, consider how the UK Branch made such supplies, that is to say, whether it did so as a commercial (or economic) activity. Whether or not it did so for profit or gain is, of course, wholly immaterial to this final matter. Applying the foregoing considerations we have no hesitation in holding that [the taxpayer] by its UK Branch in the United Kingdom was carrying on a business throughout the period of the 1973 Accounts. It was a limited liability corporation, and had registered under the Companies Act 1948 as carrying on a business in Great Britain. It received during that period sums amounting to L 625,648 as "donations" and "contributions" from member Scientologists, only part of which will have been or will ultimately be applied in paying for courses. It paid a ten per cent commission to the Field Service Ministers and Volunteer Ministers who obtained such "donations" and "contributions". It budgeted for a surplus from the payments made for, or with a view to, the taking of training and auditing courses in order to meet the expenses of its other activities. In the "auditing" courses the UK Branch was competing with trained and partly-trained psychologists and psychiatrists who operated professionally. The UK Branch kept books of account and a file for each member Scientologist, and employed staff to manage Saint Hill Manor efficiently and in a reasonably business-like way. It prepared and filed accounts and dealt with large sums of cash both in sterling and other currencies. [Then the tribunal concluded:] In our opinion, the foregoing are sufficient hall-marks of a business or commercial activity to compel us to hold that [the taxpayer], during the period of the 1973 Accounts, was carrying on a "business" for tax purposes. That "business" was, in our view, the propagation of Scientology.' Counsel for the taxpayer criticised these reasons in a powerful and sustained argument; in particular he criticised the paragraph which I have just read out, in which the tribunal set out what they described as 'sufficient hall-marks of a business or commercial activity'. I have given these criticisms and counsel's argument for the taxpayer very careful consideration, but I have come to the clear conclusion that no error in point of law has been shown which would entitle this court to interfere. In my judgment, the tribunal was quite right to look for guidance to the helpful judgments of the Court of Session in the Morrison's Academy case n1. I do not accept counsel's basic submission for the taxpayer that as a matter of law a body which propagates a religion or a religious philosophy cannot be regarded in so doing as carrying on a business for the purposes of the 1972 Act. I consider that the tribunal is entitled to, and should, in each case look at the facts to see how the body has organised its activities. I have made detailed reference to the facts in the present case as set out by the tribunal in its decision. On looking at all those facts, including the matters disclosed by the accounts, I find it impossible to say that the tribunal erred in law in finding that the propagation of Scientology was carried on by the taxpayer as a business. n1 [1978] STC 1 In some cases it is no doubt appropriate, and, if s 15 of the 1972 Act applies, even necessary, to look at each of the individual activities of the company or other body. But in the present case I see no reason whatever to criticise the tribunal for looking at the activities of the taxpayer as a whole. It looked at these activities as a whole over a period of several days and set out the facts in a decision which is clear and comprehensive. The tribunal found on looking in detail at the facts what it considered to be sufficient indications that the relevant supplies were made as a commercial and economic activity and accordingly in the course of a business. I have already referred to the powers and functions of this court on an appeal on a point of law. I see no grounds for interfering with the determination of the tribunal. I therefore dismiss this appeal. DISPOSITION: Appeal dismissed. SOLICITORS: Stephen M Bird (for the taxpayer); Solicitor for the Customs and Excise. Church of Scientology of California v The Commissioners LONDON VAT TRIBUNAL [1977] VATTR 278 HEARING-DATES: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 29 November 1977 29 November 1977 CATCHWORDS: Education -- United Kingdom branch of overseas company propagating a religion or religious philosophy -- Branch providing training and other courses in England -- Whether the branch supplying education of a kind provided by a University -- Whether such supplies provided otherwise than for profit -- Finance Act 1972, Schedule 5, Group 6, item 1(b) Business -- United Kingdom branch of overseas company propagating a religion or religious philosophy -- Branch providing training and other courses in England -- Branch selling books, pamphlets, religious artefacts and emblems -- Whether such activities constitute a business for tax purposes -- Finance Act 1972, sections 2(2) and 45 HEADNOTE: APPEAL The Appellant was incorporated in 1954 in California as a religious membership corporation prohibited from making any distribution of its profits, and has a branch in the United Kingdom. This branch propagates Scientology in the United Kingdom. Scientology is, or claims to be, a religion or religious philosophy discovered by Mr Ron Hubbard containing spiritual counselling procedures intended to assist an individual to attain spiritual freedom. The United Kingdom branch owns premises at East Grinstead at which it provides some 32 Scientology courses of which some are 'auditing' and others are 'training' courses. An 'auditing' course consists of a supervisor directing predetermined questions at the person taking it, listening to the responses and guiding the person taking it to think for himself and to achieve spiritual awareness. For such purposes the supervisor normally uses an 'E-Meter' which is a device designed to measure physical responses to mental stimuli. A 'training' course consists of the study of the teaching of Mr Hubbard by the person taking it listening to tapes recorded by Mr Hubbard and reading books written by him. The United Kingdom branch employs some 257 persons of whom 23 are directly concerned with the giving of such courses at East Grinstead. Courses are paid for in advance. Scientologists and persons becoming interested in it are encouraged to make payments to the branch which can later be applied in or towards payment for a course or courses. During the period of approximately one year from the 29th December 1972 to the 4th January 1974 the branch received contributions from member Scientologists amounting to L 625,648. In its Income and Expenditure Account for that period the branch included L 484,225 as the amount of 'contributions received and receivable from member Scientologists for courses less refunds' and in its Balance Sheet as at the end of that period it included L 527,126 as the then amount of the 'contributions received in advance'. During the same period the branch expended L 31,625 in purchasing, and received L 44,242 for sales of books, E-Meters and Scientology emblems. According to the Accounts of the branch during such period the amounts received or becoming receivable by the branch from other Scientology organisations totalled L 263,738. 'Expenditures' of the branch was stated in such Accounts to have been L 823,145 of which L 285,016 was the total of amounts paid and payable by the branch to a Scientology organisation called 'Flag' for advanced Scientology courses given to members of the staff of the branch, L 456,816 was included as general expenditures and L 36,547 for professional charges. The general expenditures included Scientology dissemination expenses of L 54,271, postage and carriage expenses of L 53,495, salaries of L 170,447, and staff welfare of L 36,542. The Accounts for such period showed a deficit of L 18,360 and an accumulated deficit of L 139,529 as at the end thereof. The Appellant, excluding its United Kingdom branch, had an accumulated deficit in its Accounts as at the 31st December 1973 amounting to 1,166,811 United States dollars. The Commissioners formed the view that the Appellant, by its branch in the United Kingdom, was carrying on a business for tax purposes. They also concluded that, in providing the courses at East Grinstead and selling the books, E-meters and Scientology emblems, the Appellant was making taxable supplies of goods and services in the course of such business and, having regard to the amounts involved, that the Appellant was registrable as a taxable person with effect from the 1st April 1973. The Commissioners accordingly assessed the Appellant for tax in a sum of L 20,661.96 for the period of five months ended on the 31st August 1973. The Appellant appealed against such assessment. First, it contended that it was not carrying on any business for tax purposes. Secondly, it contended that, in giving the courses at East Grinstead, it was providing education of a kind provided by a University and was doing so otherwise than for profit. Therefore, so it contended, it was supplying services exempt from tax under item 1(b) of Group 6 of the Fifth Schedule to the Finance Act 1972. Held (i) the Appellant, in providing the courses, was not providing education of a kind provided by a University. The 'auditing' courses did not amount to the provision of education, but were more closely allied to psychiatry and psychotherapy than to education and were designed to treat rather than teach. The 'training' courses were not education of a kind provided by a University because they did not treat Scientology in the same depth as a comparable subject is treated on a University course. The teachings of Mr Hubbard consist of a number of authoritarian assertions unsupported by logical reasoning and which are not explained or explored on the 'training' courses in the same way as theological and philosophical beliefs are explained and explored at University. (ii) the Appellant was not providing the courses otherwise than for profit. It is to be inferred from the Accounts of the branch that the fees chargeable for the courses were fixed at such amounts as should, after bringing in all other anticipated receipts, produce sufficient income to meet all expected expenditures. Such expected expenditures included matters other than the courses such as the dissemination of Scientology, the establishment and support of Scientology establishments and missions and a proportion of the upkeep of 'Flag' in the United States of America. (iii) the activities of the Appellant, in providing the Scientology courses and in buying and selling the books, E-Meters and Scientology emblems, had such marks of a commercial (or economic) activity as constituted the same as business for tax purposes. Commissioners of Customs and Excise v Morrison's Academy Boarding Houses Association [1977] SLT 197; (1978) STC 1 followed. CASES-REF-TO: Commissioners of Customs and Excise v Morrison's Academy Boarding Houses Association [1977] SLT 197; [1978] STC 1 COUNSEL: Mr Roger Gray QC and Mr Marcus Jones for the Appellant Mr Patrick Medd QC, Mr Harry Woolf and Mr Peter Vallance for the Commissioners. PANEL: THE RT HON LORD GRANTCHESTER QC (CHAIRMAN) MISS I E THURSTON AND MR G C S GREENHEAD JUDGMENTBY-1: Tribunal JUDGMENT-1: DECISION This is an appeal by the Church of Scientology of California ('the Appellant Company') against an assessment for tax dated the 2nd April 1974 in a sum of L 20,661.96 for the period of five months ending on the 31st August 1973. The Notice of Appeal also refers to a second assessment dated the 2nd April 1974 in a sum of L 17,314 for the period of three months ending on the 30th November 1973. But on the 12th September 1974 this tribunal decided to hear the appeal against such second assessment after it had heard the appeal against the first assessment. It was then hoped that the major issues between the Appellant Company and the Commissioners could be determined against a detailed consideration of the activities of the Appellant Company over a five month, instead of an eight month, period. The Appellant Company was incorporated under the laws of the State of California in the United States of America on the 18th February 1954. Its main and primary purposes, as set out in its Articles of Incorporation, include the following: '(a) To accept and adopt the aims, purposes, principles and creed of The Mother Church, "THE CHURCH OF AMERICAN SCIENCE" of Camden, New Jersey, with the powers objectives and duties as herein defined and enumerated. (b) To train and indoctrinate ministers and brothers and sisters in the principles and teachings of the Church of American Science. (c) To prepare them and ordain them to carry forward the work of the Church of American Science, and to conduct churches and minister to and conduct congregations. (d) To resolve the travail and difficulties of members of congregations, as they may appertain to the spirit. (e) To instruct in spiritual healing acts and other matters within the Creed of the Church of American Science. {281} (f) To conduct seminaries and instruction groups. (g) To create congregations and have other powers similar to those of the Church of American Science. (h) The propagation of the religious faith known as SCIENTOLOGY. Believing that Man's best evidence of God is the God he finds within himself, and trusting with Enduring Faith that The Author of this Universe intended Life to thrive within it, the Church of Scientology is formed to espouse such evidence of the Supreme Being and Spirit as may be knowable to Man and by their use the Church of Scientology hopes to bring a breater tranquility to the State and better order and survival to Man upon this planet. (i) -- (w) ' Further according to its Articles of Incorporation, 'the principal office for the transaction of the business of the corporation is to be located' in the Company of Los Angeles, the Appellant Company has no shares and is 'a non-profit religious, charitable, social, fraternal, educational, welfare, protective, research, membership corporation'. The Articles provide that it is to have three trustees in whom are vested, according to its bye-laws, the powers of the Appellant Company and 'authority to control, regulate, oversee and manage its activities and affairs, business, funds and property.' On the 22nd March 1966 the Appellant Company filed with the registrar of companies the documents required, pursuant to section 407 of the Companies Act 1948, to be filed by a company which, being incorporated outside Great Britain, establishes a place of business within Great Britain. At about the same time the Appellant Company acquired certain assets in England including a property known as Saint Hill Manor, East Grinstead, Sussex, all the issued shares of four United Kingdom companies and just over fifty per cent of the issued shares of a fifth such company. In acquiring such assets or in connection therewith the Appellant Company undertook substantial liabilities including the payment of L 37,452 to the Hubbard Association of Scientologists International Inc, another American corporation. Since such acquisitions the activities of the Appellant Company in the United Kingdom have been carried on as its 'UK Branch' under the direction of a 'Board of Directors' which, during the period relevant to this appeal, consisted of a Mr Denzil Gogerly, a Mrs Mary Garlick and a Mr Ronald Hopkins, none of whom was a trustee of the Appellant Company. During the period of virtually a year from the 29th December 1972 down to the 3rd January 1974 ('the period of the 1973 Accounts') the amounts received and receivable by the UK branch of the Appellant Company as 'Contributions from Member Scientologists for Pastoral Counselling and Training less Refunds' totalled L 484,225 and for 'Books, Meters and Sundry Merchandise' totalled L 44,242. A substantial proportion of both such sums is referable to the five month period covered by the first assessment. The Commissioners are contending that such sums were the consideration for taxable supplies made by the Appellant Company in the United Kingdom in the course of a business carried on by it. As a result the Commissioners made the first assessment contending that the Appellant Company is liable to be registered as a taxable person under Part I of the Finance Act 1972 ('the Act') with effect from the 1st April 1973, and is accountable to them for tax on such supplies. The amount of the first {282} assessment is based on figures supplied by the Appellant Company to the Commissioners. But the Appellant Company does not accept that it is so accountable. First, it denies that it was or is carrying on any 'business' for tax purposes. In the alternative it contends that the 'contributions' were for the provision by the Appellant Company of education 'of a kind provided by a University', which education it provided 'otherwise than for profit', and as a result that the supplies of such services were exempt from tax under item 1(b) of Group 6 in the Fifth Schedule to the Act. Thirdly, the Appellant Company submits that the first assessment is excessive. However, by agreement between the parties we will limit this decision to a consideration of the principles involved, leaving the parties to apply for a further hearing if they cannot agree the amount (if any) of the liability for tax arising on the application of such principles. Scientology is the 'invention' or 'discovery' of a Mr Ron L Hubbard and is, or claims to be, a religion or 'a religious philosophy' containing spiritual counselling procedures intended to assist an individual to attain spiritual freedom'. We understand that it has evolved from, or is a development of, 'Dianetics'. 'Dianetics' is, or claims to be, 'an organised science of thought built on definite axioms to reveal the existence of natural laws by which behaviour can uniformly be predicated in the unit organisms of society'. It offers, or claims to offer, a 'therapeutic technique' by which 'inorganic mental and organic psychosomatic ills' can be treated. In this decision, unless the context otherwise indicates, we will use the word 'Scientology' to include 'Dianetics' as well. During the period of the 1973 Accounts the sum of L 484,225 was the amount brought into the accounts of the UK Branch for courses in Scientology at Saint Hill Manor aforesaid given during the period of the 1973 Accounts. Some thirty or so courses were available at Saint Hill Manor during such period. Such courses and the amounts chargeable for them respectively were as follows: ________________________________________________________ Course Cost L 1. Anatomy of the Human Mind 20 2. Hubbard Apprentice Scientology 5 3. Extension 15 4. Hubbard Qualified Scientologist 40 5. Basic Grammar 15 6. Student Hat 50 7. Professional Word Clearer 125 8. Ministerial 50 9. Hubbard Standard Dianetics 125 10. Academy Levels 0-IV 200 11. Saint Hill Special Briefing 275 12. Dianetics C/S 50 13. Class IV C/S 100 14. Class VI C/S 165 15. Dianetic Internship 40 16. Academy Internship 100 17. Expanded Dianetics L300 18. Life Repair 19. Drug Rundown 20. ARC Straightwire 21. Dianetics L150 per 25 hours 22. Grade 0, Grade I, Grade II, Grade III, Grade IV 23. Expanded Grades 0-IV 24. Word Clearing Method I 25. Expanded Dianetics L225 per 25 hours L150 per 12 1/2 26. Integrity Processing hours 27. Power Processing L420 28. Solo Course L275 29. Clearing Course L335 30. OT Sections L1,250 31. Review Auditing L8 per hour 32. Cramming L4 per day ______________________________________________________________ {283} Persons becoming interested in Scientology are encouraged to learn about it and to progress as Scientologists by taking such courses and, if unable immediately to attend for a course or courses, are encouraged to make payments which may be in round sums and which can later be applied wholly or in part by way of payment for a course. Such payments are sometimes termed 'donations' and sometimes 'contributions' and courses are sometimes termed 'services'. The courses and their contents are arranged to enable to person to progress through them from an elementary introduction to Scientology (the Student Hat Course) to technical perfection (on completion of a Class XII course not available at Saint Hill Manor). All courses are what might be termed 'Scientology-orientated'; the Basic Grammar Course appears to be designed to give the person taking it an introduction to the rudiments of grammar and practice in using a dictionary to enable him or her to embark on the Student Hat Course in which he or she will encounter the 'language' of Scientology. The time required to take a course at Saint Hill Manor varies with its nature, its contents and the standard and ability of the person taking it. Courses are taken individually or in pairs and not in groups or classes. Persons taking courses attend daily. During the period of the assessment there were some 257 full-time employees of the Appellant Company at its UK Branch, some 67 of whom Lives at Saint Hill Manor and some 23 of whom were 'Faculty staff' directly connected with the courses taken thereat. Employees were not paid large salaries but had the advantage of themselves taking courses at reduced rates or receiving training in the higher grade courses as part of the staff training to which we shall have to refer later. Courses at Saint Hill Manor fell into two main groups, training courses and 'auditing' courses. A person desiring to take a course or courses at Saint Hill Manor is first assessed for suitability and directed to the course considered to be most suitable for him or her. For training courses a check sheet prepared and approved by Mr Hubbard is provided which sets out the matters to be learnt and which also contains exhortations and instructions to the person supervising the course. The person taking a training course reads books written in the main by Mr Hubbard and listens to tape recordings made by him. (We understand that there are nearly 2,000 different tapes made by Mr Hubbard containing his teachings of which 1,200 are available at Saint Hill Manor, each one taking approximately one {284} hour to play.) The person taking the course is assisted by a supervisor present while he or she is working. In 'auditing' courses a supervisor (termed the Auditor) listens to the person taking the course (termed the Pre-clear) having directed certain predetermined questions to him or her, the aim being to guide the person taking the course 'to think for himself or herself and to achieve spiritual awareness'. The process of auditing is a fundamental practice of Scientology and is often described as 'pastoral counselling'. It can involve the use by the supervisor of an instrument termed an 'E-Meter', a modern adaptation of the Wheatstone Bridge designed to measure physical responses to mental stimuli. An 'E-Meter' is said to reveal 'engrams' in the person taking the course, an 'engram' being said to be 'a mental image picture which is a recording of a time of physical pain and unconsciousness' which must be 'cleared' to enable the individual to become free from all psychoses, neuroses, compulsions and repressions. The courses numbered 1 to 17 both inclusive on the foregoing list were training courses, those numbered 18 to 31 both inclusive were auditing courses and 'cramming' was a revision course for a person who had taken, but failed, a training course. In the list the letters 'C/S' stand for 'Case Supervisor', the courses numbered 12, 13 and 14 being designed to train people to be supervisors for auditing, and 'Internship' means a pupillage. The provision of the Scientology training and auditing courses at Saint Hill Manor constituted the principal activity of the UK Branch of the Appellant Company during the relevant period. Some of the 'Faculty' staff of 23 had obtained University degrees and this staff included many regarded as well qualified in Scientology. Those who received the courses can be divided into three main categories. First, there were the 'seekers after truth' who formed the largest number. Secondly, there were those who thought that Scientology might help them in their chosen careers. Thirdly, there were those with problems who came to try to overcome or solve them. In connection with the courses Field Service Ministers and Volunteer Ministers of Scientology seek to persuade members of the public to take an interest in Scientology by going on a course or courses at Saint Hill Manor. During the period of the 1973 Accounts Ministers were entitled to a ten per cent commission on the amount of payments received by the UK Branch as a result of their efforts, which commissions were often applied by the Ministers in paying for further courses for themselves. During the period of the 1973 Accounts commissions averaged L 49.50 per Minister and were regarded as reimbursement of the expenses of travelling, telephone, postage and the like expenses incurred in obtaining the donations or contributions. Also in connection with the courses the Appellant Company at its UK Branch bought and sold Books, E-Meters and Sundry Merchandise. The Books were almost exclusively books written by Mr Hubbard which the Appellant Company bought from 'AOSH DK Publications Department A/S', a Danish Company with limited liability, and sold to Scientologists and others. The 'Sundry Merchandise' consists of the Scientologists' eight-pointed crosses and lapel badges. The relevant figures for such sales and purchases are as follows: ________________________________________________________________________________ 1. Stock of Books and E-Meters at the 29th December 1972 L6,719 2. Cost of Books, E-Meters and Sundry Merchandise from that date to the 3rd January 1974 L31,625 3. Amount received and receivable during that period for Books, E-Meters and Sundry Merchandise L44,242 4. Stock of Books and E-Meters at the 3rd January 1974 L9,892 ________________________________________________________________________________ {285} A relatively minor activity of the UK Branch of the Appellant Company during the period consisted of the staffing and financing of 'Missions' at Tottenham Court Road in London and in Plymouth. Both at such 'Mission' premises and at Saint Hill Manor were there 'church rooms' in which services in the normal sense, but in accordance with the 'liturgy' of Scientology as laid down by Mr Hubbard, could be held. The various sums of money to which reference has been made have been taken from the 1973 Accounts of the UK Branch of the American Company. No accounts of the Appellant Company complying with the requirements of the Companies Act 1948 have ever been prepared or delivered to the registrar of companies as directed by section 410(1) of that Act. Accounts for the UK Branch of the Appellant Company consisting of a Receipts and Expenditure Account and a Balance Sheet were audited by a Mr Field, a Chartered Accountant who initially acted for the Appellant Company in these proceedings. The Appellant Company is not required to prepare and publish accounts under the Federal laws of the United States of America or the State laws of California and no such accounts were produced to us. The Appellant Company and other Scientology associations in the United States of America are now treated by the Internal Revenue Service of that country to be tax-exempt, religious, nonprofit making organisations. As a result they are not required to file tax returns, but the Appellant Company does file a limited tax declaration in California relating only to its affairs in the United States of America and excluding the affairs of the UK Branch. In the accounts of the UK Branch for the period of the 1973 Accounts the total of the amounts received and receivable entered under 'Receipts' is L 528,910, consisting of the sums of L 484,225 and L 44,242 already mentioned and donations (i.e. gifts) of L 443. But a sum of L 263,738 has been deducted from 'Expenditures' for 'Contributions from Organisations and Missions'. This sum is the total amount received during the period by the UK Branch from Scientology organisations other than the Appellant Company by way of 'tithes', that is to say, annual payments calculated as a percentage of their incomes regarded as made for 'research work'. We were told that, when in 1968 the UK Branch was under attack and got into financial difficulties, Mr Hubbard 'diverted' to the UK Branch tithes which otherwise would have been paid to the Appellant Company in California, but that 1973 was the last year in which such payments were made to the UK Branch. One other entry under 'Expenditures' is also in the nature of a receipt. The UK Branch had a favourable balance of L 12,137 in respect of 'Bank charges less currency conversion differences and interest receivable'. The main headings in the Accounts under 'Expenditures' are as follows: ________________________________________________________________________________
L (i) Cost of Technical Services 285,016 (ii) Cost of Books, Meters and Sundry Merchandise 31,625 (iii) General Divisional Expenditures 456,816 (iv) Professional Charges 36,547 (v) Depreciation & amortisation of lease 13,141 Total L823,145 ________________________________________________________________________________ {286} The foregoing results in an accountancy deficit of L 18,360 for the UK Branch. But further explanations must be given in relation to the foregoing items (i) and (iii). First, we refer to item (i), and 'Cost of Technical Services'. This was the total of amounts fixed by an organisation termed 'Flag' for courses given to members of the staff of the UK Branch to make them better and more able Scientologists. Prior to and during 1973 a number of individuals highly versed in Scientology were based and resided on a ship called the 'Flagship Apollo' which flew the Panamanian flag. These individuals constituted the organisation 'Flag' and gave advanced Scientology training and auditing courses. In the period of the 1973 Accounts some 40 or so of the staff of the UK Branch took such courses under one or more of the following heads namely (a) Advanced Technical Training (b) Advanced Administration Training (c) Special Counselling and (d) Direct Assistance. However, in the Accounts there was included under 'Expenditures' a sum of L 285,016 in respect of courses taken by staff of the UK Branch, of which about L 91,641 was referable to the period of the 1973 Accounts and about L 193,355 to provious years. The sum of L 285,016 related to courses taken by 72 members of the staff of the UK Branch, of whom 9 or 10 had taken courses aboard the 'Flagship Apollo' at a total cost of L 37,000 approximately, and the remainder had taken courses in England supervised by 2 or 3 members of Flag who came to England for the purpose. In the case of the 9 or 10 who took their courses aboard the Flagship Apollo, the UK Branch also paid their travelling expenses and subsistence expenses whilst on the ship and these sums are included in the L 47,959 for 'Travelling and Motor Expenses' in the General Divisional Expenditures. Three-quarters of the staff of the UK Branch who took such courses are still at Saint Hill Manor. We understand that it was decided to bring the whole of such L 285,016 into the 1973 Accounts because the Board of Directors of the UK Branch considered that the full benefit of the courses had been obtained by the UK Branch by the end of the period of the 1973 Accounts. This represented a change in accounting practice because, in previous Accounts, amounts invoiced by Flag for courses had been 'written off' over a five year period. Secondly, we refer to item (iii) which is the amount for General Divisional Expenditures in the Accounts. The following are the amounts (to the nearest pound) of such 'Expenditures': ________________________________________________________________________________
L Salaries and allowances 170,446 Directors' Salaries 1,418 Postage and Carriage 53,495 Rent, rates and Insurance 9,223 Lighting, heating and water 15,607 Telephone, cable and telex 18,300 Repairs and Maintenance 19,237 Cleaning and Laundry 618 Dissemination expenses 54,271 Printing, stationery and general office expenses 22,506 Hire of office equipment 10,162 Staff Welfare 36,542 Course materials 1,254 Travelling and Motor Expenses 47,959 Donations 73 Total L461,111 ________________________________________________________________________________
{287} The 'Directors' salaries' are the amounts paid to the three 'directors' of the UK Branch as such. The 'Dissemination expenses' were, in the main, the costs of printing a monthly journal called 'The Auditor' and promotional literature designed to encourage persons attracted to *scientology to practice it and take training and auditing courses and to keep in touch with persons who had taken courses. The substantial amount for 'Postage and Carriage' includes the costs of the distribution of Magazines, journals and literature. Included in the General Divisional Expenditures is a fee of L 15,000 payable to Mr Hubbard for 'technical materials'. Finally the 'Staff Welfare' includes the cost of food and other benefits supplied to the staff of the UK Branch who live at Saint Hill Manor or at neighbouring premises owned by the Appellant Company. In the Balance Sheet as at the 3rd January 1974 of the UK Branch the following amounts (which we have rounded up or down to the nearest pound) appear against the following entries: (i) Freehold Land and Buildings L 266,904 This comprises Saint Hill Manor at cost plus subsequent additions and improvements, adjoining properties which have been purchased and premises in Edinburgh. (ii) Leasehold Property L 25,750 This comprises premises in London and a small leasehold property near Saint Hill Manor. (iii) Amounts owing by Scientology Churches and Missions L 83,646 Less provisions L 11,286 L72,360 These are debts which became payable in 1964 and 1965 by other Scientology organisations when the UK Branch was a branch of a company formed under the laws of the State of Arizona. We were told that, in relation to the 1973 Accounts, the directors of the UK Branch wrote down this asset to the Amount which they thought would eventually be received. We note that, in the Accounts for the following year, a further provision of L 66,022 appears in respect of this asset. (iv) Investments in shares of subsidiary companies L 340 Amounts totalling L 3,129 owing by subsidiary companies were wholly written off in the 1973 Accounts but amounts totalling L 15,854 due to subsidiary companies remained as liabilities. We were informed that, after 1964, these subsidiary companies were dormant and thought to be insolvent. (v) Cash at Bank and in Hand L 529,078 Approximately L 303,000 of this amount was at a bank in the United Kingdom and the balance was in banks in Europe. (We note in the Accounts a reference to the conversion of Swiss Francs at 7.70 to L 1 sterling). (vi) Amount due to Hubbard Association of Scientologists International Inc L37,452 Reference has already been made to this debt and this American Company. (vii) Amounts due to Scientology Churches and Missions L 345,045 Most of this amount was due and payable to Flag, the organisation aboard the 'Flagship Apollo' to which we have already referred. (viii) Sundry creditors and accrued expenses L 139,776 {288} This includes a sum slightly under L 70,000 due to Mr Hubbard on a loan account, being an amount due to him in respect of the purchase of Saint Hill Manor, annual fees due to him for previous years and royalties payable to him down to January 1969. (ix) Contributions from Member Scientologists received in advance less refunds L 527,126 This is in the nature of an accumulating revenue reserve being a combination of amounts paid by way of 'donations' and the unallocated balance of 'contributions' paid in advance by Scientologists and others up to the end of the period of the 1973 Accounts which might be applied in or towards the amount payable for courses at Saint Hill Manor. An amount so paid appears in the Accounts of the UK Branch under this heading until such time as it is applied in or towards payment for a course taken by the payer (any balance not so applied being retained under the heading). Refunds are only made to payers who declare that they are no longer Scientologists. The corresponding figure at the end of the previous accounting period was L 385,703. We have not in the foregoing summary made references to all the items in the Balance Sheet. The book value of the assets of the UK Branch appearing therein is L 974,751, and there is added thereto the accumulated debit balance on the Receipts and Expenditures Account of L 139,529 to make a total of L 1,114,280. Mr M J Greenberg, an American Certified Public Accountant who has been for some years concerned with the finances and taxation liabilities of the Appellant Company in the United States of America, was called as a witness and commented on the financial position of the Appellant Company in 1973. He stated that, in 1973, the Appellant Company, excluding the UK Branch (and excluding other Scientology associations in the United States of America and elsewhere) had a deficit amounting to 1,166,811 US dollars (which at 2.32 US dollars to L 1 sterling is equal to L 502,935). He indicated that the Appellant Company operated on a much larger scale than, but in the same way as, the UK Branch (including the building up of a large account in the nature of an accumulating revenue reserve) and that the Appellant Company (excluding the UK Branch and all other Scientology associations) had an annual income in the region of 15 million US dollars. He said that in the year 1973 the Appellant Company in the United States of America had paid Mr Hubbard 15,000 US dollars which the United States federal tax authorities accepted to be 'reasonable and necessary compensation for services to the Appellant Company in America'. Finally he named the Trustees of the Appellant Company in 1973 as having been The Reverends Burgess, Hare and Walker. Such evidence was not challenged on behalf of the Respondent Commissioners. At the hearing both parties called a number of experts on modern University education and teaching, to whose evidence we shall shortly have to refer in more detail. Before doing so we would outline the arguments. Mr Gray for the Appellant Company submitted that the Appellant Company was a non-profit making concern with a substantial accumulated deficit. It ran the 'College' at Saint Hill Manor, not to make a profit, but to teach and give effect to the religious philosophy of Scientology. The 'College' was, therefore, similar to a College of Philosophy or religious Foundation (such as, for example, Campion Hall at Oxford). Such a College of Philosophy or religious Foundation could not properly be said to be 'carrying on a business', and so neither could the {289} Appellant Company. Then, in considering whether courses at Saint Hill Manor were' education of a kind provided by a University', it was necessary to compare such courses broadly from the point of view of intellectual content with courses now provided by Universities in the United Kingdom. Having regard to the courses (including extra-mural short courses) now provided by such Universities (including the Open University) the courses at Saint Hill Manor could not be said to be intellectually of a lower standard than modern University courses. In this respect reference was made to University courses on Brewing, Films, Safety and Health, Catering, Personal Administration and Recreational Management. Mr Gray did not seek to argue that the courses provided education of a kind provided by a school, conceding that such was not the case. Mr Medd for the Commissioners argued that, on the evidence, the Appellant Company was carrying on a business for tax purposes, and that an activity does not have to have the acquisition of gain as an ingredient to constitute such a business. On the other aspects of this appeal he contended that the Appellant Company, in providing the courses at Saint Hill Manor, was not providing 'education' but something akin to psychotherapy. He conceded that 'education of a kind provided by a University' could be provided by a course of a lesser duration than a 'full' University course. But he argued that, on the evidence, the Appellant Company did not provide that type of education because a study of Scientology did not involve the depth of study which you would expect in a University course and because the teaching methods at Saint Hill Manor were radically different from those expected to be found at a University. Finally he submitted that the Appellant Company had not discharged the onus of proof of establishing that the courses were provided 'otherwise than for profit'; the Appellant Company calculated its intake of students and prepared its programme and budgets so as to cover its total estimated expenditure for all matters out of its estimated receipts for the courses. Having considered such arguments we will deal first with the question whether or not the Appellant Company provides at Saint Hill Manor 'education of a kind provided by a University otherwise than for profit' and secondly with the question whether or not it does so 'in the course of a business carried on by it'. By section 2(2) of the Act tax is charged on a supply of goods or services only where the supply is (inter alia) a "taxable supply' which by section 46(1) means any supply other than an exempt supply. By section 13(1) of the Act a supply is an exempt supply if it is of a description for the time being specified in the Fifth Schedule thereto. The relevant parts of Group 6 of such Fifth Schedule setting out the exempt supplies in relation to education as in force during the period of the 1973 Accounts were as follows: "1. The provision of education if -- (a) it is provided by a school or university; or (b) it is of a kind provided by a school or university and is provided otherwise than for profit. 2-4 Notes (1) & (2) (3) "University" includes a university college and the college school or hall of a university.' {290} Thus the Appellant Company would not be liable to register as a taxable person as alleged by the Commissioners or to account for tax to the Commissioners if the only supplies which it made during the period of the assessment consisted of education of a kind provided by a University, and if it provided such education otherwise than for profit. This raises three questions with which we must deal. First, did the Appellant Company by the UK Branch provide education at Saint Hill Manor? Secondly, was that education of a kind provided by a University? Thirdly, did the Appellant Company provide that education otherwise than for profit? The word 'education' has been variously defined or described by the expert witnesses who have given evidence. In our view the word, as appearing in the Act, is not used in any unusual sense so that we must give it the normal everyday meaning. In this respect reference was made to one of the definitions given in the Shorter Oxford English Dictionary as follows: '3. The systematic instruction, schooling or training given to the young (and, by extension, to adults) in preparation for the work of life.' Both Mr Elsey (a lecturer in Education at Nottingham University called on behalf of the Appellant Company) and Miss Sheila Browne (a Senior Chief Inspector for the Ministry of Education and Science called on behalf of the Commissioners) referred to a definition of education contained in the Russell Report. This was to the effect that it means activities and processes involving learning and concerned with the developing of the ability of individuals to understand and articulate, to reason and make judgments and to develop sensitivity and creativity. We would respectfully adopt the foregoing definitions in our approach to this first question. Applying such definitions to the activities of the Appellant Company we take the view that, in providing the training courses at Saint Hill Manor, the Appellant Company was providing education. Although the training courses can be criticised as a form of indoctrination, the aim of the Appellant Company being to indoctrinate in the 'religious philosophy' of Mr Hubbard, we take the view that this does not exclude the courses from being education in the wide sense of those definitions. But we consider that the giving of the auditing courses, that is to say, the courses numbered 18 to 31 in the list set out above, did not amount to the provision of education. Auditing is, and is claimed by Mr Hubbard in his book 'Dianetics, The Modern Science Of Mental Health' to be, a therapy. It is claimed that Dianetics releases all the physical pain and painful emotion from the life of an individual and 'demonstrates the single source of all insanities, psychoses, neuroses, compulsions, repressions, social derangements and psychosomatic ills'. Auditing was frequently referred to by the witnesses for the Appellant Company as 'pastoral counselling'. We consider that, as the aforesaid, it is more closely allied to psychiatry and psychotherapy than to education, and that the courses are designed to treat rather than to teach. In this regard we refer to the evidence of three of the expert witnesses called for the Appellant Company who commented on this aspect. Mr. Pritchard, the Head of Educational Technology at Reading University, in dealing with the E-Meter used in auditing, stated that if it improved a person's 'spiritual level', or was used to increase a person's 'personal awareness' he would regard the process as education. We do not agree, and take the view that Mr Pritchard was using the word education in a wider sense than its ordinary meaning. Mr. Hawkins, a lecturer in Science {291} Education at Reading University stated that 'if a person gets a personal benefit from a course, I do not see why it should not be education' and 'if what was happening was psychotherapy or the like, I would have thought it appropriate in psychology'. We consider that Mr Hawkins also was using the word education in too wide a sense and in a way which would extend to medical treatment. Furthermore we take the view that he did not fully appreciate what took place on 'auditing' courses. Finally Mr Allscop, a clinical psychiatrist and a PhD of London University Institute of Psychology, stated that the two-way communication methods employed at Saint Hill Manor in 'auditing' were similar to training exercises used in psychotherapy courses aimed at treating and teaching the treatment of psychiatry. In our view, Mr Allsop was comparing auditing with courses in psychology and psychiatry. This, in our opinion, is not a valid comparison. The courses designed to teach a person how to audit are those designated C/S (Case Supervisor) and numbered 12, 13 and 14, whereas the auditing courses numbered 18 to 31 which we have excluded from 'education' are designed to be therapeutic and should, in our view, more properly be compared to psychiatric treatment. Accordingly we reject the expert evidence given on behalf of the Appellant Company which sought to include the auditing courses as part of the education provided at Saint Hill Manor. The question whether or not the training courses at Saint Hill Manor provide 'education of a kind provided by a University' is one of considerable difficulty. We construe those words as appearing in item 1(b) of Group 6 aforesaid as being restricted to Universities in the United Kingdom, thereby excluding from our consideration all foreign Universities. We also construe those words as referring to University education in general, by reason of the use of the indefinite article. Mr. Medd for the Commissioners did not put forward his case on the simple basis that Scientology (or the philosophy of Mr Hubbard) was not taught at any United Kingdom University (as University is defined in the Act) and that there was no evidence that it was studied as part of any theological or philosophical or other course at such a University, therefore the courses on Scientology at Saint Hill Manor fell outside the item. Both Mr Medd and Mr Gray adduced expert evidence comparing the courses at Saint Hill Manor in various respects with University courses. Accordingly we pass to to consider whether it is possible to distinguish between University education and other education, and if so, to quantify the distinguishing features. The expert witnesses called for the Appellant Company all visited Saint Hill Manor for short periods, observed the way in which the courses there were being conducted and were shown course materials. They all stated that, in their views, the courses constituted 'education of a kind provided by a University', but on differing grounds. We would refer to a number of salient points brought out in such evidence to indicate its nature. Mr Elsey, a lecturer in Education at Nottingham University, stated that he looked for twelve specific matters in assessing the matter, these being (1) the aims of the courses (2) the curriculum content (3) the teaching methods (4) the time-table of students' activities (5) the students' characteristics (6) the 'support' services (7) the monitoring of students' progresses (8) the student-teacher ratio (9) the teachers' qualifications (10) the student selection procedures (11) course evaluation by students and teachers and (12) extra-curricula activities. He stated that, in his opinion, Saint Hill Manor was assisting with learning and was doing things which fell within his tests, although it was not as liberal as it might have been because it did not bring {292} into the curriculum any criticisms of the theories propounded. Mr Jones, a lecturer in adult education at Nottingham University, stated that the courses at Saint Hill Manor, although confined almost exclusively to the philosophy of Mr Hubbard, were comparable to some University courses, such as study techniques, and to the short courses offered by University extra-mural departments on which, for a relatively short period, a student could study the works or philosophy of one person such as, for example, Descartes. Mr Gayford, a lecturer in Biological Education at Reading University, stated that the individual learning methods at Saint Hill Manor were similar to methods now widely employed at Universities in the United States of America and at the University of Wales. Mr Allsop, a PhD of London University Institute of Psychology, compared the courses at Saint Hill Manor with University courses for 'counsellors' (semi-qyalified psychologists) and to clinical psychological and psychistric courses. Finally Mr Woodley, a Principal Lecturer in Education at the Middlesex Polytechnic College, examined the materials for the Ministerial Course (No 8) the Basic Grammar Course (No 5) and a Student Communication Course and rated them as falling within the fields of philosophy and psychology. He stated that they broke away from recognised academic pigeon-holes, but the aims of the courses were similar to the aims of University courses, the efforts demanded of students were just as exacting and the results achieved were just as effective. By comparison with the foregoing, none of the three expert witnesses for the Commissioners had visited Saint Hill Manor, but they had been supplied with course material, a selection of the 27 text books put before us and a prospectus. Dr Thomas, a fellow of Trinity Hall and until recently the Vice-Chancellor of Liverpool University, indicated that he considered that there were five essential ingredients to a University education, that is to say, (a) the students must be qualified for higher education (b) the teaching staff must be qualified in their subjects (c) the teaching methods should be based on lectures, supervisions and tutoring (d) the staff must enjoy academic freedom to express their views and opinions on all matters within their competence and (e) the students should be motivated to learn, and not to receive treatment. Under cross-examination, however, Dr Thomas conceded that no student qualification is required for the Open University and that, in other Universities, the student qualification required varies according to the demand for places. He admitted that, if the staff at Saint Hill Manor were qualified Scientologists, his second requirement would be satisfied, and that the teaching methods employed as described in evidence appeared adequate. The final requirement concerned the auditing courses. But Dr Thomas remained adamant on the requirement of academic freedom. Miss Browne, the Senior Chief Inspector for the Ministry of Education and Science, was called as an expert on school education but, having had 14 years experience of teaching at London and Oxford Universities, was asked to comment also on the University education aspect. She drew a distinction between the dogmatic or didactic approach to the study of Scientology adopted at Saint Hill Manor and the academic approach to studies adopted at Universities where students have access to a wide range of background information concerning their subjects, and are expected to use and develop their critical faculties. Finally Dr. Hill, the Professor of Economics at the University of East Anglia, stated that Scientology consisted of a number of dogmatic assertions made by Mr Hubbard unsupported by reasoning or reasoned analysis. As a result the reasoning upon which such assertions were based was incapable of study or logical criticism, {293} and no research on such assertions or reasoning could take place, or was conducted at Saint Hill Manor. Moreover he regarded research as a necessary ingredient of education at a University. Finally he stated that, in his view, Scientology was not acceptable or suitable material for inclusion in a University course. In the light of such expert evidence we consider that, for the purposes of such item 1(b) of Group 6, we should first consider whether what is taught at Saint Hill Manor is the same as, or similar to, a subject taught at Universities generally. Then we should decide whether or not what is taught at Saint Hill Manor is taught there in the same depth as the same or such similar subject is taught in general at such Universities. For this latter purpose we accept the evidence of Dr Thomas and Miss Browne that we should take account of the extent to which students at Saint Hill Manor and such Universities respectively are encouraged and required to extend their reading and to exercise their critical faculties. In our view, only if the teaching at Saint Hill Manor is comparable in depth to the teaching of the same or such other similar subject at Universities in the United Kingdom can it be said that the former provides 'education of a kind provided by a University'. In coming to such conclusion we are rejecting most of the expert evidence given for the Appellant Company. We do so because we consider that such experts laid undue stress on the modern teaching methods employed at Saint Hill Manor, such as tapes and tape recorders, and gave insufficient weight to the content of the subject taught and the intellectual level of the teaching and study required to make what was taught comparable to University education. Scientology is not taught as such at any University in the United Kingdom, and there is no evidence that it is studied at any such University as part of a wider course. But it can be described as the religious philosophy of Mr Hubbard and therefore, in our view, we must compare the training courses at Saint Hill Manor with University courses in theology and philosophy, in relation to the teachings of one man. So, do the training courses at Saint Hill Manor go into the religious philosophy of Mr Hubbard in the same depth (as we use that expression) as such parts of University courses in theology and philosophy? In this regard we take the view that they do not. The teachings of Mr Hubbard consist of a number of authoritarian assertions unsupported by logical reasoning. These consist of the 'dogmas' of Scientology. The reasoning behind the 'dogmas' is not propounded, explained or explored as the dogmas of a religious faith are propounded, explained and explored in a theology or philosophy course at a University, or a religious Foundation such as Campion Hall at Oxford. The training courses at Saint Hill Manor consist of the transmission of Mr Hubbard's religious and philosophical assertions to the students through the medium of tapes made by Mr Hubbard and books written by him. The staff at Saint Hill Manor are instructed to transmit Mr Hubbard's teachings and not to interpose their own views or interpretations. They do not interpret the subject taught or interpose their own personalities, views and explanations in the way in which University lecturers are encouraged and expected to do. The students at Saint Hill Manor confine their studies there to the teachings of Mr Hubbard, and are not expected to exercise or develop their critical faculties in relation thereto. As a result Scientology is not, in our view, taught at Saint Hill Manor in the same depth as the religious or philosophical teachings of an individual such as, for example, the teachings of Descaries is studied and taught at a University. {294} Accordingly we take the view that the training courses do not fall within the relevant exemption from tax. We turn to the third limb of item 1(b), that is to say, whether the courses at Saint Hill Manor were provided 'otherwise than for profit'. In relation to this aspect we include in our consideration both the training courses and the auditing courses as, in relation to the fees chargeable therefor and contributions and donations received and receivable, no distinction was drawn between the two types of courses. Item 1(b) of Group 6 exempts from tax education if, inter alia, it is provided 'otherwise than for profit'. In our opinion, on this aspect, we must consider whether or not, in our view, the fees for the course at Saint Hill Manor were fixed at amounts intended to meet the costs of providing such courses only, or to exceed such costs either to defray other expenditure or to provide an income or other benefits to an individual or individuals. But no direct evidence was adduced to establish how the amounts charged for courses were fixed. Mr Oaks, a Chartered Accountant employed to inspect the Accounts of the UK Branch for the period of the 1973 Accounts for the purposes of these hearings, stated that the UK Branch budgeted annually to cover its extimated expenditures out of the anticipated income from 'contributions'. Otherwise the only other evidence on this point is the statement in the Report of the Directors of the UK Branch attached to such Accounts as follows: 'Turning now to financial matters, the audited Accounts reveal a deficit for the year of L 18,360.66. This is somewhat disappointing since we have striven to live within our budget and indeed must do so if we are to remain financially viable and if we are to continue our expansion at the present rate. In the forthcoming year therefore we shall make a very determined effort to balance our expenditures with the contributions from our members.' Since 1973 the fees charged for courses at Saint Hill Manor have been considerably increased. Accordingly from all the foregoing we infer that the fees chargeable for courses at Saint Hill Manor are fixed from time to time at such amounts as, after bringing into account all (if any) other anticipated receipts, will produce sufficient income to meet all the expected expenditures of the UK Branch. The 1973 Accounts of the UK Branch reveal a deficiency for the period of the 1973 Accounts of L 18,361 and an accumulated deficit to the end of that period of L 121,168. The Appellant Company, excluding the UK Branch, was said by Mr. Greenberg to have had an accumulated deficit of 1,166,811 United States dollars by the end of 1973. However, we take the view that the 1973 Accounts of the UK Branch could equally well have shown a substantial profit or surplus. First, the whole of the outstanding cost of technical services at L 285,016 was brought into the 1973 Accounts as part of the Expenditures notwithstanding that about L 193,355 of it was referable to previous years. The 1973 Accounts departed from the practice adopted in previous Accounts of 'writing off' under Expenditures the amounts charged by Flag for staff training courses over a five year period which, previously, had been regarded as the average time over which the benefit of a member of the staff taking such a course was obtained by the UK Branch. Secondly, we were not supplied with any breakdown of the L 527,126 included as 'Contributions received in advance' and which, as we have stated, was in the nature of an accumulating {295} revenue reserve. This amount includes receipts which will never be applied in or towards the payment for a course or refunded, but according to Mr Oaks, such receipts are never brought into the Receipts and Expenditure Account. Thirdly, the UK Branch of the Appellant Company must have received, in our view, during the period of the 1973 Accounts, sums amounting in the aggregate to L 625,648 by way of 'Contributions from member Scientologists'. Such sum is the L 484,225 brought into the Receipts and Expenditures Account plusL 141,423, being the difference between the figures for 'contributions from member Scientologists received in advance' at the beginning and the end of the period. Mr Greenberg stated that the Appellant Company operated in the same way in the United States. Accordingly we place no weight whatsoever on the deficits appearing in the 1973 Accounts or the deficit of the Appellant Company in the United States in determining whether or not the courses at Saint Hill Manor are provided 'otherwise than for profit'. Having regard to the foregoing, and on the basis of the 1973 Accounts and the Accounts of the UK Branch of the Appellant Company for previous years and for 1974, we are firmly of the opinion that the Appellant Company and its UK Branch fixed the fees for courses at Saint Hill Manor to produce in 1973 a sufficient income to cover both the costs of providing such courses and other matters. In our opinion such other matters included the dissemination of the religious philosophy of Scientology amongst members and others, and the establishment and support of Scientology establishments and missions such as the missions in London and Plymouth. In our opinion such other matters also included, through the 'cost of technical services', a proportion of the upkeep of the Flagship Apollo upon which Mr Hubbard and other highly qualified Scientologists resided, and the creation of reserve funds for, or with a view to, the expansion of Scientology organisations. Less than one third of the 257 employees of the UK Branch appear to have been directly concerned with the courses at Saint Hill Manor and the giving of such courses. Whilst we fully appreciate that propagation and expansion of Scientology must be a meritorious aim and object to a Scientologist, we consider that, for tax purposes, the requirement now under consideration relating to education as contained in item 1(b) aforesaid was not satisfied in relation to the courses provided at Saint Hill Manor. The final matter for our consideration is whether the Appellant Company provided the training and auditing courses at Saint Hill Manor and the Books, E-Meters and Sundry Merchandise relating to Scientology 'in the course of a business' carried on by it, so as to become liable to account for tax on such supplies. On this aspect we do not accept the submission by Mr Gray that, as Scientology is to be regarded as a religion or a religious philosophy, the establishment at Saint Hill Manor is to be compared with a religious teaching foundation, and such a foundation would not normally be described as carrying on a business, even though it charged fees to its students. In our opinion an establishment can provide the study of a religion or a religious philosophy as a business in the same way as the study of a language or any other branch of knowledge. The meaning of the word 'business' as contained in Part I of the Act has been considered by the Court of Session in Scotland. In that case a tribunal in Scotland had held that, under Scots law, the word 'business' connoted a commercial purpose and a commercial purpose could not exist without the acquisition of gain as an object. In this respect the tribunal in Scotland differed {296} from all the decisions on that point given by tribunds in England. In his opinion in the Court of Session the Lord President n1 stated: n1 Commissioners of Customs and Excise v Morrison's Academy Boarding Houses Association (1977) SLT 197; (1978) STC 1. 'In my opinion it will never be possible or desirable to define exhaustively "business" within the meaning of section 2(2)(b). What one must do is discover what are the activities of the taxable person in the course of which supplies are made. If these activities are, as in this case, predominantly concerned with the making of taxable supplies to consumers for a consideration it seems to me to require no straining of the language of section 2(2)(b) to enable one to conclude that the taxable person is in the "business" of making taxable supplies, and that taxable supplies which he makes are supplies made in the course of carrying on that business, especially if, as in this case, the supplies are of a kind which, subject to differences of detail, are made commercially by those who seek to profit by them.' A similar opinion was given by Lord Cameron. However in our view, in considering section 2(2)(b) of the Act, some meaning should be given to the requirement that supplies, to attract a liability for tax, must be made 'in the course of a business'. A person who makes supplies of goods or services for a consideration cannot have been intended, merely by so doing, to be accountable for tax thereon as such a construction of section 2(2)(b) would render the requirement that, to be taxable, he must do so 'in the course of a business' wholly otiose. Earlier tribunals in England, in holding that 'business' in the Act connoted 'an occupation carried on as a commercial activity' had founded themselves on the words 'economic activities' in paragraph 1 of Annex A to the Second Council Directive of the European Economic Community. In relation to this appeal Mr Gray laid great attress on a passage in Lord Cameron's opinion n1 as follows: n1 Commissioners of Customs and Excise v Morrison's Academy Boarding Houses Association (1977) SLT 197; (1978) STC 1. 'If the question is put another way -- how would this activity be properly described, without any reference to the issues of tax liability? -- I think the answer would be that it is eventually a business activity of a very usual and normal kind. It has every mark of a business activity: it is regular, conducted on sound and recognised business principles, with a structure which can be recognised as providing a familiar constitutional mechanism for carrying on a commercial undertaking, and it has as its declared purpose the provision of goods and services which are of a type provided and exchanged in the course of everyday life and commerce. Not only so, but to some extent the Association is necessarily competing in the market with other persons and concerns offering precisely similar services to the same clients or customers, i.e. the parents of pupils at Morrison's Academy who may seek or require residential and boarding accommodation.' As Mr Gray has pointed out, most of the marks of a business activity mentioned by Lord Cameron in that passage are missing in relation to the activities of the UK Branch of the Appellant Company in the United Kingdom. In particular, the Appellant Company by its UK Branch is not competing in the United Kingdom with any other person or concern offering courses on Scientology or a religious philosophy or books on Scientology, E-Meters and Scientology crosses and lapel badges. It can be said to be competing with Churches and other religious establishments only for adherents to its doctrines. {297} For the purpose of this decision we accept the opinions given in the Court of Session in the appeal to which we have referred in the context in which they were given. But, by way of extension thereto, we consider that, for the purposes of this appeal, we must regard Scientology as if it were a commodity consisting of the training and auditing courses and the books on Scientology, E-Meters and Sundry Merchandise sold by the UK Branch. We must then, in our view, consider how the UK Branch made such supplies, that is to say, whether it did so as a commercial (or economic) activity. Whether or not it did so for profit or gain is, of course, wholly immaterial to this final matter. Applying the foregoing considerations we have no hesitation in holding that the Appellant Company by its UK Branch in the United Kingdom was carrying on a business throughout the period of the 1973 Accounts. It was a limited liability corporation, and had registered under the Companies Act 1948 as carrying on a business in Great Britain. It received during that period sums amounting to L 625,648 as 'donations' and 'contributions' from member Scientologists, only part of which will have been or will ultimately be applied in paying for courses. It paid a ten per cent commission to the Field Service Ministers and Volunteer Ministers who obtained such 'donations' and 'contributions'. It budgeted for a surplus from the payments made for, or with a view to, the taking of training and auditing courses in order to meet the expenses of its other activities. In the 'auditing' courses the UK Branch was competing with trained and partly-trained psychologists and psychiatrists who operated professionally. The UK Branch kept books of account and a file for each member Scientologist, and employed staff to manage Saint Hill Manor efficiently and in a reasonably business-like way. It prepared and filed accounts and dealt with large sums of cash both in sterling and other currencies. In our opinion, the foregoing are sufficient hall-marks of a business or commercial activity to compel us to hold that the Appellant Company, during the period of the 1973 Accounts, was carrying on a 'business' for tax purposes. That 'business' was, in our view, the propagation of Scientology. Accordingly the provision of the training and auditing courses in Scientology at Saint Hill Manor, and the sales of books on Scientology, E-Meters and Sundry Merchandise amounted, in our judgment, to taxable supplies in the course of such business. The value of such supplies during such period and the previous year was well in excess of L 5,000. It follows, in our decision, that the Appellant Company became liable to be registered as a taxable person with effect from the 1st April 1973 and is liable to account for tax on such supplies made on or after that date. Subject to determination of the tax payable by the Appellant Company for the period of five months covered by the first assessment in the sum of L 20,661.96, we dismiss this appeal. If the parties agree on the amount of tax so payable, they should each forthwith give notice thereof in writing to the Proper Officer at the appropriate tribunal centre for this appeal, stating the amount agreed to be payable. Should the parties be unable so to agree then, at the written request of either party, a further hearing of this appeal will be arranged on written notice given to both parties in accordance with the Value Added Tax Tribunals Rules 1972 n2 as for the time being amended. Finally, as already arranged and announced, {298} either party shall be at liberty to apply for a direction as to costs. Any such application must be made by notice in writing served at the appropriate tribunal centre for this appeal within one calendar month after the date of this decision. n2 (1972) SI No 1344 now amended by (1974) SI No 1934 and (1977) SI No 1017. DISPOSITION: Appeal dismissed subject to the parties agreeing or, in default, the tribunal subsequently determining, the actual amount of tax payable SOLICITORS: Stephen M Bird; The Solicilor HM Customs and Excise. CHURCH OF SCIENTOLOGY OF CALIFORNIA AND OTHERS v KAUFMAN AND ANOTHER CHANCERY DIVISION [1973] RPC 635 HEARING-DATES: 26, 27, 28, 29, 30 March, 6, 9, 12, 13 April 1973 13 April 1973 CATCHWORDS: Confidential information -- Trial of action -- Public interest -- Clean hands -- Adequacy of damages -- Whether subject matter of confidence such as court would protect -- Action dismissed. HEADNOTE: The plaintiffs, who controlled and managed two institutions for the teaching and practice of Scientology, brought an action against a former student and against a publishing company seeking to restrain the publication by the second defendant of a book written by the first defendant and alleged to contain considerable extracts from confidential portions of courses of the institutions. The defendants pleaded a number of alleged instances of fraudulent representation in the plaintiffs' literature and relied as a defence upon disclosure in the public interest. They also claimed that the plaintiffs did not come into equity with clean hands, that damages were an adequate remedy, and that the subject matter of the confidence was not such as the court would protect. The trial took place, subject to certain qualifications, on the basis of affidavit evidence which was before the court in earlier interlocutory proceedings. Held, dismissing the action, (1) that the defendants had proved one case, out of those pleaded, of fraudulent misrepresentation of what Scientology was; (2) That the defence of disclosure in the public interest succeeded. (3) That the plaintiffs did not, in the matter of protection of their secrets, come into equity with clean hands. (4) That damages were an adequate remedy, but that any injury appeared to be problematical and speculative in the extreme. (5) The subject matter of the confidence was not such as the court would protect. CASES-REF-TO: Gartside v Outram (1856) 26 LJ Ch 113. Cheavin v Walker (1877) 5 Ch D 850. Johnson v Barnes (1883) WN 32. Adelaide Co of Jehovah's Witnesses Inc v The Commonwealth (1943) 87 CLR 116. Initial Services Ltd v Putterill [1969] 1 QB 396. Coco v AN Clark (Engineers) Ltd [1969] RPC 41. Fraser v Evans [1969] 1 QB 362. Reg v Registrar-Regeneral, Ex parte Segerdal [1970] 1 QB 430; [1970] 2 QB 697. Hubbard v Vosper [1972] 2 QB 84. CASES-CITED: Wright v Tallis (1845) CB 893. Lee v Haley (1869) 5 Ch App 155. Doherty v Allman (1878) 3 App Cas 709. Derry v Peek [1889] AC 337. Reddaway v Bentham Hemp Spinning Co (1892) 9 RPC 503. Slingsby v Bradford Patent Truck & Trolley Co (1905) WN 122; (1906) WN 51. Bile Beans Mfg Co v Davidson (1906) 23 RPC 725. Coomber, Re [1911] 1 Ch 723. Nocton v Ashburton [1914] AC 942. Pratt v BMA [1919] 1 KB 244 R v Donovan [1934] 2 KB 498. Barr (Aaron) Petition for writ of habeus corpus 93 Fed Sup 7. Thomson (DC) & Co v Deakin [1952] Ch 646. Seager v Copydex [1967] 2 All ER 415. Craig, Re [1971] Ch 95. Evans Marshall & Co v Bertola SA [1973] 1 WLR 349. INTRODUCTION: This was the trial of an action for alleged breach of confidence brought by The Church of Scientology of California and by Donald Ian High Clark and Phyllis Cherie Stevens, both suing as Trustees of Hubbard Foundation Scotland, against Robert Kaufman and against Olympia Press Ltd. The facts of the case appear from the following judgment and from that given in earlier interlocutory proceedings (reported [1973] RPC 627). Harman, QC -- There are two primary issues in this action. First, whether or not the material complained of was confidential material; and secondly, if it was confidential, can the defendant publishers disclose it on the grounds that they had a defence of "publication in the public interest". Publication might be in the public interest because either (a) the mental or physical health of persons is endangered by the material; or (b) the conduct of the plaintiffs is a fraud on the public; or (c) the contract between the plaintiffs and the defendant Kaufman was obtained by undue influence and so cannot be relied on. As between those two parties a presumption of undue influence is raised but it is not one to be relied on by Olympia Press, not a contracting party. Because restitution in integrum of this contract is now impossible, the defence of undue influence is in any event not available to either defendant. The likelihood of danger to mental or physical health is not a defence in law: but of course this court is bound by Hubbard v Vosper [1972] 2 QB 84 per contra. The plaintiffs rely upon two submissions of law. (1) If they prove that the material the subject of this action was in law confidential material, they are entitled to an injunction to restrain its publication under two (cumulative) heads: (a) Doherty v Allman (1878) 3 App Cas 709 decides that the court has no discretion in deciding whether to grant an injunction to restrain breach of a negative stipulation contained in a contract; and (b) The plaintiffs carry on courses for fees and much of the material contained in those courses is revealed in the book. As a consequence, if the book is published the plaintiffs will suffer great damage by way of lost fees. Such damage is unquantifiable and therefore damages are not an appropriate remedy in this case. (2) There are only three possible defences open to the Olympia Press. First, they can attempt to show that this material ought to be published in the public interest, as danger to mental or physical health may otherwise result. Secondly, they can attempt to show that the plaintiffs have set out to defraud persons and have in fact done so; thirdly, they can rely on a claim of undue influence. But equity has never granted relief against the consequences of a contract such as this where restitutio in integrum is no longer possible. Nor can either defendant show that he has suffered financial detriment as the result of the alleged undue influence. All cases of undue influence are cases where there has been a gross disparity between the parties. It is not every fiduciary relationship which gives rise to a presumption of undue influence: see Re Coomber [1911] 1 Ch 723, and Re Craig [1971] Ch 95. [At this point Hugh Laddie for the Olympia Press Ltd formally abandoned the plea of undue influence in so far as it related to the case of that defendant, and all necessary consequential amendments were ordered to be made.] On all the evidence in this case the plaintiffs submit that there is no evidence of fraud, common law or equitable. On the topic of unclean hands, the rules are not referred to when you take this course, so there cannot be unclean hands in relation to that. There can only be unclean hands if the threats were made at the time of entering into the contract. The mere existence of the rules does not amount to unclean hands. [By consent, facts to be proved by existing affidavits on terms and conditions read to the court by Harman, QC.] Save in the rarest cases an injunction is never refused for breach of a negative covenant: see Doherty v Allman (1878) 3 App Cas 709, and also Snell's Principles of Equity, 26th ed p 701; Seager v Copydex [1967] 2 All ER 415. [Goff, J -- What if there had been a delay? Would I still be bound to grant an injunction?] No, at least if the delay was considerable. Of course, a discretion to grant or withhold must exist when there is no privity of contract between plaintiff and defendant, but that is only the case against Olympia Press, not against Kaufman. "The court will always grant unless . . ."; that is the proper attitude to adopt in these cases. This is not now an interlocutory matter, and so the problems relating exclusively to interlocutory injunctions do not arise. [Goff, J -- Can private societies impose rules relating to deprivation of privileges?] Yes. Religious societies such as the Roman Catholic church impose severe penalties. In the Navy men have died under the lash and in the merchant navy captains can put their sailors in irons. [Goff, J -- But if harm is inflicted, isn't that illegal?] No. For instance, there is beating at school and you can't complain. At University there is gating: that is a case of imprisonment. Here, Kaufman's punishment was not "unclean". Laddie -- The basic proposition on the law of fraud upon the public is to be found in Gartside v Outram (1856) 26 LJ Ch 113 and has been followed for example in Initial Services v Putterill [1968] 1 QB 396 and Hubbard v Vosper [1972] 2 QB 84. Unless an obligation of confidence is expressly included in a contract it can only otherwise arise in equity. It is important to distinguish the position of Kaufman from that of the Olympia Press. Olympia Press certainly do not deny that Kaufman was under a contractual duty of confidence, but they themselves were not. So if they were under a duty of confidence, it is one which arises in equity or not at all. The plaintiffs are guilty of perpetrating a fraud on the public, and such a fraud suffices to defeat any right of theirs to an injunction. They have sought an exclusively equitable remedy in an action to enforce an exclusively equitable right, and they must be able to show that they have satisfied the exacting standards imposed by this court when deciding whether or not to award equitable relief. The court will prevent a plaintiff from asserting a right which has been built up or nurtured by means of a deception of the public: see Bile Bean Manufacturing Co v Davidson (1906) 23 RPC 725. This is one facet of the "clean hands" doctrine. See also Slingsby v Bradford Patent Truck & Trolley Co (1905) WN 122, a copyright action, on appeal: (1906) WN 51; and Wright v Tallis (1845) 1 CB 893 at 904. All these cases support the contention that where there is a course of activity in which the plaintiff is the prime mover, or where there is a right of property in the plaintiff, fraud as to an important part of that activity or property will disentitle that plaintiff to relief for the protection of the property as a whole. See also Cheavin v Walker (1877) 5 Ch D 850 at 863, per James, LJ; and Lee v Haley (1869) 5 Ch App 155. If there is no fraud in the common law sense here, the plaintiffs are at least guilty of equitable fraud. See Snell at p 605 where the position is set out. In equity, intention is not a necessary element in fraud, and this is in keeping with all other well-known principles of equity: cf Iaches, which can defeat a claim for equitable relief without anything more; and also acquiescence; innocent misrepresentation; and passing off. In passing off actions the word "defrauding" is given an equitable sense: Reddaway v Bentham Hemp Spinning Co (1892) RPC 503. The case of Nocton v Ashburton [1914] AC 942 shows that the rule in Derry v Peek (1889) AC 337 is all-embracing where the jurisdictions of equity and law are concurrent. But the position is different in cases on unconscionable bargains, where equity enjoys exclusive jurisdiction. In any event, these plaintiffs have been intentionally or at least recklessly fraudulent; but it is possible to go further and say that as this is a case of exclusive jurisdiction the court can refuse relief on the grounds that there has been a "mere misleading" on the part of the plaintiffs. Turning to the evidence, Scientology is not a religion. R v Registrar General ex parte Segerdal [1970] 1 QB 430 held that the Registrar General was justified in refusing to register the chapel at St Hill Manor as a "place of religious worship" within the meaning of section 2 of the Places of Worship Registration Act, 1855, and this decision was affirmed by Lord Denning, MR and Winn and Buckley, LJJ at [1970] 2 QB 697. This, while not conclusive of the question whether or not Scientology is a religion, is at least a strong pointer. What is more, the Scientology leadership itself does not regard the movement as a religion: it merely attempts to operate behind a religious facade the better to perpetrate its fraud upon the public generally. In their voluminous literature the plaintiffs have made extravagant claims to possess miraculous healing powers. If this is true, why do they consistently refuse ever to apply them? They are the only people who have evidence of the efficacy of these powers, but they refuse to adduce any such evidence. It is a rule of evidence that a party who has in his possession all the evidence relating to one issue must produce it. The obvious inference is that the powers do not exist and the claims are not bona fide held. Is it really enough for the plaintiffs to say: "I don't condescend to tell you how, or even why it is done, nor to provide any demonstration, but nevertheless you must believe me"? Now as to the equitable defence of unclean hands. The most relevant case is Hubbard v Vosper [1972] 2 QB 84, in particular the judgment of Megaw, LJ and his discussion of the "Fair Game" law. It should be noticed that not once does the learned Lord Justice say that it was because those methods were applied to the defendant in that case that they were "unclean", but it was the mere fact that such methods were contemplated and approved by the plaintiffs which was so damning. The "Fair Game" law was still in force for at least part of the time during which Kaufman attended Scientology courses. He himself was at least twice punished for being in a condition of liability but the "Fair Game" law was never applied to him. It is irrelevant that the "Fair Game" law may now have been repealed. If a man holds a pistol to my head for four years and makes threats against me, it will be no defence for him to say that he has now pocketed that pistol. These powers might have been used against Kaufman; that is the point. It is said that something akin to the "Fair Game" law is enforced in many institutions, such as Public Schools, the Navy, etc. This is not true. R v Donovan (1934) 2 KB 498 decides that it is impossible effectively to consent to an illegal act in such a way as to rob it of its consequences. Cf Manslaughter: if a defence of provocation is to be made out, it must be shown that the retaliation adopted bore some relation to the degree of provocation. The analogy with schools and clubs is false: a parent may use reasonable force to discipline his child and a schoolmaster is merely acting in loco parentis. Besides, the "Fair Game" law could by its terms be applied alike to those who were and those who were not Scientologists. [Goff, J -- It is all a question of degree, is it not?] Yes. The evidence in this case is much stronger on this issue than that placed before the Court of Appeal in Hubbard v Vosper (supra). This is a matter which goes particularly to the question of discretion in granting or withholding an injunction. Doherty v Allman (1878) 3 App Cas 709 does not automatically decide the present case in the plaintiffs' favour. There is always a discretion involved in such a decision: see Seager v Copydex [1967] 2 All ER 415. If this book is not published there is a great danger of mental and physical harm being perpetrated by the activities of the plaintiffs. It is said that the plaintiffs will suffer irremediable damage if the book is published. But the statement of claim does not allege damage, presumably because this action began on a quia timet basis. Any damage will be trivial, and a court of equity will not concern itself to protect trivialities: see the judgment of Megarry, J in Coco v Clark [1969] RPC 41 [Goff, J: Perhaps what they mean is that their students will suffer damage if this material is prematurely divulged to them?] Then if an injunction is granted it will have the sole effect of protecting third parties, not these plaintiffs. And to patch up the damage it will be necessary for the plaintiffs to sell their existing students more auditing, with the result that their profits will soar! Where is the damage then? [Goff, J -- Do you rely on the judgment of Stephenson, LJ in Hubbard?] Yes. Here as there, the award of monetary damages is the appropriate method of remedying the breach, if breach there is. I also rely upon it in this way: this began as a quia timet matter and is now an action for a quia timet injunction. In order to succeed on that basis the plaintiffs must show potential damage. It is no objection that the damages will be hard to quantify. See Evans Marshall & Co v Bertola SA [1973] 1 WLR 349. This is not material of a kind which equity will protect. Even if fraud and misrepresentation are found to be absent, that submission still stands. This "set-up", in colloquial terms, is one the court will not protect, and if authority is wanted for that proposition it may be found in Hubbard v Vosper [1972] 2 QB 84. Ian McCulloch (in reply) -- In truth and in fact this is a case in tort: we seek relief against a threatened inducement of breach of contract between the plaintiffs and the defendant Kaufman. Equity will imply a term of confidentiality into that contract. Doherty v Allman (1878) 3 App Cas 709 is relevant to the present case, but as there is no privity of contract between the plaintiffs and the intending tortfeasor the normal discretion applies. See Halsbury's Laws of England, 3rd ed Vol 21, p 382 para 802. (Counsel also referred to DC Thompson v Deakin [1952] Ch 646.) In this court the plaintiffs are bound by Hubbard v Vosper [1972] 2 QB 84 to accept that there is a defence of publication in the public interest. Otherwise, unless either fraud or danger to physical or mental health contained in the writings and teachings of the plaintiffs are established, there can be no justification for publication of this material by the Olympia Press. On well-settled principles of contract, if those defences are available to a contractbreaker, they also avail the tortfeasor who induces a breach of that contract. Pratt v BMA [1919] 1 KB 244. A publisher can be heard to say: "There was no contract for me to break" but he cannot say: "There was a contract, but the public have a right to know about this material nonetheless". [Goff, J -- What if there is such a case that the court thinks that damages will be sufficient; must the court grant an injunction?] The court can only grant an injunction, especially in quia timet actions. [Goff, J -- But if it is quia timet, and it is obvious that damages would suffice, surely the plaintiff cannot be better off merely by jumping in early?] In quia timet actions prima facie the remedy is an injunction. [Goff, J -- It is the only remedy. If you cannot restrain Kaufman, can you yet restrain his publisher?] Yes. See Winfield on Tort, 8th ed 538. [Goff, J -- That has the effect of enforcing an unenforceable contract.] But the contract is still enforceable in the sense that damages will be awarded for its breach. Cf the position in Hubbard v Vosper. No equitable relief was granted, but that did not affect the legal rights and obligations of the parties. [Goff, J -- I find that a startling result. There does not appear to be any authority on the point.] In Hubbard also the publisher was joined as a defendant. But the point was never argued. On the question of fraud: unless the requirements of the tort of deceit (other than that of individual damage) are made out, there can be no fraud in this case. Innocent misrepresentation does not suffice. See Nocton v Ashburton [1914] AC 942. All the cases on which the defendant relies concerned fraud. [Goff, J -- There was no fraud in Cheavin v Walker (1877) 5 Ch D 850]. The Master of the Rolls in that case was not talking about "fraud in equity". James, LJ did not say that innocent misrepresentation could amount to fraud in equity. Lee v Haley (1869) 5 Ch App 155 was an attempt to protect business "style" generally, not specific items of confidence. It is important to distinguish between the two plaintiffs in this case. The defendant must show that the fraud was perpetrated by the person seeking to protect the proprietary interest, or was at least adopted by him. The second plaintiff does not come into that category; there is no evidence that they either made or adopted the statements complained of. [Goff, J -- An intent to defraud can be inferred if a party finds out that a statement is false and he does nothing to set the matter right.] In Hubbard v Vosper the court's attention was never drawn to the question of protection of individual proprietary interest. The defendant must particularise and prove his claim of fraud. It is not enough to put up a "cloud" of fraud. See RSC Ord 18 r 12 and the notes thereto. [Goff, J -- If the plaintiffs claim that cancer has been eradicated. I can take judicial notice of the fact that cancer has not been eradicated. I can infer fraud. If the claim is so extravagant that nobody can be expected to make it honestly I can infer fraud unless evidence can be brought to show why they made the claim.] No the defendant must go further. [Goff, J -- But how much further can he go?] He must allege and prove the ingredients of fraud. On the question of religion: it is necessary to distinguish between "religion" and "religious worship". "Religion" has never been defined in a reported case. [Goff, J -- Can there be a religion without a God? Or at least a prophet?] The Scientology Creed acknowledges a God. Besides, the teachings and writings of Hubbard are fundamental to the cult. Hubbard is considered to be a prophet. [Goff, J -- Are you seriously suggesting that Hubbard is a prophet?] It is for the defendant to show that he is not. Religion presupposes worship or acceptance of a Supreme Being, or acceptance of the teachings of a prophet as a way of life, or both. The religious activities of this cult should be firmly separated from its other activities, eg the courses. It is possible to be a religion and yet to engage in commercial activities. (Counsel then referred to the Segerdal case [1970] 1 QB 430; [1970] 2 QB 697.) [Goff, J -- The courses are essential to the religion. I find it very hard to divorce the religious activities from the courses of secular training, and if one cannot expect that divorce the inference of fraud must be strong. Auditors appear on both sides, both as "Ministers" and "teachers".] That is not unusual: cf the Rabbis who teach in schools. If Scientology is a way of life, if it has a code of morals and if people believe in it and its creed, it is a religion. The mere fact of having to pay for courses does not denigrate from its position as a religion. [Goff, J -- Are not the teachings of this cult so incredible that I ought to find that it is not a religion?] That could be said of many cults which are undoubtedly religious. The mere fact that payment is made for these courses does not mean that they are incapable of forming a true religion. It is impossible to define religion: see Adelaide Co of Jehovah's Witnesses Inc v Commonwealth (1943) 67 CLR 116. Many accepted religions advance theories and beliefs quite extraordinary to us. That does not make them any the less religious. Nor does the fact that the founder of the religions may have received funds from his adherents make them any the less religious. (Counsel referred to The Petition of Aaron Barr for writ of Habeas Corpus 293 Fed Supp 7.) As to the medical claims: there is no evidence before the court that those claims are untrue. The Scientologists merely claim to have discovered the technique by which to effect cures but they do not use it. [Goff, J -- You say that however much one may suspect that this is a pack of lies, it has not been proved?] Yes. [Goff, J -- I think I should tell you that I have read all the confidential material contained in the book and it appears that some passages are absolute nonsense, while the rest are of no value whatsoever. Possibly that is a ground for refusing an injunction.] To any of us here in this court it may look like rubbish, gibberish or nonsense but it is otherwise to the Scientologists themselves. The passages here are part of the courses run by the plaintiffs and for them to be taken out of context and to say "this is gibberish" is not the way for the defendants to prove their case. It is not normally necessary for the court to understand the information. If your Lordship were giving directions to a jury it would be in the following words: "Read what is here and consider whether or not there is evidence of the following: (i) the material was the subject of original research; (ii) the material was not in the public domain". If those questions are answered it is enough. It does not matter if the material is gibberish to you . . . for example, chemical formulae are frequently beyond the comprehension of the untrained eye and are unintelligible. If the material is useful to the owner for his purposes that is enough. In Coco v Clarke [1969] RPC 41 the "trivial tittle-tattle" which was not protected there was not the whole business secrets of an organisation, it was mere casual conversation. [Goff, J -- If I had evidence of its meaning and I still thought that it was nonsense, would you still be entitled to an injunction?] Yes. That does not acquit the wrongdoer of his obligation of confidence. If it is confidential it must be protected. Nowhere yet has a court said that because information was nonsense it would not be protected. [Goff, J: Perhaps it is time the court did say that. It must be a matter of degree; scientific formulae are capable of explanation. The test must be (i) is the material capable of explanation? and (ii) if it is, what is its meaning? And it is on you to show what its meaning is. It may be a matter to bear in mind when exercising my discretion as to whether or not to grant an injunction.] If that were the test then in confidential information actions the plaintiff would have to bring evidence that the information was viable as a process. The court would be left to assess the evidence on either side as to whether the information was nonsense. [Goff, J -- The test would only be relevant in cases where the information was so obviously absurd to any eye as not to be entitled to protection.] On the question of harm to the public: the fact that the plaintiffs took waivers of liability from all their students does not presuppose any likelihood of injury actually occurring. Cf a factory. There is always one fool who takes an unjustifiable risk, and these waivers are directed against fools. [Goff, J -- But the waiver is not directed at people who disobey the rules, it is directed at those who make mistakes, even if they are doing their best. Since those who sign the waivers are students and are learning, ex hypothesi they will make mistakes. On your own admission, if a student goes wrong there will be devastating consequences.] There is no evidence that Scientology was responsible for Kaufman's mental breakdown. Nor is there any sworn evidence that Scientology is dangerous. "Unclean hands". We have done nothing iniquitous in relation to the transactions under discussion, nor in the enforcement of our rights. This is a claim for an injunction to restrain a tort. We have made no threats against the publishers. We do not seek to protect shamefulness, but only the confidential material: we are content that the book should be published without that material and we will provide other matter with which to fill the blanks. There is no bar to the relief we seek, save for the case of Hubbard v Vosper [1972] 2 QB 84. The remarks of Megaw, LJ on the "Fair Game" law in that case were obiter. The issue of clean hands must be separately examined in every case. The point was not argued before the Court of Appeal and the references to it in the judgments are obiter. The plaintiffs do not seek to argue here that Hubbard was wrongly decided. In your Lordship's own judgment on the interlocutory motion in this case there was no express finding of unclean hands. The "Fair Game" law has now been repealed. [Goff, J -- One must look at the facts as they existed at the time when the contract was signed. Are you entitled to take advantage of subsequent changes?] That "law" is on a par with the internal disciplinary systems of schools and private clubs. It was not so very terrible, and it has not been used against this defendant Kaufman. [Goff, J -- Are damages an adequate remedy in this case? I am thinking of the judgment of Stephenson, LJ in Hubbard v Vosper.] No. Confidence is normally protected by the grant of an injunction. Stephenson, LJ's remarks were obiter. Hugh Laddie (in reply on the additional case) -- It is not safe to accept the Jehovah's Witnesses' case. Williams, J sets out the case properly. It was never argued that the Jehovah's Witnesses were not a religion. They were part of the Christian religion, even if an undesirable part. The definitions of religion are obiter. The tests proposed by Latham, CJ are unworkable. If a religion merely consists of a system of beliefs or statements of doctrine, that would include anarchists and vegetarians. If a religion is merely a prescribed code of conduct then the Bar is a religion. If a religion is merely a "form of ritual or religious observance" then the Boy Scouts, a Hunt, and the Household Cavalry are all religions. COUNSEL: Jeremiah Harman, QC and Ian McCullough, for the plaintiffs. Hugh Laddie for the defendants. PANEL: GOFF J JUDGMENTBY-1: GOFF J JUDGMENT-1: GOFF J: This case first came before me on a motion for interlocutory relief, when, applying Hubbard v Vosper [1972] 2 QB 84, I refused to grant an injunction, save only a temporary one to cover an appeal. The plaintiffs then wished to embrace the leapfrog procedure authorised by Part II of the Administration of Justice Act, 1969, and thus to go direct to the House of Lords on the question whether that case was rightly decided on the defence of disclosure in the public interest, but that was not possible because the defendants would not consent. Notice of appeal was accordingly served, but the defendants then changed their minds and both parties became anxious that the leapfrog procedure should be applied. In those circumstances the plaintiffs allowed the appeal to be dismissed without any hearing on the merits, and it being then too late to treat the motion as the trial an application was made to me, with the concurrence of both parties, to take the trial of the case on the evidence adduced on the motion and, as I understood it, without further argument, so that I might formally give judgment on the trial of the action to the same effect as I had given on the motion, and the parties could then ask me to give a certificate under the 1969 Act. Accordingly I placed the case in the list for prompt hearing and granted an injunction pending the trial; but the matter had become complicated because the defendants had delivered a defence alleging fraud, and particulars had been requested and given of this new case. Moreover, as soon as the case was opened it emerged that there had been a serious misunderstanding between the parties. The defendants' counsel's understanding of the position was the same as mine, but counsel for the plaintiffs proposed to re-open the argument on the facts, and not upon the totality of the former evidence, but selecting such parts of the affidavits as would, apart from any objection that the evidence was by affidavit and not given orally, be admissible at the trial of the action as distinct from a motion for interlocutory relief -- that is to say, excluding hearsay. This would have produced an intolerable result, as on most of the matters pleaded the defendants would be left with no evidence at all. I therefore refused to proceed with the trial save strictly on oral evidence in the usual way unless the parties could agree on some fair and effective mode of procedure. After deliberation they agreed that the case should be tried on the affidavits but on certain terms as to admissibility and the right to comment adversely on weight recorded in an agreement between them. In view of the time which had elapsed with a temporary injunction in force, and to save costs, I agreed to this course, warning the parties that it was not really satisfactory and that they must each suffer any adverse consequences which might flow from the inadequate nature of the evidence. The case proceeded on this basis and I have now to determine it upon that evidence. In paragraph 12 of the amended defence the defendants made allegations of fraud, and they gave as particulars twelve alleged false claims, two of which, (a) and (f), were abandoned during the trial. The plaintiffs, as a general preliminary answer, submitted that it had not been shown that the claims relied upon were made by or on behalf of or accepted by the plaintiffs, or at any rate the second plaintiff. In my judgment that is a bad point since the claims relied upon are claims made by or on behalf of the organisation which both plaintiffs are carrying on. Then before proceeding to detailed argument on the facts the plaintiffs relied upon the general rule that "fraudulent conduct must be distinctly alleged and as distinctly proved and it is not allowable to leave fraud to be inferred from the facts: Annual Practice, 1973, Vol 1, page 279, notes 18/12/11. That, however, does not mean that, provided fraud is clearly pleaded, it may not be inferred from acts pleaded and proved: see, for example, Johnson v Barnes (1883) WN 32. In the present case fraud is, of course, expressly and explicitly pleaded, but I have to consider whether the alleged claims have been proved and, if so, whether they are false and fraudulent. In my judgment the defendants have succeeded in proving one, but only one, of the alleged fraudulent claims, namely, (j), the claim that there are no tenets in the cult of Scientology which cannot be demonstrated with entirely scientific procedures. This allegation accords precisely with the passage on page 51 of the Foster Report to which the particulars refer. The question then is: Have the defendants shown it to be false and, if so, knowingly or recklessly? Mr Laddie agreed that this could be inferred from the fact that, as appears from the evidence of Dr Hamlyn (agreed bundle, page 33), and more especially from that of Dr Gellatly at page 81, the plaintiffs refuse to treat medical or mental illnesses or disorders. He said if Scientology or Dianetics can do all the wonderful things that are claimed for it is it not odd that the plaintiffs do not put it into practice? That comment, however, goes only to the medical representations which he grouped with this one, but he also said: "How can you have something scientific and subject to proof or disproof if you refuse to use it, and how on earth do you get your tens of thousands of case histories and 270 on colds alone: see Foster, pages 117-118?". There is, of course, great force in this, although it is not conclusive because there might be the results of laboratory tests or results from work done by ordinary medical practitioners who had fortified their knowledge by studying Scientology. The matter does not rest there, however, because Mr Laddie also relied on paragraph 106 of the Foster Report at page 49, which says: "I therefore asked the Scientologists whether they still claimed that Dianetics or Scientology was a science, and to give me a bibliography of the published experimental or other evidence on which they based such a claim. Their answer, so far as relevant, was this: "Dianetics is a science. Our claims are not based on acceptability but on workability. Since both Dianetics, which deals with the mind, and Scientology which deals with the spirit, are broadly subjective, we feel that workability is a most valid criterion in these fields"." In other words, when asked to produce written evidence or references of scientific proof they declined, and, it would seem, limited the claim to Dianetics as distinct from Scientology, and in any case relied upon workability in preference to acceptability, which seems to me the exact opposite of scientific proof. If I am right in this interpretation it seems to me to follow that the assertion that there is no tenet of Scientology which cannot be demonstrated with entirely scientific procedures must have been reckless as well as wrong. One other representation, (e), has caused me considerable anxiety, but on the whole I have come to the conclusion that the defendants have not made out their case on that point and I will return to give my reasons later. The remaining points on paragraph 12 can, I think, be disposed off fairly shortly. I start with (b). The claim as proved is that the various disorders specified are cured by dianetic therapy, but as the pleading is that the cult of Scientology incorporates procedures capable of providing the cures, and Dianetics is, in my judgment, on the evidence before me, part of Scientology and not something distinct from it, the claim proved falls within the allegation pleaded. I suspect that this claim is far too wide and therefore untrue, but I cannot take judicial notice of the fact, and the defendants, on whom the onus lies, have failed to adduce any medical or other evidence of its falsity. The next is (c). Here the pleading is: Claims by and on behalf of the plaintiffs that the cult of Scientology has "eradicated" cancer, but the actual claim proved is "Cancer has been eradicated by auditing out conception and mitosis". This presents a certain difficulty because it is ambiguous. If it means, "Cancer has been eradicated as a disease", I would take judicial notice that it is untrue. If, however, it means, "We have eradicated cancer in particular cases by our auditing process" then I cannot take judicial notice that it is false, and although I think it might well have been proved wrong there is no evidence before me on which I can so find as a fact. Which is the true meaning is not entirely easy to see. Mitosis appears to refer to the growth of cancers, and conception perhaps to their onset, and so it may perhaps mean, "Our process does prevent anyone having cancer", but the narrower view is at least equally possible, and I do not think it would be right to hold a charge of fraud established when it rests on a point of construction of this nature. (d) This representation is clearly pleaded and proved, but once again although I suspect that it is far too wide to be true I have absolutely no evidence on the point and I cannot take judicial notice that it is false. (g) This is still more clearly something the falsity of which required to be proved by evidence which is lacking. (h) This, like so many of the other claims put forward in the Scientologists' literature, appears to me to suffer from hyperbole, but it is a very general statement on which to seek to found a charge of fraud. In any case in my judgment the defendants cannot do so, when their own witness, Dr Clark (agreed bundle page 70), says this: "In my opinion it is clearly in the public interest that details of these processes should be freely available. A variety of methods of psychological healing are offered to the public at the present time. Differing results are claimed and various theories of the mind are put forward in support. It is most important that all possible information about both practices and theories should be readily available for examination and scrutiny by both the enquiring individual or potential client and by scientific enquirers attempting comparisons and evaluation". He does not begin to say there is no truth in this claim; it is all false. In the case of (i) I am not sure that the representation proved is as pleaded, since the allegation is that the cult of Scientology does the things mentioned but the representation is confined to Dianetics and, unlike (b), the pleading does not refer to Scientology incorporating procedures having the alleged results, but I will assume that the pleading sufficiently covers the representation. Here again, however, in my judgment it was incumbent on the defendants to adduce medical evidence, or evidence from some other expert in Dianetics, as to falsity. It may well be that evidence could have been adduced to show that whatever else Dianetics may do it has not discovered the hidden source of all psychosomatic ills and human aberration, nor developed skills for their invariable cure; but such evidence has not been adduced before me. (k) I think is far too general to found an allegation of fraud. It seems to me to be no more than a puff. Again I am not entirely satisfied that (1) has been proved, since the pleading refers to the cult of Scientology and the representation mentions only Dianetics. Assuming, however, that this is sufficient in point of pleading, the claim is too narrow for me to take judicial notice that it is false, and I have no evidence to prove it so. I now turn to (e). As I have said, this has caused me much anxiety, because there are consraideble passages in the evidence which do support the defendants' contention that Scientology has been formed into the structure of a religion for the purpose of avoiding public criticism or obtaining fiscal advantages, although not, on the evidence before me, that of transferring assets to Mr LR Hubbard. I refer to the following: (a) The pamphlet entitled "How Saint Hill went from Financial Crisis to Affluence in 13 1/2 months", Foster Report, pages 68-69, which refers to "driving in business" and to "customers". (b) The HCO Policy Letter of 18th February 1966, Foster pages 137-138, which specifies "being religious in nature and corporate status" as part of the proper action to be taken for handling attacks, and groups this with "Getting waivers from all people we sign up" and "catching the dropped balls goofed by others and hired professionals". (c) The waivers themselves: (i) in the form of contract, clause 2, Foster pages 78-79; and (ii) as stated in effect in the proposed book at page 160, which form the first defendant says he signed. (d) The encouragement of direct salesmanship by the payment of a commission of 10 to 15% in cash or in the form of processing (Foster, page 71). (e) The published price list with its reduced price for all eight sections as a package, and its exhortation to "Buy now in advance and save" (Foster, page 102), coupled with the somewhat disingenuous description of the prices charged as "offerings for the Courses" given by Mr Gaiman who is, or was, so I was informed, a public relations officer acting on behalf of the Scientologists. (f) The special offer of all the courses at half price to those who have taken the children's courses (Foster, page 108). (g) The pamphlet on Corporate Status (Foster, pages 27-29), which contains these two passages: "Rapidly then C of S of Calif as a foreign corporation (not as a new friendly society just being registered) is being qualified to do business through the UK and Commonwealth and every HASI office abroad is being turned over to it. "This means no change in staff or character of business. It means a change of name and bank accounts. All successful executive secretaries will be retained and things will go on as usual". [page 28] "So we're getting all straight now, it seems. And good news! As all auditors will be ministers, ministers have in many places special privileges including tax and housing allowances. "Of course anything is a religion that treats the human spirit. And also parliaments don't attack religions. But that isn't our real reason -- it's been a long hard task to make a good corporate structure in the UK and Commonwealth so the assets could be transferred". [page 29] The reference to doing "business" will be especially observed. In the end, however, it seems to me that the essence of the defendants' case here is that Scientology is not a religion, and unless they can prove that -- and the onus is clearly on them -- they cannot succeed in my judgment. I very much doubt whether it is, and I respectfully share the doubts expressed by Ashworth, J in Regina v Registrar-General, Ex parte Segerdal [1970] 1 QB 430 at 444, where he said: "I find it difficult to reach the conclusion that it is a religion", and by Lord Denning in the same case on appeal [1970] 2 QB 697 at 707, and particularly where he says: "I must say that it seems to me to be more a philosophy of the existence of man or of life rather than a religion". The question there, however, was different, namely, whether a certain building used by the Scientologists as a chapel was a "place of meeting for religious worship". And I have some guidance from the Australian case of Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 123, where Latham, CJ gave a very wide meaning to the conception of religion. He said: "It would be difficult, if not impossible, to devise a definition of religion which would satisfy the adherents of all the many and various religions which exist, or have existed, in the world. There are those who regard religion as consisting principally in a system of beliefs or statement of doctrine. So viewed religion may be either true or false. Others are more inclined to regard religion as prescribing a code of conduct. So viewed a religion may be good or bad. There are others who pay greater attention to religion as involving some prescribed form of ritual or religious observance. Many religious conflicts have been concerned with matters of ritual and observance. Sec 116 must be regarded as operating in relation to all these aspects of religion, irrespective of varying opinions in the community as to the truth of particular religious doctrines, as to the goodness of conduct prescribed by a particular religion, or as to the propriety of any particular religious observance. What is religion to one is superstition to another. Some religions are regarded as morally evil by adherents of other creeds. At all times there are many who agree with the reflective comment of the Roman poet: 'Tantum religio potuit saudere malorum'". Moreover, I have evidence in the affidavits that some of the adherents certainly regard it as a religion. In the circumstances I have come to the conclusion, simply on the onus of proof, that the defendants have not shown that Scientology is not a religion. I guard myself carefully from any possible misapprehension that I am deciding that it is a religion. I need only add, before passing to the other aspects of this case, that I do not see how the defendants can avoid their shortcomings on the charges of fraud on the ground of fraud in equity or innocent misrepresentation, and the case of Cheavin v Walker (1877) 5 Ch D 850, on which Mr Laddie placed much reliance, is in my judgment very different from the present one. I turn next to the defence of disclosure in the public interest. The plaintiffs sought to draw some distinction in this respect between the first defendant, who is liable in contract, and the second defendants, whose liability is in tort for procuring a breach of contract, but I cannot accept that. If the defence of disclosure in the public interest be a good one, and if it be made out on the facts, it must, as it seems to me, be equally available to both defendants. In Hubbard v Vosper [1972] 2 QB 84 at 95 to 96, Lord Denning, MR put the possibility of this defence being established at the trial on the allegation that the books indicated medical quackeries of a sort which might be dangerous if practised behind closed doors. They are so dangerous, it was submitted, "that it is in the public interest that these goings-on should be made known". However, he quoted at page 95 from what he had said in Fraser v Evans [1969] 1 QB 349 at 362, where he put it on a much wider basis: "There are some things which may be required to be disclosed in the public interest, in which event no confidence can be prayed in aid to keep them secret". That must, of course, have limits, and clearly Lord Denning was not suggesting otherwise. It might well be in the public interest to have a valuable chemical formula or the secrets of an invention disclosed, but that could never justify a breach of confidence. The full passage is: "They rely on the line of authority from Gartside v Outram (1856) 26 LJ Ch 113 to the latest case, Initial Services Ltd v Putterill [1969] 1 QB 396. They quote the words of Woods, V-C that 'there is no confidence as to the disclosure of iniquity'. I do not look upon the word 'iniquity' as expressing a principle. It is merely an instance of just cause or excuse for breaking confidence. There are some things which may be required to be disclosed in the public interest, in which event no confidence can be prayed in aid to keep them secret". So the test is "just cause or excuse for breaking confidence". Hubbard v Vosper [1972] 2 QB 84 was, of course, an application for interlocutory relief, and, therefore, Lord Denning could not, and did not, decide that the teaching and practices of Scientology are dangerous, but he said this at page 96: "But I think that, even on what we have heard so far, there is good ground for thinking that these courses contain such dangerous material that it is in the public interest that it should be made known". Now, of course, I have to reach a decision. In giving my judgment on the motion in this case I said there was a very considerable body of evidence raising a reasonable prima facie case of defence of disclosure in the public interest, and Mr Laddie says nothing has been adduced to displace that prima facie case, which must therefore be confirmed. In my judgment, however, it is not as simple as that, since I there relied, as I was entitled to do on a motion, on matters not admissible at the trial even under the agreement between the parties, notably the conclusions of the Public Inquiry in the State of Victoria as contained in the Anderson Report. I must consider the question of fact afresh on the admissible evidence before me. First I will consider the question on the narrow basis, whether it has been shown that the practices of the Scientologists are dangerous. Mr Harman says that I cannot so hold in view of the medical evidence to the contrary filed on behalf of the plaintiffs, and because the defendants' own witness, Dr Clark, does not say that they are. On the contrary he said what I have already read; and further, at page 69 of the agreed bundle, he agreed with Sir John Foster's conclusion "that the practices of Scientology constitute a therapy, which claims to cure people of their real or imagined ills". In passing, it will be observed that he says "which claims to cure" not "which cures". Mr Harman relied on paragraphs 7 to 10 of the affidavit of Dr Hamlyn (bundle, pages 32-33), which read as follows: "Throughout the said exhibit, for example" -- and then he specifies certain pages -- -- there are allegations which might be taken to mean that the first defendant was becoming physically and mentally ill as a direct result of undertaking the said courses. "(8) In my opinion as a medical practitioner there is nothing in the said courses which might cause anyone to become physically or mentally ill as a result of or by reason of undertaking the said courses. "(9) At no time whilst attending the said courses, nor indeed since, have I ever encountered, nor heard of, any person being physically or mentally affected deleteriously by the said courses. "(10) I have heard it said from time to time among medical colleagues that Scientology is a form of medical quackery, and indeed there is a part of Scientology which is called Dianetics which is of value, in my opinion, in the practice of medicine. However the advanced courses of Scientology do not even remotely approach the practice of medicine, and can no more be considered quackery than, in my view, could the practice of yoga be so considered. I would define quackery as an attempt, whether fraudulent, or merely mistaken by a medically unqualified person to cure or alleviate an illness or injury. The said advanced courses do not address illness, either mental or physical, in any way whatsoever, and indeed it is the policy of the plaintiffs, in my experience, to insist that a person, who is ill or suspected of being ill, receives full medical attention before commencing or continuing any said course, on the grounds that any illness, mental or physical, would interfere with the person's progress on the said course". Mr Harman further relied on the affidavits of Drs Atkinson and Pai. The former, at page 74, said: "In my view there is nothing harmful or dangerous in the practice of Scientology. I have never known, or heard, of anyone being deleteriously physically or mentally affected by it". Dr Pai, at page 76, says: "(3) I can find no treatment or technique or practice or matter of any kind in those pages" -- being the pages of the book in which the confidential passages occur, but, of course, limited to those pages -- -- "which might cause or affect any mental or physical disorder". Mr Laddie criticised this evidence because of the rule that "testifying as a hostile witness against Scientology in public" made the witness a suppressive person (see Hubbard v Vosper [1972] 2 QB 84 at 99), but I cannot attach much, if any, weight to that comment since it has not been shown that such rule was still in force when these affidavits were sworn; because these deponents are medical practitioners and must be presumed to be witnesses of integrity unless and until the contrary be shown, which it was not; and because Dr Pai was not himself a Scientologist. However, I have to weigh this against the evidence adduced by the defendants. First, there is positive evidence that the first defendant did become physically and mentally ill as the result of taking the Scientology courses. Mr Girodias in his affidavit (page 57) quotes him as giving his opinion that as a result of the courses he undertook his mental health was adversely affected, and in the book itself the first defendant says that it was so. I quote from page 114 ["Inside Scientology" by Robert Kaufman]: "My conclusion about this labyrinth of incoherent material had been so great that I had tired myself to the point of illness"; and when I look at the confidential passages on pages 105-106, to which I will presently refer again, I am not surprised. Again at page 119 the first defendant says: "That afternoon I took sick. The clay table was in the midst of a strong draft. I felt flushed and feverish and by six o'clock my sole desire was to pile into bed. I awoke early the next morning and couldn't get back to sleep. A malevolent force kept me awake mulling over in my mind the coming Solo audit. I lay shivering under the covers, thinking of all the ways I was dramatizing. Some of the words ended in ness. It could be Unhappiness. I had been stuck out in Sussex for weeks, with perhaps several more months of study to follow, away from city streets and old friends, subjected to considerable discomfort and rigid discipline which left me with no time to myself. For this period of my stay, I had denied myself what I thought of as 'living' as a test of my determination. Now, thinking about it in the early morning hours, it struck me that life had become quite forlorn. As light began to brighten up the room, and the first birds of the morning shrieked in the tree-tops, a vibration shot through my stomach like a charge of electric voltage: it was fear. I lay huddled around the shock, revulsed by the feel of the sheets against my legs. I was aware of the sharp, antiseptic smell of the English coal-tar soap on the windowsill above my head, and the shrill buzzing of an electric-razor converter under the bed, just below my pillow, sound and smell which keyed-in primitive terror from the bank". Next I refer to page 200 where I find: "I awoke the next morning with the thought that I would have to kill myself. Dim light outside the window told me that it was dawn in Edinburgh. I pondered the matter of my death carefully as Nash lay snoring a few feet away. Where had the thought come from? I had never had it before; but I had damaged myself beyond repair on OT III, and even the Sea Org, with their S&Ds, couldn't help me. The next logical step was suicide. I could jump off the bridge into the Edinburgh railroad yards. By so doing I would be invalidating Scientology. I couldn't stand the shame of that; my name would go up on the bulletin board. Nash began to stir in his bed. I got dressed and went to the kitchen to wear the cook's hat". Finally I quote from pages 223 and 224: "The visitations appeared more frequently. I knew I was losing my mind. Something had been taken away and something put there. At times I could feel the thing in my head trying to eat its way out. Once I had a notion that my brain was quicksand, with a puckered hole through which it was sucking itself down with gurgling noises. Once it was a hole in a sofa, left by a burning cigarette, the faint trickle of smoke wafting up through charred shreds of fabric. Everything I perceived carried to me a profound disgust: colors, thoughts, memories, passing faces, all were infected with the disease. I was aghast at the power of Ron's creation, as I began to see things through his mad vision . . . The last few pages describe my life during the week or two before I had myself committed to a psychiatric ward in upstate New York, where I joined the nerve-ridden and depressed peoples of the wog world". Mr Harman submitted that it is only a matter of inference that the first defendant's breakdown was due to Scientology, but the inference seems to me irresistible. Of course, I have no evidence whether he was a person of peculiar susceptibilities, more likely than others to be affected, but here is definite evidence of actual harm being done, and I observe that, significantly, Dr Hamlyn makes no reference to these pages of the book. Further -- although this cannot be checked -- some weight must be given to the statement in the Foster Report, page 120, paragraph 170, that he had received written evidence from a number of persons who claimed either that Scientology had done them or their friends or relations demonstrable harm or that they had derived no benefit from processing and had felt themselves cheated of their money. In addition -- and this, to my mind, is very cogent -- I have clear evidence of admissions that the courses may do harm, and that to the physical mind or body and not merely to the thetan or spirit. First, there is this passage at page 111 of the book: "R6EW is the process which makes you a Grade VI Release. It prepares you to face the highly charged core of the bank on the Clearing Course without endangering yourself". Secondly, at page 144 I find: "If you get sick on course some mistake has been made. "If your eyes water on course you're invalidating yourself. "When you finish a session you should drop the matter and get on with the business of living. "Remember, IT'S ALL IN YOUR MIND". Thirdly, at page 159, after quoting, in one of the confidential passages, a warning to the auditor -- that is the customer himself, because this is solo auditing -- the first defendant says: "Any injury done to oneself by violating this order would be", and he quotes, "patched up by the organisation only upon payment of a $2,000 fine'". True, that refers to injury due to "violating the order", but that might be done by mistake; and I compare that with Foster, page 105: "No auditor should audit with the fear that he will do some irreparable damage if he makes an error'", not, be it observed, that he will do "any damage", and in the context of the further quotation on the same page: "'Any case, no matter how serious, no matter how unskilled the auditor, is better opened than left closed'". Fourthly, at page 160 of the book there is this remarkable statement, in the OT III Instructions: "It is dangerous to run OT III wrong. The results of these mistakes are severe. You may suffer from lack of sleep, catch pneumonia, or die". No attempt was made on behalf of the plaintiffs anywhere in their evidence to explain that away, not even by Dr Pai, who said he had read page 160. Fifthly, passages quoted in the Foster Report as to the Dianetic processing of children are in my judgment illuminating. They occur at page 109 and are as follows: "(1) From the time the child begins to speak, use straight-line memory technique on locks, controls, and valence shifts. (2) Do not invalidate the child's sense of reality: honor the Auditor's Code. (3) Re-orient the child semantically, by treating reception of original faulty information as a lock. (4) From the age of 8, run the child in reverie: pleasure, grief and locks. (5) From the age of 12, process the child, using standard procedure as outlined in SCIENCE OF SURVIVAL: Simplified, Faster Dianetic Techniques. (6) Restate any dianetic term if it contains a charge for the child, or treat the receipt of the charge as a lock". Against this background the waivers to which I have referred are particularly significant, and especially the specific waiver which the first defendant says he signed before entering on the OT III Course: book page 160. In my judgment the defence is made out on the narrower test laid down by Lord Denning. If, however, one takes the wider proposition from Fraser v Evans [1969] 1 QB 362 then in my judgment it is made out even apart from the question of danger. I have read the confidential passages, and I refer in particular to pages 105-106 and 111, and I find there what the first defendant so aptly described as "a labyrinth of incoherent material" and what I consider to be absolutely nonsensical mumbo-jumbo, and for instruction of that kind which the plaintiffs seek to keep secret large fees are charged. Moreover, as will have been seen, there is evidence of a pecuniary penalty being exacted to patch up any injury done to oneself by violating orders. In my judgment the public interest does indeed require disclosure of the type of thing for which they are being asked to pay. Mr Harman likened these passages to a chemical or mathematical formula or scientific data, which he rightly said the court can only understand when enlightened by expert evidence. He said these passages only seem incoherent or mumbo-jumbo because the court has not the knowledge of Scientology which would afford the key and make them intelligible. In my judgment, however, these things are not in the least comparable. In any case, even were it possible, which I do not believe, the plaintiffs have not adduced any evidence to explain these passages, and I am left to form my judgment on their face value. I turn next to the defence of unclean hands, which Megaw, LJ applied in Hubbard v Vosper [1972] 2 QB 84 at 99 et seq, and which I must follow unless the cases are distinguishable. To this end Mr Harman first pointed out that the offending "fair game" and "enemy" provisions had actually been applied to Vosper (see page 92) but Megaw, LJ did not refer to that at all. His judgment was much more general. The argument was general -- see page 91 -- and that was accepted by Megaw, LJ at pages 100 to 101, where he said: "Having regard to the matters which we have seen and, bearing in mind Mr Pain's observations that he came to this court unprepared to deal with matters of that sort, to my mind it is here sufficiently clear that, whatever explanations may be given, assuming that the words used in relation to 'suppressive acts' mean what they on their face appear to mean, Mr Caplan is more than abundantly justified in his proposition that there is here evidence that the plaintiffs are or have been protecting their secrets by deplorable means such as is evidenced by this code of ethics; and, that being so, they do not come with clean hands to this court in asking this court to protect these secrets by the equitable remedy of an injunction". Moreover, if it be necessary, I find that the first defendant was at all material times aware of the relevant penal rules and was afraid of the Enemy and Fair Game Law. There is some evidence of that in the form of agreement to keep secrets (Foster, page 80), but in the book the first defendant actually refers to them at pages 92, 132, 149, and at 195, where he says this notice appeared on the Bulletin Board: RS "has been put in Condition of Doubt for having seizures in public thus invalidating Scientology. If there is any reoccurrence of these either consciously or unconsciously on his part he will be placed in Condition of Enemy". That the first defendant feared these punishments is shown at pages 164, where he was placed in Liability and says: "It was a relief to have the long-dreaded punishment meted out at last"; and at page 204 he shows that he was placed in "Doubt" and he says this: "'I've made up my mind', I said, 'I'm leaving'. "'I simply don't understand it', he said unhappily. 'I don't even know what Condition you're in. If you blow the AO I'll have to place you in Doubt. Then anytime you wish to return all you have to do is work your way out of that Condition and the others, up through Danger . . . but I just don't understand. Are you in Doubt?'. "'No, I'm not in any doubt', I replied, playing on his words. "His voice was chilly, 'I wonder if perhaps you're not in a Lower Condition than Doubt'. I shivered: Enemy . . . the Fair-Game Law". "No". "Well, I'll put you in Doubt then. When you wish to come back you'll be welcome here. You know you're a very beautiful being'". Secondly, the plaintiffs sought to distinguish Hubbard v Vosper [1972] 2 QB 84 on the ground that the Fair Game rule was abolished before the defendants sought to publish their book, but the dates in the two cases appear to me to be entirely comparable. Vosper was a member of the Scientologists for 14 years and then left, as far as I can see, about September 1968. The book was published on 9th September 1971. The first defendant was a scientologist, or taking courses, for a short while only. He also left in 1968 and his book was introduced to the second defendants during the course of 1971: see the affidavit of Mr Girodias, page 56. The position as to the Fair Game rule is somewhat obscure. It appears to have originated in 1965 (Hubbard v Vosper [1972] 2 QB 84 at 99) and at one time was in the form set out in Foster page 129 and in the book page 143. Later it was changed to the form recited in Hubbard v Vosper [1972] 2 QB 84 at 93 and 100, but I am not clear when this happened. Megaw, LJ (page 100), speaking of 1968, gives the modified version, but the Foster Report (page 129) states the older form as being still operative down to 21st October 1968. Be this as it may, at least it was in operation down to that date in the modified form. It is suggested that the rule was wholly abrogated on 21st October 1968 by the Policy letter of that date (Foster, page 192), but what that letter says is: "The practice of declaring people FAIR GAME will cease. FAIR GAME may not appear on any Ethics Order. It causes bad public relations". Then follow these significant words: 'This P/L does not cancel any policy on the treatment or handling of an SP". Therefore I accept Mr Laddie's submission that although after October 1968 there was to be no declaration in any Ethics Order, the Fair Game rule was still to be applied in practice to any suppressive person. This is confirmed by the statement in Foster (page 128) that Mr Gaiman told him "all penalties for all Lower Conditions were abolished in 1970", and accords with Megaw, LJ's statement at page 99 of Vosper that the passage cited by Lord Denning at page 93 (being the modified form of the Fair Game rule) disappeared from the latest or 1970 Edition of the book "Introduction to Scientology Ethics". If one looks, in the present case, to the date of proposed publication, it is after 1970 it is true, but so publication was in Vosper's case, and I think I cannot simply say, "Well, the rule has gone". Megaw, LJ took the 1968 position in comparable circumstances, and so, I think, must I. In my judgment, therefore, I must follow Megaw, LJ and hold that in this matter the plaintiffs do not come into court with clean hands; but an additional matter was canvassed before me which is not dealt with in Hubbard v Vosper [1972] 2 QB 84 and that is the deplorable means adopted to suppress inquiry or criticism. I read from HCO Policy letter of 15th February 1966 (Foster, pages 135 and 136): "NEVER agree to an investigation of Scientology. ONLY agree to an investigation of the attackers. "This was the BIG error made in Victoria. I Okayed an Enquiry into all Mental healing. I ordered evidence on psychiatric murders to be collected. Non-compliance with these orders brought on the loss of Melbourne and the law in Victoria against Scientology. This was the non-compliance that began it. The original order I gave was relayed as 'we welcome an Enquiry into Scientology . . .' or it was changed to that in Melbourne. "This is correct procedure: (1) Spot who is attacking us. (2) Start investigating them promptly for FELONIES or worse using own professionals, not outside agencies. (3) Double curve our reply by saying we welcome an investigation of them. (4) Start feeding lurid, blood sex crime actual evidence on the attackers to the press. "Don't ever tamely submit to an investigation of us. Make it rough, rough on attackers all the way. "You can get 'reasonable about it' and lose. Sure we break no laws. Sure we have nothing to hide. BUT attackers are simply an anti-Scientology propaganda agency so far as we are concerned. They have proven they want no facts and will only lie no matter what they discover. So BANISH all ideas that any fair hearing is intended and start our attack with their first breath. Never wait. Never talk about us -- only them. Use their blood, sex, crime to get headlines. Don't use us. "I speak from 15 years of experience in this. There has never yet been an attacker who was not reeking with crime. All we had to do was look for it and murder would come out . . . HOW TO STOP ATTACKS "The way we will eventually stop all attacks from there on out is by processing the society as follows: (1) Locate a source of attack on us. (2) Investigate it. (3) Expose it with wide lurid publicity. "You see the same thing in a preclear. He has a rotten spot in his behaviour. He attacks the practitioner. The spot is located on a meter. It blows and the preclear relaxes. "Well this is just what is happening in the society. We are a practitioner to the society. It has rotten spots in it. Those show up in attacks on us. We investigate and expose -- the attack ceases . . . "The way to seize the initiative is to use our own professionals to investigate intensively parts of the society that may attack us. Get an ammunition locker full. Be sure of our facts. And then expose via the press . . . "The only error we can make is disperse our investigation. We do a preliminary look, then we must select a target and investigate it until we have the cold facts and then BANG, fire the salvo. "Don't worry about libel if our facts indicate rottenness. The last thing that target will do is sue as then we would have a chance to prove it in court, which they are terrified of our doing. "Remember -- the only reason we are in trouble with the press or government is that we are not searching out and exposing rotten spots in the society. We must practice on the whole group called society. If we do not it will attack us just as preclear will attack a Scientologist that won't audit him". Mr McCullough relied on the exhortation, "Be sure of our facts", and the references to "having the cold facts", and the passage, "The last thing that target will do is sue as then we would have a chance to prove it in court, which they are terrified of our doing". But it is inconceivable that everyone who dares to criticise Scientology should be utterly evil as there suggested, and the Policy letter of 18th February 1966 (Foster, page 137) expressly augmenting that of 15th February 1966 rejects "Being carefully legal in our utterances" as a course of action which has not been effective in handling attacks, and advocates as positive in stopping attacks (page 138) "Investigating noisily the attackers". Then I turn to the executive letter of 5th September 1966 (Foster, page 144) on the subject "How to do a NOISY Investigation". That expressly directs Scientologists, as soon as anyone attacks them, to make insinuations to his employers, friends, medical advisers and neighbours -- "anyone" -- that the attacker is engaged in criminal activities, and says naively: "You will find that Scientologists will come rushing forward with 90% of your facts anyway". Surely Megaw, LJ's words, and this is the organisation which is seeking to have its documents treated as confidential by the order of the court", directly apply to such conduct. The last question is that of damages. In Hubbard v Vosper [1972] 2 QB 84 Stephenson, LJ said that damages appeared to him to be an adequate remedy. The present case is a quia timet action and I have to consider the damage envisaged. In the affidavits the plaintiffs said first that they would suffer damage because the defendants are pornographic publishers, and association with them would harm their reputation, but damage on this score was disclaimed at the trial; and secondly that their students, or possible future students, would be prejudiced by premature disclosure as it is a strict rule that all the classes must be taken in order. Whether the plaintiffs are entitled to rely on this, which is damage not to themselves but to others, may be open to question -- see per Megarry, J in Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 48, line 26 et seq -- but I would think and would assume that there is a sufficient nexus, because harm to the students is an interference with the plaintiffs' business, but this, I would think, could only be minimal. In any event, it was not the case made at the trial. What the plaintiffs argued was that disclosure of their secrets might lose them business, but there has never been any suggestion in the case that the confidential passages are sufficient to enable or even assist others to teach the plaintiffs' courses or disclose so much that there is nothing left for the plaintiffs to teach those who want to become Scientologists. Therefore save insofar as disclosure may prejudice the plaintiffs by exposing the worthless nature of the passages disclosed, any injury appears to me to be problematical and speculative in the extreme. I would, therefore, respectfully adopt Stephenson, LJ's view, but in my judgment the passages sought to be protected are pernicious nonsense, and I accept the submission that equity will not lend its aid to prevent disclosure of such matters. It was argued that there is no case in which an injunction has been refused on that ground, but the facts here are unlike those of any other confidence case of which I am aware, and in any case I find support for the submission in the judgment of Megarry, J in the Coco case (supra), again at page 48, where he said: "Equity ought not to be invoked merely to protect trivial tittle-tattle however confidential". By analogy, ought it to be invoked to protect what I see here, which, even if I am wrong in finding it to be dangerous, is at best utterly absurd? I again refer to pages 105-106 and 111 of the book. In my judgment the answer is "No". Accordingly in my judgment this action fails and must be dismissed on the following grounds: (1) The one proven case of fraudulent misrepresentation of what Scientology is. (2) On the defence of disclosure in the public interest. (3) Because the plaintiffs do not, in this matter -- that is, the protection of their secrets -- come into equity with clean hands. (4) Because damages are an adequate remedy. (5) In any event the subject matter of the confidence is not such as the court will protect. [A discussion then took place as to costs.] Goff, J -- For the reasons which I have already given in my judgment this action has failed and must therefore be dismissed, and that has the effect of bringing any injunction to an end. I do not have to discharge it, because the only injunction which subsists is one until the trial. But a dispute has arisen between the parties concerning costs. The defendants, for their part, say that they ought to have costs on a common fund basis, which would be a very special order, and they give these reasons for that: first, that the plaintiffs brought this action well knowing of the difficulties they would face by reason of the decision in Hubbard v Vosper [1972] 2 QB 84; secondly, that the plaintiffs had benefited from the enforcement of secrecy; thirdly, that one of the defendants -- not the one who has in fact fought the action -- has suffered a nervous breakdown; and fourthly because counsel for the plaintiffs was instructed, at the outset, to say that the disciplinary measures had not been applied to the first defendant whereas in fact it turned out that they had. The plaintiffs counter that by saying not only should it be party and party costs only but the defendants ought not to have the whole of their costs, because they raised many charges of fraud and succeeded only in one. The plaintiffs therefore submitted that I should order a taxation on an issues basis, and alternatively that I should allow only five-sevenths of the costs. In my judgment this is not a proper case for any special rule giving common fund basis costs. The ordinary rule, party and party, must apply. So far as the first ground on which the defendants rely is concerned, the plaintiffs were entitled to come before this Court and seek to distinguish Hubbard v Vosper [1972] 2 QB 84; and, moreover, should they wish to appeal they can only do so by starting in this court. I cannot, because there is an adverse decision, make a special order as to costs. Secondly, that the plaintiffs benefited from the enforcement of secrecy appears to me to be irrelevant as a consideration affecting their liability for costs of the litigation. So far as the nervous breakdown is concerned, I observe that there has been no counterclaim. So far as the manner in which those instructing the plaintiffs conducted this case, I desire to say that I do not find any impropriety at all. I think that is right. It often happens, in the course of a case, that counsel put something before the court on instructions and, as the case develops, it is found to be not maintainable. In this case, that having emerged, the suggestion or statement was withdrawn. There is one other matter which I did not mention in my recital upon which the defendants relied, namely, that they were performing a valuable public service in deciding to disclose this secret information. Against that they have frankly admitted they are desiring to engage in a business venture for profit. Therefore I see no ground for applying a common fund basis, and the order will be on a party and party basis. But I then have to deal with the cross-suggestion. In answer to that the defendants say that all the issues were interrelated, and a great deal of the time occupied in considering allegations of fraud which failed would have had to be taken up in any event dealing with the other issues; and, further, that in many cases they have failed merely because they failed to prove their case and not because the contrary was found as a fact. That does not seem to me to be a sufficient answer to the cross-claim. I have no doubt that the defendants, by raising the large number of charges of fraud which they did raise, increased the costs of the trial. It is no answer to that to say, "We merely failed to prove them", and I think they are not entitled to the whole of their costs. On the other hand, I think to make an order on an issues basis would be eminently unsatisfactory. I am not sure that the taxing master would know how to work it out, but I am quite certain that whatever he did there would be a dispute between the parties as to whether he had got it right or wrong. The only way of dealing with it, as it seems to me, is to say that the defendants shall have some appropriate fraction of their costs. The plaintiffs have suggested five-sevenths, which is almost exactly the figure which was in my own mind, and I therefore accept it as being a fair and proper figure, and accordingly I dismiss this action but I order the plaintiffs to pay the defendants five-sevenths of their party and party costs. DISPOSITION: Order accordingly, including enquiry as to damages suffered by defendants by reason of injunction (save insofar as increased by sequestration). Sequestration summons adjourned into chambers. SOLICITORS: Stephen M Bard; Douglas-Mann & Co.

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