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Cunliffe v Fielden and another


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[2005] EWCA Civ 1508

FAMILY; Family Proceedings
COURT OF APPEAL, CIVIL DIVISION
MUMMERY, WALL AND MOORE-BICK LJJ
25 OCTOBER, 6 DECEMBER 2005
Family provision – Widow – Reasonable financial provision – Large estate – Husband leaving residuary estate on discretionary trusts for beneficial class including widow of brief marriage – Approach to claims for financial provision by spouses – Inheritance (Provision for Family and Dependants) Act 1975, ss 1, 3(2).
The claimant’s husband had died in November 2002, aged 66.  His estate was valued for probate at £1·4m and included the matrimonial home valued at some £325,000.  By his will, he left his residuary estate on discretionary trusts for a class of beneficiaries which included the claimant, whom he had married in October 2001.  Section 1(1)(a)a of the Inheritance (Provision for Family and Dependants) Act 1975 provided that the spouse of a deceased person could apply to the court for an order for financial provision on the ground that the disposition of the deceased’s estate effected by his will was not such as to make reasonable financial provision for the applicant.  In the case of an application made by a spouse ‘reasonable financial provision’ meant such provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision was required for his or her maintenance.  Under s 3(2)b of the 1975 Act, in the case of an application by the spouse, the court was to have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased had died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.  The claimant instituted proceedings under s 1(1)(a) of the 1975 Act on the basis that by making her one of a discretionary class of beneficiaries, the deceased had not made reasonable financial provision for her.  The judge made an order that the claimant be paid a lump sum of £800,000 out of the deceased’s estate in place of her interest as an object of the trust.  The executors, accepting that the deceased had not made reasonable financial provision, appealed in relation to the amount of the lump sum, contending, inter alia, that the judge had not given sufficient reasons for his decision; that he had failed to have sufficient regard to the short duration of the marriage or to give sufficient weight to the likely award the claimant would have obtained had the marriage ended in divorce rather than death and that he had wrongly applied the principles in House of Lords authority having stated that he was required to presume, as a starting point, an equal split of the estate; and that in assessing the claimant’s housing needs he had wrongly stated that it was not for the court to say that she should move out of the matrimonial home.
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a      Section 1, so far as material, is set out at [18], below
b      Section 3, so far as material, is set out at [18], below
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Held – (1) The correct approach for the court to adopt in claims for financial provision, as in property adjustment in proceedings between divorced former
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spouses, was to apply the statutory provisions to the facts of the individual case with the objective of achieving a result which was fair, and non-discriminatory.  Having undertaken that exercise, a way of assessing the fairness and non-discriminatory nature of the proposed result was to check it against the yardstick of equality of division.  There was no presumption of equal division of assets, but as a general guide, equality should be departed from only if, and to the extent that, there was good reason for doing so.  With appropriate adjustments based on the different statutory provisions, there was no reason, in principle, why that approach to marital financial claims should not be applied to proceedings under the 1975 Act brought by a widow, not least because, in any case brought under s 1(1)(a) of the 1975 Act, s 3(2) imposed a statutory cross-check of its own to the provision which the widow might reasonably have expected to receive if, on the day on which the deceased had died the marriage had been terminated by a decree of divorce.  Caution was necessary when considering the cross-check in the context of a case under the 1975 Act as while divorce involved two living spouses to each of whom the statutory provisions applied, in a case under the 1975 Act a deceased spouse who left a widow was entitled to leave his estate as he pleased; his only statutory obligation was to make reasonable financial provision for her.  Depending on the value of the estate, the concept of equality might bear little relation to such provision (see [19]–[21], [110], [112], below); White v White [2001] 1 All ER 1 considered.
(2) The proper exercise of a judicial discretion required the judge to explain how he had exercised it, which the judge in the instant case had not done.  That in itself vitiated his decision.  Moreover he had misunderstood authority.  However, there was enough material before the court for it to exercise its discretion.  There was sufficient in the estate to make reasonable financial provision for the widow, but considering the brevity of the marriage and the limited nature of the widow’s contribution, such provision should not be of a level and nature to allow her to live for the rest of her life in the former matrimonial home or at the standard of living which she had enjoyed during the course of the marriage.  A lump sum of £400,000 producing a notional income of £20,000 to £25,000 net, index linked for life, plus a housing fund of £200,000 was reasonable financial provision on the facts of the instant case taking into account the widow’s free capital of £150,000, the bulk of which derived from the deceased by way of survivorship, as well as any additional income from employment.  Accordingly, the appeal would be allowed (see [23], [26], [29], [39], [59], [71]–[75], [85], [94], [98], [102], [103], [108]–[112], below); Meek v Birmingham City Council [1987] IRLR 250, English v Emery Reimbold & Strick Ltd [2002] 3 All ER 385 and White v White [2001] 1 All ER 1 applied.
Notes
For the test of reasonable financial provision, for the meaning of reasonable financial provision in the case of an application by the spouse, and for the guidelines applicable to the wife or husband of the deceased, see 17(2) Halsbury’s Laws (4th edn reissue) paras 668, 669, 677.
For the Inheritance (Provision for Family and Dependants) Act 1975, ss 1, 3, see 18 Halsbury’s Statutes (4th edn) (2005 reissue) 594, 599.
Cases referred to in judgments
Besterman (decd), Re [1984] 2 All ER 656, [1984] Ch 458, [1984] 3 WLR 280, CA.
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Duxbury v Duxbury [1990] 2 All ER 77, [1992] Fam 62, [1991] 3 WLR 639, CA.
English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605, [2002] 3 All ER 385, [2002] 1 WLR 2409.
Krubert, Re [1996] 3 FCR 281, [1997] Ch 97, [1996] 3 WLR 959, CA.
Meek v Birmingham City Council [1987] IRLR 250, CA.
Miller v Miller [2005] EWCA Civ 984, [2005] 2 FCR 713.
Preston v Preston [1982] 1 All ER 41, [1982] Fam 17, [1981] 3 WLR 619, CA.
White v White [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, HL.
Cases referred to in skeleton arguments
Adams v Lewis [2001] WTLR 493.
Attar v Attar (No 2) [1985] FLR 653.
G v G [1985] 2 All ER 225, [1985] 1 WLR 647, HL.
GW v RW [2003] EWHC 611 (Fam), [2003] 2 FCR 289, [2003] 2 FLR 108.
McNulty v McNulty [2002] EWHC 123 (Ch), [2002] WTLR 737.
Phonographic Performance Ltd v AEI Rediffusion Music Ltd [1999] 2 All ER 299, [1999] 1 WLR 1507, CA.
Price v Price (t/a Poppyland Headware) [2003] EWCA Civ 888, [2003] 3 All ER 911.
Tanfern Ltd v Cameron-MacDonald [2000] 2 All ER 801, [2000] 1 WLR 1311, CA.
Appeal
John Anthony Haigh Fielden and Kathryn Ann Graham, the executors of John Derrick Cunliffe deceased, appealed from the order of Judge Howarth sitting as a judge of the Chancery Division in the Manchester District Registry on 15 February 2005 in proceedings instituted by Monika Theresia Gerda Cunliffe under s 1(1)(a) of the Inheritance (Provision for Family and Dependants) Act 1975.  The facts are set out in the judgment of Wall LJ.
Penelope Reed (instructed by Cobbetts, Manchester) for the executors.
Judith Bryant (instructed by Aughton Ainsworth, Manchester) for Mrs Cunliffe.
Cur adv vult
6 December 2005.  The following judgments were delivered.
WALL LJ (giving the first judgment at the invitation of Mummery LJ).
[1] Mr John Fielden and Ms Kathryn Graham are the executors of the will of John Derick Cunliffe (the deceased).  They appeal against an order made by Judge Howarth, sitting as a judge of the Chancery Division in Manchester on 15 February 2005 in proceedings instituted by the deceased’s widow, Monika Cunliffe under s 1(1)(a) of the Inheritance (Provision for Family and Dependants) Act 1975.  The order was that Mrs Cunliffe be paid a lump sum of £800,000 out of the deceased’s estate in place of her interest as an object of the discretionary trust created by the deceased’s will.  The lump sum was to be paid as to £200,000 within 28 days, but the order is silent as to the payment of the balance.  The £200,000 has been paid.  There are other ancillary orders, which are not material to this appeal.
[2] The judge refused the executors permission to appeal.  The appellants’ notice was filed one day out of time on 2 March 2005, and on 26 April 2005, Thorpe LJ, on the papers, directed that the appellants’ application for permission
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to appeal should be listed for oral hearing on notice to Mrs Cunliffe, with the appeal to follow immediately if permission was granted.
[3] At the outset of the hearing before us on 25 October 2005, we extended time for the filing of the appellants’ notice and gave permission to appeal.  Having heard full argument, we reserved our decision.
THE DECEASED’S WILL
[4] The deceased died, domiciled in England and Wales, on 11 November 2002 at the age of 66.  Probate was granted out of the District Probate Registry of the High Court of Justice at Manchester on 11 June 2003.  The estate was valued for probate purposes at £1,399,543.
[5] The deceased’s will (the will) was executed on 25 October 2001.  It is expressed to have been made in contemplation of his marriage to Mrs Cunliffe, which took place four days later on 29 October 2001.  By his will, the deceased left his residuary estate on discretionary trusts for a class of beneficiaries which included: (1) his wife; (2) the children and remoter issue of his brother Bernard Cunliffe who had died on 6 August 2001 (this class including Bernard’s son Victor Cunliffe, who in turn has three infant children); (3) his gardener, George Isherwood; (4) a friend, Caroline Perry; (5) Diana Cunliffe, Bernard’s widow; (6) the employees of Worsley Hall Nurseries and Garden Centre, which was the family business; and (7) such additional beneficiaries as his trustees should appoint.
[6] The figure which the judge took as the net value of the estate for the purposes of the proceedings before him was £1·4m.  Shortly before the hearing, the executors made an open offer to Mrs Cunliffe to appoint a lump sum of £200,000 under the terms of the deceased’s will settlement.  That was rejected by Mrs Cunliffe, but the fact that it was made demonstrates the executors’ acceptance, both at trial and before us, that the deceased had not made reasonable financial provision for his widow by making her one of a discretionary class of beneficiaries.  The question, accordingly, was how much she should receive from the deceased’s estate.
THE FACTS
[7] These are within a relatively narrow compass, although some time appears to have been taken up before the judge investigating Mrs Cunliffe’s relationship with and conduct towards the deceased.  In the event the judge, whilst finding that Mrs Cunliffe had been ‘at cross purposes’ with the other beneficiaries of the deceased’s will, came to the conclusion that conduct on all sides was irrelevant.  There is no appeal against that finding, or indeed against any of the judge’s findings of fact.
[8] Mrs Cunliffe is now 52.  She was born on 19 September 1953.  She is German by origin, but has lived and worked in this country for more than 20 years.  She has the advantage of being bilingual in German and English.  A copy of her curriculum vitae is in our papers.  This shows that she has undertaken a wide variety of different employments over the years, including caring for three different elderly people between March and October 1998.
[9] The circumstances in which Mrs Cunliffe and the deceased met are set out in her first witness statement.  In March 2001, Mrs Cunliffe saw an advertisement in The Lady magazine placed by the deceased, who was advertising for a housekeeper.  She was interviewed by the deceased on 1 April 2001.  Because Mrs Cunliffe had had to travel from the south of England, the deceased put her
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up overnight, and asked her to start working for him immediately.  She says she began work on 4 April 2001, and remained the deceased’s housekeeper until June of that year, when the deceased booked a holiday for them both and they began to cohabit as man and wife.
[10] As I have already related, Mrs Cunliffe and the deceased were married on 29 October 2001.  She was then 48, and recently divorced.  The deceased was a bachelor, then aged 65.  It will be immediately apparent that the marriage was of short duration, lasting only some 12 months from its celebration to the date of the deceased’s death.
[11] Mrs Cunliffe’s circumstances were modest when she married the deceased.  She owned a small property near Brecon, which she sold.  The proceeds were some £22,600.  Of that sum £20,000 was paid into accounts in joint names.  This apart, she does not appear to have had any assets of substance, nor any independent income.  She became financially dependent on the deceased, initially as housekeeper, and then as wife.
[12] By contrast, the deceased was a moderately wealthy man.  He had been born on 22 January 1936.  He suffered from a physical disability which it seems had been caused during his birth or perhaps childhood.  He appears to have spent his working life in the family business, Worsley Hall Nurseries and Garden Centre (the garden centre).  The family home was Chaddock Hall at Boothstown, Worsley, near Manchester.  The deceased lived there with his parents until his mother died in 1988.  Thereafter he lived with his father, who died on 20 May 1999.
[13] The deceased’s father, John Cunliffe, left Chaddock Hall to the deceased and after certain pecuniary legacies left the residue of his estate on discretionary trusts for a class including his sons, remoter issue and Wayne Broadbent, an employee at that time of the Garden Centre.  One half of John Cunliffe’s partnership interest in the family business was appointed out to Mr Broadbent, who became a partner in it.  Thereafter, one half of John Cunliffe’s residuary estate was appointed out to the deceased, and the other half was held on trust for Bernard Cunliffe and his family.
[14] An unusual aspect of the family is that Bernard Cunliffe was deaf and dumb as are his wife, Diana, their son Victor, as well as one of Victor’s three children.  This plainly has a relevance when s 3(1)(c) and (d) of the 1975 Act comes to be considered.
THE VALUE OF THE ESTATE
[15] As I have already stated, the figure taken by the judge for the value of the net estate of the deceased was £1·4m.  The costs of the proceedings amounted to approximately £250,000.  The judge was rightly critical of this figure which, he said, would have horrified the deceased ‘more than anything else’.  The inheritance tax (IHT) payable on the estate as it stood had been calculated at £352,822, although it was again common ground that any lump sum payable to Mrs Cunliffe would attract the surviving spouse’s exemption, and thus reduce the IHT burden.
[16] The principal assets in the estate comprised investments of various kinds, Chaddock Hall, valued at some £325,000 and the deceased’s share in the family business, which was in the process of being sold to Mr Broadbent.  It is valued in the latest accounts shown to us as a debt of £337,016, being paid by instalments.  No point was taken at the hearing about liquidity, and it was clear that the estate
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could afford to meet any reasonable order for a lump sum payment without difficulty.
MONEY ACCRUING TO MRS CUNLIFFE ON SURVIVORSHIP
[17] It was also common ground that Mrs Cunliffe had benefited by survivorship in relation to a number of funds and policies in the joint names of herself and the deceased.  The judge assessed this sum at £226,000, which did not form part of the estate.  He also recognised that Mrs Cunliffe had been obliged to spend some of this money on costs and living expenses.  That apart, however, she did not have any assets of substance, nor any income.  It was common ground that she had an earning capacity, the extent and relevance of which I will discuss in due course
THE STATUTORY PROVISIONS
[18] I set out the provisions of the 1975 Act only in so far as they apply to the instant case, and as they stood prior to their amendment by the provisions of the Civil Partnership Act 2004.

1. Application for financial provision from deceased’s estate.—(1) Where after the commencement of this Act a person dies domiciled in England and Wales and is survived by any of the following persons—(a) the wife or husband of the deceased … that person may apply to the court for an order under section 2 of this Act on the ground that the disposition of the deceased’s estate effected by his will … is not such as to make reasonable financial provision for the applicant.
(2) In this Act “reasonable financial provision”—(a) in the case of an application made by virtue of subsection (1)(a) above by the husband or wife of the deceased … means such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance; (b) in the case of any other application made by virtue of subsection (1) above, means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance.
2. Powers of court to make orders.—(1) Subject to the provisions of this Act, where an application is made for an order under this section, the court may, if it is satisfied that the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant, make any one or more of the following orders—(a) an order for the making to the applicant out of the net estate of the deceased of such periodical payments and for such term as may be specified in the order; (b) an order for the payment to the applicant out of that estate of a lump sum of such amount as may be so specified; (c) an order for the transfer to the applicant of such property comprised in that estate as may be so specified; (d) an order for the settlement for the benefit of the applicant of such property comprised in that estate as may be so specified; (e) an order for the acquisition out of property comprised in that estate of such property as may be so specified and for the transfer of the property so acquired to the applicant or for the settlement thereof for his benefit; (f) an order varying any ante-nuptial or post-nuptial settlement (including such a settlement made by will) made on the parties to a marriage to which the deceased was one of the parties, the variation being
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for the benefit of the surviving party to that marriage, or any child of that marriage, or any person who was treated by the deceased as a child of the family in relation to that marriage.
3. Matters to which court is to have regard in exercising powers under s 2.—(1) Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters, that is to say—(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future; (b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future; (c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future; (d) any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased; (e) the size and nature of the net estate of the deceased; (f) any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased; (g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.
(2) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(a) or 1(1)(b) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to—(a) the age of the applicant and the duration of the marriage; (b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family, and, in the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.
(5) In considering the matters to which the court is required to have regard under this section, the court shall take into account the facts as known to the court at the date of the hearing.
(6) In considering the financial resources of any person for the purposes of this section the court shall take into account his earning capacity and in considering the financial needs of any person for the purposes of this section the court shall take into account his financial obligations and responsibilities.’

THE CORRECT OVERALL APPROACH TO A CLAIM UNDER SECTION 1(1)(a) OF THE 1975 ACT
[19] There can, I think, be little doubt that in relation to claims for financial provision and property adjustment in proceedings between divorced former
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spouses, the correct approach for the court to adopt, following the decision of the House of Lords in White v White [2001] 1 All ER 1, [2001] 1 AC 596, is to apply the statutory provisions to the facts of the individual case with the objective of achieving a result which is fair, and non-discriminatory.  Having undertaken that exercise, a way of assessing the fairness and non-discriminatory nature of the proposed result is to check it against the yardstick of equality of division.  There is, however, no presumption of equal division of assets, but as a general guide, in the words of Lord Nicholls of Birkenhead, ‘equality should be departed from only if, and to the extent that, there is good reason for doing so’ (see [2001] 1 All ER 1 at 9, [2001] 1 AC 596 at 605).  He added: ‘The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.‘
[20] With appropriate adjustments based on the different statutory provisions, I see no reason, in principle, why the White v White approach to marital financial claims should not be applied to proceedings under the 1975 Act brought by a widow, not least because, in any case brought under s 1(1)(a) of the 1975 Act, s 3(2) imposes a statutory cross-check of its own to the provision which Mrs Cunliffe might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.  This subsection assumes a particular importance in the instant case due to the brevity of the marriage.
[21] Caution, however, seems to me necessary when considering the White v White cross-check in the context of a case under the 1975 Act.  Divorce involves two living former spouses, to each of whom the provisions of s 25(2) of the Matrimonial Causes Act 1973 apply.  In cases under the 1975 Act, a deceased spouse who leaves a widow is entitled to bequeath his estate to whomsoever he pleases: his only statutory obligation is to make reasonable financial provision for his widow.  In such a case, depending on the value of the estate, the concept of equality may bear little relation to such provision.
THE JUDGMENT AND THE ATTACK UPON IT
[22] The judgment of Judge Howarth was extempore.  It has an element of informality about it which is, at times, engaging, and the judge undoubtedly mentioned all the relevant statutory criteria.  However, it has to be said that the judgment, taken as a whole, is both discursive and unfocused.  Moreover, from a forensic standpoint, its principal deficiency, as Miss Bryant for Mrs Cunliffe was forced to acknowledge, is that it lacks any kind of judicial analysis.  The consequence, in my judgment, is that the judge simply fails to explain how he reached his figure of £800,000.  This, I think, is simply demonstrated by setting out the two paragraphs of his judgment in which he comes to announce his award.  Indeed, the relevant paragraphs ([65] and [66]) give a flavour of the judgment overall:

‘[65] Subject to that, I must find an appropriate sum of capital which should be awarded to Monika [Mrs Cunliffe], and doing the best that I can and how much is always one of the most difficult questions a judge ever has to answer or a barrister to advise upon.  Counsel will know that very often within a set of barristers’ chambers, people will go into each other’s rooms and say “We have a claim under the Inheritance Act.  These are the facts.  How much?”, and you will get from members of chambers differing answers over sometimes a quite broad spectrum.  For better or worse the case has
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ended up before me and no doubt one party will say it is better for them and another party will say it is worse for them, and perhaps they might both say it is worse for them, and if that is so, that would be a very good indication that I have got it about right.
[66] The figure I have in mind is £800,000, and that is the amount of the order.’

[23] In my judgment, the proper exercise of a judicial discretion requires the judge to explain how he has exercised it.  This is the well-known ‘balancing exercise’.  The judge has not only to identify the factors he has taken into account, but to explain why he has given more weight to some rather than to others.  Either a failure to undertake this exercise, or for it to be impossible to discern from the terms of the judgment that it has been undertaken, vitiates the judicial conclusion, which remains unexplained.
[24] In the law of employment, the case of Meek v Birmingham City Council [1987] IRLR 250 in this court contains a statement of the basic ingredients of a reasoned decision, and why reasons are necessary.  The case, of course, relates to the reasons to be given by employment tribunals, but the principles explained (at 251) in the judgment of Bingham LJ, as he then was, are universal.  This is what he said:

‘It has on a number of occasions been made plain that the decision of an Industrial Tribunal is not required to be an elaborate formalistic product of refined legal draftsmanship, but it must contain an outline of the story which has given rise to the complaint and a summary of the Tribunal’s basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts.  The parties are entitled to be told why they have won or lost.  There should be sufficient account of the facts and of the reasoning to enable the [Employment Appeal Tribunal] or, on further appeal, this court to see whether any question of law arises; and it is highly desirable that the decision of an Industrial Tribunal should give guidance both to employers and trade unions as to practices which should or should not be adopted.’

[25] Similar observations were made more recently in the judgment of this court in English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605 at [15]–[19], [2002] 3 All ER 385 at [15]–[19] (and in particular para [19]).  The judgment in the instant case, in my view, fails both the test laid down in para [19] of the judgment in English v Emery Reimbold & Strick Ltd and the basic Meek v Birmingham City Council test.  As Bingham LJ says in the latter case, the parties need to know why they have won or lost.  In the instant case, neither the executors nor this court has any idea why the judge has obliged them to write a cheque for £800,000 as opposed to any other figure, including the £200,000 they had proposed.
[26] In my judgment, the judge’s failure to explain himself is, of itself, sufficient to vitiate his decision and to make it inevitable that this appeal must be allowed.  Miss Reed, however, does not limit her attack to this broad ground.  She makes seven additional submissions which, while they tend to pile Pelion on Ossa, deserve to be recorded, albeit in summary form.  These are: (i) that the judge failed to have sufficient regard to the very short duration of the marriage—namely a period of just over a year; (ii) that he failed to take into account properly or to give sufficient weight to the likely award Mrs Cunliffe would have obtained had the marriage to the deceased ended in divorce rather
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than his death, and in particular wrongly applied the principles in White v White to the case; (iii) that he failed to give sufficient weight to the fact that other beneficiaries under the discretionary trust comprised in the deceased’s will, namely his sister-in-law, his nephew and members of the nephew’s family, were deaf and dumb and dependent wholly on family money including the discretionary trusts comprised in the deceased’s will; (iv) that he gave too much weight to the legal duty of the deceased to maintain his wife; (v) that he placed too much weight on Mrs Cunliffe’s contribution to the welfare of the deceased which, on any view of the evidence, could not have been significant because of the short duration of the marriage; (vi) that in assessing Mrs Cunliffe’s resources, the judge failed to give any or any proper weight to her earning potential (which she had accepted); and (vii) that in assessing Mrs Cunliffe’s housing needs wrongly stated that it was not for the court to say that Mrs Cunliffe should move out of the deceased’s house known as Chaddock Hall and failed to assess her reasonable housing needs.
[27] This is a formidable indictment, although for reasons which I will set out below, I think that the accusation in [26](ii) above, that the judge ‘in particular wrongly applied the principles in White v White to the case’ does not accurately identify the judge’s error in this respect.
[28] In seeking to meet the appellants’ notice Miss Judith Bryant, for Mrs Cunliffe, had plainly decided in her skeleton argument that attack was the best form of defence.  She submitted we should not even grant permission to appeal.  She pointed out that the judge had identified all the key statutory provisions.  He had plainly had regard to them, and taken them into account.  £800,000 was about half the gross estate.  It could not be wrong in principle to make such an award to a widow.  Diana Cunliffe, Victor Cunliffe and the latter’s children were provided for by the other family trusts, and in any event the award to Mrs Cunliffe did not exhaust the estate: there was plenty left over for other family members.  The judge had properly looked at Mrs Cunliffe’s housing needs, and the duty of the deceased to provide for her.  He had taken her earning potential into account.  He had plainly balanced all the relevant factors and reached an award which was within the appropriate bracket.
[29] Skilfully, indeed elegantly, as this argument was presented on paper, it crumbled when presented with the relevant paragraphs of the judge’s judgment—and in particular, of course, with para [65].  Since, in my view, the appeal succeeds on the reasons ground, I do not propose to examine the other grounds in detail, save for the argument over White v White and the brevity of the marriage.  I will, however, need to look at other parts of the judgment, in order to identify the judge’s findings, such as they are, relevant to the application of the statutory criteria under s 3 of the 1975 Act.
WHITE v WHITE AND THE SHORT MARRIAGE POINT
[30] As I have already indicated, there is, self-evidently, a profound difference between a marriage which ends through the death of one of the spouses, and a marriage which ends through divorce.  For present purposes, some elementary facets of that difference suffice.  A marriage dissolved by divorce involves a conscious decision by one or both of the spouses to bring the marriage to an end.  That process leaves two living former spouses, each of whom has resources, needs and responsibilities.  In such a case the length of the marriage and the parties’ respective contributions to it assume a particular importance when the
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court is striving to reach a fair financial outcome.  However, where the marriage, as here, is dissolved by death, a widow is entitled to say that she entered into it on the basis that it would be of indefinite duration, and in the expectation that she would devote the remainder of the parties’ joint lives to being her husband’s wife and caring for him.  The fact that the marriage has been prematurely terminated by death after a short period may therefore render the length of the marriage a less critical factor than it would be in the case of a divorce.
[31] This does not, of course, mean that the length of the marriage is irrelevant or that the widow is entitled to one-half of the estate, as Miss Bryant seeks to argue.  The consequences of a short marriage for any award under the 1975 Act will, of course, depend on the facts of the individual case.  It may well be that, as here, the brevity of the marriage is part of a powerful argument against equality of division.  Whilst, therefore, there is an inevitable degree of artificiality in conducting the exercise required by s 3(2) of the 1975 Act, I am in no doubt at all that the brevity of the marriage is an important factor, and has to be brought fully into the equation when deciding what is reasonable financial provision for Mrs Cunliffe from the deceased’s estate.
[32] An example of its relevance, and the judge’s failure to appreciate the point, seem to me to emerge from the judge’s attitude to Mrs Cunliffe’s future housing.  This is what the judge says about it:

‘[58] I have been quoted a number of other authorities which it seems to me turn very much on their own individual facts, which do not necessarily help me in any meaningful way as to how I am to exercise this jurisdiction, but one comes back, it seems to me, to the question of first of all is it right within the context of this litigation that Mrs Cunliffe continues to live at Chaddock Hall?  It is worth some £325,000 or was so at the date of death.  No doubt it may well have gone up due to appreciation since that time, but I do not know whether it has remained in the same state of repair as it was at the date of death, and I simply do not know its present value, but let us take it at that.
[59] Having myself moved from a large house to a small bungalow four years ago, I might well be sympathetic to Miss Reed’s point that Chaddock Hall is unreasonably large for Mrs Cunliffe, but it was my decision and my wife’s decision that we moved house four years ago.  It is not for me to tell Mrs Cunliffe how she lives her life and where she lives.  If she can afford reasonably to continue living at Chaddock Hall, a house which must have some happy memories for her, that is not necessarily anything which I ought to deprive her of.  On the other hand, I do not propose to award her Chaddock Hall itself.  I propose to award her a sum of money, and if she wishes to use part of it to purchase Chaddock Hall from the trustees at no doubt an independent valuation so be it.  That will be her choice and the trustees’ choice.’

[33] Whilst the judge’s personal experience is interesting, it is irrelevant, and in my judgment, his approach to Mrs Cunliffe’s housing is plainly wrong for a number of reasons.  Principal amongst them, however, is that the judge does not seem to me to have assessed Mrs Cunliffe’s housing needs within the statutory context.  Of course, Mrs Cunliffe needs somewhere suitable to live.  Chaddock Hall was manifestly in excess of her reasonable housing needs.  Thus it was for
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the judge to assess what constituted reasonable provision for her housing from the estate.  This he has simply failed to do.
[34] It is at this point that the length of the marriage becomes relevant.  It may well be appropriate in many cases for a widow to remain living in a former matrimonial home.  But in the context of ‘reasonable financial provision’ within ss 1(2)(a) and 3(2)(a), (b) of the 1975 Act there is, I think, a clear difference between a widow who had been married for many years and who had made an equal contribution to the family of the deceased, and a woman in Mrs Cunliffe’s position, who had been married only a little over a year, and who had, as a matter of simple fact, made no contribution to the family business and only a very small contribution to the family wealth.  The judge does not differentiate between them.  He is of the view that if Mrs Cunliffe wants to go on living in Chaddock Hall, she should be given the money to do so.  And the judge’s phrase ‘if she can afford reasonably to continue living at Chaddock Hall’ begs the question.  It is for the judge to decide what reasonable provision shall be.
[35] Thus in relation to housing, the comparison with what would be likely to happen on divorce is significant.  Given the resources in this case, I am confident that after such a short marriage, a judge or district judge hearing an application for ancillary relief under the 1973 Act would have assessed Mrs Cunliffe’s housing needs and provided her with a lump sum notionally allocated to her housing.  I see no reason to adopt a different approach under the 1975 Act on the facts of this case.
[36] A subsidiary, but nonetheless relevant, factor is that the judge was aiming for a ‘clean break’ between Mrs Cunliffe and the other beneficiaries.  Chaddock Hall is situated only some two-and-a-half miles away from the garden centre.  It was plainly inconsistent with the philosophy of the clean break for Mrs Cunliffe to continue living in that particular property, nor was it necessary for her to do so, when the funds sensibly to re-house her were plainly to hand.
[37] The judge did not undertake the essential task identified in [35], above, although he was provided with all the necessary materials to do so.  Such a failure is particularly unfortunate in a case like the present, as the judge will have a local knowledge of house prices.  For the outsider, looking at estate agents’ particulars is a poor substitute.
THE JUDGE’S ATTITUDE TO WHITE v WHITE
[38] The judge deals with White v White [2001] 1 All ER 1, [2001] 1 AC 596 and the ‘short marriage’ point in paras [56] and [57] of his judgment.  This is what he says:

‘[56] In regard to what the claimant would be likely to receive had the marriage ended in divorce, it is clear from White v White that one starts from the position that you add together what each of the parties to the divorce has and start from the presumption that that is to be split so that each has a similar sum.  That is a starting point, it is not a finishing point, and any circumstances of the case have to be looked at and appropriate action taken to ensure that the ultimate award is a just one.
[57] It is right that where there is a short marriage, the authorities show that a wife will get less.  See, for example, the extract from Duckworth: Matrimonial Property and Finance which has been put in in this regard by Miss Reed, and I fully accept that.’

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[39] In my judgment, para [56] shows a misunderstanding of White v White.  The correct interpretation is set out at para [19], above.  If the judge thought he was required to presume a 50:50 split of the estate, he was plainly wrong.  Furthermore, his discussion of the short marriage point (at [57]) is woefully inadequate.  The judge simply does not appear to have applied his mind to the elements in the award to which the length of the marriage was relevant.
OTHER RELEVANT FINDINGS BY THE JUDGE
[40] The judge recognised that this was a claim by a widow, and thus not limited to maintenance (see s 1(2) of the 1975 Act).  He identified the value of the estate at £1·4m and the costs at £250,000.  He found the moneys received by Mrs Cunliffe through survivorship to be £226,000.  The IHT currently payable was £352,822, although that figure would be reduced by an award to Mrs Cunliffe at the rate of 40p in each pound paid to her.
[41] Having related this historical background, the judge identified a number of witnesses called by the executors, and found that they and Mrs Cunliffe ‘got at cross purposes’.  That was not, however, what the proceedings were about, and the judge declined, rightly, to make any findings in relation to this part of the case.  The judge also declined to make any finding of conduct adverse to Mrs Cunliffe under s 3(1)(g) of the 1975 Act.  He said:

‘[24] A great deal of time has been spent in saying whether or no Derek and Monika were happy together or whether Monika dominated Derek, and frankly at the end of the day I doubt whether any of that evidence helps me to any marked degree to determine whether this application should succeed or no, and if it should succeed, as to what extent.’

[42] Having concluded that the will did not make reasonable financial provision for Mrs Cunliffe, the judge turned to s 3 of the 1975 Act, and the factors to which he had to have regard.  He says (at [28]):

‘The first is the financial resources and financial needs which the claimant has or is likely to have in the foreseeable future.  Well, it seems to me that in that regard, the claimant has a number of and I think it is conceded that she has a number of matters in terms of financial needs.  She will need a house in which to live.  She will need income on which to live, and she will need some form of capital.  It is described as a capital cushion by Miss Reed when addressing me on behalf of the defendants, and in many cases that is so.  Certainly there is a need for capital out of which any extraordinary expenditure can be met, and extraordinary expenditure can be anything from having to look after one’s own health through to providing repairs to a house, providing yourself with a new care when the old one is not longer acceptable or functioning.’

[43] The judge then refers to the £226,000 Mrs Cunliffe received by survivorship, and the £14,000 of her own, although he accepts that these funds have been depleted by legal costs.  He estimates her expenditure of costs at £125,000.  He then records the £200,000 offer from the executors.  He begins para [31] by saying: ‘We will have to look at what sort of a house is appropriate for Mrs Cunliffe and what amount should be paid, held on trust for her by way of capital.’
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[44] The latter thought prompts him to break away from considering the question of housing, and to say:

‘This is clearly a case, and I say this as strongly as I can, where there has been a falling out between Mrs Cunliffe on the one hand and other persons entitled to an interest in the estate on the other hand, and any suggestion of there being life interests is frankly inappropriate in this case … any awards in favour of Mrs Cunliffe will have to be of a capital nature and not by way of a life interest or an interest during widowhood or anything of that sort.’

Nobody asserts that this is the wrong approach.  I have, however, already set out (at [32], above) what the judge went on to say about Mrs Cunliffe’s future housing.
[45] The judge then turned to the financial resources and financial needs of the other beneficiaries within the discretionary class.  He left Mrs Perry and Mr Isherwood out of account, on the basis that neither had put in any evidence about their financial circumstances.  He equally took no account of the employees of the garden centre.  As to Mr Broadbent, the judge knew little about him except that he had been able to purchase the deceased’s interest in the garden centre, and that there was a possibility of part of the garden centre being acquired for parking in relation to a neighbouring development.
[46] The relevant beneficiaries were, plainly, Diana Cunliffe, Victor, and Victor’s children.  The judge said Diana had other children about whom the judge knew nothing.  Both Diana and Victor were living in houses purchased by what the judge described as ‘the family trusts’.  Diana’s ‘modest, very modest’ income comprised largely state benefits, but this had been supplemented from the family trusts ‘if and when she needs extraordinary expenditure’.  The judge surmised that the trustees did not wish to pay her a regular income for fear of it affecting her state benefits.
[47] Victor was in a similar case, although his housing appeared to be inadequate for himself and his five children.  The judge records that in the deceased’s lifetime Victor attempted to persuade him and the other trustees to buy a larger house for Victor and his children.
[48] Most unfortunately, the judge does not in this part of his judgment identify the ‘family trusts’ available for the support of Diana, Victor and the latter’s children, nor the value of the assets in those trusts.  This, in my judgment was a serious omission.
[49] The judge then turns to s 3(1)(d) of the 1975 Act.  The judge said (at [39]):

‘In simple terms, Derek had obligations and responsibilities to his wife.  He did not have obligations and responsibilities to his brother’s family.  It is perfectly reasonable for him to want to benefit his brother’s family, especially reasonable bearing in mind the unfortunate circumstances of some of them, but it seems to me that they are not even in a moral sense obligations or responsibilities once Derek has become a married man.  His primary obligation is to his wife, and that is that.’

[50] Whilst, speaking for myself, I have no quarrel with the first seven words of the final sentence of that citation, and whilst I accept that what the judge is saying in the balance of the extract amounts to a finding of fact, I do not think that what the judge says is a proper fulfilment of his obligation to weigh in the balance the matters contained in s 3(1)(d) of the 1975 Act, particularly when he has not
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troubled to relate how much money was available in the other ‘family trusts’ to benefit Diana, Victor and the latter’s children, or set out what the terms of those trusts were.
[51] The judge then turns to the size and nature of the deceased’s estate.  Nothing appears to turn on that.  He notes in passing the disabilities of ‘certain of the objects of the discretionary trust’.  He then recites s 3(1)(g) and (2) of the 1975 Act.  In this respect, he says:

‘[45] In that regard I have been referred and I have no complaint about having been referred to the principles of matrimonial law which are set out by the House of Lords in the case of White v White [2001] 1 All ER 1, [2001] 1 AC 596 and in particular to the speech of Lord Nicholls in that case, and I will come to those again perhaps in some greater detail later in this judgment, as I have to have regard to all the circumstances of the case.’

I have already set out the judge’s further reference to White v White (at [38], above).
[52] The judge then returns to the question of conduct.  His conclusion, which is not challenged, is that ‘the evidence I have heard is that to outward appearances at least, Derek and Monika were happy together’.  As to Mrs Cunliffe’s age and the duration of the marriage, the judge says:

‘[49] I know I have to look at the age and duration of the marriage.  The duration of the marriage was of course just over a year.  The age of Mrs Cunliffe, she is now I think 51 years old or thereabouts.  She accepts that she may be able in the future to obtain employment and to provide in part at least for her own support, but she has been unemployed since she ceased to be the housekeeper and carer of Derek in October of 2001 when they married.  Thus, one has something like I think three-and-a-half years of what could be unkindly called unemployment, and one knows that obtaining further employment for a lady of 51 with little in the way of paper qualifications but a great deal in the way of experience as is shown by her curriculum vitae, will not necessarily be that easy…’

[53] It has to be said that the judge’s findings appear to run counter to a degree to Mrs Cunliffe’s own evidence.  In her second statement in the proceedings she made it quite clear that it would be necessary for her to obtain another form of employment, and that she intended to obtain work.  She anticipated, however, that her earning capacity would be limited to something in the region of £10,000 pa gross.  She does, of course, have the advantage of being bilingual in German.
[54] As to contribution to the deceased’s welfare during the period of the marriage, this seemed to the judge to be ‘quite obvious’.  She had looked after the deceased, and had taken over the care of the house and the garden.  The judge then reverted to the conduct question, only to reach the conclusion, once again, that it was irrelevant.
[55] Having referred briefly to White v White in the manner which I have already set out, the judge deals with Mrs Cunliffe’s housing in the manner in which I have, once again, already described.  In para [60] of the judgment, the judge addresses the question of additional capital.  He says:

‘[60] In addition to that in terms of housing, she is in need of capital, capital which will form the basis for her investing it to give her an income, which together with anything she may earn by way of future salary or wages, will
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provide her with a proper and fair means to support herself for the rest of her days.  She is now 51.  Even if she obtains employment, it would be surprising if that employment were to last beyond her sixtieth birthday.  One knows that some people do carry on working until well after retirement age, and one does hear that the government is considering putting the retirement age up, but it is one thing putting it up for people who are in secure employment.  It is another thing actually obtaining employment when you have got past 50 years of age anyway.
[61] In addition to that, the capital must not only provide it seems to me income, it must provide some form of fund which can be used to meet such expenses as are not ordinary everyday expenses, whatever it is.  If the house in which she is living, whether it be Chaddock Hall or elsewhere needs repairs carrying out to it, that it can be resorted to for that purpose.’

[56] The judge then refers to ‘clear evidence’ that the deceased had consulted another solicitor after his marriage, with a view to altering the will in order to leave ‘the bulk of his estate’ to Mrs Cunliffe.  Nothing, however, happened, and the judge is left with the requirement for reasonable provision.  I have already set out paras [65] and [66], and indicated that in the paragraphs leading up to them, one gets no idea of how the judge reached his figure.  Paragraphs [63] and [64] read:

‘[63] Now doing the very best that I can, and looking at all the circumstances and looking at for example the Duxbury tables [see Duxbury v Duxbury [1990] 2 All ER 77, [1992] Fam 62] providing some form of annuity, one still is not necessarily that much further forward.  One the one hand, I have no doubt that the £200,000 that the executors have so far proposed does not go far enough.  On the other hand, when giving evidence, Mrs Cunliffe sought to portray her position as being that of someone in whose favour the vast majority of the estate should be paid to her directly.  That, it seems to me, whilst being perfectly reasonable if that is what Derek had wanted to do and had done, is not the situation I am in.  I have to award reasonable financial provision, and that, it seems to me, is more than is in fact what it would be proper for me to award, and in all the circumstances of this case.  I think doing the best that I can, that one should first of all seek to prevent future disputes.  There has been a suggestion that Monika should pay something for living in Chaddock Hall from the date of the deceased’s death to the present time.  I am going to provide her with an interest up to today in possession in that property so that the trustees are not bound to make any claim against her, and if they do they will not succeed.
[64] Similarly, in regard to the two motor vehicles that she eventually purchased from the trustees, I am going to provide again that the trustees should not make any claim in that respect.  Nor in respect of any furniture that is in Chaddock Hall or anything of that sort.  I want a clean break between these parties.  They are not going to get on, and it is plain that I will be doing nobody any service by prolonging legal disputes.’

THE PROPER APPLICATION OF THE 1975 ACT TO THE FACTS OF THIS CASE
[57] Counsel for both parties sensibly agreed that given the high level of costs already incurred in this case, a re-trial was not the appropriate course if we came
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to the view that the judge’s order could not stand.  Both invited us to provide a figure in substitution for that ordered by the judge.
[58] Whilst I agree that this is the better course, it has some disadvantages from this court’s point of view.  For example, the judge failed to make any finding about Mrs Cunliffe’s housing needs, or the cost of suitable alternative accommodation.  His finding as to her earning capacity is not altogether secure, given her evidence.  On the other side, he did not value the family trust funds (apart from the deceased’s estate) available for the support of Diana, Victor and the latter’s children.
[59] Fortunately, I think there is sufficient material in the papers for this court to exercise its discretion and reach a figure, although the exercise, of necessity, will be somewhat rough and ready.
THE ASSESSMENT OF THE CLAIM
[60] This is a claim by a widow, and the court is looking to provide ‘such financial provision as it would be reasonable in all the circumstances of the case for a … wife to receive, whether or not that provision is required for …. her maintenance’ (see s 1(2)(a) of the 1975 Act).  The will does not make such provision.  The question is one of amount.  Looking at s 2 of the 1975 Act, I am in no doubt at all that this is a lump sum, once and for all clean break case, for all the reasons the judge gives.  We thus reach s 3 of the 1975 Act.
[61] Mrs Cunliffe’s resources comprise the balance of the money received by survivorship.  We were told that the original figure was £240,000 (£226,000 + £14,000: see [17] and [43], above).  This sum has been substantially depleted by living expenses and costs, but if (as is agreed should happen) her costs of the proceedings (including this appeal) are paid out of the estate, Mrs Cunliffe will recoup the money she had expended on costs.  This is something of a bow at a venture, but I am prepared to take Miss Bryant’s figure of £150,000 as being correct for Mrs Cunliffe’s capital once her costs are refunded, although that figure is unlikely to be conservative.  For current purposes, however, I take Mrs Cunliffe as having £150,000 by way of capital and a modest earning capacity.
[62] I find it very difficult to put a figure on her earning capacity, or the length of time she may be able to exercise it.  In the event, I prefer to approach the matter from a slightly different direction.  The object of the exercise is to provide reasonable financial provision from the estate.  In so far as any such provision is calculated without taking Mrs Cunliffe’s earning capacity into account, it can properly be said that provision from the estate can be supplemented by Mrs Cunliffe taking employment.  On this point, I tend to share the judge’s conservatism.  Clearly, her time span for full-time employment and pension earning is limited.  In so far as she can generate income from employment, however, that will enable her to consolidate her financial provision, and help provide her with extras.
[63] Counsel sensibly agreed that if we are to approach Mrs Cunliffe’s case on a realistic basis, we need to know what sum will be left in her hands at the end of the proceedings.  To this end, counsel agreed that the costs both here and below should be borne by the estate.  It is on this basis that I have been able to calculate the figure of £150,000 referred to in [61], above.
[64] In terms of ‘financial needs’ within s 3(1)(a) of the 1975 Act, therefore, Mrs Cunliffe has a need for housing and income for the remainder of her life.  She either needs the latter to be sufficient to include contingencies; alternatively she
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needs free capital which is not required to generate income and can be available for such contingencies.
[65] Section 3(1)(b) of the 1975 Act does not seem to apply.  Mrs Cunliffe’s is the only application.  As far as s 3(1)(c) is concerned, Miss Reed for the executors produced a summary of financial information which identified five family settlements, the details of which I need not set out, with a total value of approximately £800,000.  One of these, the JHR Cunliffe Discretionary Will Trust was providing housing and school fees for Victor’s children.  We were also told that Bernard Cunliffe’s estate went to his widow.  The executor’s statement of account in our papers put the value of the net estate at £110, 583.
[66] I do not think I need to analyse these figures any further.  They demonstrate that there is a substantial fund already available to meet the financial needs of the beneficiaries who are in need of support, which will be effectively supplemented by the balance of the deceased’s estate once Mrs Cunliffe’s claim has been met.  In my judgment, therefore, the calculation of Mrs Cunliffe’s claim need not be affected by considerations arising under s 3(1)(c).  Similar considerations apply to s 3(1)(d) so far as the other beneficiaries are concerned.
[67] As to s 3(1)(d) in so far as it relates to Mrs Cunliffe, she was, of course, his wife and he was under a duty to make reasonable financial provision for her from his estate.
[68] The estate (see s 3(1)(e)) was taken by the judge at £1·4m subject to IHT being reclaimed as a result of any order made in Mrs Cunliffe’s favour.  No question of liquidity was raised by the executors, and the nature of the estate is not highly material, save that it includes the former matrimonial home and the deceased’s share in the family business, the latter being in the process of being sold.  For the reasons I have already given, it was plainly inappropriate for Mrs Cunliffe to remain living in Chaddock Hall.
[69] Mrs Cunliffe has no physical or mental disability (see s 3(1)(f)): various of the other beneficiaries are deaf and dumb, but for the reasons which I have given in [66], above, this does not seem to me a material consideration.  Conduct (see s 3(1)(g)) was found by the judge to be irrelevant, and there is no challenge to that finding.  There do not seem to me to be any other matters of relevance within s 3(1)(g).
THE LENGTH OF THE MARRIAGE, CONTRIBUTION AND COMPARISON WITH AN AWARD ON DIVORCE
[70] What is the correct approach to a short marriage case under the 1975 Act?  I have already identified the broad approach based on White v White [2001] 1 All ER 1, [2001] 1 AC 596.  How do those considerations translate into the instant case?
[71] The first point to make is that although this is a short marriage, Mrs Cunliffe entered into it on the basis that her obligations to her husband were of indefinite duration, and could take all manner of forms.  He was considerably older than she was.  She might well have been expected to spend a number of years nursing an invalid.  In short, I think it right to approach the case on the basis that in marrying the deceased, Mrs Cunliffe, like Mrs Miller (see Miller v Miller [2005] EWCA Civ 984, [2005] 2 FCR 713) was entitled to have what Singer J described in the latter case (at [41]) as ‘a reasonable expectation that her life as once again a single woman need not revert to what it was before her marriage’, and that she could look forward to financial security for the rest of her life.  Since
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the judge expressly disregarded conduct, it is in my judgment appropriate to approach her claim for reasonable financial provision on that basis.
[72] Mrs Cunliffe plainly needs accommodation.  Where she chooses to live, and how much she chooses to pay for accommodation will, of course, be a matter for her within the parameters of her overall award.  But I would, as I have already indicated, allocate a notional fund which it would be reasonable for her to spend on housing.
[73] Her second need is for income.  Once again, the brevity of the marriage makes it inappropriate, to my mind, that Mrs Cunliffe should expect to be maintained out of the estate at the standard of living and the level of expenditure which she enjoyed whilst Mr Cunliffe was alive.  What she requires is a sufficient lump sum to provide her with a reasonable income.  In this context the Duxbury v Duxbury [1990] 2 All ER 77, [1992] Fam 62 approach provides useful guidance, not—as the judge appears to have thought—as a figure for an annuity, but as the calculation of a lump sum designed to produce a given level of income, index linked, for life.
[74] It also seems to me to be right that in looking at both housing and income the court should bring into account the money previously in joint names which Mrs Cunliffe received by way of survivorship.
[75] In essence, therefore, in considering the brevity of this marriage and the limited nature of Mrs Cunliffe’s contribution, the factors which they most affect seem to be the important ones of housing and level of income.  There is, in my judgment, sufficient in the estate to make reasonable financial provision for Mrs Cunliffe, but such provision should not be of a level and nature to allow her to live for the rest of her life in the former matrimonial home or at the standard of living which she enjoyed during the course of the marriage.
THE RE BESTERMAN (DECD) CUSHION
[76] Re Besterman (decd) [1984] 2 All ER 656, [1984] Ch 458 must, I think, be viewed with a substantial element of caution, not least because Oliver LJ, giving the leading judgment, warned against using it as a basis for drawing general decisions of principle to be applied in other and probably quite different cases.  Furthermore, its comparison with awards made in divorce is based on the now long repealed injunction previously concluding s 25 of the 1973 Act which required the court:

‘So to exercise those powers as to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.’

[77] Re Besterman, self-evidently, pre-dates the change of thinking in matrimonial cases brought about by White v White.  In its discussion of annuities, it also predates Duxbury v Duxbury.  The Re Besterman ‘cushion’ is no longer considered a proper approach in financial proceedings following divorce.  The case remains, nonetheless, I think authority for the proposition that the blameless widow of a wealthy man is entitled to look forward to financial security throughout her remaining lifetime, and that ‘reasonable financial provision’, which is not limited to maintenance, must be viewed accordingly.
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REASONABLE FINANCIAL PROVISION ON THE FACTS OF THIS CASE
[78] It is, I think, most unfortunate, that the parties approached this litigation from extreme positions on the spectrum.  Mrs Cunliffe appeared to be saying that she should have everything, or nearly everything: the executors appear to have been saying, albeit only shortly before trial, that she should receive, at the most, £200,000, a figure to which Miss Reed adhered as being the right figure.
[79] It was at this point that Miss Bryant produced her most effective argument, although strictly speaking it should, I think, have been by way of respondent’s notice.  If the judge’s order was unexplained, she said, the answer was that the appeal should nonetheless be dismissed, because £800,000 was the award he would have reached if he had applied his mind properly to the 1975 Act and to the figures.  Miss Bryant’s calculation was as follows:
[80] On this analysis, Miss Bryant submitted, the figure produced by the judge was only marginally out, and well within the discretionary bracket.
[81] Miss Bryant’s figures are, of course, capable of being attacked from a number of directions.  Firstly, whilst she attributes a generous earning capacity to her client, the figure of £49,885 pa is taken from an exhibit to a statement made by Mrs Cunliffe on 9 June 2004.  The exhibit in question is divided into three columns.  The first, which totals £75,570 is said to represent the joint expenditure of Mrs Cunliffe and the deceased when living together.  The second column, which totals £23,118 is said to be based on Mrs Cunliffe’s actual expenditure at the time.  The third column contains the figure of £49,885.  Mrs Cunliffe says of this figure:

‘I have therefore calculated that on balance my future needs are somewhat less than my initial expenditure schedule but more than I have been living on as this has been very much the bare minimum.  These figures appear in column 3 (£49,885).’

[82] In my judgment, it would not be reasonable for the estate to be expected to make financial provision for Mrs Cunliffe at the rate of nearly £50,000 pa net, even if that figure is substantially discounted by what is probably an overestimate of her earning capacity.
[83] Secondly, for the reasons I have already given, I do not think that this is a case for a Re Besterman ‘cushion’.  Provided the lump sum awarded to Mrs Cunliffe is sufficient to make reasonable provision for her, how she allocates it between housing, income and capital savings will be a matter for her.  The
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figure does, however, need to be of a sufficient size to enable contingencies to be catered for.
[84] Thirdly, it seems to me that on the properties in the estate agents’ particulars disclosed in the papers, £250,000 as a housing fund is at the top end of the bracket.  Had the judge, in the exercise of a reasoned discretion, allotted that figure, it might well have been difficult to take a different view.  However, as we are exercising the discretion afresh, my own figure would be lower.
[85] In all the circumstances of this case, I have come to the conclusion that the correct lump sum for Mrs Cunliffe to receive from the deceased’s estate is a total of £600,000.  This will require, accordingly a further payment of £400,000 by the executors.  I reach this conclusion in the following way.
[86] Firstly, whilst estimating the costs of alternative accommodation is at best an art rather than a science, I would, as I have already indicated, discount Miss Bryant’s figure for her client’s housing to the sum of £200,000.  Whilst such a figure must be, at best, an educated guess, since property prices self-evidently vary from place to place, the particulars contained in our bundle make it clear that suitable properties in the same area as Chaddock Hall can be acquired for this figure.  I bear in mind that, as a single person, Mrs Cunliffe may elect, like the judge, to live in modest accommodation, and spend less money on housing than is allotted to her for that purpose.  Whilst £200,000 as a housing fund may not be over-generous, I bear in mind, amongst other factors, that if Mrs Cunliffe is to return to full- or even part-time paid employment she needs to be living within reasonable travelling distance of any such employment.
[87] The second element of reasonable provision on the facts of this case is, of course, capital to provide income and to meet the other exigencies of life.  When her costs are paid, Mrs Cunliffe will have, on a conservative estimate, £150,000 free capital of her own, which must plainly come into the equation.  She is now 52.  Section 3(5) of the 1975 Act requires me to ‘take into account the facts as known to the court at the date of the hearing’.  That, I take to be the hearing before this court.
[88] In my judgment, this is a case in which the Duxbury v Duxbury [1990] 2 All ER 77, [1992] Fam 62 approach is appropriate.  There are, plainly, several ways of approaching the problem.  In my judgment, Miss Bryant’s approach produces too high a figure.  It inflates Mrs Cunliffe’s income needs, and by giving her a Duxbury lump sum of £560,000 to produce a notional income of £30,000 pa net, index-linked for life without bringing her own assets into account, it runs the risk of duplicating the already inappropriate ‘cushion’.
[89] In my view, a preferable approach is either to treat the Duxbury calculation as providing the estate’s contribution to Mrs Cunliffe’s essential (core) support, with her earning capacity and the £150,000 capital as her contingency fund; alternatively, the £150,000 can be added into the Duxbury fund, with Mrs Cunliffe’s earning capacity as the fund for contingencies.
[90] As I indicated in [76] and [77], the concept of the Re Besterman cushion must in any event be viewed with caution.  A Duxbury fund is not the same as an annuity.  The Duxbury model was designed to meet criticisms made in this court in Preston v Preston [1982] 1 All ER 41, [1982] Fam 17 that lump sum orders designed to produce income took no cognisance of the fact that the payee retained the capital.  The Duxbury lump sum was designed to meet this criticism and thus to produce the same level of income, index-linked, for the remainder of the recipient’s actuarial life-span, with the capital being spent in the process so that, on death, there was nothing left.  A sophisticated Duxbury calculation could
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factor in a given number of years of gainful employment for Mrs Cunliffe at a given notional rate, together with any state pension benefits to which she may be entitled.
[91] We lack the material to undertake such a sophisticated calculation, and in any event it has to be accepted that the Duxbury exercise is highly artificial.  As has been said more than once, the only thing one can be sure about Duxbury v Duxbury is that the figure is likely to be either too high or too low.  It remains, nonetheless, a useful guide.
[92] Using the latest tables, contained in the 2005/2006 edition of At a Glance: Essential Court Tables for Ancillary Relief (Family Law Bar Association) a lump sum of £560,000 will produce an income of £30,000 pa net for life.  £30,000 pa net seems to me a not unreasonable income for a person in Mrs Cunliffe’s position, who has no dependants and no mortgage.  If, from that figure one deducts Mrs Cunliffe’s conservatively calculated £150,000, the lump sum is reduced to £410,000, which I would round down to £400,000.  Added to that is her housing fund of £200,000, making a total lump sum of £600,000.
[93] An alternative way of looking at the problem is to posit that a lump sum of £400,000 would, on the Duxbury tables produce an income of between £20,000 and £25,000 pa net, with £150,000 left to Mrs Cunliffe as ‘free’ capital for contingencies.  In either case, Mrs Cunliffe has her earning capacity on top.
[94] Speaking for myself, therefore, I regard a lump sum of £400,000 producing a notional income of between £20,000 and £25,000 pa net, index linked for life, plus a housing fund of £200,000 as reasonable financial provision from the deceased’s estate on the facts of this case, taking into account, as I do, that Mrs Cunliffe will have, in addition, free capital of £150,000 the bulk of which derives from the deceased by way of survivorship, as well as any additional income from employment.
[95] Finally, as required by White v White [2001] 1 All ER 1, [2001] 1 AC 596, I apply the ‘equality of division’ cross-check.  For the reasons which I have already given, I regard this as being a less valuable tool in a case under the 1975 Act than it is under the 1973 Act.  Apart from the matters I have already mentioned, a lump sum of £600,000 will result in a total saving of £240,000 in IHT: the estimated figure of £352,822 is thus reduced to £112,822.
[96] As a percentage of the gross estate (taking the judge’s figure of £1·4m) a lump sum of £600,000 is a little under 43%.  Taking the same figure for the gross estate, and taking into account the reduction of IHT to £112,822, the net estate becomes £1,287,178, of which £600,000 is 46·61%.  If costs of between £250,000 and £300,000 are deducted from the estate before the calculation of Mrs Cunliffe’s lump sum, her award easily exceeds 50% of the estate.  If £250,000 is taken as the figure for costs, the award of £600,000 amounts to nearly 58% of the estate: if the figure of £300,000 is taken, the award amounts to a little over 60%.
[97] The figures set out in [96], above, reinforce my view that £600,000 is at the top end of the proper bracket for an award on the facts of this case.  I have, of course, also considered whether the reasonable financial provision for Mrs Cunliffe should be reduced in the light of the very substantial costs incurred by both sides in fighting this litigation.  I have, however, come to the view that it would be wrong to penalise Mrs Cunliffe for the fact that the executors did not make an offer until a very late stage, and when they did, they made an offer which was manifestly inadequate and which Mrs Cunliffe was clearly entitled to reject.  Furthermore, although this is not a matter which we have investigated in depth,
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it is plain that the question of Mrs Cunliffe’s conduct was raised before the judge, and a considerable amount of court time spent on an issue which the judge, rightly, ruled irrelevant.  Whilst I am not suggesting that the executors have behaved in any way improperly, the fact that the estate has to bear so substantial a burden of legal costs is not a matter which I think should interfere with what is otherwise a proper award.
[98] There are, in my judgment, ample reasons for departing from equality in this case, not least the brevity of the marriage and the absence of any substantial financial contribution on Mrs Cunliffe’s part.  An award of £600,000 in my judgment fulfils the terms of the statute, and does not discriminate against Mrs Cunliffe.  It leaves ample funds for the exercise of the trustees’ discretion in relation to the other beneficiaries.  It also has the side effect of reducing the overall IHT payable by the estate by £240,000.  In my judgment, it is a fair result.
[99] I am conscious that my calculations lay me open to the charge that in assessing reasonable financial provision for Mrs Cunliffe, I have concentrated on ‘needs’.  In practical terms, however, Mrs Cunliffe’s needs, seen in the context of the case, seem to me the major factor within the statutory framework.  In the event, however, there is no one ‘correct’ figure: the exercise of a judicial discretion would normally result in a ‘bracket’ for the award.  My award leaves Mrs Cunliffe with assets totalling £750,000, and for the reasons I have given, the award of £600,000 is, in my judgment, at the top end of the bracket.  A lower figure could easily be warranted without either being plainly wrong.
[100] I would, accordingly, allow the appeal.  I would set aside the judge’s award in para (1) of his order of £800,000 and substitute £600,000.  Since £200,000 has already been paid, I would propose that the balance be paid within three months, and that payment of the balance should coincide with Mrs Cunliffe vacating Chaddock Hall.  I would not interfere with the order for costs made below, and would propose that the costs of both sides in the appeal be paid from the estate on a similar basis.
[101] In order to save further costs, I would also propose that counsel be invited to draft the order of the court, and that neither party need attend when this judgment is handed down.  In the event of any dispute over time to pay or Mrs Cunliffe vacating Chaddock Hall, submissions should be addressed to us in writing.
[102] I would allow the appeal accordingly.
MUMMERY LJ.
[103] I agree with Wall LJ that the appeal should be allowed and that the amount of the financial provision for Mrs Cunliffe should be reduced from £800,000 to £600,000.
[104] The disposition of the deceased’s estate effected by his will clearly failed to make reasonable provision for Mrs Cunliffe.  The judge was accordingly entitled to make an order for the payment out of the estate of a lump sum in order to make such financial provision for her as would, in all the circumstances of the case, be reasonable for her to receive.  In exercising his discretion as to the amount of the provision the judge was directed by s 3 of the Inheritance (Provision for Family and Dependants) Act 1975 to have regard to the specific factors listed in the section and to any other matters which the court might consider relevant.
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[105] When considering whether to overturn Judge Howarth’s decision in favour of Mrs Cunliffe, this court must be mindful of the limited circumstances in which it is entitled to interfere with the exercise of his judicial discretion as to what would be reasonable financial provision.
[106] The deceased’s personal representatives, who made an open offer to appoint £200,000 out of the discretionary will trust, think that the award of £800,000 was excessive and so they appeal against it.  The Court of Appeal is not, however, entitled to set aside the order simply on the ground that, if it had heard the case at first instance, it would have taken a less generous view of Mrs Cunliffe’s claim.  When dealing with a substantial estate of this kind it is perfectly possible for different judges hearing the same evidence and the same legal arguments to make unappealable decisions varying widely in their assessment of what would constitute reasonable provision for the deceased’s widow.  The judicial discretion in the 1975 Act to do what is reasonable in the way of financial provision allows for a range of awards.  There is no single ‘right’ figure.
[107] In order to succeed the appellants must satisfy the Court of Appeal that the judge failed to take proper account of the guiding factors laid down in s 3 of the 1975 Act, or that he has failed to exercise his discretion as to the amount of the lump sum judicially: for example, as a result of applying a wrong principle of law, or through a misunderstanding of the facts of the case, or in arriving at an amount which is, for some other reason, plainly wrong.  As Nourse LJ said in Re Krubert [1996] 3 FCR 281 at 284, [1997] Ch 97 at 102: ‘So the question on the appeal is whether the [recorder’s] decision as to the provision she should receive was wrong in principle or, viewed as an exercise of discretion, plainly wrong.’
[108] In this case I agree with Wall LJ that the award of a lump sum of £800,000 to Mrs Cunliffe is not justified by the sparse reasoning of the judge, by the facts found by him or by the application of the relevant law to them.  The judge’s exercise of discretion relating to the amount of the lump sum was flawed, in particular, by his misunderstanding that the effect of White v White [2001] 1 All ER 1, [2001] 1 AC 596 was to give rise to a presumed entitlement to equal division of assets between spouses in the context of the 1975 Act; by his failure to take proper account of the short duration of the marriage and its impact on the assessment of the lump sum; and by his failure to grapple with the important question of Mrs Cunliffe’s actual housing situation in Chaddock Hall (valued at £325,000 at the date of death) and of an assessment of her reasonable housing needs.  His award of over 60% of the net estate of £1·4m to a wife to whom the deceased had been married for only just over a year was not the product of a correctly informed judicial balancing exercise.  It erred in principle by arriving at that amount without taking proper account of the relevant statutory guidelines.  It so far exceeded the reasonable ambit of his discretion on quantum as to be plainly wrong.
[109] I agree that the reasonable course for the deceased to have taken in disposing of his estate would have been to give Mrs Cunliffe an absolute interest in a substantial lump sum.  How much?  £800,000 was far too much. The substitution of the sum of £600,000 proposed by Wall LJ is not and cannot be the product of a precise calculation.  It is, however, for the reasons explained by him, an approximation which involves a departure from the starting point of equality of division amply justified by a number of factors: the size of the net estate, Mrs Cunliffe’s reasonable housing and financial needs, her financial resources, in
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particular her entitlement to £226,000 by survivorship, and the agreement that she will recoup her substantial costs of the proceedings from the estate.
[110] The substituted sum also takes proper account of the statutory guidelines to which the court is directed to have regard, in particular Mrs Cunliffe’s age and the very short duration of her marriage to the deceased.  The shortness of the marriage limited the opportunities available to Mrs Cunliffe to make a significant contribution to the welfare of the deceased.  The size of the amount awarded by the judge indicates that he could not have had any real regard to the short duration of the marriage, there being only a passing mention of the factor in para [49] of his judgment.  He noted the factor without attempting to explain what effect it had on his assessment of the lump sum in this case, as compared, for example, with a marriage lasting for ten or twenty years.
[111] For the above reasons this is one of those unusual cases in which this court is entitled to interfere with the judge’s discretion relating to reasonable financial provision under the 1975 Act.
MOORE-BICK LJ.
[112] I agree that the appeal should be allowed for the reasons given by Wall LJ and Mummery LJ and that the amount of the financial provision for Mrs Cunliffe should be reduced from £800,000 to £600,000.
Appeal allowed.
Kate O’Hanlon   Barrister.
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[2006] 2 All ER 140


Nizami v Butt
Kamaluden v Butt
[2006] EWHC 159 (QB)

CIVIL PROCEDURE: QUANTUM
QUEEN’S BENCH DIVISION
SIMON J SITTING WITH MASTER HURST AND JASON ROWLEY AS ASSESSORS
31 JANUARY, 9 FEBRUARY 2006
Costs – Order for costs – Conditional fee agreement – Fixed recoverable costs – Success fee – Receiving party relying on conditional fee agreement – Whether necessary to satisfy paying party that conditional fee agreement compliant with regulations – Whether necessary for receiving party to demonstrate existence of valid retainer between solicitor and client – CPR 45.9, 45.11.
The claimants instructed solicitors to pursue claims for damages following a motor accident caused by the defendant.  They entered into conditional fee agreements.  The claims were settled before proceedings were begun but parties could not agree on costs and the claimants issued costs only proceedings.  Section II of CPR Pt 45 (rr 45.7–45.14) governed fixed recoverable costs for road traffic accidents.  The claimants claimed fixed recoverable costs under r 45.9a which provided that the amount of such costs was the total of (a) £800; (b) 20% of the damages agreed up to £5,000; and (c) 15% of the damages agreed between £5,000 and £10,000, disbursements and a success fee under r 45.11b, which provided that such a fee could be recovered if the claimant had entered into a funding arrangement which provided for such a fee and the amount of the fee was to be 12·5% of the amount of fixed recoverable costs.  The defendant’s insurers suspected that the conditional fee agreements had not complied with the relevant regulations on the basis that the claimants’ solicitor had failed to make appropriate inquiries about the availability of before-the-event insurance, the existence of which might have invalidated the conditional fee agreements.  At a directions hearing the master took the view that the entitlement to the fixed recoverable costs under CPR 45.9 and the success fee under CPR 45.11 did not depend on the existence of a valid and enforceable conditional fee agreement.  He held that, although disbursements were subject to assessment, fixed recoverable costs and success fees should be recoverable without any intervention by the courts.  The defendant appealed.  He submitted, inter alia, (i) that the indemnity principle was fundamental to orders for the recovery of costs; (ii) that in any event a conditional fee agreement had to be lawful before recovery was permitted; so that (iii) although CPR 45.9 and 45.11 provided for a fixed sum to be paid, on their proper construction that was always subject to the validity of the retainer, including the conditional fee agreement.
________________________________________
a      Rule 45.9, so far as material, is set out at [11], below
b      Rule 45.11, so far as material, is set out at [11], below
________________________________________
Held – The clear intention underlying Section II of CPR Pt 45 was to provide an agreed scheme of recovery which was certain and easily calculated.  That was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when
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taken as a whole. In so doing it was clear that the draftsman had intended that the indemnity principle should not apply to the figures which were recoverable.  The overriding objective of the CPR included saving expense and dealing with cases in ways which were proportionate to the amount of money involved.  The range of fixed costs recoverable under CPR 45.9 was £800 to £2,250, and on that basis, the range of success fees under CPR 45.11 was £100 to £318·75.  It was hardly consonant with the overriding objective that sums of that order should be subject to the sort of scrutiny that could be a matter of course if the defendant was right in his analysis.  Underlying Section II of Pt 45 was the idea that it should be possible to ascertain the appropriate costs payable without the need for further recourse to the court.  There was no overriding need to enable a paying party to satisfy itself that a conditional fee agreement was compliant with the regulations.  Further, in cases falling under Section II of Pt 45 the receiving party did not have to demonstrate that there was a valid retainer between the solicitor and client, merely that the conditions laid down under the CPR had been complied with.  Accordingly, the appeals would be dismissed (see [23]–[27], below).
Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] 4 All ER 590 applied.
Notes
For costs-only proceedings relating to road traffic accidents, see Supp to 10 Halsbury’s Laws (4th edn reissue) para 57A, and for the meaning of ‘conditional fee agreement’ and the nature of agreement, see Supp to 44(1) Halsbury’s Laws (4th edn reissue) paras 188–189.
Cases referred to in judgment
Bailey v IBC Vehicles Ltd [1998] 3 All ER 570, CA.
Harold v Smith (1860) 5 H & N 381, 157 ER 1229.
Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] EWCA Civ 718, [2003] 4 All ER 590, [2003] 1 WLR 2487.
Cases referred to in skeleton arguments
General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 2 All ER 301, [1998] 1 WLR 1231, CA.
Samonini v London General Transport Services Ltd (19 January 2005, unreported), SCCO.
Sarwar v Alam [2001] EWCA Civ 1401, [2001] 4 All ER 541, [2002] 1 WLR 125.
Appeals in costs proceedings
The defendant Mohammed Butt appealed from the order of Master O’Hare dated 30 June 2005 refusing to grant the directions sought by the defendant in Pt 8 proceedings in the Supreme Court Costs Office brought by the claimants Christi Nizami and Cadhar Kamaluden against the defendant that the claimants’ solicitor answer certain questions asked by the legal costs negotiators appointed by the defendant’s insurers or certify that conditional fee agreements entered into by the claimants complied with the Conditional Fee Agreements Regulations 2000, SI 2000/692.  The facts are set out in the judgment.
RogerMallalieu(instructed byMcCullagh & Co, Peterborough) for the defendant.
Nicholas Bacon (instructed by Colman Coyle) for the claimants.
Cur adv vult
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9 February 2006.  The following judgment was delivered.
SIMON J.
[1] This is the defendant’s appeal from the order of Master O’Hare dated 30 June 2005.
THE BACKGROUND
[2] On 30 December 2003 the claimants, Mr Kamaluden and Mr Nizami, were the driver and passenger respectively of a car which had stopped at traffic lights in Salford, Manchester.  The car was struck from behind by a vehicle driven by the defendant, Mr Butt; and as a result of the accident, both the claimants suffered whiplash injury.
[3] The claimants instructed Messrs Colman Coyle to pursue claims for damages on their behalf; and at some stage, they entered into conditional fee agreements (CFAs) in relation to the claims.
[4] In the event, the claims were each settled before proceedings were begun.  Mr Nizami’s claim was settled on 28 January 2005 for £1,675·05, plus costs on the standard basis to be assessed if not agreed.  Mr Kamaluden’s claim was settled on 23 February 2005 for £2,430·31, plus costs on the standard basis to be assessed if not agreed.
[5] Costs could not be agreed; and on 19 April 2005 the claimants issued CPR Pt 8 proceedings in the Supreme Court Costs Office in accordance with CPR 44.12A for the determination of costs.
[6] At the heart of the dispute between the parties is the suspicion of those representing the defendant’s insurers that the CFAs did not comply with the Conditional Fee Agreement Regulations 2000, SI 2000/692 (the 2000 regulations). The issue was initially articulated by Jaggards, legal costs negotiators appointed by the defendant’s insurers.  In a letter dated 10 March 2005, Jaggards wrote:

‘Please can you confirm in writing that … the fee earner with the conduct of the matter personally saw and checked the motor policy document of the vehicle in which the claimant was travelling for legal expense insurance and there was none available.  Please confirm that the fee earner checked the household policy document for legal expense insurance and there was none available.
Please also confirm who gave oral advice to your client and when the same took place.’

[7] The claimants’ solicitors sent a copy of the CFAs, but declined to respond further to Jaggards’ interrogation. The defendant is concerned that, before the signing of the CFAs, the claimants’ solicitors failed to make appropriate inquiries about the availability of before-the-event (BTE) insurance, the existence of which might invalidate the CFAs.
THE INDEMNITY PRINCIPLE AND THE CHANGE IN THE LAW
[8] At its simplest the indemnity principle provides that an unsuccessful party cannot be held liable to pay more to a successful party than the successful party is himself legally liable to pay. This principle worked satisfactorily until the introduction of CFAs.  These usually provide that the client does not have to pay the solicitor’s costs unless the claim is successful. Although most modern litigation (particularly in the field of personal injuries) is now conducted on the
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basis of CFAs, they are difficult to reconcile with the indemnity principle.  For this reason the law was changed.
[9] In June 2003, s 51(2) of the Supreme Court Act 1981:

‘Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings including, in particular, prescribing scales of costs to be paid to legal and other representatives …’

was amended so as to add:

‘or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs.’

[10] The amendment conferred the power to make rules of court which provided for the inter-party recovery of costs which would otherwise be precluded by the indemnity principle.
SECTION II OF CPR PART 45
[11] Section II of CPR Pt 45, provides, so far as relevant:

45.7 Scope and interpretation
(1) This Section sets out the costs which are to be allowed in—
(a) costs-only proceedings under the procedure set out in rule 44.12A … in cases to which this Section applies.
(2) This section applies where—
(a) the dispute arises from a road traffic accident;
(b) the agreed damages include damages in respect of personal injury, damage to property, or both;
(c) the total value of the agreed damages does not exceed £10,000; and
(d) if a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim …
45.8 Application of fixed recoverable costs
Subject to rule 45.12, the only costs which are to be allowed are—
(a) fixed recoverable costs calculated in accordance with rule 45.9;
(b) disbursements allowed in accordance with rule 45.10; and
(c) a success fee allowed in accordance with rule 45.11 …
45.9 Amount of fixed recoverable costs
(1) Subject to paragraphs (2) and (3), the amount of fixed recoverable costs is the total of—
(a) £800;
(b) 20% of the damages agreed up to £5,000; and
(c) 15% of the damages agreed between £5,000 and £10,000.
(2) Where the claimant—
(a) lives or works in an area set out in the relevant Practice Direction; and
(b) instructs a solicitor or firm of solicitors who practise in that area, the fixed recoverable costs shall include, in addition to the costs specified in paragraph (1), an amount equal to 12·5% of the costs allowable under that paragraph.
(3) Where appropriate, value added tax (VAT) may be recovered in addition to the amount of fixed recoverable costs and any reference in this Section to fixed recoverable costs is a reference to those costs net of any such VAT.
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45.10 Disbursements
(1) The court—
(a) may allow a claim for a disbursement of a type mentioned in paragraph (2); but
(b) must not allow a claim for any other type of disbursement.
(2) The disbursements referred to in paragraph (1) are—
(a) the cost of obtaining—
(i) medical records;
(ii) a medical report;
(iii) a police report;
(iv) an engineer’s report; or
(v) a search in the records of the Driver Vehicle Licensing Authority …
45.11 Success fee
(1) A claimant may recover a success fee if he has entered into a funding arrangement of a type specified in rule 43.2(k)(i).
(2) The amount of the success fee shall be 12·5% of the fixed recoverable costs calculated in accordance with rule 45.9(1), disregarding any additional amount which may be included in the fixed recoverable costs by virtue of rule 45.9(2) …’

[12] These rules were brought into effect following the amendment to the 1981 Act.
THE ARGUMENT BEFORE MASTER O’HARE
[13] In their Pt 8 claim forms the claimants claimed fixed recoverable costs under CPR 45.9, disbursements under CPR 45.10 and a success fee under CPR 45.11.  The costs claimed in Mr Kamaluden’s case were £2,168·91, and Mr Nazami’s case were £1,962·32.
[14] The matter was listed before Master O’Hare for directions. The defendant sought a direction that the claimants’ solicitors either answer Jaggards’ questions or certify that there had been proper compliance with the 2000 regulations.  Mr Mallalieu who appeared then (as now) on behalf of the defendant argued that the indemnity principle required that the costs claimed should be costs properly payable by the claimants to their solicitors and that this presupposed valid and enforceable CFAs.
MASTER O’HARE’S DECISION
[15] Master O’Hare took the view that the entitlement to the fixed recoverable costs under CPR 45.9 and the success fee under CPR 45.11 did not depend on the existence of a valid and enforceable CFA. He held that, although disbursements were subject to assessment, fixed recoverable costs and success fees should be recoverable without any intervention by the courts.
[16] As he put it in his judgment (at para 7):

‘The purpose of the rules was to simplify the payment of costs in small cases, not to make it more complex.  The fixed recoverable costs are just that; they are fixed.  But they are payable by the defendant whether or not the claimant’s solicitor’s retainer is valid.  An extra 12·5% is payable if the claimant and his solicitor entered into a CFA, whether that CFA is valid or not.’

So far as the disbursements claimed under CPR 45.10 were concerned, he said:

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‘… I am unable to take the same approach to disbursements.  It seems to me that, for them, the standard rules, including the familiar indemnity principle, continue to apply.  I accept that it seems inconsistent to allow what might be invalid profit costs whilst at the same time disallowing unpaid disbursements … Nevertheless, I think that the inconsistency arises because Pt 45 does not deal with the disbursements in the same way as it deals with profit costs.  Disbursements are not fixed by Pt 45.’

THE ARGUMENTS ON THE APPEAL
[17] For the defendants Mr Mallalieu submitted as follows: (i) The indemnity principle is fundamental to orders for the recovery of costs (see for example Harold v Smith (1860) 5 H & N 381 at 385, 157 ER 1229 at 1231, per Baron Bramwell, and Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] EWCA Civ 718 at [23], [2003] 4 All ER 590 at [23], [2003] 1 WLR 2487).  (ii) Since the principle is fundamental to the recovery of costs, clear wording is required before the principle is abrogated.  As Mr Mallalieu put it, the principle should only be disregarded ‘if absolutely necessary’.  He referred to the clear words used in the amendment to the 2000 regulations, by the introduction of reg 3A, which permits the recovery of costs beyond those payable to the solicitor.  (iii) In any event, and regardless of the indemnity principle, a CFA must be lawful before recovery is permitted.  Mr Mallalieu drew attention to CPR 43.2(3) and (4).  CPR 43 sets out the definitions and interpretations of the cost rules in rr 44–48.  CPR 43.2 provides:

‘(3) Where advocacy or litigation services are provided to a client under a conditional fee agreement, costs are recoverable under Parts 44 to 48 notwithstanding that the client is liable to pay his legal representative’s fees and expenses only to the extent that sums are recovered in respect of the proceedings, whether by way of costs or otherwise.
(4) In paragraph (3), the reference to a conditional fee agreement is to an agreement which satisfies all the conditions applicable to it by virtue of section 58 of the Courts and Legal Services Act 1990.’

As already indicated, underlying this submission is the suspicion (fuelled by the claimant’s solicitor’s refusal to answer questions about BTE cover) that there have been material breaches of the regulations made pursuant to the Courts amd Legal Services Act 1990, with the result that the CFA is unenforceable.  Mr Mallalieu relied on the general statement of principle in Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] 4 All ER 590 at [53], [2003] 1 WLR 2487 in relation to the position before the change to s 51 of the 1981 Act:

‘we must take it to be the policy of Parliament that the paying party should be protected by the indemnity principle in relation to the CFA entered into by the receiving party.  In other words, that he should be entitled to object to paying costs which he has been ordered to pay if they are made payable by a CFA which is not rendered enforceable by s 58(1) [of the 1990 Act].’

(iv) Thus on their proper construction, although CPR 45.9 and 45.11 provide for a fixed sum to be paid, this is always subject to the validity of the retainer, including the CFA. (v) All that is necessary to satisfy this requirement is a certificate demonstrating that the CFA complies with the rules.  Mr Mallalieu suggested the following form of words: ‘What is claimed in the schedule/bill of
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costs are in respect of items which the claimant has a liability to pay the firm.’  If such a certificate were given, he accepted that the paying party could not go behind the certificate.
[18] Mr Bacon, for the claimant, submitted: (i) Master O’Hare’s analysis was correct.  Section II of CPR Pt 45 provides for a self-contained scheme for the recovery of costs in litigation involving road traffic accidents giving rise to relatively small claims.  The costs are recoverable whether or not they have actually been incurred.  The indemnity principle has no place in a scheme where the costs are fixed.  The defendant’s arguments subvert this principle.  (ii) Section II of CPR Pt 45 applies to a closely-confined category of cases.  As CPR 45.7 makes clear, it is limited to costs-only proceedings under the procedure set out in CPR 44.12A:

44.12A Costs-only proceedings
(1) This rule sets out a procedure which may be followed where—
(a) the parties to a dispute have reached an agreement on all issues (including which party is to pay the costs) which is made or confirmed in writing; but
(b) they have failed to agree the amount of those costs; and
(c) no proceedings have been started.’

If the defendant’s argument that the indemnity principle applies to this category of cases is correct, there is no reason why it could not challenge the amount of costs.  (iii) As to Mr Mallalieu’s point (iii), the success fee which is recoverable under CPR 43.11 is in relation to a funding agreement as defined in CPR 43.2(1)(k)(i), and not as defined in CPR 43.2(3) and (4), which require ‘an agreement which satisfies all the conditions applicable to it by virtue of section 58 of the Courts and Legal Services Act 1990’ (my emphasis).  CPR 43.11 is not concerned with compliance with conditions, simply with a funding arrangement, which is defined as a CFA which provides for a success fee within the meaning of s 58(2) of the 1990 Act.  Section 58(2) provides:

‘For the purposes of this section and section 58A—(a) a conditional fee agreement is an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances; and (b) a conditional fee agreement provides for a success fee if it provides for the amount of any fees to which it applies to be increased, in specified circumstances, above the amount which would be payable if it were not payable only in specified circumstances.’

(iv) In any event this appeal is premature since the claimants have not yet prepared a bill of costs, let alone been in a position to provide a certificate.  As Master O’Hare recorded: ‘The claimants’ solicitor volunteers to give a certificate as to compliance with the conditional fee agreement regulations in this case.’
CONCLUSION
[19] I am advised by the assessors that until the Court of Appeal decision in Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] 4 All ER 590, [2003] 1 WLR 2487 numerous technical challenges were made to the validity of CFAs.  As Mr Mallalieu put it in the course of argument, ‘the history of litigation in this field indicates that disproportionate points were taken’.  The challenges sought to show that CFAs did not comply with primary and secondary litigation; and were therefore unenforceable between solicitor and client.  On this basis the paying party was able to rely on the indemnity principle
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so as to argue that it could avoid liability for the receiving party’s costs.  It is clear that such challenges had a significantly detrimental effect on the efficient conduct of personal injury litigation and were inconsistent with the overriding objective of enabling the court to deal with cases justly.  As Judge LJ noted in Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 at 575: ‘The defendants’ request that the plaintiff be required to provide information proving that the indemnity principle had been observed represents pointless satellite litigation.’  The problem was addressed in three ways.
[20] In Sharratt v London Central Bus Co Ltd (The Accident Group Test Cases), Hollins v Russell [2003] 4 All ER 590, [2003] 1 WLR 2487 the Court of Appeal gave guidance on the approach which should be adopted to technical challenges to CFAs.  Among other points, the Court of Appeal dealt with how the conditions in s 58(1) could be satisfied.  The subsection provides:

‘A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but … any other conditional fee shall be unenforceable.’

At [105]–[106] the court gave answers:

‘… In approaching the meaning of the words “satisfies all of the conditions …” we can be confident that Parliament would not have meant to render unenforceable a CFA which adequately meets the requirements which were designed to safeguard the administration of justice, protect the client, and acknowledge the legitimate interests of the other party to the litigation …
[106] … in general conditions are sufficiently met when there has been substantial compliance with, or in other words no material departure from, what is required.’

This guidance was intended to cut down the highly technical arguments based on minor infractions of the conditions.
[21] Secondly, there was the change in the law effected by the amendment to s 51(2) of the 1981 Act which significantly modified the indemnity principle and permitted changes in the rules to give effect to the modification.
[22] Thirdly, changes were made to the rules of court. Some of these changes, and in particular the provisions of sections II–V of CPR Pt 45, were introduced following ‘industry wide’ discussions under the aegis of the Civil Justice Council.  Agreement was reached on the recoverable costs in the different situations covered by the various sections.
[23] It seems to me clear that the intention underlying CPR 45.7–45.14 was to provide an agreed scheme of recovery which was certain and easily calculated.  This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole.
[24] It is clear that in making this change the draftsman of the rules intended that the indemnity principle should not apply to the figures which were recoverable.  If that is so I can see little reason why it should be assumed that the indemnity principle has any application to CPR 45.9 and 45.11, and good reasons why it should not: (i) The overriding objective of the CPR includes saving expense and dealing with the cases in ways which are proportionate to the amount of money involved.  (ii) The assessors have pointed out that the range of fixed costs recoverable under CPR 45.9 is £800–£2,550; and on this basis, the
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range of success fees under CPR 45.11 is £100–£318·75.  It is hardly consonant with the overriding objective that sums of this order should be subject to the sort of scrutiny that could be a matter of course if Mr Mallalieu is right in his analysis.  (iii) The whole idea underlying Section II of CPR Pt 45 is that it should be possible to ascertain the appropriate costs payable without the need for further recourse to the court.
[25] I should add that in coming to this conclusion: (i) I have rejected the argument that there is an overriding need to enable the paying party to satisfy themselves that the CFA is compliant with the 2000 regulations.  This may result in some non-compliant agreements having effect, but will avoid wasteful arguments about whether there has or has not been substantial non-compliance in what is required in these straightforward types of case.  (ii) I have rejected the argument that there is an anomaly in that CPR 45.10 requires a different approach.  The reason why the costs under CPR 45.10 call for a different approach is that there are no fixed figures for disbursements. (iii) I have rejected Mr Mallalieu’s argument that the concerns of the paying party could be dealt with by a certificate.  It seems to me that such a certificate would simply invite parasitic litigation in an area which reveals a propensity for such litigation on an almost industrial scale.  Nor am I attracted by the idea of a certificate whose terms are drafted (albeit deftly) in the course of argument.  It seems to me that the terms of any certificate should be carefully drafted after proper consultation.
[26] In cases falling under Section II of CPR Pt 45 the receiving party does not have to demonstrate that there is a valid retainer between the solicitor and client, merely that the conditions laid down under the rules have been complied with.
[27] For these reasons I have concluded that the defendant’s appeal in each case should be dismissed.
Appeals dismissed.
Neneh Munu   Barrister.
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[2006] 2 All ER 149



Culnane v Morris and another
[2005] EWHC 2438 (QB)

HUMAN RIGHTS; Expression, Fair Trial: TORTS; Defamation
QUEEN’S BENCH DIVISION
EADY J
1, 8 NOVEMBER 2005
Libel and slander – Qualified privilege – Public interest – Election – Limitation of privilege at elections – Whether election candidate precluded from relying on defence of qualified privilege in respect of statement in election that was material to question in issue in election – Defamation Act 1952, s 10 – Human Rights Act 1998, s 3, Sch 1, Pt I, arts 6, 10.
The claimant had been a candidate in a local government by-election.  She brought proceedings for libel against the defendants, a rival candidate and his election agent, in respect of words contained in one of their party’s leaflets.  During the course of proceedings, the defendants sought permission to amend their defence to add a plea of qualified privilege to the original pleas of justification and fair comment.  In response, the claimant contended that such a defence was precluded by s 10a of the Defamation Act 1952 which provided that a defamatory statement published by or on behalf of any candidate in any election to a local government authority or Parliament was not to be deemed to be published on a privileged occasion on the ground that it was material to a question in issue in the election. At pre-trial review, the court considered, as a preliminary issue, whether that was indeed the effect of s 10 of the 1952 Act in light of the court’s duty under s 3b of the Human Rights Act 1998 to read and give effect to legislation, so far as it was possible to do so, in a way that was compatible with the rights to a fair hearing and to freedom of expression under arts 6c and 10d of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as set out in Sch 1 to the 1998 Act).
________________________________________
a     Section 10 is set out at [8], below
b     Section 3, so far as material, provides: ‘(1) So far as it is possible to do so, primary legislation … must be read and given effect in a way which is compatible with the Convention rights …’
c     Article 6, so far as material, provides: ‘1. In determination of his civil rights and obligations … everyone is entitled to a fair … hearing …’
d     Article 10, so far as material, provides: ‘1. Everyone has the right to freedom of expression … 2. The exercise of these freedoms … may be subject to such … restrictions … as are prescribed by law and are necessary in a democratic society … for the protection of the reputation … of others …’
________________________________________
Held – Section 10 of the 1952 Act did not preclude an election candidate from relying on the defence of qualified privilege.  On the natural meaning of that provision, a candidate could not claim a special privilege by virtue only of publishing words that were material to a question in issue in the election, but, like any other citizen, he might be able to establish a defence of qualified privilege if the ingredients recognised at common law were present on the facts of the case.  The 1952 Act did not specify that a candidate should be confined to the defences of fair comment and justification.  There was therefore no difficulty in interpreting s 10 in a way that was compatible with convention rights.  To construe that provision as precluding a defence of qualified privilege for
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candidates, qua candidates, would, in contrast, impinge adversely on their rights under arts 6 and 10 of the convention, and would not be consistent with any legitimate aim. More importantly, that was not what Parliament had set out to achieve.  It followed in the instant case that the pleaded defence of privilege was not barred by s 10 of the 1952 Act (see [27], [29], [32], [33], below).
Plummer v Charman [1962] 3 All ER 823 not followed.
Notes
For the convention rights to a fair trial and freedom of expression, see 8(2) Halsbury’s Laws (4th edn reissue) paras 134, 158, and for defamatory statements at elections, see 28 Halsbury’s Laws (4th edn reissue) para 115.
For the Defamation Act 1952, s 10, see 24 Halsbury’s Statutes (4th   edn) (2003 reissue) 36.
For the Human Rights Act 1998, s 3, Sch 1, Pt I, arts 6, 10, see 7 Halsbury’s Statutes (4th   edn) (2004 reissue) 679, 706, 707.
Cases referred to in judgment
Bowman v UK (1998) 4 BHRC 25, ECt HR.
Braddock v Bevins [1948] 1 All ER 450, [1948] 1 KB 580, CA.
Castells v Spain (1992) 14 EHRR 445, [1992] ECHR 11798/85, ECt HR.
Da Silva v Portugal (2002) 34 EHRR 1376, ECt HR.
Donnelly v Young (5 November 2001, unreported).
Greenaway v Poole [2003] EWHC 1735 (QB), [2003] All ER (D) 345 (Jul).
Pepper (Inspector of Taxes) v Hart [1993] 1 All ER 42, [1993] AC 593, [1992] 3 WLR 1032, HL.
Plummer v Charman [1962] 3 All ER 823, [1962] 1 WLR 1469, CA.
Reynolds v Times Newspapers Ltd [1999] 4 All ER 609, [2001] 2 AC 127, [1999] 3 WLR 1010, HL.
Preliminary issue
At a pre-trial review in proceedings for libel brought by the claimant, Mary Culnane, against the defendants, Mark Morris and Vijay Naidu, the court heard a preliminary issue, namely whether the pleaded defence of privilege was precluded by s 10 of the Defamation Act 1952.  The facts are set out in the judgment.
Claire Miskin (instructed by Osmond & Osmond) for the claimant.
Sara Mansoori (instructed by Wragge & Co LLP, Birmingham) for the defendants.
Cur adv vult
8 November 2005.  The following judgment was delivered.
EADY J.
[1] On 1 November 2005 a pre-trial review took place in these proceedings, which were due for trial before a jury on Monday, 7 November.  Various matters were dealt with, including the hearing of a preliminary issue, encouraged by Gray J at an earlier hearing, whereby I was invited to rule upon the impact of s 10 of the Defamation Act 1952 upon the plea of qualified privilege (recently added by way of amendment).
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[2] The point is a rather unusual one, although the provision was bound to require consideration sooner or later in the light of the Human Rights Act 1998, as Lord Nicholls of Birkenhead rather anticipated in Reynolds v Times Newspapers Ltd [1999] 4 All ER 609 at 618, [2001] 2 AC 127 at 197:

‘Parliament seems to have taken the view that the defence of comment on a matter of public interest provided sufficient protection for election addresses.  Whether this statutory provision can withstand scrutiny under the Human Rights Act 1998 is not a matter to be pursued on this appeal.’

[3] The case arises in this way.  Ms Mary Culnane stood for election in November 2002, in the interests of the British National Party (BNP), at a by-election in the Downham ward in the London Borough of Lewisham.  She sues in these proceedings for defamation in respect of words contained in an article published in the local Liberal Democrat leaflet, Downham Focus, three years ago on 2 November 2002.  It was apparently written by another member of the party, a Ms Cathy Priddey, but it was approved by Mr Vijay Naidu, the second defendant, in his capacity as election agent.  Mr Mark Morris, the first defendant, was standing as the Liberal Democrat candidate.
[4] The article was headed ‘Don’t be fooled by the BNP’ and contained the following words:

‘The BNP are keen to persuade local residents that they are a respectable political party who will stand up for your interests.  Don’t be taken in!
Since BNP became active in Downham, local people tell us they have felt more intimidated and less safe, particularly at night.  There’s been an increase in racist graffiti and residents have reported a number of racially motivated attacks on people and their homes.  One local resident reported being followed by a gang of youths chanting racial abuse and “BNP” and having objects thrown at him whilst trying to do his shopping.
They are a blight on our area—and think how much worse it would be if they got elected!  Downham would be seen by outsiders as a no-go area and house prices would fall as people would no longer be interested in moving in to our community.
Time and time again, respected bodies, such as the BBC, have discovered members of the BNP with links to football hooliganism and other violent activities.  And this is a party that claims to want a crackdown on crime!
Facts about the BNP leadership.
FACT: 5 Out of the 15 members of the BNP Advisory Council have criminal convictions.
FACT: 10 out of the 27 BNP regional party organisers have criminal convictions.
There [sic] offences include:
 A petrol bomb attack Possessing Weapons Possession of drugs Violent attacks Public disorder Criminal damage Offences under the Explosives Act Attacking a teacher.
When you go to vote on November 7th, ask yourself—is this the kind of person you want as your elected councillor?’

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[5] Almost a year elapsed before a letter of complaint was sent by the claimant on 2 September 2003, the claim form following shortly afterwards on 30 September.  There will no doubt be arguments as to whether the words refer to the claimant, and as to their meaning, but she contends that the words would convey the meaning that she has convictions:

‘… for some or all the following criminal offences, alternatively that [she] is the kind of person who would commit some or all of the following criminal offences:
A petrol bomb attack
Possessing weapons
Possession of drugs
Violent attack
Public disorder
Criminal damage
Offences under the Explosives Act
Attacking a teacher.’

[6] Quite recently, in September of this year, there was a change of legal representation for the defendants. It was this no doubt which led to the applications before Gray J on 13 October for permission to amend the defence.  They wished to expand and clarify the pleas of justification and fair comment, already relied upon, and to add a new defence of privilege, which was framed upon two alternative bases.  In the light of certain pleaded facts, the defendants wish to contend that they were each under a social, moral or legal duty to communicate to those to whom the words were published the true nature of the BNP and that the recipients had a corresponding interest in receiving the words complained of.  It is said that the privileged occasion arose as a result of the duty and interest in correcting hypocritical and/or potentially misleading political statements by the BNP (and the claimant on the BNP’s behalf).  It is expressly pleaded that this was quite independent of the fact that there was an election at the time of publication.
[7] Alternatively, it is pleaded that, if any potential privilege is found only to arise as a result of the publication having taken place ‘at a time of an election’ (which is denied), the provisions of s 10 of the 1952 Act should be construed in a manner which permits the availability of the defence of privilege in this case in order to comply with the 1998 Act and certain articles of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as set out in Sch 1 to the 1998 Act), and specifically arts 6 and 10.
[8] In the amended reply, served on 21 October 2005, the point is taken on the claimant’s behalf that no privilege attached to the occasion of publication, for a variety of reasons, and that in any event ‘the Claimant is entitled to rely on section 10 of the Defamation Act 1952 according to its true meaning and intendment’.  It is the claimant’s case that this statutory provision simply precludes reliance on privilege in the circumstances I have described.  I therefore turn to the words of the enactment themselves:

10. Limitation on privilege at elections.—A defamatory statement published by or on behalf of a candidate in any election to a local government authority … or to Parliament shall not be deemed to be published on a privileged occasion on the ground that it is material to a
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question in issue in the election, whether or not the person by whom it is published is qualified to vote at the election.’

[9] For what it is worth, the introductory rubric would appear to suggest that it was Parliament’s intention that privilege at elections should be ‘limited’ rather than precluded altogether.  More importantly, however, it is to be noted that the section does not provide that: ‘A defamatory statement published by or on behalf of a candidate in any election to a local government authority or to Parliament shall be deemed not to be published on a privileged occasion …
[10] If I were to be determining the matter from first principles, and without reference to earlier appellate authority, I should construe the provision as making it clear that it would never be sufficient to establish privilege ipso facto that a defamatory statement was ‘material to a question in issue in the election’.  In other words, a candidate could not acquire a special privilege for the publication of defamatory statements, not open to other citizens, merely because he or she happened to be addressing such a material issue.  It would not seem to me to be plausible that the legislature intended actually to cut down the rights of a candidate during an election period—by comparison, for example, with the rights that he or she would enjoy outside an election period or with the rights enjoyed by other citizens during the election period.
[11] No doubt, in accordance with ordinary principles of defamation law, circumstances could arise in the course of communications with electors, or potential electors, that would give rise to a prima facie defence of qualified privilege.  This would depend on whether the usual ingredients, such as a social or moral duty, or a common and corresponding interest, could be demonstrated to be present on the particular occasion.  It seems counter-intuitive that the legislature intended that a citizen should have to face an additional hurdle purely by virtue of being a candidate at an election.  As I commented in Donnelly v Young (5 November 2001, unreported):

‘Freedom of speech is, if anything, more important than ever in a democratic society at times when candidates are submitting themselves for election to their fellow citizens.  Free and frank discussion is vital.  The section cannot be construed, in my judgment, as imposing a more “chilling” environment for the free communication of ideas and information at such times than generally applies.  That would be absurd.’

[12] In the particular circumstances of Donnelly v Young the defendants wished to rely upon the form of privilege generally categorised as ‘a reply to an attack’.  That was rather a special case and it has no application here.  I took the view on that occasion that s 10 of the 1952 Act was not capable of cutting down any rights of that kind which would otherwise apply.
[13] The observations I made in Donnelly v Young about freedom of speech do no more than reflect more eloquent reminders contained in judgments of the European Court of Human Rights.  Ms Mansoori, appearing on the defendants’ behalf, has rehearsed some of these well-known and important pronouncements.  It is right that I should have them in mind when attempting to construe these rather controversial words of the legislature. Perhaps I may be forgiven, therefore, for setting them out.
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[14] In Castells v Spain (1992) 14 EHRR 445 at 476 (para 43) it was said:

‘Freedom of the press affords the public one of the best means of discovering and forming an opinion of the ideas and attitudes of their political leaders. In particular, it gives politicians the opportunity to reflect and comment on the preoccupations of public opinion; it thus enables everyone to participate in the free political debate which is at the very core of the concept of a democratic society.’

In Da Silva v Portugal (2002) 34 EHRR 1376 at 1385 (paras 32, 33) the court was concerned with an editorial expressing a reaction to the news that a particular candidate had been invited to stand in the Lisbon City Council elections as the Popular Party candidate and observed in that context:

‘32. … The applicant, in his editorial, reacted to such news by expressing his views on the political opinions and ideology of [the candidate] and referring in a more general manner to the political strategy pursued by the Popular Party with this selection of candidate.
33. Such a situation clearly arose out of a political debate concerning matters of general interest, a field in which, the Court stresses, restrictions on freedom of expression must be interpreted strictly.’

[15] Coming closer to home, I was reminded also of the following words from Bowman v UK (1998) 4 BHRC 25 at 34 (para 42):

‘Free elections and freedom of expression, particularly freedom of political debate, together form the bedrock of any democratic system … The two rights are interrelated and operate to reinforce each other: for example, as the court has observed in the past, freedom of expression is one of the “conditions” necessary to “ensure the free expression of the opinion of the people in the choice of legislature” … For this reason, it is particularly important in the period preceding an election that opinions and information of all kinds are permitted to circulate freely.’

[16] Returning to the speech of Lord Nicholls in Reynolds v Times Newspapers Ltd, from which I made a brief citation earlier, one finds very similar sentiments (see [1999] 4 All ER 609 at 621, [2001] 2 AC 127 at 200) which, no doubt, provided the context for his Lordship’s query as to whether s 10 of the 1952 Act could be said to be compliant with the disciplines of art 10 of the convention:

‘At a pragmatic level, freedom to disseminate and receive information on political matters is essential to the proper functioning of the system of parliamentary democracy cherished in this country.  This freedom enables those who elect representatives to Parliament to make an informed choice, regarding individuals as well as policies, and those elected to make informed decisions.’

[17] In the light of such ringing pronouncements, I would have no hesitation, as I have said, in construing the wording of the statutory provision narrowly.  I would permit the defence of privilege, as pleaded, to go forward to be determined at trial in the light of the jury’s decision on the disputes, such as they are, relating to the primary facts relied upon as giving rise to the privilege.  Matters are not, however, quite that straightforward, since to a
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limited extent the wording of s 10 has been the subject of consideration by an appellate court, which is clearly binding upon me according to familiar principles of stare decisis.
[18] It would seem to be clear from the decision of the Court of Appeal in Plummer v Charman [1962] 3 All ER 823, [1962] 1 WLR 1469 that the members of that court considered that its effect was to impose significant restrictions upon a candidate’s scope for pleading privilege in respect of words published during an election period.  Lord Denning MR commented ([1962] 3 All ER 823 at 825–826, [1962] 1 WLR 1469 at 1472) that ‘in the ordinary way, the only defences open to a person who makes an election address and puts it out to the electors is either that the words were true or that they were fair comment on a matter of public interest’.  In other words, that decision would provide considerable support for the claimant’s submission in this case that the statute actually precludes the defendants from relying on privilege at all.  It is noteworthy that the two other members of the Court of Appeal who expressed agreement with Lord Denning in the Plummer case were Upjohn and Diplock LJJ.
[19] I should perhaps briefly summarise the factual context of their Lordships’ decision.  Sir Leslie Plummer was a member of Parliament who claimed damages against three candidates at a local government election, and against their election agents, for defamatory words contained in an election address published within his constituency.  As it happened, the election address was that published on behalf of the BNP at the London County Council elections for the division of Deptford held in April 1961.  Sir Leslie had been described as ‘Your pro-black MP’ and it further contained the remarkable words: ‘There you have it: your Labour MP comes down solidly on the side of coloured spivs and their vice-dens as opposed to the white people of Deptford.’  It was against that background that Upjohn LJ, agreeing with Lord Denning, clearly stated:

‘Prima facie the plea which is now sought to be raised is plainly barred by s 10 of the Defamation Act, 1952 … The alleged libellous statement is published on behalf of three candidates in an election to a local authority, and it would appear to be material to a question in issue in this election …
[Counsel], however, has argued that there may be a case—I should think a somewhat theoretical one—where the statement, although contained in an election address, may be the subject of some qualified privilege because, quite independently of its being the occasion of an election or being contained in an election address, the person who has made it was under a public or private duty, legal or moral, in matters where his interests were concerned, to communicate it to the persons who were in fact the electors who had an interest to receive it.  It is, I suppose, possible that such a case may one day be made, and, if so, the court will then have to determine whether that alternative case of privilege can still be made, notwithstanding s 10.’  (See [1962] 3 All ER 823 at 826, [1962] 1 WLR 1469 at 1472–1473.)

I imagine that it was the ‘theoretical’ possibility canvassed by Upjohn LJ which led Ms Mansoori to plead the alternative ground of privilege (which I have identified above).
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[20] Equally unequivocal were the words of Diplock LJ:

‘As my Lords have pointed out, and I agree, that particular ground of privilege, although it would have been available before the passing of s 10 of the Defamation Act, 1952, was removed by that section.’  (See [1962] 3 All ER 823 at 827, [1962] 1 WLR 1469 at 1474.)

[21] For a judge invited to construe s 10 of the 1952 Act, those are formidable authoritative statements, which might be thought to conclude the matter once and for all, or at least until Parliament in its wisdom decides to amend the law.  It is obvious, on the other hand, that these statements were made not only prior to the advent of the 1998 Act, with its requirement that judges should construe legislation consistently with Convention rights, but also prior to the decision of the House of Lords in Pepper (Inspector of Taxes) v Hart [1993] 1 All ER 42, [1993] AC 593 which, as is well known, now affords to judges an opportunity (where there is ambiguity) of considering parliamentary debates and ministerial statements in order to understand the purpose and rationale of any particular enactment.  There is here in my view sufficient scope for differing interpretation of s 10 as to justify Ms Mansoori’s investigation of the legislative background.
[22] It is quite clear that the members of the Court of Appeal in Plummer v Charman were of the opinion that the purpose of the legislature had been, putting it perhaps somewhat crudely, to reverse the effect of the decision of the Court of Appeal in Braddock v Bevins [1948] 1 All ER 450, [1948] 1 KB 580.  Most of the provisions of the 1952 Act derived from recommendations made by Lord Porter’s committee which had reported on the law of defamation in 1949 (see Report of the Committee on the Law of Defamation (Cmd 7536) (1948)).  By contrast, however, s 10 was introduced independently (rather as, so many years later, the right of a member of Parliament to waive the provisions of the Bill of Rights 1689 was introduced in s 13 of the Defamation Act 1996 quite independently of the recommendations of Sir Brian Neill’s committee in 1991 (see Supreme Court Committee Report on Practice and Procedure in Defamation) (July 1991)).  It would seem that the opportunity was taken simply because a Defamation Bill was before the House.  It is of some marginal historical interest to note that s 10 was introduced at the standing committee stage of the Bill in the House of Commons by Mr Sidney Silverman MP (who happened to have been, in his capacity as a solicitor, on the losing side of the issue in Braddock v Bevins).
[23] It is of greater interest to follow through how Mr Silverman’s original proposal was modified in the course of parliamentary progress, apparently to a large extent under the influence of the then Attorney General (Sir Lionel Heald).  Mr Silverman’s original formula was in these terms:

‘No privilege shall attach to any defamatory statement by or on behalf of a candidate in any election to a local government authority or to Parliament nor shall the plaintiff in an action founded upon such a statement be required to allege or prove that the defendant was actuated by malice.’

To my mind that wording is clearly more restrictive, on its face, of a candidate’s rights in defamation proceedings than the terms later enacted.  It would indeed have precluded, without question, a defence of qualified
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privilege.  There is no doubt that Mr Silverman was of the opinion that in circumstances of parliamentary or local government elections the defence of fair comment was quite enough.  No wider protection was necessary.  He expressed his thoughts in the course of debate on 18 March 1952:

‘Provided one clothed those participating in such an election with the protection of the law of fair comment, which is not affected by this new clause, one would have thought that those interests—interests of the public, the electorate, the candidate, the supporters and the interests of Parliamentary representative democracy—were being fully and wholly served.  That is not the present law. Until quite recently it was thought to be the present law.  A recent decision of the Court of Appeal in a case in which I was professionally concerned decided otherwise … It is not for me to say whether the Court of Appeal decided wrongly, because they are the judges of the law and not I; but I submit the court decided wrongly so far as public interest was concerned.’

[24] Hansard records that a week later, on 25 March 1952, a significant amendment was introduced because of concerns that an election candidate would be placed at a disadvantageous position in public debate as compared with any other citizen.  The modified wording proposed was as follows:

‘No privilege shall attach to any defamatory statement by reason only of the fact that it was published by or on behalf of a candidate in any election to a local government authority or to Parliament.’

It is significant that Mr Silverman, in supporting the new wording, offered the following explanation:

‘the Solicitor-General pointed out that as the Clause was drafted it might take away from a man the protection he otherwise would have had.  In other words, there might be something he had said, written or published which was perfectly defensible and the Clause, as I have somewhat carelessly drafted it, might have left an election candidate in a worse position than if he had not been a candidate.  It would have meant he had no privilege.
The intention was not to take away from an election candidate any privilege possessed by everybody else.  On the contrary he has certain protection and he ought to retain it.  The intention was that a statement defamatory and not privileged when made by somebody else should not become privileged merely because it was made at an election.  I think the new Clause completely meets the objections raised to the previous Clause.’

[25] At the report stage of the Bill the Attorney General proposed an amendment which included the wording eventually accepted; that is to say with the words ‘… shall not be deemed to be published on a privileged occasion on the ground that it is material to a question in issue in the election, whether or not the person by whom it is published is qualified to vote at the election’ (see 502 HC Official Report (5th series) col 2731).  The reasoning behind this proposal is of importance for present purposes (or so it seems to me).  The Attorney General explained on 27 June 1952 (col 2732) that he was trying to achieve a position whereby—

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‘no candidate at an election should have any special privilege by virtue alone of his being a candidate, and that he should not be able to secure that privilege by a side-wind, as it were, by saying, “Well, as a matter of fact, I am an elector.  Therefore when I was speaking on that platform as the candidate at that election I was speaking as one elector to another, and not as a candidate.”’

[26] There is thus a clear correspondence between what the Attorney General was attempting to achieve and the interpretation I would have given to the words of s 10, as it now stands—were the matter entirely free from authority.  There does not appear to have been, by that stage, any intention to deprive a candidate or agent of a privilege which would be available to other citizens, but rather only to ensure that such persons were not accorded a special privilege of their own.  I believe that these developments between March and June 1952 are illuminating.  If I may say so, with all due deference, it would appear that the distinguished members of the Court of Appeal in Plummer v Charman were construing the intention of the legislature as being consistent with, and identical to, the intention of Mr Sidney Silverman when he introduced the original wording.  It was at that stage his objective, or so it appears, that the effect of the judicial decision in Braddock v Bevins should be comprehensively reversed.  That may, however, be a somewhat simplistic interpretation of the words ultimately enacted—especially having regard to the concerns expressed by, among others, the Attorney General of the day.
[27] It would not be open to me, as a judge of first instance, to adopt the interpretation which seems to me to be the natural one if matters were still governed by the traditional rules of precedent.  Fortunately or unfortunately, depending on one’s point of view, matters are not now so straightforward.  I am bound by the requirements of the 1998 Act to do the best I can to construe legislation in a way that is consistent with the rights guaranteed by the convention.  So far, I have referred only to art 10, which is of undoubted importance in this context.  On the other hand, I need also to have in mind, as Ms Mansoori submits, the public policy factors underlying arts 6 and 14.  If the background circumstances give rise to a pleadable defence of qualified privilege, as Gray J has held, then the litigants who seek to rely upon it would appear to have a right to have that defence considered and determined fairly by a court of competent jurisdiction.  If they are to be deprived of the opportunity of canvassing this important defence at all, purely because of their status, relative to the local government by-election, at the time of publication, then they would clearly be put at a disadvantage compared to other citizens who might have wished to make similar points about the BNP.  The interpretation of s 10 of the 1952 Act for which the claimant, through Ms Miskin, now contends would certainly impinge adversely upon the defendants’ rights under arts 6 and 10.  Accordingly, it seems to me that I must ask myself whether those restrictive consequences (which are undoubtedly ‘prescribed by law’, within the meaning of art 10(2) of the convention) are necessary in a democratic society and proportionate to the achieving of a legitimate aim.
[28] Doing the best I can, it seems to me that the purpose which Parliament must be taken to have intended was that of ensuring that candidates in local and Parliamentary elections should not abuse their position by defaming people, in circumstances in which they could not
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establish a defence of either justification or fair comment, by availing themselves of a special privilege.  I have considerable difficulty with this.  It is not obvious to me why candidates should be placed during an election campaign, of all times, in a worse position than anyone else.  Moreover, it is necessary to remember that a plea of qualified privilege is defeasible on proof of malice.  That is the means by which the law has always recognised that occasions of qualified privilege should not be abused.  As with any other defendant in a libel action, if a candidate has on an occasion of prima facie qualified privilege abused his position by saying something which he knows to be false or, perhaps, has behaved recklessly, then the defence will not be available.
[29] To construe the provision as precluding a defence of qualified privilege for candidates, qua candidates, does not seem to me to be consistent with any legitimate aim—nor, more importantly, is that what Parliament (or even, by the end, Mr Sidney Silverman) set out to achieve.
[30] In Plummer v Charman the court did not have the opportunity to consider the Parliamentary debates.  It might have made a significant difference.
[31] Ms Mansoori cited another unreported case on s 10, which she submitted illustrates the reductio ad absurdum of the traditional restrictive interpretation.  In Greenaway v Poole [2003] EWHC 1735 (QB), [2003] All ER (D) 345 (Jul) Jack J was invited to rule on the effect of the provision without counsel even apparently citing Plummer v Charman.  It concerned the publication of three newsletters said to contain defamatory allegations about a council member and town clerk.  Qualified privilege was held to apply to the first—not being published as an ‘election special’.  The other two, however, were so described.  A distinction was drawn between them nevertheless.  In respect of one of them, the defendant was acting in the capacity of councillor (not qua candidate) and, moreover, the parishioners had a legitimate interest in hearing his views.  Privilege was therefore upheld.  As to the other publication, by contrast, this took place in a different parish in which the defendant was standing as a candidate.  It was thus held that s 10 prevailed and the defence of privilege was not open to him.  This set of facts is almost like an examination question designed to illustrate the consequences of the traditional interpretation of the section or, as Ms Mansoori suggests, its absurdity.
[32] I have no difficulty in interpreting s 10 in a way that is compatible with convention rights, as s 3 of the 1998 Act requires.  I construe it in accordance with what seems to me to be the natural meaning of the words: a candidate cannot claim a special privilege by virtue only of publishing words that are ‘material to a question in issue in the election’.  On the other hand, a candidate like any other citizen may be able to establish a defence of qualified privilege if the ingredients recognised at common law are present on the facts of the case.  The 1952 Act does not specify that a candidate should be confined to the defences of fair comment and justification.  I am not prepared to read such words into the text by implication.  It would be a curious step to take given that Mr Silverman concluded, more than half a century ago, that such a stipulation would be going too far: ‘The intention was not to take away from an election candidate any privilege possessed by everybody else.’
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[33] It is not for me to rule at this stage whether the words complained of are protected by privilege.  That will turn in part on the facts as found by the jury at trial.  All I am asked to do is to rule on whether the pleaded defence of privilege is ‘barred by section 10’ (in the words of Upjohn LJ).  I am quite satisfied that it is not.
[34] There is no need for Ms Mansoori, in advancing a plea of privilege at trial, to confine herself to arguing that the occasion of privilege ‘was quite independent of the fact that this was an occasion of an election’.  I am not addressing the merits of the defence at the moment, and would not attempt to do so unless and until the facts are all agreed or the disputed allegations resolved by the jury.  But at the moment what I wish to make clear is that, for determination of whether or not there was an occasion of privilege, there is no statutory bar prohibiting reference to the fact of an election or to the relevance of issues within it.  Such matters are part of the background circumstances, which it may be proper to take into account, even if they are insufficient in themselves to give rise to privilege automatically.
Order accordingly.
Aaron Turpin   Barrister.
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[2006] 2 All ER 161


R (on the application of Bushell and others) v Newcastle upon Tyne Licensing Justices and another
[2006] UKHL 7

ADMINISTRATION OF JUSTICE; Courts: LEISURE AND LICENSING
HOUSE OF LORDS
LORD HOFFMANN, LORD SCOTT OF FOSCOTE, LORD RODGER OF EARLSFERRY, LORD WALKER OF GESTINGTHORPE AND LORD BROWN OF EATON-UNDER-HEYWOOD
18 JANUARY, 15 FEBRUARY 2006
House of Lords – Appeal – Appeal becoming moot – Appeal not becoming academic for parties – Point of general public importance not in issue – Whether House of Lords should nevertheless hear and determine appeal.
Licensing – Licence – Removal – Special removal – Old on-licence – Removal on the ground that premises for which licence granted are or are about to be pulled down or occupied for any public purpose – Whether public authority obtaining possession – Licensing Act 1964, s 15(1)(a).
Newcastle City Council acquired a public house from its owners, the second defendants (Ultimate), for the purposes of a scheme of redevelopment.  Although the sale was by agreement, it was against the background of an as yet unconfirmed compulsory purchase order under the town and country planning legislation. Ultimate applied to the licensing justices for a special removal of the on-licence to premises which it had acquired in the same licensing district.  The justices granted the application.  Judicial review proceedings were brought by various objectors, who were residents in the area of the premises for which the special removal was sought.  The second interested party, who was a trade competitor, gave a cross-undertaking in return for an undertaking by Ultimate, inter alia, not to commence trading until the application for permission to apply for judicial review had been heard.  The judge held that the justices had no jurisdiction under s 15a of the Licensing Act 1964 because at the time the application came before the justices the premises of the public house were not ‘occupied’ or about to be ‘occupied’ for a ‘public purpose’ within the meaning of s 15(1)(a).  He, therefore, quashed the removal. His order was affirmed by the Court of Appeal which ruled that ‘occupied … for a public purpose’ did not include mere public ownership of a vacant property. Ultimate appealed to the House of Lords.  As the whole of the 1964 Act had been repealed after the decision of the Court of Appeal, the claimants made a preliminary objection to the hearing of the appeal.  They submitted that the appeal had become moot as the removed on-licence had disappeared with the 1964 Act and that as no decision of the House of Lords could bring it back the appeal should be dismissed without a hearing as permission to appeal had only been granted because the case raised a point of general public importance.   Ultimate argued that appeal was not moot as the delay had caused them loss of profit and because they had started
________________________________________
a     Section 15 is set out at [1], below
________________________________________
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proceedings to enforce the cross-undertaking, which would be doomed to failure if the House of Lords dismissed their appeal.
Held – Although, the possibility could not be excluded that the House of Lords might, in its discretion, decide to revoke its leave to appeal if it appeared that subsequent events had made the prospective cost of the appeal disproportionate to the value or importance of the substantive question in dispute, the grant of leave to appeal would ordinarily entitle an appellant to bring any genuine issue between the parties before the House.  There was no rule of law or practice that the House would not proceed with an appeal because there had been a change of circumstances as a result of which the questions which remained in issue between the parties were no longer of general public importance.  Unless the House had expressly restricted its leave to the particular issue, the appellant was even at liberty to abandon the point of general public importance and argue any point which was otherwise open to him but which, taken by itself, would never have justified the grant of leave.  In the instant case, there remained two aspects in which Ultimate’s rights and obligations might be, namely the costs which it had incurred or had been ordered to pay in the proceedings, and the proceedings to enforce the cross-undertaking.  As to the substantive appeal, a public authority which obtained legal possession of licensed premises with a view to putting them to some future public use was in immediate occupation of those premises for the purposes of s 15 of the 1964 Act.  It followed that the conditions for a special removal had been satisfied and the justices had had jurisdiction to grant it.  Accordingly, the appeal would be allowed (see [5], [8], [12], [17]–[20], below).
Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2005] 1 All ER 191 considered.
Decision of the Court of Appeal [2004] 3 All ER 493 reversed.
Per Lord Brown of Eaton-under-Heywood.  Where no issue arose of any wider importance than who should pay the costs incurred at the earlier stages of the litigation, the House would be altogether readier to refuse to hear an appeal notwithstanding that leave had been granted (see [27], below).
Notes
For leave to appeal to the House of Lords, see 10 Halsbury’s Laws (4th edn reissue) para 381.
For special removal of licences, see 26 Halsbury’s Laws (4th edn reissue) paras 172, 173, 179–182.
The Licensing Act 1964 was repealed, subject to transitional provisions, by the Licensing Act 2003, ss 199, 200, Schs 7, 8, as from 24 November 2005.
For the Licensing Act 1964, s 15, see 24 Halsbury’s Statutes (4th edn) (2003 reissue) 320.
Cases referred to in opinions
Ainsbury v Millington [1987] 1 All ER 929, [1987] 1 WLR 379n, HL.
Hampstead BC v Associated Cinema Properties Ltd [1944] 1 All ER 436, [1944] KB 412, CA.
Madrassa Anjuman Islamia of Kholwad v Johannesburg Municipal Council [1922] 1 AC 500, PC.
Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54, [2005] 1 All ER 191, [2004] 1 WLR 3251.
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Sun Life Assurance of Canada v Jervis [1944] 1 All ER 469, [1944] AC 111, HL; affg [1943] 2 All ER 425, CA.
Cases referred to in list of authorities
Harris v Birkenhead Corp [1976] 1 All ER 341, [1976] 1 WLR 279, CA.
Heydon’s Case (1584) 3 Co Rep 7a.
Horn v Sunderland Corp [1941] 1 All ER 480, [1941] 2 KB 26, CA.
Laceby v E Lacon & Co Ltd [1899] AC 222, [1895–9] All ER Rep 223, HL.R v Howard and ors, Licensing Justices of Farnham [1902] 2 KB 363 sub nom R v Farnham Licensing Justices, ex p Smith [1900–3] All ER Rep 903, CA.
R v Warrington Crown Court, ex p RBNB (a company) [2002] UKHL 24, [2002] 4 All ER 131, [2002] 1 WLR 1954.
R v Weymouth Justices, ex p Sleep [1942] 1 All ER 317, [1942] 1 KB 465, DC.
Seay v Eastwood [1976] 3 All ER 153, [1976] 1 WLR 1117, HL.
Southern Water Authority v Nature Conservancy Council [1992] 3 All ER 481, [1992] 1 WLR 775, HL.
Waters v Welsh Development Agency [2004] UKHL 19, [2004] 2 All ER 915, [2004] 1 WLR 1304.
Wheat v E Lacon & Co Ltd [1966] 1 All ER 582, [1966] AC 552, [1966] 2 WLR 581, HL.
Appeal
The second defendant, Ultimate Leisure Group plc (Ultimate), appealed with permission of the Appeal Committee of the House of Lords, given on 20 October 2004, from the decision of the Court of Appeal (Jacob, Maurice Kay LJJ and Sir Martin Nourse) on 24 June 2004 ([2004] EWCA Civ 767, [2004] 3 All ER 493) dismissing the appeal of Ultimate from the decision of Lightman J on 15 March 2004 ([2004] EWHC 446 (Admin), [2004] All ER (D) 272 (Mar)), in proceedings for judicial review brought by the claimants Ron Bushell and others, quashing the grant on 1 December 2003 by the first defendants, the licensing justices for Newcastle upon Tyne, of Ultimate’s application under s 15 of the Licensing Act 1964 for special removal of an old on-licence from its public house, Mims Bar, Newcastle upon Tyne, to its property, the Gresham Hotel, Osborne Road, Newcastle upon Tyne, and remitting the application to the justices for reconsideration. Rindberg Holding Company Ltd and Peel Hotels Ltd appeared as interested parties.  The facts are set out in the judgment of Lord Hoffmann.
Susanna Fitzgerald QC and Simon Colton (instructed by Mincoffs, Newcastle upon Tyne) for Ultimate.
John Steel QC and Gerald Gouriet (instructed by Sintons, Newcastle upon Tyne) for the respondents.
James Rankin (instructed by Sintons, Newcastle upon Tyne) for the interested parties.
Their Lordships took time for consideration.
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15 February 2006.  The following opinions were delivered.
LORD HOFFMANN.
[1] My Lords, on 15 November 2002 the Newcastle City Council acquired a public house called Mim’s Bar from its owners, Ultimate Leisure Group plc (Ultimate), for the purposes of a scheme of redevelopment, pursuant to s 227(1) of the Town and Country Planning Act 1990.  Although the sale was by agreement, it was against the background of an as yet unconfirmed compulsory purchase order under s 226.  The question in this appeal is whether the owners became entitled to apply for a special removal of the justices’ on-licence pursuant to s 15 of the Licensing Act 1964:

Special removals of old on-licences.—(1) Where application is made for the special removal of an old on-licence from any premises in a licensing district to premises in the same district on the ground—(a) that the premises for which the licence was granted are or are about to be pulled down or occupied under any Act for the improvement of highways, or for any other public purpose; or (b) that the premises for which the licence was granted have been rendered unfit for use for the business carried on there under the licence by fire, tempest or other unforeseen and unavoidable calamity; the provisions of sections 12 to 14 of this Act shall apply as they apply to a renewal, subject to the restrictions on removals imposed by Parts VI and VII of this Act and subject to subsections (3) and (4) of this section.
(2) A removal to which those provisions apply as aforesaid is in this Act referred to as a special removal.’

[2] Ultimate applied to the transfer sessions for the licensing district of Newcastle held on 11 March 2003 for a special removal to premises called the Gresham Hotel which it had recently acquired in another part of Newcastle.  The effect of the referential application of s 12 by s 15(1) meant that the grounds upon which the justices could refuse the removal were narrowly restricted.  They could do so only on the grounds that the applicant was not a fit and proper person or that the premises had been ill-conducted or were structurally deficient or structurally unsuitable: see s 12(4).
[3] After a lengthy adjournment for an unsuccessful challenge to their jurisdiction in judicial review proceedings before Owen J, the justices held that none of these grounds of objection had been made out and granted the application on 1 December 2003.  In further judicial review proceedings brought by residents and supported by trade competitors in the area of the Gresham Hotel, Lightman J held that the justices had no jurisdiction under s 15 because, at the time the application came before the justices, the premises of Mim’s Bar were not ‘occupied’ or about to be ‘occupied’ for a ‘public purpose’ within the meaning of s 15(1)(a): [2004] EWHC 446 (Admin), [2004] All ER (D) 272 (Mar).  He therefore quashed the removal and his order was affirmed by the Court of Appeal (Jacob and Maurice Kay LJJ and Sir Martin Nourse) on 24 June 2004: [2004] EWCA Civ 767, [2004] 3 All ER 493, [2005] 1 WLR 1732.  Ultimate now appeals to your Lordships’ House.
[4] Before coming to the substance of the matter, I must mention a preliminary objection which Mr Steel QC, on behalf of the respondent objectors, made to the hearing of the appeal.  Since the decision of the Court of Appeal, the whole of the Licensing Act 1964 has been repealed by the Licensing
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Act 2003 with effect from 24 November 2005 (see s 199 and Sch 7 and the Licensing Act 2003 (Commencement No 7 and Transitional Provisions) Order 2005, SI 2005/3056).  Under the transitional provisions in Sch 8 to the 2003 Act, the holder of an existing licence under the old Act could have applied to have it converted into a licence under the new Act.  Their Lordships have heard no argument on whether Ultimate could have made such an application.  Whether they had an existing licence to convert would of course have depended upon the outcome of this appeal.  But no such application was made and the time for making one has now expired.  So the subject matter of the appeal, that is to say, the removed on-licence, has disappeared with the 1964 Act and no decision of the House can bring it back.
[5] In these circumstances Mr Steel says that the appeal has become moot and the House should dismiss it without a hearing. But the appeal is not moot in the sense that its outcome can have no practical consequences for the parties.  There remain two respects in which it may affect their rights and obligations.  The first is in relation to the costs which Ultimate incurred or was ordered to pay in the hearings before Lightman J and the Court of Appeal and the costs of the appeal to this House.  The second arises out of a cross-undertaking which one of the objectors, Rindberg Holding Co Ltd, gave in return for, first, an undertaking by Ultimate not to commence trading until an application for leave to apply for judicial review had been heard, and then, an order to stay the continuation of the hearing before the justices.  Ultimate say that the delay caused them loss of profit and have started proceedings to enforce the cross-undertaking.  But those proceedings would be doomed to failure if the House agreed that the justices had no jurisdiction under s 15 and dismissed the appeal.
[6] The case therefore does not fall within the principle upon which the House has previously refused to entertain appeals when the outcome could have had no effect upon the position of the parties.  For example, in Sun Life Assurance of Canada v Jervis [1944] 1 All ER 469, [1944] AC 111, a dispute over a life insurance policy in which the insured had been successful in recovering the sum he claimed, the Court of Appeal ([1943] 2 All ER 425) gave the company leave to appeal upon an undertaking ‘to pay the costs as between solicitor and client in the House of Lords in any event and not to ask for the return of any money ordered to be paid by this order’.  The House declined to hear the appeal because, as Viscount Simon LC pointed out, neither side had any monetary interest in its outcome.  It was an essential part of the reasoning of the Lord Chancellor that the terms upon which leave had been given disposed of the question of costs as well as the actual sum in dispute. Likewise in Ainsbury v Millington [1987] 1 All ER 929, [1987] 1 WLR 379n, not only had the subject matter of the dispute (a council house tenancy) ceased to exist but both parties were legally aided with nil contributions and so immune from any order as to costs.
[7] But Mr Steel says that the House only gave leave to appeal because the case raised a point of general public importance and although the appeal has not become academic for the parties, the point of public importance has.  If the House had known when it gave leave on 20 October 2004 that the question of the construction of s 15 of the 1964 Act would become academic, it would not have granted leave.  Therefore it should not hear the appeal now.
[8] Your Lordships indicated to Mr Steel in the course of argument that you did not accept the last stage in this reasoning and that you would proceed to hear
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the appeal.  There is no rule of law or practice that the House will not proceed with an appeal because there has been a change of circumstances as a result of which the questions which remain in issue between the parties are no longer of general public importance.  Unless the House has expressly restricted its leave to the particular issue, the appellant is even at liberty to abandon the point of general public importance and argue any point which is otherwise open to him but which, taken by itself, would never have justified the grant of leave: Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54, [2005] 1 All ER 191, [2004] 1 WLR 3251.  I would not like to exclude the possibility that the House may in its discretion decide to revoke its leave to appeal if it appears that subsequent events have made the prospective cost of the appeal disproportionate to the value or importance of the substantive question in dispute.  But the grant of leave to appeal will ordinarily entitle an appellant to bring any genuine issue between the parties before the House.
[9] I return therefore to the substantive appeal.  The question is whether, after it acquired ownership on 15 November 2002, the Newcastle City Council was occupying the premises for a public purpose.  The justices did not try to answer this question because they thought that whether the council had gone into occupation or not, the making of the compulsory purchase order created a ‘special removal situation’, presumably on the ground that the council was ‘about to’ occupy the premises for a public purpose.  Lightman J said ([2004] All ER (D) 272 (Mar) at [27]) that this was wrong: there had to be ‘practical certainty and imminence of outcome’ and this did not exist when the compulsory purchase order was made.  The order had still to be confirmed; this would involve a public inquiry and the outcome was uncertain.  He rejected an alternative argument that the council had actually occupied the premises on the ground that it was not considered by the justices and that there was no up-to-date evidence of the ‘physical presence or degree of control’ necessary to establish occupation: para [29]).
[10] In the Court of Appeal, Jacob LJ (who gave the principal judgment) agreed with Lightman J on both points.  On the second point, he said (at [26]) that ‘occupied … for [a] public purpose’ does not include ‘mere public ownership of a vacant property’.
[11] As Lightman J correctly observed, there appears to have been no evidence before the justices about exactly what happened when the sale by Ultimate to the council was completed.  However, in the absence of evidence to the contrary I think that one should assume that it was an ordinary sale with vacant possession.  The premises had been closed for business for the previous four months.  The council would in law have obtained possession by virtue of being given the land certificate and the keys or other indicia or means of control.  If squatters had entered, it would have been the council and not Ultimate who would have been entitled to bring an action for trespass.  But, as the judge also said, one cannot assume that the council actually entered upon the premises or did anything to exercise control.
[12] In Madrassa Anjuman Islamia of Kholwad v Johannesburg Municipal Council [1922] 1 AC 500 at 504 Viscount Cave said that ‘occupy’ was a word of uncertain meaning, the precise meaning of which in any particular statute or document ‘must depend on the purpose for which, and the context in which, it is used’.  One must start, therefore, by inquiring into the purpose of the provisions for special removal.  The grounds upon which a licensee may apply for a special
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removal are now set out in para (a) and (b) of s 15(1), but the language remains substantially unchanged since (at the latest) the Alehouses Act 1828.  The common element in the statutory grounds is that something outside the control of the licensee has happened (or shortly will happen) to the licensed premises which makes (or will make) it impossible for him to carry on business.  As Jacob LJ put it, ‘some force majeure either of God or man’ (see [2004] 3 All ER 493 at [21]).  Thus the purpose which one derives from the context of the other grounds for special removal suggests that the section is more concerned with whether the ‘occupation’ for public purposes is such as immediately or shortly to exclude the licensee than with whether it is immediately beneficial to the occupier.  One may contrast occupation for the purposes of rating, where, in addition to legal possession, ‘use and enjoyment’ of the hereditament is required: see Hampstead BC v Associated Cinema Properties Ltd [1944] 1 All ER 436, [1944] KB 412.  By contrast, I consider that a public authority which obtains legal possession of licensed premises with a view to putting them to some future public use is in immediate occupation of those premises for the purposes of s 15.  The possession of the authority is sufficient to exclude the licensee, who would be committing a trespass if he attempted to re-enter and carry on his business.  I agree with Jacob LJ that ‘mere public ownership’ of a vacant property is not sufficient but I think that possession is.  But once one treats the council as having gone into occupation when they took possession, then it is clear that their occupation must have been for a public purpose, namely for the implementation of the statutory scheme.
[13] Mr Steel said that the grounds in s 15 should be given a narrow construction because the right to a special removal could be abused.  A licensee lucky enough to have been compulsorily acquired could shift his licence to much larger premises which might not be open to objection as ‘structurally deficient or structurally unsuitable’ but be very unsuitable on broader environmental grounds.  The chronology of the acquisitions of Mim’s Bar and the Gresham by Ultimate gave rise to some suspicion that the former had been bought specifically because it was likely to be subject to a compulsory purchase order and could enable Ultimate by special removal to obtain a licence for the Gresham which would otherwise have been refused.  Mr Steel, who is experienced in these matters, told us that such tactics were not unusual under the 1964 Act and that there had been a market in public houses subject to compulsory purchase orders.
[14] There are two difficulties about this argument.  The first is that the grounds for a special removal (although the term ‘special removal’ came later) have remained unchanged since the 1828 Act.  At that time the justices had a complete discretion as to whether to grant the removal or not.  So the procedure was not then open to abuse.  The restriction on the grounds of refusal was first introduced by the Licensing Act 1904.  But that change in the law could not have changed the meaning of occupation for a public purpose.
[15] Secondly, the kind of strict construction proposed by Mr Steel and adopted by the Court of Appeal would be a very haphazard way of dealing with the mischief.  As long as the acquiring authority moved quickly to use or demolish the licensed premises, the licensee would be able to remove the licence to somewhere environmentally unsuitable.  This would be an irrational policy for Parliament to adopt.
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[16] It follows that in my opinion the conditions for a special removal were satisfied and the justices had jurisdiction to grant it.  The appeal must be allowed.  The interested parties, Rindberg Holding Co Ltd and Peel Hotels Ltd, must pay their costs here and below.
LORD SCOTT OF FOSCOTE.
[17] My Lords, I have had the advantage of reading in advance the opinion of my noble and learned friend Lord Hoffmann and for the reasons he gives, with which I agree and to which there is nothing I can usefully add, I too would allow this appeal.
LORD RODGER OF EARLSFERRY.
[18] My Lords, I have had the advantage of considering the speech of my noble and learned friend, Lord Hoffmann, in draft.  I agree with it and, for the reasons he gives, I too would allow the appeal with costs here and below.
LORD WALKER OF GESTINGTHORPE.
[19] My Lords, I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Hoffmann.  I agree with his opinion and for the reasons which he gives I would allow this appeal.
LORD BROWN OF EATON-UNDER-HEYWOOD.
[20] My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann and for the reasons he gives I too would allow the appeal and make the order which he proposes.  I wish, however, to add a short judgment of my own in connection with the respondents’ preliminary objection.  This objection is to your Lordships hearing the appeal at all given the impossibility of the appellants ever now being able to take advantage of the disputed licence to trade at the Gresham Hotel.  The appeal, say the respondents, is now moot.
[21] I respectfully agree with Lord Hoffmann that a complete answer to this objection is to be found in the appellants’ outstanding claim for damages (currently put at some £340,000) pursuant to the respondents’ cross-undertaking given as a condition of the appellants’ own undertaking and a subsequent stay order which together operated to delay any chance of opening the Gresham for licensed trading by some eight months.  Admittedly success on this appeal does not guarantee success on the claim for damages; without a successful appeal, however, the Court of Appeal’s judgment would stand and of itself necessarily defeat the damages claim ([2004] EWCA Civ 767, [2004] 3 All ER 493, [2005] 1 WLR 1732).  That seems to me sufficient justification for deciding the point at issue notwithstanding that no one’s entitlement to an on-licence can ever again depend upon the proper construction of the words ‘occupied … for the improvement of highways, or for any other public purpose’ in s 15(1)(a) of the Licensing Act 1964—the point of law of general public importance at issue when this House granted the appellants leave to appeal on 20 October 2004.
[22] The other ground on which the appellants sought to resist the respondents’ preliminary objection, however, the question of costs, seems to me altogether more difficult and it is on this issue that I wish to express certain thoughts of my own.
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[23] True it is that very substantial costs have already now been incurred in litigating this case in the lower courts: the combined costs of both sides in the High Court ([2004] EWHC 446 (Admin), [2004] All ER (D) 272 (Mar)) and the Court of Appeal are put at some £250,000.  But nobody has suggested (nor, to my mind, could possibly suggest) that this House would ever give leave to appeal if the only reason for doing so was to determine what had become a purely academic point just so as to see whether the Court of Appeal had decided it correctly and thus made the right costs order below.  That would simply not be a proper exercise of this House’s jurisdiction as a second-tier appeal tribunal nor an appropriate use of your Lordships’ time, put aside the expenditure of the further costs involved in litigating the issue yet again.
[24] I acknowledge the point made by Lord Hoffmann at [8], above, that, generally speaking, an appellant before the House is permitted to pursue his appeal even though it no longer turns on a question of general public importance but rather has become, as in Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54, [2005] 1 All ER 191, [2004] 1 WLR 3251, ‘a one-off case’ for which ‘the House would not ordinarily have given leave to appeal’ (see para [3] of Lord Steyn’s speech).  There seems to me a significant difference, however, between a case like Sirius where there remained a live issue between the parties on the outcome of which hung a substantial claim and a case such as I am envisaging where all that is at stake is past (and future) costs.
[25] The only other decisions of the House which were referred to your Lordships, Sun Life Assurance of Canada v Jervis [1944] 1 All ER 469, [1944] AC 111 and Ainsbury v Millington [1987] 1 All ER 929, [1987] 1 WLR 379n, involved very different considerations.  In each of those cases, as Lord Hoffmann has explained at [6], above, the outcome of the appeal could have had no effect upon the position of the parties—either as to their respective rights or, and this was critical, as to costs—and were therefore in a complete sense moot.  But each of them unquestionably would have involved the House deciding a substantive point so as to clarify the law for future cases: in the Sun Life case, the law concerning a large number of the appellants’ other endowment policies; in Ainsbury’s case a question of general importance regarding housing law.  That notwithstanding, the House declined to hear either appeal.
[26] The situation I am presently considering is, of course, essentially the obverse of those two cases: here, unlike there, costs is the one matter which can be affected by the appeal; but here, of course, unlike there, no issue arises of any wider importance than who should pay the costs incurred at the earlier stages of the litigation.
[27] In this situation I for my part would expect the House to be altogether readier to refuse to hear an appeal notwithstanding that leave had been granted than where, as in Sirius, some genuine question other than costs still divides the parties and remains at issue.
[28] In the present case the appellants should surely have sought the expedition of their appeal so that, if successful, the disputed licence would have taken effect at the Gresham before lapsing by operation of law on 24 November 2005 (when the new licensing regime came into effect under the 2003 Act)—preferably indeed, so that it would have been available for conversion to a premises licence under Sch 8 to the 2003 Act, namely before the cut-off date of 6 August 2005.  Once those dates had passed, however, the respondents (assuming there were no outstanding claim for damages and that
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the parties’ previously incurred costs had been all that remained at stake between them), should have alerted the House to the essentially academic character of the point of law for which leave to appeal had originally been given and sought its dismissal on that ground.  It is not, of course, necessary to reach a concluded view upon whether such an application would in fact have proved successful.  For my part, however, I think I would have found it fairly compelling.  And certainly the present appeal is not to be regarded as any kind of precedent for this House to decide points of law for no purpose other than to determine who should be liable for past costs.
Appeal allowed.
KUJUA STYLE TAMU ZA KUMKUNA MSICHANA AKAKUPENDA DAIMA ASIKUSALITI BONYEZA HAPA CHINI


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