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.
________________________________________
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
________________________________________
Held – (1) The correct approach for the court
to adopt in claims for financial provision, as in property adjustment in
proceedings between divorced former
115
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.
116
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
117
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
118
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
119
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
120
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
121
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
122
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
123
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
124
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.’
127
[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
128
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
129
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
130
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
131
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
132
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.
133
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
134
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
135
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,
136
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.
137
[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
138
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.
139
[2006] 2 All ER 140
Nizami v Butt
Kamaluden 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
140
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
141
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
142
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.
143
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:
144
‘… 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
145
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
146
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
147
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.
148
[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
149
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).
150
[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?’
151
[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
152
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.
153
[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
154
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).
155
[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
156
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—
157
‘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
158
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.’
159
[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.
160
[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
________________________________________
161
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.
162
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.
163
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
164
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
165
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
166
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.
167
[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.
168
[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
169
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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