R v McKenna 

R v McKenna 

R v Busby

[1960] 1 All ER 326

Categories:        CRIMINAL; Criminal Law        

Court:        COURT OF CRIMINAL APPEAL        

Lord(s):        CASSELS, DONOVAN AND ASHWORTH JJ        

Hearing Date(s):        12, 15 JANUARY 1960        

Criminal Law – Jury – Intimidation or threat – Jury recalled by judge and told that they would be kept for the night if they did not reach a verdict in ten minutes – Freedom of jury to take time – Convictions quashed.

It is a cardinal principle of English criminal law that a jury in considering their verdict shall deliberate in complete freedom, uninfluenced by any promise, unintimidated by any threat: they still stand between the Crown and the subject, and they are still one of the main defences of personal liberty (see p 329, letter g, post).

At the beginning of a criminal trial of three accused on a Monday the judge told the jury that the court could not sit after 1 pm on the following Wednesday. The trial proceeded and the court sat until 5 pm on Monday and until 6.30 pm on Tuesday. The jury retired at 12.20 pm on Wednesday. At 2.38 pm the judge recalled the jury and told them that if they had not reached a conclusion in ten minutes they would be kept all night and the case would be resumed on the next day. The jury retired and returned six minutes later with verdicts of guilty against all accused. They appealed against conviction. It was submitted for the prosecution that the evidence had been so cogent that there had been no miscarriage of justice and that, if the convictions could not stand by virtue of the proviso to s 4(1) of the Criminal Appeal Act, 1907, a venire de novo should be ordered.

Held – The convictions would be quashed.

Appeals allowed.

Page 327 of [1960] 1 All ER 326

Notes

As to the retirement of juries to consider their verdicts, see 10 Halsbury’s Laws (3rd Edn) 431, para 795, and as to the delivery of a jury’s verdict, see ibid, p 427, para 789; and for cases on the retirement of juries, see 14 Digest (Repl) 367, 3557–3563.

For the power to dismiss an appeal where there has been no miscarriage of justice, see 10 Halsbury’s Laws (3rd Edn) 535, para 985, and as to venire de novo, see ibid, pp 540, 541, para 992.

Appeals

The appellants, Charles Alexander McKenna, William James McKenna and Arthur William Busby, were convicted at Nottingham Assizes before Stable J on 25 November 1959. Busby was convicted of stealing television sets and other electrical equipment from a motor van and taking and driving away the van without the owner’s consent, and the other two appellants were convicted of being accessories after the fact.

All three applicants appealed against conviction on the ground that a substantial miscarriage of justice had occurred at the trial in that the judge had set the jury a time limit in which to reach their verdict and threatened that otherwise they would not be separated until the resumption of the hearing of the case the next day. William McKenna also appealed on the ground that the jury were wrongly directed that a person who assisted an accessory after the fact could be an accessory after the fact to the principal felon.

The facts relevant to the main appeals are set out in the judgment of the courta.

J J Deave for the appellants, Charles and William McKenna.

P G Hughes for the appellant, Busby.

T R Fitzwalter Butler and D M Cowley for the Crown.

Cur adv vult

15 January 1960. The following judgment was delivered.

CASSELS J read the following judgment of the court: These three appellants were convicted at Nottinghamshire Assizes on 25 November 1959, before Stable J of the following offences: Busby of stealing 162 television sets, 120 pocket radio sets, six automatic record players, and other valuable electrical equipment from a Dennis motor van in the county of Nottingham in May 1959; and also of taking and driving away the same van without the owner’s consent. Charles and William McKenna of being accessories after the fact in respect of the same theft.

Busby, a man with a criminal record, was sentenced to three years’ imprisonment for the theft, and to six months for taking and driving away the van, these sentences to run concurrently. Charles McKenna, who had a previous conviction in October 1959, of being an accessory after the fact in respect of the theft of certain other television sets, for which he received a term of eighteen months’ imprisonment, was now sentenced to two years’ imprisonment, the sentences to run as from commission day of the assizes. William McKenna, who had only one minor previous conviction, was put on probation for three years.

All three prisoners now appeal to this court, Busby and Charles McKenna by leave of the court, and William McKenna with the certificate of the learned judge on a point of law peculiar to his case alone. This was whether a person who, knowing of the felony, assisted not the principal felon, but an accessory after the fact, could thereby be guilty of himself being an accessory after the fact in respect of the same felony. The learned judge ruled that he could, and we agree. Indeed, as a proposition of law this ruling was not seriously disputed before us. The argument addressed to us was that since William McKenna was

Page 328 of [1960] 1 All ER 326

charged in terms with assisting the principal felon, it would not be enough to justify a conviction that he should be found guilty of assisting an accessory only. The jury by their verdict found William McKenna guilty of assisting the principal felon. He could do this indirectly by assisting an accessory after the fact to the same felony, and there was cogent evidence that he did so. If, therefore, there were no other ground of appeal in William McKenna’s case, there would be no reason for interfering with the verdict.

There is, however, a further ground of appeal common to all three appellants. In the case of Busby and Charles McKenna it is their only ground. It is this: that the learned judge, after the jury had been considering their verdict for over two hours, called them back into court and threatened to keep them together all night and until 11.45 am the next day unless they arrived at a conclusion within the next ten minutes.

The learned judge’s actual words, according to the transcript of the proceedings, were these:

“I have disorganised my travel arrangements out of consideration for you pretty considerably already. I am not going to disorganise them any further. In ten minutes I shall leave this building and if, by that time, you have not arrived at a conclusion in this case you will have to be kept all night and we will resume this matter at 11.45 a.m. tomorrow. I do not know, and I am not entitled to ask—and I shall not ask—why in a case which does not involve any study of figures or documents you should require all this time to talk about the matter. May I suggest to you that you go back to your room, that you use your common sense, and do not worry yourself with legal quibbles. That is what you are brought here for: to use your common sense, bring a bit in from outside. There it is, members of the jury.”

The jury thereupon retired again and came back into court six minutes later with verdicts of guilty on the charges above set out. It is now said on behalf of all three appellants that the ultimatum delivered by the learned judge was so improper that the convictions should be quashed.

In fairness to the learned judge the following facts should be mentioned. The trial began on Monday, 23 November 1959, and at the outset the jury were informed that the court could not sit on the Wednesday afternoon [ie, 25 November 1959], but would rise at 1 pm. The court sat until 5 pm on the Monday, and until 6.30 pm on the Tuesday. On Wednesday morning the learned judge commenced his summing-up, and at 12 noon he addressed the jury as follows:

“Under the rules that govern our procedure once a summing-up is finished and the jury retire they cannot separate until the verdict has been arrived at. If in the middle of a summing-up a break is requested, the jury can go before the conclusion, and come back and hear the conclusion of the summing-up the next day or after the adjournment. The position is this, that I am very much afraid that I have this engagement and I cannot escape it. I have to get up to London by the 1.35 train, which means I shall have to leave here about ten minutes past one o’clock. If you feel you cannot arrive at a verdict in this case before then I can break off my summing-up at this stage. There won’t be very much to add, I can assure you, and you can come back here tomorrow morning at 11.45 a.m., by which time I shall have returned from London, and then I can conclude the summing-up and you can retire and arrive at your verdict. What I want to guard against is one o’clock coming and you saying, ‘we still have not arrived at our verdict’, in which case I would have to throw this engagement over and it would be very inconvenient and would keep you all locked up overnight.”

(The foreman of the jury): “May we discuss that, my Lord?”

(Stable J): “I won’t finish my summing-up; we will have a little break.“

Page 329 of [1960] 1 All ER 326

The court thereupon adjourned for ten minutes, and on the resumption at 12.15 pm the foreman of the jury informed the learned judge that the jury would require more than three-quarters of an hour to reach a verdict. This, of course, would mean that if the learned judge went on to conclude his summing-up, the court would not rise at 1 pm as had been arranged. Instead of accepting this position, and concluding his summing-up the next morning, the judge said: “I will catch the later train and I will now run through the indictment again”. Having done this, and finished his summing-up, the judge asked the jury to consider their verdict at 12.20 pm. They, thereupon, retired and were out for two hours. At 2.20 pm they returned, asking for guidance on two questions, and this the learned judge gave. One question was whether by wittingly helping an accessory after the fact William McKenna could himself be an accessory after the fact, and the judge, as we have already stated, said: “Yes”. The other was a question which seemed to indicate that the jury might be convinced that Busby took and drove away the Dennis van in Cambridgeshire but not in Nottinghamshire, as the count in the indictment alleged. They wanted to know if in the circumstances the indictment could be altered. If we may respectfully say so, the learned judge did not seem fully to grasp the point the jury were making. Otherwise he could have told them that they could say, if they so found, that Busby was guilty of taking and driving the van away in Cambridgeshire. Nothing, however, now turns on this particular point and the answer which the learned judge in fact gave, except that the prosecution, very naturally, stresses the fact that the jury’s question showed that they thought that Busby was guilty of this offence at any rate in the county of Cambridge.

Having received answers to their two questions the jury retired again at 2.23 pm. Fifteen minutes later they were apparently brought back into court by order of the judge and he then delivered to them what has been called the ultimatum to reach a conclusion within the next ten minutes or be kept together all night. We think we ought to state that a jury is, in any event, never locked up in the jury room all night, but if necessary accommodated in a hotel. This jury may, very understandably, not have known this. After the threat (and we regret we can call it nothing else) that failing a conclusion in ten minutes they would be kept together till 11.45 the next morning, the jury arrived at a conclusion adverse to the appellants in six minutes.

It is a cardinal principle of our criminal law that in considering their verdict, concerning, as it does, the liberty of the subject, a jury shall deliberate in complete freedom, uninfluenced by any promise, unintimidated by any threat. They still stand between the Crown and the subject, and they are still one of the main defences of personal liberty. To say to such a tribunal in the course of its deliberations that it must reach a conclusion within ten minutes or else under-go hours of personal inconvenience and discomfort, is a disservice to the cause of justice. In this case the ultimatum no doubt fell with added force on the jury since two of them were women. It may well be that having regard to the steps he had taken from the outset to ensure that the case should finish by mid-day on the third day, steps which included working beyond the normal hours on the Monday and the Tuesday, the learned judge was understandably irritated by the inconvenient slowness of the jury in reaching a verdict in what he thought was a plain straightforward case. But juries do at times take much longer than a judge may think necessary to arrive at a verdict; there are, after all, twelve of them who have to be unanimous and the proper exercise of the judicial office requires that irritation on these occasions must be suppressed or at any rate kept severely in check. To experience it is understandable; to express it in the form of such a threat to the jury as was uttered here is insupportable.

What then, in these circumstances, should this court do? The prosecution asked originally that a distinction should be drawn between the cases of Busby

Page 330 of [1960] 1 All ER 326

and Charles McKenna on the one hand, and William McKenna on the other; and that if the learned judge’s ultimatum to the jury were a grievous irregularity, William McKenna’s conviction should be quashed, but the other convictions should stand. This was because, in the prosecution’s view, the case against Busby and Charles McKenna was overwhelming, but not nearly so strong against William McKenna. Pressed by the court with the strength of the evidence against William McKenna the prosecution finally submitted that his conviction, too, ought in any event to be sustained. In other words, in the case of all three appellants the proviso to s 4(1) of the Criminal Appeal Act, 1907, should be appliedb.

We subscribe to the view that the evidence against all three appellants was cogent to a degree. We also agree that it is possible that the jury had little doubt about the guilt, at any rate, of Busby and Charles McKenna. The difficulty, however, is that the opposite view cannot, with complete confidence, be excluded. They had put forward defences which though they may appear to a lawyer to be fanciful, at any rate had the effect that after two hours the jury still had not arrived at a unanimous verdict. At no stage did they say, as they could have done, that they were agreed in the case of some of the prisoners but still not agreed as regards another. And when they were told to reach a conclusion as regards all three prisoners within the next ten minutes or in default to remain together all night it is, at the very least, a reasonable inference that what their minds concentrated on in these last ten minutes was not so much the evidence they had to consider, but the inconvenience and discomfort with which they had been threatened. This being so, the court does not think it right to resort to the proviso to s 4(1). The prosecution also submits, as an alternative that a venire de novo should be ordered, but this trial was not in the true sense of the word a nullity.

With regret, therefore, the court feels bound to quash these convictions. Although any jury would have been amply justified in finding all these appellants guilty of what was, by whomsoever committed, an extremely serious, well-planned crime, it is of fundamental importance that in their deliberations a jury should be free to take such time as they feel they need, subject always, of course, to the right of a judge to discharge them if protracted consideration still produces disagreement. Plain though many juries might have thought this case, the principle at stake is more important than the case itself.

The appeals are accordingly allowed and the convictions quashed. In the case of Charles McKenna this will not mean his discharge. He is still serving his sentence of eighteen months’ imprisonment on another case. In the case of Busby it does mean that he is discharged.

Appeals allowed. Convictions quashed.

Solicitors: Registrar, Court of Criminal Appeal (for all three appellants); R A Young & Pearce, Nottingham (for the Crown).

N P Metcalfe Esq   Barrister.

R v Willis

[1960] 1 All ER 331

Categories:        CRIMINAL; Criminal Law        

Court:        COURT OF CRIMINAL APPEAL        

Lord(s):        LORD PARKER CJ, HILBERY AND SALMON JJ        

Hearing Date(s):        23 NOVEMBER 1959        

Criminal Law – Evidence – Admissibility – Hearsay – Evidence of statement made to accused by person not called as a witness – Statement relevant in considering subsequent conduct of accused.

On 19 January 1959, while the appellant, a scrap dealer, was visiting a customer in the course of business, his foreman, N, who was responsible for loading his lorries, stole from the customer a valuable drum of metal cable by hiding it on one of the lorries. On the following day the drum was unloaded in the appellant’s yard and on the morning of 21 January N took the drum to S, another customer of the appellant, who immediately spoke to the appellant on the telephone telling him that the drum had arrived. The appellant was not present when the drum was put on his lorry, or when it was unloaded in his yard, or when it was put on another lorry to be taken to S, and, according to the statements which he made later to the police, he did not know that the drum to which S referred in that conversation was one which had been stolen. After being questioned by the police during the afternoon of 21 January the appellant had another conversation with S, who told him that the drum was a valuable one and described its contents. According to the appellant’s own admission, he then suspected that the drum was stolen. On the evening of 21 January the appellant saw N, who had been taken into custody in connexion with the theft, and a conversation took place between them. Later, N confessed to having stolen the drum, and the appellant also was charged with larceny on the ground that he had acted in concert with N. At the appellant’s trial, counsel for the defence raised the question whether the appellant could give evidence of what N had said to him on the evening of 21 January (the evidence being to the effect that N had said that he was not guilty of any offence and had not taken the drum to S), in order to explain the appellant’s subsequent conduct and answers to the police, but the deputy chairman of the quarter sessions ruled that this evidence was inadmissible. In his summing-up, the deputy chairman referred to the fact that, even after seeing N on the evening of 21 January the appellant told the police that he knew nothing about the stolen drum. The appellant was convicted of the offence. On appeal,

Held – (i) the deputy chairman’s ruling was wrong, because evidence of what N had said to the appellant was relevant to explain his answers to the police and his conduct when charged, and, therefore, was admissible.

Dictum of Mr L M D De Silva in Subramaniam v Public Prosecutor ([1956] 1 WLR at p 970) applied.

(ii) even if, however, that evidence had been admitted, any jury, properly directed, would have found the appellant guilty of the offence, and the appeal would therefore be dismissed under the provisoa to s 4(1) of the Criminal Appeal Act, 1907.

Appeal dismissed.

Notes

It has long been settled law in England that the so-called hearsay rule relates only to evidence that is tendered to prove the truth of the facts stated. A statement can be “hearsay” if it is tendered to prove the truth of the facts that were heard to be stated; but if its relevance is that it was in fact made, evidence of its having been made is original evidence. Thus,

Page 332 of [1960] 1 All ER 331

the fact that a statement was made may explain the hearer’s state of mind and be admissible for that purpose; similarly, as the present case shows, the fact that a statement was made may be admissible to explain the hearer’s subsequent conduct when questioned by the police.

As to the rule against hearsay, see 15 Halsbury’s Laws (3rd Edn) 294, para 533; and for cases on the subject, see 14 Digest (Repl) 507, 508, 4909–4924.

For the Criminal Appeal Act, 1907, s 4(1), proviso, see 5 Halsbury’s Statutes (2nd Edn) 929.

Cases referred to in judgment

Subramaniam v Public Prosecutor [1956] 1 WLR 965, 3rd Digest Supp.

Appeal

The appellant, George Arthur Willis, was convicted at the Berkshire Quarter Sessions, before the deputy chairman and a jury, of the larceny of a drum of metal cable and was sentenced to eighteen months’ imprisonment. He appealed against conviction.

E Clarke for the appellant.

K Jones for the Crown.

23 November 1959. The following judgment was delivered.

LORD PARKER CJ delivered the following judgment of the court: The appellant was convicted at the Berkshire Quarter Sessions, before the deputy chairman, of larceny and was sentenced to eighteen months’ imprisonment. He now appeals by leave of the court against his conviction. It is necessary, in order to understand the position, to state the facts in a little detail. The appellant is in business at Southend as a dealer in scrap metal. He has a number of lorries and he employs a number of lorry drivers, and, in particular, he employed a man called Boulton as a lorry driver and a man called Napper, who was what was called the outside foreman. His business had a contract with the Atomic Energy Authority to remove scrap weekly from Aldermaston, and it was his practice to go down there in his car, accompanying such lorries as were necessary, once a week to collect the scrap. His evidence was that he left the actual collection of the scrap and of loading-up to the foreman, Napper, and that he himself was only concerned with seeing the officials of the Atomic Energy Authority and inspecting any property which from time to time they were prepared to sell.

On 19 January 1959, two lorries, three drivers, Napper and the appellant all went down to Aldermaston. His evidence was that, while he was seeing various people about the place, Napper was responsible for the loading, and there is no doubt that Napper instructed Boulton, who was incidentally convicted also, to load a large and valuable drum of cable. That was put on one of these lorries. It was packed round with scrap metal and a tarpaulin was put over it. Towards the end of the day, the two lorries went over the weighbridge. The appellant followed in his car and the procession went to an inn known as the Hare and Hounds, where it was the practice for the party to spend the night. The lorries were parked outside the inn. The drivers, Napper, and the appellant stayed there, and the next morning the appellant and Napper, who had business of their own elsewhere, went their separate ways. The lorry with the drum of cable was driven back to the yard at Southend. The evidence is that there it was unloaded. That was on the afternoon of 20 Janary. After dark that evening the appellant got back to his yard at Southend. The next morning, according to him, before he arrived at the office a lorry had left with this particular drum of cable going to Watford to a company known as the Brookside Metal Co of which Mr Stock was the manager.

Napper confessed to having stolen that drum of cable, and the whole question in the trial which followed of Boulton and the appellant was whether they, in their respective capacities, had been acting in concert with Napper. The appellant maintained—and it was not contradicted—that he had nothing to do

Page 333 of [1960] 1 All ER 331

with the actual loading. He said that, although he had gone with the lorries to the Hare and Hounds, he never realised that there was this valuable drum of cable on one of the lorries. He said that he never saw it in the yard; that it was dark when he got back to Southend in the evening; and that the cable had gone by the time he got down there the next morning.

The prosecution’s case against the appellant, on the other hand, was, first, based on the argument that, if Napper was acting on his own and not on the instructions of or in concert with a fraudulent employer, he was taking a quite fantastic risk because he was doing everything right under the eyes of his employer who, if an honest man, would have handed him over to the police at once. Added to that, Napper took a drum said to be worth £550—it contained forty per cent copper—to an old customer of his employer, the Brookside Metal Co where, if payment was to be made, it would be payment made to his employer, and therefore he, Napper, stood to get nothing out of it.

The second part of the prosecution case was based on the appellant’s failure to give candid answers to the police. The position with regard to that was that on 21 January Mr Stock rang up as soon as the drum had arrived and said that it had arrived. The appellant said that he had no idea that it was a drum of cable which had come from Aldermaston but thought that Mr Stock referred to some cable which had been inspected some few days before. That same afternoon the police arrived. Sergeant Rickwood questioned the appellant. He denied having taken the drum from Aldermaston. The yard was searched. The drum was not there, and the appellant said that it was quite impossible for it to be there without his knowing it. Then followed another conversation with Mr Stock, and it is perfectly clear that Mr Stock then told the appellant that he had seen the cable; that it was a very valuable one and contained forty per cent copper; and that the appellant was forced to admit that, as soon as that occurred, he suspected that it was a stolen drum. Still on 21 January at about 10 pm, he saw Napper, who was in custody, and a conversation took place, and it is as a result of a ruling given with regard to that conversation that this appeal comes before the court. Counsel for the defence raised the question whether he was allowed to ask and the appellant was allowed to answer what Napper had told him in that conversation. It was said that evidence of that conversation was material in considering the appellant’s subsequent conduct and the answers that he gave to the police, which were to the effect that he knew nothing about the stolen drum of cable. The matter was argued in the absence of the jury, and in the end the deputy chairman ruled that the evidence was inadmissible.

This court is of opinion that that ruling was wrong. It is quite clear that evidence of what has been said by somebody else, who is not called as a witness, may be perfectly good evidence of the state of mind in which the prisoner was. In a recent case in the Privy Council, Subramaniam v Public Prosecutor, it was held that the state of mind of a man charged with possessing ammunition, contrary to certain regulations, could be proved by what had been told him in that case by certain terrorists into whose hands he had come. Mr De Silva, giving the advice of the Board, said this ([1956] 1 WLR at p 970)

“In ruling out peremptorily the evidence of conversation between the terrorists and the appellant the trial judge was in error. Evidence of a statement made to a witness by a person who is not himself called as a witness may or may not be hearsay. It is hearsay and inadmissible when the object of the evidence is to establish the truth of what is contained in the statement. It is not hearsay and is admissible when it is proposed to establish by the evidence, not the truth of the statement, but the fact that it was made. The fact that the statement was made, quite apart from

Page 334 of [1960] 1 All ER 331

its truth, is frequently relevant in considering the mental state and conduct thereafter of the witness or of some other person in whose presence the statement was made.”

In the opinion of this court, that statement of the law is applicable to the position in the present case. It is true that the Board were there considering the state of mind and conduct of the prisoner at the time of the commission of the offence, but, provided that the evidence as to his state of mind and conduct is relevant, it matters not whether it was in regard to the conduct at the time of the commission of the offence or, as here, at a subsequent time to explain his answers to the police and his conduct when charged. Accordingly, it seems to this court that that evidence in the present case was wrongly excluded.

In those circumstances, counsel for the appellant points to the fact that a great deal of the prosecution case was based on the answers which the appellant gave to the police, and counsel has drawn attention to a number of passages in which the deputy chairman in his summing-up stressed the matter. It is perhaps sufficient to refer only to one of the passages, occurring at the end of the summing-up. It is in these terms:

“But it does not end there. [The appellant] told you the reason why he did not do it was because he wanted to see Napper first. He saw Napper that evening, and saw Sergeant Rickwood immediately after he had seen Napper. You may ask yourselves, members of the jury, if he had decided not to tell the police until he had seen Napper, why, after he had seen Napper, did he not then tell Rickwood, whom he saw that evening, about the drum. You will have to consider that very carefully, members of the jury, and ask yourselves what light that throws on [the appellant’s] mentality.”

It appears that the evidence which the appellant sought to give was that Napper had said that he, Napper, was not guilty of any offence and had not taken any drum of cable to the Brookside Metal Co. It is said that, if that evidence had been given, a comment such as that to which I have just referred—and there are several others—would not have been made. It seems to this court, however, that, although the comment would not have taken exactly the same form, a similar comment was inevitable, namely: Was the absence of a true statement to the police consistent with the appellant’s innocence?

This court is sparing in its application of the proviso to s 4(1) of the Criminal Appeal Act, 1907b,but in the present case it seems to the court that the evidence here is really overwhelming and that, even if evidence as to the conversation with Napper had been admitted, any jury, properly directed, were bound to come to the same conclusion as that to which this jury came. In the first place, it is almost inconceivable that an honest employer, even though told by his employee that nothing had been stolen and that nothing had been taken to Mr Stock’s yard, should not at once have told the police what he had been told by Mr Stock, namely, that a drum of cable which appeared to have been stolen had come from the appellant’s yard. It is almost inconceivable that, on the next day when he was seen by Inspector Moyle, he should have said, as I think he did, “My lorries have not been used to take any drums of cable out; I know different to that”. Finally, as I said at the beginning, there was the overwhelming case against the appellant on the basis that Napper, with an honest employer, was taking the most fantastic risk and appeared at

Page 335 of [1960] 1 All ER 331

the end not to be in a position to obtain any advantage from it. It seems to this court that any jury properly directed would have been bound to return the same verdict even if this evidence had been admitted, and, accordingly, this appeal must be dismissed.

Appeal dismissed.

Solicitors: Nelson Mitchell & Williams, Southend-on-Sea (for the appellant); Solicitor to Berkshire County Council (for the Crown).

Kevin Winstain Esq   Barrister.

R v Bennett, Ex parte R

[1960] 1 All ER 335

Categories:        ADMINISTRATION OF JUSTICE; Judiciary        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, HILBERY AND PEARSON JJ        

Hearing Date(s):        11 DECEMBER 1959        

Magistrates – Procedure – Summary trial for indictable offence – Consent of accused to summary trial – Case adjourned for a week after evidence of first prosecution witness – Whether accused entitled to withdraw consent at adjourned hearing – Whether summary trial begun – Magistrates’ Courts Act, 1952 (15 & 16 Geo 6 & 1 Eliz 2 c 55), s 19(5), s 24.

The applicant appeared before a metropolitan magistrate on an information charging her with attempted suicide, which was an indictable offence triable summarily under s 19 of the Magistrates’ Courts Act, 1952. The provisions of the section having been complied with, the applicant elected to be tried summarily and pleaded not guilty. A woman police officer was then called and said that she had seen the applicant that morning in a hospital and had told her that she would be taken to a police station and charged with attempted suicide, and that, when the applicant was charged and cautioned, she had said “It was not an attempt to commit suicide.” The woman police officer was the only witness for the prosecution ready to give evidence and the applicant, at the request of the prosecution, was remanded for a week. At the adjourned hearing the applicant, through counsel, asked for leave to withdraw her consent to be tried summarily so that she could be tried by a jury. The magistrate held that, as he had begun to try the case summarily, he could not allow the applicant to change her election. On an application for an order prohibiting the magistrate from continuing with the summary trial, it was contended for the applicant that the evidence of the woman police officer was merely formal evidence in connexion with remand and not evidence in the case.

Held – The evidence of the woman police officer was evidence in the case, and, therefore, the magistrate had begun “to try an information … summarily” within the meaning of s 24a of the Magistrates’ Courts Act, 1952, and could not allow the applicant to change her election, as he was precluded by s 24 from inquiring into the information as an examining justice.

R v Craske, Ex p Metropolis Police Commissioner ([1957] 2 All ER 772) distinguished.

Notes

As to consent by adults for summary trial of indictable offences, see 25 Halsbury’s Laws (3rd Edn) 177, para 326, and 205, para 372.

For the Magistrates’ Courts Act, 1952, s 19 and s 24, see 32 Halsbury’s Statutes (2nd Edn) 438, 443.

Page 336 of [1960] 1 All ER 335

Cases referred to in judgment

R v Craske, Ex p Metropolis Police Commissioner [1957] 2 All ER 772, [1957] 2 QB 591, 121 JP 502, [1957] 3 WLR 308, 3rd Digest Supp.

R v Ibrahim (1957), 122 JP 119, 42 Cr App Rep 38, 3rd Digest Supp.

Motions for prohibition and mandamus

The applicant moved the court for (i) an order of prohibition, directed to Paul Bennett, Esq, VC, the metropolitan magistrate sitting at the Marlborough Street Magistrates’ Court, prohibiting him from proceeding with the summary trial of the applicant on a charge of attempted suicide; and (ii) an order of mandamus requiring him to inquire into the case as an examining justice.

The facts are stated in the judgment of Lord Parker CJ.

P Sheridan for the applicant.

Paul Wrightson for the respondent, the prosecutor.

11 December 1959. The following judgments were delivered.

LORD PARKER CJ. On 16 November 1959, the applicant appeared before the learned magistrate charged with attempted suicideb. It appeared to be a matter with which the magistrate could properly deal summarily, and accordingly the provisions of s 19 of the Magistrates’ Courts Act, 1952, were invoked. I entirely accept the learned magistrate’s affidavit that that section was fully complied with; in other words, the court ordered the charge to be written down and read to the accused, who was told that she was at liberty to be tried summarily instead of being tried by a jury, and so on. She elected to be tried summarily, and thereupon she was asked to plead, and she pleaded not guilty. Thereafter, a woman police constable was called, who said this:

“At 11.45 today at St. George’s Hospital I saw the [applicant]. I told her I should take her to Gerald Row Police Station where she would be charged with attempted suicide. When charged and cautioned she said ‘It was not an attempt to commit suicide’.”

Thereafter, the applicant was remanded for seven days, and the magistrate directed that there should be a medical report. At the adjourned hearing on 23 November she was represented by counsel, who asked the magistrate for leave to change her election so that she should go for trial by a jury. The magistrate decided that he had no power to allow her to change her election. In those circumstances this court was moved to prohibit him from continuing with the trial in a summary way.

The whole matter depends on s 19 and s 24 of the Magistrates’ Courts Act, 1952. By s 19(5) it is provided:

“After informing the accused as provided by the last two preceding subsections the court shall ask him whether he wishes to be tried by a jury or consents to be tried summarily, and, if he consents, shall proceed to the summary trial of the information.”

Pausing there, there is nothing in the statute which deals in any way with the possibility of a change in the election, but s 24 provides:

“Except as provided in sub-s. (5) of s. 18 of this Act [which has no relevance in this case], a magistrates’ court, having begun to try an information for any indictable offence summarily, shall not thereafter proceed to inquire into the information as examining justices.”

Page 337 of [1960] 1 All ER 335

Accordingly, the short question here is whether, on the facts, the magistrate had begun to try an information summarily within the meaning of that section.

There have been two authorities at least on this matter. In R v Craske, Ex p Metropolis Police Commissioner, it was held by this court that a magistrate who has merely taken the plea has not begun to try an information summarily and that he does not so begin until he begins to take evidence. Again, in R v Ibrahim, it was held by the Court of Criminal Appeal that a magistrate has not begun to try an information summarily within s 24 by hearing the opening by the prosecution. Again, it is said that he does not so begin until he begins to hear evidence.

In the present case, a policewoman gave the evidence to which I have referred. Counsel for the applicant, however, says that that evidence was merely formal evidence, the sort of evidence which would have been given in connexion with bail. He says that this was formal evidence in connexion with remand and was not, as he puts it, evidence in the case. He seeks to support that by reference to R v Craske, where he maintains that similar evidence of arrest and charge had been given, albeit in the form of depositions. For my part, I am satisfied that no help can be obtained from R v Craske. It is true that there is a reference ([1957] 2 All ER at p 773; [1957] 2 QB at p 594) to evidence being taken in deposition form of the arrest and charge of one Rees, but, if one looks at the passage closely, it is quite clear that that evidence in deposition form was taken after the magistrate had decided in that case to allow the prisoner to change his election and had begun to take evidence as an examining justice. For my part, without deciding whether there can be what is called formal evidence as opposed to evidence in the case, I am quite clear, accepting the learned magistrate’s affidavit as I do, that the evidence of this police officer was evidence in the case. In his affidavit the learned magistrate says:

“The witness concerned was a witness in the trial and fully gave her evidence, though I believe the police officer in charge of the case had first intimated to me that he had only one witness ready to give evidence and would ask for a remand after she had so given evidence. The police officer in charge did so ask for a remand thereafter.”

The court has been supplied with a transcript of a shorthand note which was taken and from which it appears that, after the plea, Police Inspector Francis Woods said: “I will ask for a remand, Your Worship”, and then the evidence was given. That largely supports the learned magistrate’s affidavit. Accepting that evidence as I do, it seems to me that the woman police officer was the only witness for the prosecution who was present and was the first witness in the case, and that she gave her evidence in the trial, and that the applicant was thereafter remanded. Accordingly, I think that these applications fail and should be dismissed.

HILBERY J. I agree.

PEARSON J. I also agree.

Motions dismissed.

Solicitors: Barry Ziff (for the applicant); Solicitor, Metropolitan Police (for the prosecutor).

F Guttman Esq   Barrister.

Wexler v Playle (Valuation Officer) and Others

[1960] 1 All ER 338

Categories:        LOCAL GOVERNMENT        

Court:        COURT OF APPEAL        

Lord(s):        MORRIS, WILLMER AND HARMAN LJJ        

Hearing Date(s):        8, 9 DECEMBER 1959        

Rates – Valuation – Dwelling-house – Disrepair – Landlord’s liability to repair – Dwelling-house in poor state of repair – Disrepair disregarded in arriving at value – Valuation for Rating Act, 1953 (1 & 2 Eliz 2 c 42), s 2(2), (3) (a).

A flat was in poor decorative repair and had cracks in the ceiling and walls, window frames requiring re-setting, damp in the kitchen ceiling and wall, a defective hot-water tank and the stove out of order. It was agreed that all these defects were readily repairable. They were disregarded by the Lands Tribunal in arriving at the gross value of the flat under s 2(2) of the Valuation for Rating Act, 1953, on the ground that the hypothetical tenant taking the flat would have required the hypothetical landlord to put the flat in a reasonable state of repair under his covenant to repair in accordance with everyday practice.

Held – There was no error of law in the decision of the tribunal since the landlord’s obligation to repair included the obligation to put the flat into repair and the defects being remediable were such that the hypothetical tenant would require him to put them right (see p 343, letter h, and p 346, letters f and i, post).

Quaere: (i) whether the “state” in which a dwelling-house must be assumed to have been on 30 June 1939, for valuation purposes under s 2(3)(a) of the Valuation for Rating Act, 1953, includes its state of repair (see p 342, letter b, p 345, letter h, and p 347, letter a, post).

(ii) whether the words “necessary to maintain the hereditament in a state to command that rent” in s 2(2) of the Valuation for Rating Act, 1953, govern only the words “the other expenses, if any” that immediately precede them or govern also the prior words “the cost of the repairs and insurance” in that subsection (see p 342, letter i, p 345, letter i, to p 346, letter c, and p 347, letter a, post).

Rates – Lands Tribunal – Evidence – Evidence after decision reserved – Discretion of tribunal to refuse to hear evidence that might have been adduced at hearing.

At the hearing of a rating appeal relating to a second floor flat, a schedule of rents of other flats was put in, including one particular flat, comparable in size, of which the figures and circumstances were set out. The Lands Tribunal reserved its decision. It subsequently received an application from the ratepayer for leave to adduce further evidence concerning “the comparative amounts of natural light reaching” the two flats and its effect on comparability and the value of the appeal flat. The nature of the evidence was such that it could have been given at the hearing. The tribunal rejected the application and gave its decision. On appeal,

Held – Though there might be cases in which further evidence should be admitted after a hearing and before decision, yet the tribunal had properly exercised its discretion in refusing to admit the fresh evidence in this case, since the evidence was on a matter which had been part of the inquiry before the tribunal and could have been given at the hearing.

Bigsby v Dickinson ((1876), 4 ChD 24) distinguished.

Appeal dismissed.

Notes

This case related to a dwelling-house, the method of ascertaining the gross value of which during the currency of present valuation lists (in force until 1 April 1963, under present legislation) is defined by s 2(2) and (3) of the Valuation for Rating Act, 1953. It would seem, however,

Page 339 of [1960] 1 All ER 338

that the decision would apply to the ascertainment of the value of other hereditaments for which a gross value is required to be ascertained, the definition in s 2(2) being based on and closely following that in s 68(1) of the Rating and Valuation Act, 1925 (cf s 4 of the Valuation (Metropolis) Act, 1869) save that the definition in the Act of 1953 is related to values in June, 1939.

For s 2(2) and (3) of the Valuation for Rating Act, 1953, see 33 Halsbury’s Statutes (2nd Edn) 584.

Cases referred to in judgment

Bigsby v Dickinson (1876), 4 ChD 24, 46 LJCh 280, 35 LT 679, 22 Digest (Repl) 180, 1634.

Case Stated

The appellant ratepayer was the occupier of a flat, 13, Park Mansions, Prince of Wales Drive, Battersea. He appealed by way of Case Stated against a decision of the Lands Tribunal (H P Hobbs, Esq) given on 12 December 1958, reducing the assessment of the flat from £69 gross value, £51 rateable value, to £65 gross value, £48 rateable value (4 RRC 161).

The facts appear in the judgment of Morris LJ at letter F, infra, and p 340, letter H, post.

W J Glover for the ratepayer.

J R Phillips for the valuation officer.

J P Harris for the rating authority.

9 December 1959. The following judgments were delivered.

MORRIS LJ. This matter concerns the rating of a flat on the second floor of a block of flats called Park Mansions in Prince of Wales Drive, Battersea. The matter went to the local valuation court, which gave its decision on 9 October 1957. Thereafter the tenant, who is the appellant ratepayer in this court, gave a notice of appeal to the Lands Tribunal. That was on 28 October 1957. The Lands Tribunal heard the appeal and gave its decision on 12 December 1958. Thereafter by a notice dated 21 January 1959, the tenant gave a notice requiring the Lands Tribunal to state a Case. Accordingly points of law are now raised for our consideration

The flat is situated in a road which runs along the south side of Battersea Park between Albert Bridge Road and Queenstown Road. The block of flats is at the junction of Albert Bridge Road and Prince of Wales Drive. The building is a substantial one and was erected about sixty years ago. There are no lifts in the building. The particular flat, which, as I have said, is on the second floor and is No 13, contains a lounge, three bedrooms, a kitchen, dining room, bathroom and separate water closet, the lounge and one bedroom overlooking the park. In 1934 the flat was let at a yearly rent of £110, the landlord being responsible for rates, repairs, insurance and services. Thereafter for a period the flat was vacant. That was between March, 1935 and 1944. There was evidence which showed that the flat was vacant in June, 1939. It was later occupied, however, and the ratepayer became tenant on 24 October 1948. Under his tenancy the landlord was responsible for rates, services, insurance and external repairs and the ratepayer was responsible for internal repairs.

Now the rateable value has to be arrived at by following the provisions of the Valuation for Rating Act, 1953. Section 2(1) of that Act provides as follows:

“For the purpose of making or altering the first valuation lists made after the passing of this Act, the gross value for rating purposes of a hereditament which is either a dwelling-house or a private garage or private storage premises (as hereinafter defined respectively) shall not be ascertained by reference to the definition of gross value in s. 68 of the Rating and Valuation Act, 1925 (hereinafter in this Act referred to as ‘the Act of 1925’) or in s. 4 of the Valuation (Metropolis) Act, 1869 (hereinafter in this Act referred to as ‘the Act of 1869’), but shall be an amount equal to the rent specified in the next following subsection.”

Page 340 of [1960] 1 All ER 338

There follows a proviso which is not material for present purposes. Subsection (2) is in these terms:

“The said rent is that at which the hereditament in question might reasonably have been expected on or about June 30, 1939, to let from year to year if the tenant had undertaken to pay all usual tenant’s rates and taxes and if the landlord had undertaken to bear the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent.”

Then sub-s (3) is in these terms:

“For the purposes of the last preceding subsection it shall be assumed—(a) that the hereditament was subsisting on and about the said June 30 in the state in which it actually subsists at the time of valuation.”

It is agreed that for present purposes the time of valuation was 30 March 1957. Then sub-s 3(b) reads:

“that the locality in which the hereditament is situated was on and about the said day in the same state, as respects the other premises situated in that locality and (subject to the next following subsection) as respects the occupation and use of those premises, as respects the transport services and other facilities available to persons living or working in the locality, and as respects other matters affecting the amenities of the locality, as it is at the time of valuation”,

which again, as I have said, means in this case 30 March 1957.

Questions arose as to the way in which to value having regard to the provisions of those sub-ss. (2) and (3). Under sub-s (3) a point was taken by the ratepayer that there now exists in the park near his flat a fun fair which is open in the summer months and which attracts a number of people to the locality. It was contended by the ratepayer that, if the conditions now obtaining were related to June, 1939, the effect should be to diminish the gross and rateable values. The respondent valuation officer was of the opinion that the assessment should be £77 gross value, £58 rateable value. When the matter went to the local valuation court, the determination there was that it should be £69 gross value, £51 rateable value. On appeal to the Lands Tribunal, the decision was that it should be reduced to £65 gross value, £48 rateable value. A reduction was made by the Lands Tribunal because the view was taken that there were considerations arising out of the coming of the fun fair to Battersea Park which would diminish the amenity of the flat and should result in a reduction. Accordingly, the Lands Tribunal so decided, and it awarded costs of a stated amount to the ratepayer to be paid by each one of the two respondents, the valuation officer and the rating authority, Battersea Metropolitan Borough Council. We are not concerned with that issue and no point of law arises.

The decision of the tribunal shows that evidence was given as to the state of the premises, the particular flat, in October, 1957. It is recited that a witness, Mr Arsclott, giving evidence for the ratepayer, put in a schedule of condition which had been compiled after an inspection of the flat made on 8 October 1957, and which showed that the flat was in poor decorative repair. He said that there were sundry cracks in the ceilings and in some of the walls, that the window frames required re-setting owing to war damage, that there were patches of dampness in the kitchen ceiling, presumably due to leakage from the flat above, and that there was dampness in the kitchen wall, the hot-water tank being defective and the stove apparently out of order. That witness, Mr Arsclott, agreed that all those defects were repairable. The decision also recites that the ratepayer himself gave evidence that in 1957 the water system was such that a sanitary notice had been served in respect of

“wet, defective and perished condition of walls and ceiling in kitchen; leaky condition of water tank”,

Page 341 of [1960] 1 All ER 338

and he had said that in 1956 and 1957 there was considerable inconsistency in the electricity supply. The decision further records that the valuation officer had agreed that, with regard to the flat itself, decorating was needed, that the hot-water tank required replacing, that there were defects in the window frames and that there were superficial cracks in the ceilings and walls; but he considered that all those matters permitted of repair by the landlord. The decision of the Lands Tribunal I think proceeded on the basis that on 30 March 1957, ie, the time of valuation, there were conditions of disrepair in the premises of the nature to which I have referred.

The Lands Tribunal arrived at its conclusion by looking at the 1934 rent of the flat and by looking at the rents of other second floor flats. It came to the conclusion that the starting figure should be £120. There was no doubt that certain adjustments then had to be made concerning services and interior repairs and, those adjustments having been made, the figure would become one of £115 inclusive of rates. That was the decision of the Lands Tribunal. If the deduction for rates was made, then the gross value would be £75. As I have indicated, the Lands Tribunal reduced that £75 to £65 because of the view taken concerning the change in amenities arising out of the coming of the Battersea fun fair. So that the Lands Tribunal, therefore, fixed the assessment as £65 gross value, £48 rateable value.

Two main points of law have been argued by counsel for the ratepayer and they were taken, so far as they could be taken, before the Lands Tribunal. The notice of appeal summarises the points under four heads, but the third of the four has not been argued before us. The first and second, which counsel for the ratepayer agrees can really be taken as one main point, read as follows:

“(i) that s. 2 of the Valuation for Rating Act, 1953, requires the hereditament to be valued in the state of repair in which it was at the time of valuation. (ii) that the landlord’s covenant under the said s. 2 is only to maintain the hereditament in the state of repair in which it was at the time of valuation.”

Counsel’s argument runs as follows. He says that, if reference is made to s 2(3)(a), then there has to be the assumption that on or about 30 June 1939, the hereditament was subsisting in the state in which it actually subsists at the time of valuation. The time of valuation was 30 March 1957, and counsel for the ratepayer says that the evidence was sufficient to establish that there were certain defects in the premises, of the kind to which I have referred, and that they existed on or about 30 March 1957. He therefore says that the valuation under s 2(2) must be made on the assumption that in June, 1939, the hereditament was subsisting in the state in which it actually subsisted on or about 30 March 1957. He then says that in its application to the facts of this case sub-s (2) contemplates an arrangement being made between a hypothetical landlord and a hypothetical tenant on the basis of the premises being in a state of disrepair, the landlord merely agreeing to do such repairs as would be necessary to prevent the premises becoming any worse.

To that submission learned counsel for the two respondents make several replies. They submit that that is a wholly unreal and artificial approach. They further submit certain contentions in regard to the construction of the words of sub-s (2) and sub-s (3). In regard to the words in sub-s (3)(a):

“that the hereditament was subsisting on and about the said June 30 in the state in which it actually subsists at the time of valuation”,

it is submitted, particularly by counsel for the rating authority, that the word “state” as there used refers to the structual condition of the premises but does not include the state of repair or state of decoration. In furtherance of his submission, he referred to a point, first raised I think by Harman LJ that the word “state” is also used in sub-para (b) of sub-s (3) in the clause

Page 342 of [1960] 1 All ER 338

“that the locality in which the hereditament is situated was on and about the said day in the same state, as respects the other premises situated in that locality”,

and so on. It was submitted that the basis of the argument of counsel for the ratepayer fails, because “state” does not include state of repair. Counsel for the ratepayer says that he does not contend that “state” primarily means state of repair but that the word is wide enough to include state of repair. I do not think that it is necessary to express a final opinion on this point, for I propose to reach my conclusion on the assumption that the words of sub-s (3)(a) are sufficiently wide to include the state of repair or decoration of the premises.

Another point of construction that has been raised concerns the words at the end of sub-s (2):

“if the landlord had undertaken to bear the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent.”

Are we to read the concluding words as governing “cost of the repairs and insurance” or are we to read them as governing “the other expenses, if any, necessary to maintain the hereditament in a state to command that rent.” The words used in the subsection have substantially been in existence for a very long time. They are substantially the words which form the definition of “gross value” in s 68(1) of the Rating and Valuation Act, 1925:

“‘Gross value’ means the rent at which a hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant’s rates and taxes … and if the landlord undertook to bear the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent.”

So in the Act that applied to the metropolis, the Valuation (Metropolis) Act, 1869, in s 4 we find a definition of “gross value” which is substantially in the same terms. If, however, we go back to the Parochial Assessments Act, 1836, we find these words:

“The rent at which the [hereditaments] might reasonably be expected to let from year to year, free of all usual tenant’s rates and taxes and tithe commutation rentcharge, if any, and deducting therefrom the probable average annual cost of the repairs, insurance, and other expenses, if any, necessary to maintain them in a state to command such rent.”

Those words and that punctuation would more accord with the construction for which counsel for the ratepayer contends and it has been pointed out that in the change after the Act of 1836 there was no comma between the word “repairs” and the word “insurance” but instead of a comma the word “and” was inserted. That seems to lend some support to the view that the concluding words of sub-s (2) are words that relate to “the other expenses, if any, necessary to maintain the hereditament in a state to command that rent”. The words of the subsection refer to the cost of the of insurance would not seem normally to be effectively described by the words “expenses … necessary to maintain the hereditament in a state to command that rent.”

This point of construction does not appear ever to have been decided, but counsel for the valuation officer very frankly told us that his instructions were that in practice valuers had rather proceeded on the assumption that the concluding words did govern all the words that went before. Again for my part I do not find it necessary to decide this point, for it seems to me that, even on the basis for which counsel for the ratepayer contended, he still does not succeed. Counsel’s contention was summarised in the decision in this way:

Page 343 of [1960] 1 All ER 338

“[Counsel for the ratepayer] argued that under s. 2(3)(a) of the Act of 1953 the flat must be valued exactly as it existed at the date of the proposal, submitting that, if a hereditament was out of repair at the particular date, then the rent should be the rent of the premises out of repair and conversely, if in repair, then the rent should be that of the premises in repair.”

The Lands Tribunal did not accede to those submissions. The first reason stated by the Lands Tribunal for disagreeing was expressed as follows:

“I think that it is contrary to what happens in everyday life, for in practice I am sure that a tenant viewing a house or flat with the decorations dirty and worn, some cracks in the walls and ceilings, and generally in a poor state of repair, so long as his tenancy provided that the landlord was to bear the cost of repairs, would not only require the landlord to keep the premises in a good state of repair but also to put the premises in a good and reasonable state of repair and decoration before he entered into possession and I do not think that this is a matter where the hypotheses of rating require departure from everyday practice.”

It seems to me that there is no error of law in that approach.

If, therefore, I make the assumption for which counsel for the ratepayer contends, viz, that on or about 30 June 1939, the flat was in the state in which it actually was on 30 March 1957, and if I assume in his favour that the word “state” is wide enough to cover state of repair and state of decoration, it seems to me that counsel’s submission becomes really a most unrealistic one. He submits that what has to be ascertained if premises are in temporary disrepair is what rent would be paid on the basis that the landlord only undertook to do such repairs as would prevent the premises from becoming in a worse state of disrepair. I cannot think that that is right. It runs contrary, as it seems to me, to all reason and does not accord with what could reasonably be contemplated as likely to be the bargain between a landlord and a tenant. I think we must bear in mind the opening words of sub-s (2) “The said rent is that at which the hereditament in question might reasonably have been expected … to let.” There is therefore introduced what might be expected and what might reasonably be expected. When the words of this subsection are first read, it might seem as though a somewhat illusory test is laid down for the fixing of the rent. If a high rent was fixed, then that could command onerous repair obligations and if a very low rent was fixed, that might result from a refusal to undertake any substantial repairs. That rather illusory test will not apply if the construction of sub-s (2) is the construction contended for particularly by counsel for the rating authority. It seems to me that the section is contemplating that the landlord will do repairs, and it must be remembered that, if a landlord is to maintain premises in repair or to keep premises in repair, he has the obligation to put premises in repair. So, if one postulates that a hypothetical landlord and a hypothetical tenant went into a flat which had the defects to which I have referred, such as bad window frames, cracks in the walls and celings and dampness and so on, and if we are considering what might reasonably have been expected by way of rent, I would say that it would be such rent as would be payable on the basis that the landlord would then do the necessary repairs to make the flat reasonably habitable and would do such later repairs as would be reasonable in all the circumstancesa. I think that one must assume that ordinary sensible people are dealing with the situation. I think also that consideration must be given to the class of property with which they are dealing.

Page 344 of [1960] 1 All ER 338

Counsel for the ratepayer points out that in the Case Stated, para 6 (b), it is stated as follows:

“It was admitted by both respondents that if it was correct in law to value the said hereditament in the state of repair that it was in at the date of the said proposal a deduction for the state should be made in the valuations submitted on behalf of the respondents. On behalf of the respondents [the rating authority] it was admitted that the said deduction should be the sum of £10 per annum from the inclusive rental of £120 per annum. It was admitted by the respondent [valuation officer] that the said deduction from his inclusive rental should be £5 per annum.”

There is a difference, it will be seen, between those two figures. But for the reasons that I have given, it seems to me that the Lands Tribunal did not in any way err in law in their approach. The state of disrepair was something that was easily remediable, as the Case finds. In those circumstances it seems to me that what would reasonably be expected would be that the tenant would require the landlord to put right those remediable defects. Accordingly, I consider that the basis on which the Lands Tribunal proceeded is not shown to be erroneous in law.

Now the other remaining point, which is quite a separate point, arises in this way. The hearing before the Lands Tribunal was on 29 October and 30. During the hearing, for the purpose of arriving at the starting figure of rent for the flat in question, a schedule or list of tenancies was put in showing the rents of second floor flats in the block of flats as at June, 1939. A flat which compared in size with No 13 was No 18, and the figures and circumstances with regard to that flat were set out, being part of the evidence for the tribunal to consider. After the hearing was concluded the tribunal decided to reserve its decision so as to put the decision into writing. On 10 November an application was made by the ratepayer for what was called a stay of proceedings to enable him to consider with counsel the making of an application for admission of further evidence. The other parties were not demurring to the suggestion, and on 8 December a formal application was made by the ratepayer for the hearing of further evidence arising out of the evidence given on the last day of the hearing by the expert witness for the rating authority. The decision recites that:

“The evidence was to concern the comparative amounts of natural light reaching Nos. 18 and 13 Park Mansions and the effect of this on comparability and on the value of No. 13.”

It will be apparent, therefore, that the nature of the additional evidence was such that the evidence could have been given at the time of the hearing. The Case recites that the Lands Tribunal decided to refuse the application. I read from the decision:

“I decided that these applications should be refused because I am strongly of opinion that once a hearing has been concluded that part of the proceedings is definitely finished and the fact that a decision thereon is often reserved to enable the tribunal to comply with the requirement that the decision shall be given in writing together with a brief statement of the tribunal’s reasons for its decision, should not afford an opportunity for any of the parties concerned to adduce fresh evidence.”

In the Case Stated the tribunal says:

“I refused this application and read my decision, a signed copy of which together with a document setting out the details of the second floor flats is annexed hereto and forms part of this Case.”

Now counsel for the ratepayer submits that the Lands Tribunal had power to admit the further evidence sought to be tendered but wrongfully refused to exercise such power. He submitted that there was power to admit the evidence

Page 345 of [1960] 1 All ER 338

and a discretion in the tribunal, but he says that the tribunal either failed to exercise the discretion judicially or failed to exercise it at all. We were referred to the Lands Tribunal Rules, 1956. I do not propose to mention them in detail. It does not seem to me that there is any substance in this complaint. The Lands Tribunal does not say that in no circumstances ever would it hear further evidence after the evidence had been concluded. There are many circumstances in which a court might feel it appropriate to accede to an application to hear further evidence before judgment was given in a case where the hearing had been concluded and judgment reserved. This is not the occasion to seek to describe the situations where that might be appropriate. We were referred to Bigsby v Dickinson. That was a situation in which the Court of Appeal thought that it was clearly right that an opportunity should have been given to hear further evidence. It might easily be that, after the conclusion of the evidence in a case and while judgment was reserved, it might be found that there had been some inadvertent error in a figure or in some evidence and that it would be proper to make an application to a judge to hear further evidence in order to correct an error and a judge would be very likely in an appropriate case to accede to such an application. But the present situation was quite different. A comparison between No 13 and No 18 was something which was a part of the inquiry before the Lands Tribunal and, if parties, after a hearing is concluded, have some good ideas and feel that they would like to add a little to what they have already put forward, they might well make the end of litigation quite uncertain. It seems to me that the Lands Tribunal had a discretion here over this matter. I do not think that there was any wrongful exercise or non-judicial exercise of this discretion. It was perfectly within its powers to decide as it did.

I therefore am of the opinion that that submission so clearly made by counsel for the ratepayer also fails. I think, therefore, that the points to be decided in this case must be decided against the ratepayer.

WILLMER LJ. I have come to the same conclusion, and there is but little that I desire to add to what my Lord has said. The right of appeal from the Lands Tribunal to this court is on a question of law only, and I am not persuaded in this case that the decision of the tribunal discloses any error of law. The principal argument advanced on behalf of the ratepayer amounts to this, that the combined effect of sub-s (2) and sub-s (3)(a) of s 2 of the Valuation for Rating Act, 1953, is that the gross value of the premises in question is to be fixed by reference to the rent that such premises would have been expected to command at the material date in 1939, if they were in the same state of repair in which they actually were in 1957, and on the assumption that the landlord will do such repairs as are necessary to maintain the premises in a state of repair to command that rent. It seems to me that two assumptions are fundamental to that argument, and for myself I am doubtful as to the validity of either of them. One assumption is that the word “state”, where it occurs in sub-s (3)(a), includes state of repair so as to cover the kind of defective condition of repair that we have in this case. My Lord has already read the defects alleged here and it is unnecessary to repeat them. For myself I think it is extremely doubtful whether the word “state” is to be read in the sense of including state of repair. As my Lord has pointed out, where the same word occurs in the following para (b) it clearly has no reference to state of repair, and I am not persuaded, therefore, that the first assumption is correct.

The argument also assumes that the concluding words of sub-s (2), viz, the words “necessary to maintain the hereditament in a state to command that rent”, are to be construed as governing not only the words “the other expenses, if any”, which immediately precede them, but also the earlier words, namely,

Page 346 of [1960] 1 All ER 338

“the cost of the repairs and insurance”. For it is basic to the ratepayer’s argument that the landlord’s undertaking is to be construed as an undertaking only to execute such repairs as are necessary to maintain the hereditament in the same state of repair as at the date of the proposal. My Lord has already suggested some difficulties in the way of adopting that construction. I venture to suggest another difficulty. The words actually run:

“the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent.”

On the ratepayer’s argument we should have to construe those words as though they read “the cost of the repairs and insurance, and the cost of the other expenses”. That seems to me to be a very strange way of reading the subsection, and I should have thought that the more natural construction to put on it is that the concluding words, which I have already read, are to be taken as governing only “the other expenses” which immediately precede them. Speaking for myself, therefore, I am disposed to doubt the validity of both the assumptions that underlie the appellant’s argument.

However, as my Lord has pointed out, it is not necessary for us in this case to reach any concluded view about that, because the Lands Tribunal has in fact taken another route to the solution of the case, and, as I have already said, I can see no error of law in the reasons given for the decision. Even making those two basic assumptions in favour of the ratepayer, it remains true to say that the argument involves something which, in the words of the tribunal, is contrary to what happens in everyday life. For my part I should have thought it is clear that sub-s (2) is to be construed on the basis of what normally does happen in everyday life. I infer that from the incorporation of the word “reasonably” at the beginning of sub-s (2). The subsection speaks of the rent which might “reasonably” have been expected. That imports the notion of a reasonable landlord and a reasonable tenant, behaving reasonably and making a reasonable arrangement. If that is the right approach, then I entirely agree with what my Lord has said, namely, that one would expect a reasonable landlord and a reasonable tenant, when contracting for a tenancy, if it appeared that there were readily remediable defects such as those we have in this case, to proceed on the basis that the landlord’s covenant to repair would include an obligation not only to keep the premises in repair but to put the premises in repair. That seems to me the common-sense application of the subsection. That is the way in which the tribunal applied the subsection, and I am quite unable to say that the decision was wrong. On that main point, therefore, I do not find myself able to accede to the ratepayer’s argument.

With regard to the second point, viz, that the tribunal was in error in refusing to grant leave to call further evidence after the hearing was concluded, I find myself in agreement with what my Lord has said, and I desire to add nothing further. In those circumstances I agree that this appeal should be dismissed.

HARMAN LJ. I am of the same opinion. It seems to me the decision of the Lands Tribunal was no less good law than it was clearly good sense. It would produce chaos if the ratepayer’s contentions were upheld. It seems to me that, where there is a landlord under a repairing covenant and a tenant about to take a house on a year’s tenancy, the tenant must naturally be supposed to have a landlord whom he can oblige to observe his repairing covenant, and therefore the fact that there are, at the moment when the bargain is made, repairable and temporary defects in the property ought not to be taken into account in arriving at the hypothetical rent which is the basis of the rateable value. If it were otherwise, it would be difficult in any case, and quite impossible in a case like the present, to arrive at a conclusion dependent on a state of repair existing so long ago as 1939. I am glad to think, therefore, that the tribunal was able to come to what seems to me to be a sensible conclusion

Page 347 of [1960] 1 All ER 338

and one in accordance with the law without the necessity of deciding rather nice questions of construction raised by the two subsections which my Lords have discussed. On those I desire to reserve my opinion, expressing as at present advised a preference for the views to which Willmer LJ has given expression. I need say no more on the other point except that I agree with Morris LJ.

Appeal dismissed. Leave to appeal to the House of Lords refused.

Solicitors: Mortimer, Wexler & Co (for the ratepayer); Solicitor of Inland Revenue (for the valuation officer); Sharpe, Pritchard & Co (for the rating authority).

F A Amies Esq   Barrister.

Practice Direction

(Probate and Divorce: Costs: Taxation)

[1960] 1 All ER 347

PRACTICE DIRECTIONS

PROBATE, DIVORCE AND ADMIRALTY DIVISION.

22 JANUARY 1960

Divorce – Costs – Taxation – Bill of costs – Item numbers to be shown – Rules of the Supreme Court (No 3), 1959 (SI 1959 No 1958), Sch 2, Appendix 2.

Probate – Costs – Taxation – Bill of costs – Item numbers to be shown – Rules of the Supreme Court (No 3), 1959 (SI 1959 No 1958), Sch 2, Appendix 2.

Bills drawn for taxation under Appendix 2 to the Supreme Court Costs Rulesa should show the item number in the appendix under which each item of the bill is charged.

B Long,   Senior Registrar.

22 January 1960

Isaac v Hotel De Paris Ltd

[1960] 1 All ER 348

Categories:        LANDLORD AND TENANT; Leases; Other Landlord and Tenant: COMMONWEALTH; Commonwealth countries        

Court:        PRIVY COUNCIL        

Lord(s):        LORD DENNING, LORD BIRKETT AND MR L M D DE SILVA        

Hearing Date(s):        16, 17, 18 NOVEMBER, 16 DECEMBER 1959        

Licence – Licence to occupy premises – Exclusive possession – Payment and acceptance of amount of rent due to landlord of licensor – Intention of parties – Whether licence or lease.

Privy Council – West Indies – Trinidad – Licence – Licence to occupy premises – Exclusive possession – Payment and acceptance of amount of rent due to landlord of licensor – Whether intention of parties to create relationship of landlord and tenant or of licensor and licensee.

The respondent company, owners of a hotel called the Hotel de Paris in Trinidad, were the lessees of another building called the P Hotel. J, who owned all the shares of the respondent company (sixty-four in number) had agreed to sell fifteen to the appellant. In December, 1955, at the appellant’s suggestion, the respondent company let him into occupation of the first floor of the P Hotel, it being agreed that a night bar should be established there and should be managed by the appellant on behalf of the respondent company. The appellant got a licence in his own name to use the first floor of the P Hotel as a night bar, and he put in a stock of liquor at his own expense. In February, 1956, relations between J and the appellant became strained, but at a meeting to try to settle their differences they agreed on terms which were to be embodied in a written contract. No concluded contract was reached but some of the proposed terms were acted on, viz—(i) the appellant was to remain in occupation of the first floor of the P Hotel; (ii) he agreed to pay all expenses incurred in connexion with the running of the P Hotel, including the monthly rent which the respondent company paid to their landlord; (iii) he would retain for himself all profits he made from the business carried on at the P Hotel, in lieu of the dividends on his shares if he acquired them. Another term, which was not implemented, was that the appellant would pay the balance due for the purchase of the fifteen shares. The appellant remained in occupation at the P Hotel, ran the night bar, paid all expenses, took all the profits and paid the monthly rent to the respondent company which was accepted by them. No contract having been executed and the balance due on the shares not having been paid J in May, 1956, gave notice to the appellant that the deposits made under the agreement to purchase the shares were forfeited, and required the appellant to remove and take away his stock and other materials from the P Hotel within seven days. The appellant did not do so, but the respondent company took no steps to have them removed. In October, 1956, the respondent company issued a writ asking for a declaration that they were entitled to possession of the P Hotel and an order for possession. The appellant claimed he was a tenant at a monthly rent. After the issue of the writ, everything went on as before; the appellant paid the monthly rent as “rent for the P Hotel”, and the respondent company accepted the amount but gave no receipt. In December, 1957, the court made an order for possession which was later confirmed, but the appellant stayed on.

Held – The respondent company were entitled to an order for possession of the P Hotel, because—

(i) after February, 1956, the relationship between the parties was not that of landlord and tenant but of licensor and licensee, even though there was exclusive possession by the appellant and acceptance of the amount of the rent by the respondent company, the circumstances and conduct of the parties showing that all that was intended was that the appellant should have a personal privilege of running a night bar at the P Hotel with no

Page 349 of [1960] 1 All ER 348

interest in the land at all, and this privilege came to an end with the notice of May, 1956.

(ii) after the notice of May, 1956, the appellant remained in occupation at sufferance, and, in the circumstances, the acceptance of rent by the respondent company did not waive their right to immediate possession.

Appeal dismissed.

Notes

As to principles for determining whether an agreement creates a lease or a licence, see 23 Halsbury’s Laws (3rd Edn) 427, para 1022; and for Cases on the subject, see 30 Digest (Repl) 527–529, 1649–1670.

Cases referred to in judgment

Booker v Palmer [1942] 2 All ER 674, 30 Digest (Repl) 539, 1737.

Clarke v Grant [1949] 1 All ER 768, [1950] 1 KB 104, [1949] LJR 1450, 31 Digest (Repl) 507, 6322.

Cobb v Lane [1952] 1 All ER 1199, 3rd Digest Supp.

Errington v Errington & Woods [1952] 1 All ER 149, [1952] 1 KB 290, 3rd Digest Supp.

Marcroft Wagons Ltd v Smith [1951] 2 All ER 271, [1951] 2 KB 496, 2nd Digest Supp.

Minister of Health v Bellotti [1944] 1 All ER 238, [1944] KB 298, 113 LJKB 436, 170 LT 146, 30 Digest (Repl) 540, 1747.

Murray, Bull & Co v Murray [1952] 2 All ER 1079, [1953] 1 QB 211, 3rd Digest Supp.

Appeal

Appeal by Wilfrid Isaac from an order of the Federal Supreme Court for the West Indies (Hallinan CJ, Rennie and Archer JJ), on transfer from the West Indian Court of Appeal, dated 27 May 1958, dismissing the appellant’s appeal from an order of the Supreme Court of Trinidad and Tobago (Clement-Phillips J), dated 6 December 1957, whereby he granted a declaration that the respondent company, Hotel de Paris was entitled to possession of the first and second floors of No 10 Abercrombie Street, Port of Spain (known as the Parisian Hotel), and an order for possession of the premises. The facts are set out in the judgment of the Board, p 350, post.

Dingle Foot QC and R Millner for the appellant.

B B Gillis QC and J Lloyd-Eley for the respondent company.

16 December 1959. The following judgment was delivered.

LORD DENNING. In the City of the Port of Spain in the Island of Trinidad there is a hotel called the Hotel de Paris. It is situate at No 7 Abercrombie Street and it is owned by the respondent company, Hotel de Paris, Ltd. On the other side of the street at No 10 Abercrombie Street there is a building which is owned by Mr Manoel Fernandez. He let the ground floor of it to a bank, and he let the two floors above it on a lease to the respondent company at a rent of $250 a month. The respondent company used these two floors for sometime as bedrooms in connexion with their hotel. They called it the Parisian Hotel. In or about December, 1955, the respondent company let the appellant Isaac into occupation of the Parisian Hotel, or part of it, and they now seek to get him out. The Supreme Court of Trinidad and Tobago (Clement-Phillips J) made an order for possession against the appellant. The Federal Supreme Court (Hallinan CJ, Rennie J and Archer J) affirmed the decision. The appellant now appeals to Her Majesty in Council. The contest before their Lordships turned mainly on what was the correct legal relationship between the respondent company and the appellant. Was the appellant a tenant? or was he in the premises merely under a licence to be there? Had his interest, whatever it was, been validly determined? And if it had been determined by a proper notice, had it been revived by subsequent acceptance of rent?

Page 350 of [1960] 1 All ER 348

All these issues will not become clear until their Lordships have stated the facts. The respondent company has an issued capital of sixty-four shares. In September, 1955, a Mr Attie Saffie Joseph bought all these sixty-four shares and thus gained control of the company. He was acquainted with the appellant Isaac and agreed to sell him fifteen of these shares (roughly a quarter interest in the company) for $4,687.50. The agreement was put into writing dated 1 October 1955. Under it, the appellant was to pay a deposit of $1,000 down and the balance by six monthly instalments of $614.59 each. It contained a provision that, if the appellant made default, he was to forfeit his deposit of $1,000 together with any further instalments not exceeding $2,000 in all. The appellant duly paid the $1,000 and he also paid near enough the first two monthly instalments due on 1 November and 1 December 1955. So it looked at this time as if he would acquire a fair stake in the respondent company. He had had some experience in the hotel trade, and he helped with the running of the Hotel de Paris. Then he suggested that repairs should be done to the Parisian Hotel on the other side of the road, that a night bar should be established in the Parisian Hotel and that he should be put in charge of it on behalf of the respondent company. Mr Joseph agreed. Accordingly, about December, 1955, the respondent company let the appellant into occupation of the first floor of the Parisian Hotel. The appellant got a licence to use it as a night bar. He took the licence in his own name and put in a stock of liquor at his own expense. He put up a signboard with the words “Wilfrid Isaac and Hotel de Paris Annexe—Night Bar”. This looked as if the appellant was proposing to operate it on his own account. Mr Joseph remonstrated. The appellant thereupon promised to account to the respondent company for his expenditure and receipts from the night bar: and he did so account. The position at this time, as the trial judge found, was that the appellant was installed at the Parisian Hotel for the purpose of managing a night bar on the respondent company’s behalf.

In February, 1956, the relations between Mr Joseph and the appellant Isaac became strained; and on 17 February 1956, the two men with their lawyers met to try to settle their differences. At this meeting, the parties agreed on terms which were afterwards to be embodied in a written contract between them. Their Lordships are of opinion that no concluded contract was reached at the meeting. Everything was subject to a contract later being signed. A draft contract was prepared by Mr Joseph’s lawyer but it was not approved by the appellant’s lawyer. So the contract never materialised. Nevertheless, although no concluded contract was reached, some of the terms of the proposed contract were acted on; and their Lordships must draw attention to them. They accept for this purpose the findings of the trial judge. The first term was an important term which was never implemented:

“(a) The [appellant] was to pay the balance due for the purchase of the shares.”

But the next three terms were acted on. They were these:

“(b) The [appellant] was to remain in occupation of the first floor of the Parisian Hotel, where the night bar was being operated.

“(c) The [appellant] agreed to pay all expenses incurred in connexion with the running of the Parisian Hotel, including the monthly rent of $250 which the [respondent] company paid its landlord, Mr. Manoel Fernandez. [These words were under-lined by the trial judge.]

“(d) The appellant would retain for himself all profits he made from the business carried on at the Parisian Hotel, in lieu of the dividends on his shares if he acquired them.”

It was, no doubt, anticipated by both parties that a contract would be drawn up and that the appellant would then pay the balance due on the shares. Meanwhile the appellant remained in occupation and acted just as if a contract had

Page 351 of [1960] 1 All ER 348

been concluded. He ran the night bar. He paid all expenses. He took all the profits. And he paid $250 a month to the respondent company. It was expressly paid as “rent”. For instance, on 3 April 1956, the appellant sent “the sum of $250.00 being the rent to Apr. 1, 1956, for Parisian Hotel”. No receipt or acknowledgment was ever given, but it was undoubtedly accepted by the respondent company. Towards the end of April, 1956, however, seeing that no contract had been executed and the balance due on the shares had not been paid, Mr Joseph gave notice to the appellant that he intended to forfeit the sums of money already paid for the shares. And by a letter dated 7 May or 8, 1956, he wrote to the appellant:

“Re: Agreement for purchase of shares in the Hotel de Paris, Ltd.

“I have to refer to previous correspondence passing between us on the above-mentioned subject and to inform you that your deposits made under the above agreement have been forfeited. You are required to remove and take away such stock and other materials as you have at the Parisian Hotel within seven days of the date hereof, and I am to warn you that if you fail to do so I shall be obliged to take such steps as may be necessary to have them removed therefrom.”

(A question was raised before their Lordships whether this letter was ever properly proved. Mr Joseph said he served it on the appellant. He kept a copy of it. The original should have been in the possession of the appellant. But no notice to produce had been given. This might have raised a nice point, but for the fact that the copy formed one of a bundle of agreed documents which were tendered and admitted into evidence without objection. That is enough to overcome the want of notice to produce.) Notwithstanding that notice, the appellant did not remove his stock or other materials. But the respondent company took no steps to have them removed. Everything went on as before. The appellant remained in occupation, paying the expenses and taking the profits. And he paid $250 a month to the respondent company. These were expressly paid as “rent due at Parisian Hotel”. The respondent company accepted the payments but gave no receipts.

On 19 October 1956, the respondent company issued a writ asking for a declaration that they were entitled to possession of the Parisian Hotel and an order for possession. The appellant in his defence claimed that he was a tenant at a monthly rent of $250.00. Even after the issue of the writ, everything went on as before. The appellant remained in occupation and paid $250 a month to the respondent company. These were expressly paid as “rent for the Parisian Hotel”, but no receipts were given. On 6 December 1957, the Supreme Court of Trinidad and Tobago made an order for possession, but still the appellant stayed on. On 27 May 1958, the Federal Supreme Court affirmed the order, but still he stayed on. The order has not yet been executed. Their Lordships were told that the appellant is still there awaiting the outcome of this appeal.

At the trial, the appellant alleged that in December, 1955, there was an oral agreement whereby Mr Joseph, on behalf of the respondent company, sub-let both floors of the Parisian Hotel to the appellant at a rent of $250.00. The judge rejected the evidence of the appellant and his witness on this point. He held that, originally, the appellant was put into occupation of the first floor for the purpose of establishing and managing a night bar on behalf of the respondent company. In other words, as a servant or agent on behalf of the company, with no right or interest of his own. The Federal Supreme Court upheld this finding, and their Lordships think it clearly right. But what was the position after 17 February 1956? It was submitted by counsel for the appellant that there were all the indicia of a monthly tenancy. There was not only exclusive possession but there was also the payment and acceptance of rent. (Furthermore, the appellant paid the disbursements, and so forth.) Counsel admitted that these would not be decisive to establish the tenancy in the case

Page 352 of [1960] 1 All ER 348

of premises within the Rent Restriction Acts such as Marcroft Wagons Ltd v Smith and Murray, Bull & Co Ltd v Murray, but it was altogether different, he said, in the present case where the premises were not subject to rent restriction legislation. The only proper inference here was a monthly tenancy. Their Lordships cannot accept this view. There are many cases in the books where exclusive possession has been given of premises outside the Rent Restriction Acts and yet there has been held to be no tenancy. Instances are Errington v Errington & Woods and Cobb v Lane,which were referred to during the argument. It is true that in those two cases there was no payment or acceptance of rent, but even payment and acceptance of rent—though of great weight—is not decisive of a tenancy where it can be otherwise explained: see Clarke v Grant. As Lord Greene MR said in Booker v Palmer ([1942] 2 All ER 674 at p 677):

“There is one golden rule which is of very general application, namely, that the law does not impute intention to enter into legal relationships where the circumstances and the conduct of the parties negative any intention of the kind.”

It appears to their Lordships that the law on this matter was correctly interpreted and applied by Archer J in the Federal Supreme Court when he said:

“It is clear from the authorities that the intention of the parties is the paramount consideration and while the fact of exclusive possession together with the payment of rent is of the first importance, the circumstances in which exclusive possession has been given and the character in which money paid as rent has been received are also matters to be considered. The circumstances in which [the appellant] was allowed to occupy the Parisian Hotel show that Joseph never intended to accept him as a tenant and that he was fully aware of it. The payments he made were only part of the disbursements for which he made himself responsible and the so-called rent was in the nature of a reimbursement of the rent payable by the [respondent company].”

Their Lordships are, therefore, of opinion that the relationship between the parties after 17 February 1956, was not that of landlord and tenant, but that of licensor and licensee. The circumstances and conduct of the parties show that all that was intended was that the appellant should have a personal privilege of running a night bar on the premises, with no interest in the land at all. It was at first only a privilege to be there pending the execution of a formal contract. Later, when the contract fell through, and notice was given to him to remove his belongings, even that privilege came to an end. The notice of 7 May or 8, 1956, would not, of course, have been sufficient to end a tenancy, but it was quite sufficient to end a licence: see Minister of Health v Bellotti.

But what about the position after 15 May 1956, when the notice expired? The appellant remained in possession carrying on as before. He was still permitted to be there both before and after the issue of the writ. He was in a sense still a licensee. But he was not, in the opinion of their Lordships, in such a privileged position that he could demand or expect yet another notice before being turned out. He was there at sufferance liable to be turned out whenever the respondent company thought fit to execute its right to do so; just as, in the old days, a tenant by sufferance was. And during this period it should not be taken against the respondent company that it accepted his monthly payments of so-called rent. Better to have something in hand than lose all in the long-drawn course of court proceedings. True it is that, a year after

Page 353 of [1960] 1 All ER 348

the issue of the writ, on 23 October 1957, when giving evidence on an application by the appellant for a licence, Mr Joseph said: “Hotel de Paris are sub-letting to [the appellant]. [The appellant] pays $250 a month rent. He is not in default”. But it must be remembered that a layman may in cases of this kind easily put the wrong label on to a legal relationship. Mr Joseph put it better later in his evidence on that occasion when he said: “I do not know how long the case will last so I must cash his cheques”. The acceptance of the payments did not, in these circumstances, evince any intention to waive the company’s right to immediate possession.

Their Lordships find themselves in full agreement with the Supreme Court of Trinidad and Tobago and the Federal Supreme Court. They will humbly advise Her Majesty that this appeal should be dismissed. The appellant must pay the costs.

Appeal dismissed.

Solicitors: T L Wilson & Co (for the appellant); Malcolm Slowe & Co (for the respondent company).

G A Kidner Esq   Barrister.

Note

Re Viscount Hambleden’s Will Trusts

[1960] 1 All ER 353

Categories:        TRUSTS        

Court:        CHANCERY DIVISION        

Lord(s):        WYNN-PARRY J        

Hearing Date(s):        15 DECEMBER 1959        

Trust and Trustee – Variation of trusts by the court – Practice – Order – Direction that variation should be carried into effect not to be included in order – Alteration of trusts affected by court’s approving arrangement – Variation of Trusts Act, 1958 (6 & 7 Eliz 2 c 53), s 1.

Notes

For the Variation of Trusts Act, 1958, s 1, see 38 Halsbury’s Statutes (2nd Edn) 1130.

For the Law of Property Act, 1925, s 53(1)(c), see 20 Halsbury’s Statutes (2nd Edn) 551.

Cases referred to in judgment

Grey v Inland Revenue Comrs [1959] 3 All ER 603, [1959] 3 WLR 759.

Joseph’s Will Trusts, Re [1959] 3 All ER 474, [1959] 1 WLR 1019.

Adjourned Summons

This originating summons, dated 10 July 1959, was issued on the application of the Right Honourable William Herbert Viscount Hambleden (referred to hereinafter as “the applicant”), who was one of the trustees of and a beneficiary under the will of his father, the Right Honourable William Henry Viscount Hambleden.

By his will dated 6 June 1946, the testator directed that one share of his residuary estate should be held on trusts under which, in the events which had happened, the income thereof was to be held on protective trusts for the applicant during his life, and after his death, and subject to any appointment which he should make for the benefit of any wife who might survive him for her life, in trust for his children or remoter issue as he should by deed or will appoint and in default of appointment in trust for all or any of his children or child who being male should attain the age of twenty-one years or being female should attain that age or marry and if more than one in equal shares. It was further provided that, if the trusts declared concerning the applicant’s share should fail, the share should be held on trust for other members of the testator’s family.

On his marriage in 1955, the applicant, in exercise of the power conferred on him by the will, appointed an annuity to his wife, to be paid out of his settled

Page 354 of [1960] 1 All ER 353

share, during any period of her life after his death during which any child of the marriage should be living or after a child of the marriage being dead should have attained a vested interest in the funds subject to the trusts of the marriage settlement. At the date of the summons the applicant had three infant children.

By the summons, the applicant applied to the court for an order under s 1 of the Variation of Trusts Act, 1958, approving an arrangement, intended to be exhibited to an affidavit to be filed in the proceedings on behalf of the applicant, on behalf of (a) the infant respondents, (b) all persons unborn who might thereafter become entitled (otherwise than under the protective trusts thereinafter mentioned) to a beneficial interest in the applicant’s share, and (c) any person who was or might thereafter become entitled to any discretionary interest under the protective trust on which the life interest of the applicant in the share was held.

Under the scheme of arrangement the trusts of the applicant’s settled share would be varied (a) by releasing a part of the share from the applicant’s protected life interest, in order to form an annuity fund (in which the applicant’s wife would have an immediate life interest) and a children’s fund (the income of which would be accumulated for the benefit of the applicant’s children during their minority); and (b) by releasing the whole of the applicant’s share from the annuity appointed to his wife and from the power to appoint an annuity to any surviving wife. The details of the proposed scheme are not material to this report, which is confined to the question of the form of the order. The draft minutes of order, after reciting that the adult respondents had consented to the order, stated that the court approved the arrangement on behalf of infant respondents and unborn persons and persons entitled under protective trusts (as applied for in the summons), and went on to say: “And doth authorise and direct the trustees of the said will to carry the said arrangement into effect.”

Geoffrey Cross QC and D H McMullen for the applicant, the present Lord Hambleden, a trustee of the testator’s will and beneficially entitled thereunder.

D H Mervyn Davies for the Dowager Lady Hambleden, a trustee of the will.

F E Skone James for the other trustees.

W T Elverston for the infant children of the applicant.

V G H Hallett for other infants interested under the trusts of the will.

E G Wright for adults interested under the trusts of the will.

15 December 1959. The following judgments were delivered.

WYNN-PARRY J considered and approved the scheme in principle with minor amendments, and, having been informed that no instrument had been executed by any of the consenting adult parties and that it was not intended that this should be done, heard argument on the form of the order, viz, whether it should contain a direction to the trustees to carry the arrangement into effect.

Geoffrey Cross QC and D H McMullen for the applicant: The question has been raised whether, when the court makes an order under the Variation of Trusts Act, 1958, the trusts are ipso facto varied or some document is necessary. Apart from the Act, the court would have no power to vary the trusts in a case such as this, where no question of any compromise arises. Although the Act is not perhaps very happily worded, its scheme seems to be that all the beneficiaries in existence must be before the court. All persons of full age consent to the proposed variation in the trusts, which the court then approves, if it sees its way to doing so, on behalf of the infants and unborn persons beneficially interested, thereby ipso facto varying the trusts. Having regard, however, to the decision of Vaisey J in Re Joseph’s Will Trusts ([1959] 3 All ER 474. See also the form of the order in Re Chapman’s Settlement Trusts (No 2), [1959] 2 All ER at p 50), the words “and doth authorise and direct the trustees of the said will to carry the said arrangement into effect” have been inserted in the draft minutes of order.

Wynn-Parry J: I do not agree with that decision. I take the view that I have no jurisdiction to make an order including words directing the trustees

Page 355 of [1960] 1 All ER 353

to carry the arrangement into effect, and those words should be deleted from the draft minutes. Nothing is required except the approval of the court to the arrangement. If that approval is given, the trusts are ipso facto altered, and the trustees are bound thereafter to give effect to the arrangement. I would, however, like to hear counsel for the infants.

W T Elverston for the infant children of the applicant: It is apprehended that those who have raised this point have in mind the decision of the House of Lords in Grey v Inland Revenue Comrs, where it was held that a verbal direction to trustees to hold property on certain trusts was not enforceable, since s 53(1)(c) of the Law of Property Act, 1925, requires a disposition of an equitable interest to be in writing. It is, of course, essential from the point of view of the infants in the present case that there should be a valid determination of the applicant’s protected life interest in the annuity fund and the children’s fund. It is agreed that nothing further is needed than that the court should approve the arrangement, thereby ipso facto varying the trusts, but perhaps it might be so stated.

Wynn-Parry J: I will so state, subject to anything counsel for the parties may say. If I approve an arrangement, I alter the trusts. Res ipsa loquitur.

W T Elverston: The only enforceable trust will then be the trusts of the will as varied. If, after the order of the court, anybody should at any time apply to the court for an order for the execution of the trusts, it is submitted that the trusts ordered to be executed would be the trusts as varied by the arrangement and not the original trusts.

Wynn-Parry J: Yes. The trusts will take effect according to the arrangement.

F E Skone James for the trustees other than the applicant and Lady Hambleden: The court is not asked to decide the matter otherwise than in accordance with the view just expressed, but, having regard to Grey v Inland Revenue Comrs ([1959] 3 All ER 603, see, perhaps, particularly per Lord Radcliffe at p 608), it seemed to those who took this point that the effect of s 53(1)(c) of the Law of Property Act, 1925, might be that an agreement was required, which the adult parties would execute, and the court would be asked to approve on behalf of infants and unborn persons to give effect to the proposed variation of the trusts.

Wynn-Parry J: I do not think that that Act has any application to this case. If I approve an arrangement, I vary the trusts.

E G Wright for other adult persons interested under the trusts of the share: This point was taken for the reasons just indicated, but, if the court has formed the view that no document is necessary, and will so state, that will dispose of any doubts.

Wynn-Parry J: Very well. I hold that the effect of my approval is effective for all purposes to vary the trusts. Thereafter, the trusts are the trusts as varied. I approve the minutes of order, with the slight alterations which have been referred to, and the arrangement in the schedule.

Order accordingly.

Solicitors: Bircham & Co (for all parties).

R D H Osborne   Barrister.

Re Federation of British Carpet Manufacturers’ Agreement 

Re Federation of British Carpet Manufacturers’ and others’ Common Form Agreement

[1960] 1 All ER 356

Categories:        COMPETITION        

Court:        RESTRICTIVE PRACTICES COURT        

Lord(s):        UPJOHN J, SIR STANFORD COOPER AND MR W L HEYWOOD        

Hearing Date(s):        16, 17, 18, 19, 20, 23, 24, 25, 26, 27, 30 NOVEMBER 1, 2, 3, 4, 17 DECEMBER 1959        

Restrictive Trade, Practices – Reference – Carpet manufacturers – Price cum quality restriction – Wholesale dealings restrictions – Overseas trading restrictions – No sales to be made direct to consumer buyers other than buying agencies – Whether removal of restrictions would deny public substantial benefit – Whether removal of restrictions would be likely to cause substantial reduction in volume of earnings of carpet trade export business in relation to whole business of carpet trade – Restrictive Trade Practices Act, 1956 (4 & 5 Eliz 2 c 68), s 21(1) (b), (f).

Restrictive Trade Practices – Reference – Alteration after date of reference – Overseas trading restrictions severed from home trading restrictions and embodied in new document – Discretion of court to deal with overseas trading restrictions – Restrictive Trade Practices Act, 1956 (4 & 5 Eliz 2 c 68), s 8(8), s 20.

Restrictive Trade Practices – Reference – Continuance of terms of trading – Resolution after date of reference for continuance by individual arrangements – Resolution a recommendation within Restrictive Trade Practices Act, 1956 (4 & 5 Eliz 2 c 68), s 6(7).

The Federation of British Carpet Manufacturers was established after the war of 1939–1945 to promote the interests of the carpet industry as a whole. At that time prices and qualities were controlled by the Board of Trade, who established standards, among which standards A1 and W1 (for Axminster and Wilton woven carpets) became well known. The control ended in 1952. Manufacturers who joined the Federation undertook to abide by the Federation’s Standards of Trading and decisions of its executive committee, save that, under cl 22 of the Federation’s Constitution and Rules, any member had the right to contract out of particular terms. There were some fifty-eight members of the Federation and about fourteen manufacturers outside the Federation; members of the Federation made about seventy-five per cent of the total United Kingdom production of traditional carpets. The Standards of Trading were contained in a document which was divided into clauses, of which cl 1 related both to the “Federation’s standard qualities” for Axminster and Wilton woven carpets and to prices, limiting non-standard quality carpets to a price that must not be within 12 1/2 per cent of the minimum selling price of a standard quality carpet. Clause 2 of the Standards related to terms of trading and required the Federation’s members to allow wholesale discount only to those firms whose names appeared on a list maintained by the Federation, admission to which was by the decision of the appropriate committee of the Federation, the decisions of which were found by the court in practice to be arbitrary decisions. There were 193 wholesalers on the list, and during the period 1 June 1955, to 1 January 1959, fourteen applicants had been admitted, 134 had been rejected and nine had been deferred. A member of the Federation was, however, entitled both to contract out of this provision (under cl 22 of the rules) or to put a particular wholesaler on a supplemental list, if the wholesaler would enter into the common form agreement as to discounts and terms of re-sale to retailers. If a wholesaler were so placed on the supplemental list, the member so placing him, but no other member,

Page 357 of [1960] 1 All ER 356

might then deal with him. Clause 3 related to overseas markets and its cardinal provision was that carpets should not be sold in overseas markets for less than in the home market. In December, 1957, Europe was excluded from the scope of cl 3, and subsequently Central and South America and parts of Africa were excluded. Exports of carpets to the Commonwealth were principally of high quality carpets, but were declining despite the existence of the A1 and W1 price/quality standards. By resolution of 26 August 1959, after the notices of reference had been given, the Standards of Trading were amended so as to eliminate cl 3 and to embody the standards for overseas markets in a separate document. In October, 1959, the court refused to make an order excluding the overseas restrictions from further consideration in proceedings on the reference then existing.

A wholesaler whose name was admitted to the Federation’s list of wholesalers agreed, at the time of admission, to abide by the Federation’s Standards of Trading and gave an undertaking. This undertaking included agreement to carry stock, to accept the manufacturer’s price as the minimum price to retailers and, in effect, to sell to retailers for re-sale and not to consumer-buyers subject to certain exceptions. These wholesalers were bound to accept the discount allowed, which was at a low rate, and had the benefit of trading with manufacturers within the Federation on the standard terms. Fourteen manufacturers had contracted out of this restriction, whose original purpose had been to keep out of this restriction, whose original purpose had been to keep out the “brass plater”, viz, a trader who held himself out as a wholesaler but had only a small office and carried no stock.

Thus no limit on prices was provided by the Standards of Trading, save the provision of the 12 1/2 per cent margin. The executive committee of the Federation periodically reviewed current minimum carpet prices and fixed changes in price. The prices were prices to retailers, not to the public, and were for certain standard qualities; but when selling non-standard ranges of carpets manufacturers customarily did not quote prices below the listed prices, though the Standards did not preclude them from so doing. The court found that the public as purchasers were unaware of the Federation’s standard qualities, for advertising in recent years had been mainly directed to publicising the manufacturer’s name or brand. The industry as a whole was a buoyant and prosperous one.

Restrictions arising out of the two arrangements were referred pursuant to s 20(2)(a) of the Restrictive Trade Practices Act, 1956a, by notices of reference dated 18 July 1957. On 20 October 1959, the executive committee of the Federation resolved to recommend draft letters being sent out by members individually with a view to their continuing to trade with wholesalers under rules then embodied in the Standards of Trading whatever might be the outcome of the references.

Page 358 of [1960] 1 All ER 356

Held – (i) the following restrictions contained in the Standards of Trading were, for the following reasons, deemed by s 21(1) of the Restrictive Trade Practices Act, 1956b, to be, and would be declared to be, contrary to the public interest and void—

(a) the main price standards contained in cl 1(a) of the Standards of Trading because the Federation had not established that the public would be denied substantial benefits by the removal of the restrictions (see p 373, letter a, post) which accordingly were not brought within s 21(1)(b), since, (i) though the prices fixed by the Federation’s executive committee for standard quality carpet might not be unreasonable, they were in fact arbitrarily fixed, and the public had no guarantee that the prices would be reasonable (see p 369, letter d, post); (ii) though removal of the quality standards might deprive retailers of standards of comparison, yet retailers should re-learn skills of comparing standards of carpets that they had possessed before the war (see p 372, letter c, post); (iii) stability of prices in the case of a buoyant industry conferred no public benefit (see p 373, letter b, post), and (iv) removal of the price/quality restrictions was unlikely to lead to debasement of the product, and competition would lower prices and the public would be offered a large range of carpets at competitive prices (see p 372, letter h, post).

(b) the restriction confining wholesale discount to wholesalers on the Federation’s list (cl 2(a) of the Standards of Trading) because it was contrary to the public interest, as it prevented enterprising wholesalers from having an opportunity to purchase a proper range of carpets, and as it relaxed the competition which would otherwise be a spur to those whose names were on the list (see p 373, letters c and d, post).

(c) the restriction on wholesalers selling to consumer-buyers because it offended s 21(1)(b) of the Act of 1956 (see p 374, letter f, post).

(d) the restrictions formerly contained in cl 3 of the Standards of Trading, being the restrictions concerning overseas markets, since the Federation had not proved that their removal would cause a substantial reduction in the volume or earnings of the carpet export trade, and, accordingly, these restrictions were not within s 21(1)(f) of the Act of 1956 (see p 375, letter a, post); moreover, a declaration should, in the circumstances, be made with regard to these restrictions down to 26 August 1959, though the question whether the new document embodying them, adopted on that date, was a

Page 359 of [1960] 1 All ER 356

new agreement to which the Act of 1956 did not apply (by virtue of s 8(8)c) and was justiciable only by the High Court (see p 376, letters i and d, post).

(ii) the resolution of 20 October 1959, was a recommendation to which s 6(7)d of the Act of 1956 was applicable (see p 377, letter f, post).

Notes

For the Restrictive Trade Practices Act, 1956, s 6, s 8, s 20, s 21, see 36 Halsbury’s Statutes (2nd Edn) 937, 940, 952, 954.

Cases referred to in judgment

Blanket Manufacturers’ Association’s Agreement, Re [1959] 2 All ER 1, LR 1 RP 208, [1959] 1 WLR 442, affd CA, [1959] 2 All ER 630, LR 1 RP 271, [1959] 1 WLR 1148.

Yarn Spinners’ Agreement, Re [1959] 1 All ER 299, LR 1 RP 118, [1959] 1 WLR 154.

Consolidated References

Pursuant to the Restrictive Trade Practices Act, 1956, s 20(2)(a), the Registrar of Restrictive Trading Agreements referred to the Restrictive Practices Court, by two notices of reference dated 18 July 1957, two agreements, viz, (i) an agreement between the members of the Federation of British Carpet Manufacturers and consisting of the Constitution and Rules of the Federation, a document entitled Standards of Trading, a list of houses to whom the current rate of wholesale discount might be allowed and a supplementary list of such houses, the undertakings signed by the members of the said Federation and all resolutions and minutes of the committees of the Federation which were as such binding on the members as if contained in the said agreement; and (ii) a common form agreement made between the members of the Federation of British Carpet Manufacturers and numerous carpet wholesalers whose names appeared on the list of houses to whom the current rate of wholesale discount might be allowed. The second of these two agreements consisted of a letter from the secretary of the Federation to each of the carpet wholesalers, a document signed by each of the carpet wholesalers, a document containing particulars of the Standards of Trading together with all resolutions and minutes of committees of the Federation as aforesaid. The Standards of Trading at the date of the references provided that a manufacturer should, on application for membership of the Federation, or as soon after his election as might be possible, give an undertaking to abide by “the following Standards of Trading” so long as he should be a member of the Federation, unless specific notice to contract out were given to the Federation through the secretary in accordance with cl 22 of the Constitution and Rules concerning any particular clause, or unless the Federation decided that the Standards should be varied for all members. The undertakings were in fact given by letter and included an

Page 360 of [1960] 1 All ER 356

undertaking to abide by all decisions of the Federation or its Executive Committee except as permitted by cl 22 of the Constitution and Rules. The Standards of Trading in the documents of that name consisted of clauses each denoted by a central heading. The first three of these read “1. PRICES—HOME MARKET. 2. TERMS OF TRADING—HOME MARKET. 3. PRICES—OVERSEAS MARKETS (excluding USA … ).” Each clause was subdivided into paragraphs lettered (a)-(g), (a)-(f), and (a)-(e), respectively, the paragraphs subsequent to the first paragraph of cl 1 being mainly directed to charging and discounts. The initial paragraphs of the clauses are set out in the judgment at p 365, letters b to e, and p 366, letters g to i, or are referred to at p 376, letters b and c, post. Clause 22 of the Constitution and Rules of the Federation provided, so far as is relevant:

“Any member shall have the right to contract out of any decision of the Executive Committee not included in the objects of cl. 2(b) to (g) without terminating his membership of the Federation, provided that thirty days’ notice in writing is given to the Secretary … ”

By cl 2 of the Constitution and Rules of the Federation, the objects for which the Federation was established were: (a) to promote and advance the interests of the carpet industry as a whole; (b) to carry into effect, where practicable, the recommendations of the Working Party Report for the Carpet Industry, 1947; (c) to assist, advise, negotiate and deal with government departments and others on behalf of its members, and to promote, support or oppose legislative or other measures affecting the carpet industry; (d) to assist in the procurement of raw and processed materials when necessary and in their equitable distribution to the carpet industry; (e) to promote research, development, and the design of study and colour, and, to assist in these objects, to contribute to outside bodies dealing with these bodies; to collect and distribute information and statistics which might be of interest to the carpet industry; (f) to arrange for representation on the national joint committee and district joint councils for the carpet industry and other bodies and to contribute to the costs; (g) to collaborate with the appropriate trade unions by supporting the joint advisory council for the carpet industry as a channel through which matters of interest to the well-being of the carpet industry were discussed, wages and working conditions being specifically excepted. By cl 7, the business of the Federation, so far as not transacted by the Federation itself, was to be conducted by an executive committee.

By resolution of the executive committee of the Federation on 26 August 1959, separate Standards of Trading were adopted for overseas markets with effect from 1 September 1959. The Standards of Trading were amended contemporaneously by eliminating cl 3 and defining them as standards for the home market; cl 1 was further amended so as to have the effect of establishing a standard price for each of the two Federation standard qualities.

The Federation’s Standards of Trading included in cl 2, Terms of Trading, a paragraph providing that wholesale discount should be granted only to firms appearing on the Federation’s List of Houses to whom the current rate of wholesale discount might be allowed. On admission to this list by the executive committee of the Federation the wholesaler gave an undertaking by letter by which he agreed, among other matters, to accept the manufacturer’s price as the minimum price to the retailer, to offer the goods openly and freely on the market to any and all retail buyers who purchased for re-sale, and not to sell direct to consumer-buyers, ie, public bodies (other than HM Government), householders, hotels, restaurants or cinemas; this last provision did not apply, however, to buying agencies who were the recognised channel through which purchases for certain large consumers or groups of consumers were made and who conducted their operations in recognised business premises. The wholesaler also confirmed by letter that he would comply with the Federation’s Standards of Trading.

Page 361 of [1960] 1 All ER 356

J G Foster QC, R O Wilberforce QC and A R Barrowclough for the Federation of British Carpet Manufacturers and individual carpet wholesalers.

A A Mocatta QC and Arthur Bagnall for the Registrar.

Cur adv vult

17 December 1959. The following judgment was delivered.

UPJOHN J read the following judgment of the court: This consolidated reference is concerned with certain trading restrictions which members of the Federation of British Carpet Manufacturers (which we shall call “the Federation”) have, by a series of agreements, bound themselves to observe, and also with certain common form agreements which members require wholesalers with whom they deal to enter into. The restrictions fall broadly into two classes: first, a price cum quality control of certain qualities of carpet, and, secondly, restrictions on trading by placing some limitation on wholesalers with whom manufacturers may deal, by fixing rates of discount and defining the terms on which sales may be made to retailers.

Woven carpets are made of yarns of many differing materials. They may be made of all wool or worsted, man-made fibres, cotton, or mixtures of these yarns. The backing may be of cotton, jute, linen, hemp, paper or Terylene. Furthermore, carpets may be woven in a variety of different weaves and on a number of different types of loom. The price cum quality restrictions of the Federation affect only all wool or worsted carpets, and then only certain qualities known as W1, a Wilton weave, and A1, an Axminster weave. Carpets have been woven in Axminster and in Wilton for well over two centuries. Carpet manufacture is still carried on in those towns, and “Axminster” carpets have been made in Axminster since 1755, but the main centres of the carpet-making industry are, and for many years have been, in Kidderminster, in Scotland and in the North of England. The particular weaves, Wilton and Axminster, with which we are concerned, however, originated in the United States of America, where the weaving of carpets by power loom was first invented many years ago, but carpets made on these looms were described as Wilton or Axminster no doubt for good commercial reasons. Power looms were introduced in this country under patent licences and one well-known firm—it is best that we should preserve a complete anonymity of names from start to finish of this judgment—introduced a particular quality named “Imperial Axminster” which achieved great success. Other firms began to copy this until “Imperial Axminster” became the description of a particular quality rather than the production of a particular firm. It acquired world-wide renown as a medium to good quality carpet suitable for domestic use anywhere in a house.

Before the war there were a number of associations of carpet manufacturers who were concerned to protect their mutual interests, but none of them attained the position of power and influence now held by the Federation. The most important seems to have been the Carpet Manufacturers Association (CMA) formed many years ago, although it was small in numbers compared to the whole industry, but it had a powerful rival in the Allied British Carpetmakers formed in 1937. The CMA was a staunch supporter of the Imperial Axminster standard, and its members agreed a specification for the standard comprising total yarn weight and surface yarn weight. During the pre-war years, this specification was upgraded for the reason that individual members of the CMA had been seeking to obtain some advantage over one another by giving a better quality than their competitors within the CMA. The members of the CMA agreed among themselves the price at which they would sell Imperial Axminster, and this price tended to set the general price for Imperial Axminster throughout the trade. During this time, too, the CMA devised similar standards and prices for “Super Wilton”. This is a more expensive quality than Imperial Axminster and, though used to some extent domestically, is more normally found where harder wear is to be expected, for example in hotels. Apart from this price leadership by CMA in these two qualities, there was no price control in the trade so far as we know.

Page 362 of [1960] 1 All ER 356

During the 1930’s the carpet industry experienced trouble from the type of trader known as a “brass plater”. As the possibility of re-entry of this type of trader into the carpet trade plays an important part in the Federation’s case, we shall at once explain this phrase. In the carpet industry, the wholesaler plays an important part in the distribution and sale of its products. Some manufacturers will deal only direct with retailers; they have to maintain an elaborate sales organisation of their own. Other manufacturers refuse to deal with retailers at all, but deal exclusively with wholesalers; they need only maintain a minimum sales organisation. Most manufacturers, however, deal both with wholesalers and retailers, and they regard the wholesaler as part of their selling organisation. Speaking in very general terms, the pattern of sales of this last class of manufacturers seems to be that they deal direct with the big retailers in the populous areas, leaving the less populous or more remote areas to be covered by the wholesalers’ systems of travellers. The wholesaler may be a specialist in floor coverings or he may be a general wholesaler with a carpet department. The wholesaler is expected to provide a service for the retailer; that is to say, he is expected to have adequate showrooms where the retailer can see and compare wide varieties of carpets. He is expected to carry reasonable holdings of stock so that the retailer can obtain quick delivery. Finally, the larger wholesaler is expected to provide what is called a “customer’s customer” service. This means that a small retailer holding only a small stock can send a member of the general public requiring a carpet to the wholesaler to inspect his range of carpets. The customer chooses a carpet, notes its number and then orders it through the retailer. For these services, the wholesaler of course obtains a wholesale discount on the manufacturer’s list price to the retailer. In the 1930’s the “brass plater” was a trader who held himself out as a wholesaler, but who had no more than a small office from which he conducted business—hence the name. He held no stock, had no showroom and was no more than a commission agent. If he obtained an order from a retailer, he merely passed it on to the manufacturer but, representing himself to be a wholesaler, claimed the wholesale discount though performing no service to the retailer or general public. Frequently the brass plater would deal direct with the general public and, having low overheads, would be prepared to split the wholesale discount either with the retailer or the public. This enabled him to quote lower prices to the retailer than the manufacturer was prepared to do. Very often he was only in the trade for a comparatively short time. No doubt he was a thorn in the flesh of the manufacturer, though we are satisfied that some of the evidence as to the gravity of this problem before the war was greatly exaggerated. There was, in fact, a marked expansion in the industry in the 1930’s.

To return to our brief historical survey, on the outbreak of war the overall export trade of the United Kingdom became of vital importance and a Carpet Export Group was set up to encourage the export of carpets, but by 1941 this of course had become impossible. The carpet trade was regarded as a non-essential industry, looms were dismantled and the industry turned itself to the manufacture of a large range of war products. In 1943 a Carpet Manufacturers Executive Committee was formed to represent the interests of all United Kingdom manufacturers of woollen and worsted carpets. In June, 1944, a sub-committee of this executive committee was formed under the title “The Post-War Trade Terms Sub-Committee”, and it formulated a number of recommendations (subsequently adopted by the executive committee) as to post-war trading. An important part of the recommendations dealt with transactions with wholesalers; broadly speaking, they foreshadowed the terms of trading we shall have to review in detail. Towards the end of 1944, raw materials, including wool, became sufficiently available to enable allocations to be made for civilian industrial purposes, and the Carpet Trade Rationing Committee originally constituted on the outbreak of war resumed its activities. The carpet trade began to resume its activities under a system of licensing from the Board of

Page 363 of [1960] 1 All ER 356

Trade, and a strict system of control on maximum prices at all stages—manufacturing, wholesaling and retailing—was imposed. The Board of Trade established certain quality standards by reference to the weight of surface yarn and designated each quality by reference to a symbol; maximum prices were established in each weave for each quality. Thus, in the Axminster weave four qualities were defined, numbered from A0 to A3. The A1 quality was the old Imperial Axminster. In the Chenille weave there were six qualities from C0 to C4. In the Wilton weave there were thirteen qualities from W0A to W7. The W1 quality was the old Super Wilton. In each case the top quality was 0 and the qualities descended progressively.

The establishment of rigid price control which depended on the cost from time to time of raw materials and labour, together with the great shortage of raw materials, particularly jute, necessitated continual discussion between the Board of Trade and the Carpet Manufacturers Executive Committee and a body representing the wholesalers known as the Wholesale Floorcovering Distributors’ Association (WFDA). Terms of trading were also reviewed, among other matters. A wholesale list containing the names of wholesalers with whom members might deal was drawn up, and names were subsequently added to or deleted therefrom. A wholesale rate of discount was established at ten per cent with the approval of the Board of Trade. In 1946 a working party was set up by the Board of Trade to examine the carpet industry, and it reported in 1947. Among many other recommendations, it recommended

“That the Carpet Manufacturers Executive Committee should be reconstituted with wider functions to assist in promoting the efficiency of the industry to act as a channel of communication between the government and the industry and to satisfy the government that proper progress is maintained and the interests of the community served”

(see Working Party Report on Carpets, p 41). Arising out of that recommendation, the Federation was founded in September, 1948. Control of qualities and prices by the Board of Trade came to an end in April, 1952.

We think that, during this period of control, the symbols A1, W1, C1 and so on were greatly used and became well known in all sections of the trade—manufacturing, wholesaling and retailing. There is no doubt that, rightly or wrongly, these symbols were regarded in the trade as denoting standards of quality, and this was particularly true of the A1 and W1 qualities. If a wholesaler or retailer was offered an A1 or W1 quality, he accepted it as such without question. We are not satisfied that these symbols A1 and W1 became well known as standards of quality in the minds of the general public. Some, no doubt, did regard them as denoting a general standard of quality, but we believe that many did not and relied entirely on the sales talk of their retailer. Many purchasers were governed entirely either by price considerations or by general appearance, design or colour. Whatever may have been the position when Board of Trade controls applied, we are satisfied that, since then, so far as the general public is concerned, the use of the symbols A1 and W1 in the United Kingdom has virtually come to an end. Manufacturers increasingly sell under their own trade names and not under A1 and W1. No doubt, as one of the more important witnesses for the Federation stated in his proof, those in the trade would know that the X (trade name) carpet is the Y firm’s A1 product, but to the general public the symbol A1 or W1, if (as we doubt) it ever carried the assurance of a particular quality, has long since ceased to have any precise meaning.

The Federation consists at present of some fifty-eight members. Membership has fluctuated, and since the end of 1949 there have been eight additions and eighteen resignations. There are about fourteen manufacturers outside the Federation. Members of the Federation make about seventy-five per cent of the total United Kingdom production of “traditional” carpets, that is,

Page 364 of [1960] 1 All ER 356

all wool or worsted, mixtures, hair and rayon. Of the outside manufacturers, one is very large and makes about ten per cent of total production, and two others who resigned from the Federation in 1957 together account for another ten per cent, leaving the remaining five per cent to be split anong the remaining twelve outside manufacturers. There is a remarkable diversity in the range of manufacture by the members of the Federation. Some members concentrate largely on A1 and W1 qualities and their major production (up to, in one case, in one year, one hundred per cent) is in those qualities. At the other end of the scale, some members make no A1 or W1 qualities at all. Then, again, the proportion of production by any one firm of the various qualities may differ considerably year by year.

Statistics of production within the industry are not important in this case and have not been easy to obtain, but we think such statistics as have been put before us, together with the oral evidence, justify the following brief conclusions:—(i) The industry as a whole is, and has been since the war, a prosperous expanding industry. Its condition was described by a Federation witness as “buoyant”. (ii) Over the last three years, the production of A1 and W1 by Federation members taken as a whole has been fairly constant, and it is not yet possible to say with any certainty whether there is a trend away from these qualities and other woollen carpets in favour of newer types such as tufted or mixtures containing man-made fibres. (iii) Foreign imports have greatly increased since 1953, mainly in carpets containing less than fifty per cent wool. It is fair to say that conditions within the industry are competitive.

The Federation has, in conjunction with the British Carpets Promotion Council, undertaken to advertise British carpets. Over 400,000 copies of a booklet “How to Choose and Care for British Carpets” and 500,000 copies of a booklet entitled “How to Look After Your British Carpet” have been issued to the public. Copies have been in evidence before us. They do nothing to extol any particular qualities. Indeed, the first-mentioned publication is at pains to explain that Axminster and Wilton are not brand names but two major weaving processes. The second publication merely gives hints on the care of carpets generally. The object of this advertising campaign, as appears plainly from the Promotion Council’s Report for 1957, is to advertise generally the advantages of traditionally woven wool carpets, including Wilton and Axminster, to try to stem the greatly increased sales of new types of tufted carpets. The International Wool Secretariat has published brochures for the use of salesmen, entitled “Selling Carpets” and “The Care of Carpets”. They are written to promote the sales of British wool carpets in quite general terms. “Selling Carpets” contains some imaginary conversations with an intending customer and are skilfully devised to induce a sale. It is noteworthy from start to finish that there is no mention of particular qualities. The International Wool Secretariat has also organised certain training courses for salesmen to educate them to sell more effectively to the public. In addition, Carpet Fortnights are organised, when retailers make a special display of their goods and there is an advertising campaign in the National Press. A slogan may be chosen such as “Carpets Make a Home”. The joint advertising campaign by the Promotion Council is contributed to by members of the Federation, but, in addition, there is a grant, which, over the last three or four years, has been £30,000 annually, made by the International Wool Secretariat and British Wool Marketing Board.

We propose now to summarise the main restrictions which the Federation and its members have adopted, leaving over for later consideration a number of ancillary or subsidiary restrictions. We start with the relevant restrictions as they stand on the Register of Restrictive Trade Practices today, mentioning any previous amendments which may seem material. The restrictions are contained in a document headed “Standards of Trading”, and at the outset the reader’s attention is drawn to the fact that members are entitled to contract

Page 365 of [1960] 1 All ER 356

out of any particular clause in accordance with cl 22 of the Federation’s constitution. Then there is a note that the standards of trading do not apply to jute or cotton pile carpets, or tufted, or to carpets exported. Main cl 1 deals with prices. It provides as follows:

“(a) Federation Standard Qualities

“(i) The following qualities known as ‘Federation Standard Qualities’ shall not be sold at prices other than the standard prices fixed for the time being by the Federation:

“(a) Federation Standard Qualities

“(i) The following qualities known as ‘Federation Standard Qualities’ shall not be sold at prices other than the standard prices fixed for the time being by the Federation:

        W.1 Figured Worsted

        W.1 Figured Woollen        Five frame

        A.1 Woollen

“(ii) The finished surface yarn weights of the above mentioned standard qualities shall not be less than the minimum per square yard specified below:

       Minimum per sq. yd.

         W.1 Figured Worsted        2.35 lb.

         W.1 Figured Woollen        Five frame        2.70 lb.

         A.1 Woollen                1.35 lb.

“(iii) No five-frame figured worsted or woollen Wilton and no woollen Axminster carpet containing less than the finished surface yarn weights above-mentioned shall be sold at a price within 12 1/2 per cent of the price fixed in respect of the standard quality in each type.

“(iv) The above does not prevent any carpet containing more than the finished surface yarn weights above-mentioned from being sold at more than the price fixed in respect of the standard quality.

“(v) The Standard Qualities shall be marked as ‘federation Standard Quality’ by label.”

There follow a number of ancillary and subsidiary provisions, such as making charges for cut lengths and so on. Sub-clause (iii) has been referred to as the quarantine clause. Originally, a maximum as well as a minimum weight was laid down, but a resolution of the executive committee of the Federation on 3 December 1958, abolished the maximum weight and introduced sub-cl (iv). Originally, too, the prices fixed were minimum prices, and the 12 1/2 per cent quarantine operated above as well as below the minimum price, but by a similar resolution on 26 August 1959, a fixed price was substituted and the quarantine only operated on lower qualities. At the same time exported carpets were, for the reason appearing later, excluded from the Standards of Trading. Originally the Chenille Axminster quality C 3 was treated as a Federation Standard Quality, but that was abandoned on 7 December 1955. A number of the labels referred to in sub-cl (v) have been put in evidence. An examination of them, coupled with the oral evidence we have heard, establishes conclusively that, in recent years, the whole weight of advertising in and by these labels is for the individual manufacturer’s brand or trade name. Sometimes the “Federation Standard Quality” is omitted altogether as an act of deliberate policy. In nearly every case where the phrase is still used it is in small unimportant lettering, scarcely calculated to bring to the mind of the purchaser that there is such a thing as an A1 or W1 standard or even a British Federation Standard. It strongly supports the view which we have already expressed that the ordinary purchaser is quite ignorant nowadays of any such standard or, more particularly, what is assured by it.

Two things are clear. First, subject only to the 12 1/2 per cent quarantine, there is no limitation on the prices that may be charged by the manufacturer for carpets outside the standard qualities; this applies whether the carpets in question are above or below the standard. Secondly, the prices fixed for

Page 366 of [1960] 1 All ER 356

the standard qualities are prices to the retailer. No attempt is made to control the price at which the retailer may sell to the public; he can add whatever “mark up” he thinks commercially wise to the price that he pays the manufacturer or wholesaler. It was also established that, though there is no fixing of prices for other than standard qualities, yet the prices of other qualities of woollen and worsted carpets do, in fact, tend to move in accord—as it was put in evidence—with the price fixed for the standard quality. Finally, when selling their non-standard ordinary range of carpets appearing in their retailers’ price lists from time to time, it does seem customary for manufacturers to refuse to quote prices below the listed prices, though we can see nothing in the Standards of Trading to preclude them from doing so. The reason for this will appear later. However, the manufacturer does quote special prices to wholesaler or retailer for special exclusive designs or special non-listed qualities.

We may conveniently deal here with one submission of the Registrar. He submits that a standard defined solely by reference to the weight of surface yarn is no true standard at all. The standard provides no test as to the quality of the wool to be woven or the dye to be used, and there is no definition of the structure of the carpet or the backing. Hence the standard laid down provides but little guide as to durability, as to the fastness of colour and so on. We agree, as, indeed, did many of the Federation’s witnesses, that the standard laid down is neither comprehensive nor perfect, but the difficulty is to know what more comprehensive yet workable standard can be laid down. The British Standards Institute have been considering this problem for some time and have not yet solved it. The Board of Trade adopted it for the purposes of their controls and, imperfect though it may be, we think it is probably the most useful single standard that can be devised and is entitled to recognition as such. The real truth of the matter is that the manufacturers, always jealous of their reputations, have made the standards A1 and W1 become known within the trade as good and reliable standards because they have, in fact, put good quality materials, wool, dye, backing, into the standard carpets. One reason for this is the existence of the 12 1/2 per cent quarantine. For example, the standard price of A1 to retailers is now 26s 3d, so that no member of the Federation can sell a lower quality all wool Axminster for more than approximately 23s. This prevents what has been called “debasement”; that is, that if all price controls on the quality standards are removed, there will follow (so it is said) a secret and commercially dishonest process of lowering the quality of carpets ostensibly offered as of the standard qualities.

We turn to the second main clause of the Standards of Trading:

“(a) Wholesale List and Rate of Wholesale Discount.

“(i) Wholesale discount shall be granted only to those firms appearing on the Federation’s List of Wholesale Houses.

“(ii) Every member of the Federation who contracts out of cl. 2(a)(i) of the Standards of Trading shall send to the secretary a full list of those firms, other than those whose names appear in the Federation’s Wholesale List, to whom he proposes to grant wholesale discount. He shall also obtain from each such firm and send to the secretary and undertaking identical with that given by firms whose names do appear on the Federation’s Wholesale List. He shall keep the secretary informed of any additional firms to whom he decides to grant wholesale discount.

“(iii) The rate of wholesale discount allowed shall be that authorised for the time being by the Executive Committee of the Federation.”

These provisions apply to all types of carpets not excluded from the Standards of Trading and not merely to A1 and W1. There follows in para (b) to para (j) inclusive a number of ancillary or subsidiary provisions dealing with cash discounts, quantity discounts and so on.

Closely bound up with, and an integral part of, these provisions are the

Page 367 of [1960] 1 All ER 356

arrangements which members agree to make with the wholesalers on the wholesale list. This forms the subject-matter of the second consolidated reference before us. The respondents are the wholesalers on the wholesale list and are represented before us by the WFDAe. Each wholesaler on the wholesale list is required to sign a letter to the secretary of the Federation whereby, in consideration of receiving the current wholesale trade discount from carpet manufacturers, he agrees (so far as material to this case): (a) to accept the manufacturer’s price as the minimum price to the retailers; (b) to retain the whole of the manufacturer’s current wholesale trade discount; (c) not to give any cash discount on payment or extension of time for payment in excess of the corresponding terms received from carpet manufacturers; (d) not to sell to consumer buyers. The distribution scheme of the Federation is thus a clear and coherent whole. The retailer obtains his carpets whether it be from manufacturer or wholesaler at, but not below, the list price and that, no doubt, is why the manufacturer will not quote special prices for his ordinary listed range of qualities to the retailer; he must not undercut his wholesaler. The wholesaler (if he is on the wholesale list) for the services he performs in carrying stock and having adequate showrooms receives the wholesale rate of discount. This rate was originally fixed by the Federation at eleven per cent, and it is clear that this is a low rate of discount compared to similar trades. Between 1952 and 1958, there was much pressure to increase this rate of discount and a number of small members of the Federation contracted out of cl 2(a)(i) of the Standards of Trading, as they were entitled to do under cl 22 of the constitutionf. Finally, in 1957, two substantial members (one involving two companies) contracted out and, in fact, resigned from the Federation. Apparently they now allow 12 1/2 per cent on all sales. It became evident that the line could not longer be held, and as from 1 September 1958, the Federation fixed a wholesale rate of discount on all carpets below the quality of A1 and W1 at 12 1/2 per cent  It remains at eleven per cent for A1 and W1 and higher qualities.

The last restriction in the home market with which we propose to deal is that in cl 2(k) of the Standards of Tradingg. Shortly stated, sales must not be made direct to consumer buyers; that is, public bodies, householders, hotels, restaurants or cinemas. There are excepted from this provision recognised “buying agencies” which are defined in an appendix. Briefly, buying agencies are those who supply more than normally large consumers of carpets; for example, railway and steamship companies, certain government departments, but not local authorities, hospital boards or nationalised industries except British Railways and British Airways Corporations. This restriction stands very much on its own, and is designed to prevent large consumers from obtaining wholesale terms direct from manufacturers. The argument is that such consumers require a retail service and should, therefore, be compelled to buy through retailers. Thus, for example, the London County Council, whose total requirements for carpets for their own offices, hospitals and schools come to about £20,000 per annum, are compelled to purchase through retailers. Of course, retailers will be prepared to give big local authorities and other large purchasers very favourable terms, and one case was proved before us where a retailer was content on one occasion to pass on carpets to the London County Council at the price which he (the retailer) paid; his only profit was the 2 1/2 per cent discount he received for cash. These large purchasers naturally argue that they should have the opportunity of striving to get the wholesaler’s rate of discount or at any rate some part of it.

Page 368 of [1960] 1 All ER 356

We shall deal with restrictions on trading in overseas markets at a later stage of this judgment.

We now propose to consider how these restrictions are operated by the Federation in practice. We shall consider first the fixing of prices of the standard qualities by the Federation and then with the method of selection of wholesalers for inclusion on the wholesale list. The Federation do not claim that the price fixed is a low price or a minimum price in the sense of being a “stop loss” price. They claim that it is a proper and reasonable price, a phrase which we shall examine later. In market contrast to the elaborate costings and calculations which we had to consider in Re Yarn Spinners’ Agreement and Re Blanket Manufacturers’ Association’s Agreement, there is no costings procedure in any accountancy sense whatever. The Registrar’s accountant made an investigation into the accounts of fourteen firms who were treated as representative. In only two cases were any standard forms of costing adopted, and it was difficult to extract any completely accurate or truly comparable figures of cost. However, the accountant’s evidence established all that it really set out to prove, namely, that there was a substantial range of cost between the high cost producer and the low cost producer and the price fixed by the Federation had no relationship to the costs of individual firms.

As we have stated earlier, the prices were fixed down to the time of decontrol in 1952 by the Board of Trade after negotiations with the old executive committee. When the Board of Trade’s accountants were investigating these matters, a figure of 7 1/2 per cent was taken as a basic margin of profit to be allowed on top of costs. On decontrol, the Federation was then in a position to start from those figures, and the practice has been to consider not basic costs of material and costs of conversion but differences in costs of material or of conversion since the price was last fixed. Prices are first considered by bodies known as Area Costings Committees. These are not truly sub-committees of the Federation but are meetings of manufacturers in each of the three areas. Discussion is very informal, and in the more remote areas sometimes merely by telephone. Apparently some information is exchanged, but the evidence was very vague. These meetings are no more than preparatory discussions for the quarterly meetings of the Costings and Prices Sub-committee of the Federation. This meeting is attended by the members of the sub-committee and their cost accountants, and they have before them reports from the area committees, sometimes verbal, sometimes in the form of an aide-memoire. As the cost of raw material accounts for about sixty per cent of the total cost of a carpet, the sub-committee first consider any changes in raw material prices and, after discussion, decide what should be accepted as the current price of the raw material. They then go through the same procedure with the costs of conversion. They then consider whether any change in the prices for the standard qualities is justified, but, in doing this, the committee does not rely on figures only. As the principal witness on this part of the case said in his proof of evidence:

“We rely at least as much on our collective knowledge and experience of the carpet business as on the figures themselves. Perhaps the best way of explaining the matter is to say that the costings figures produced are relied on as showing trends in costs and are used as a basis for discussion.”

The sub-committee then makes a report to the executive committee, indicating whether any change of price is justified. The matter is then discussed by the executive committee, who make the decision as to any change. This committee meets regularly shortly after the sub-committee, and it also takes a very broad view. To quote from the Federation’s answer to the Registrar’s questionnaire:

“The executive committee reviews the current minimum prices in the light of the report from the sub-committee but it also takes account of many

Page 369 of [1960] 1 All ER 356

other factors, such as current and future conditions and trends, the season of the year in relation to sales programmes and other matters not directly related to costs, before it takes a decision as to whether the current minimum prices should be changed.”

It may fairly be stated that the executive committee has never decided to make any greater increase of prices than that recommended as justifiable by the sub-committee, and on a number of occasions has either made no increase or a lesser increase than that suggested by the sub-committee. Since this scheme started in April, 1952, there have only been five changes in prices, one in June, 1952 (downwards), and subsequently in September, 1952, December, 1953, September, 1955, and March, 1957, all upwards. We observe that, though the price was last changed in March, 1957, when the price of wool was 108d per pound and it rose to 110d for the months of August to October, 1957, it then fell to 106d in November, 1957, and to 100d in April, 1958, yet no downward revision has been made. There was no evidence before us that conversion costs have risen during this period to balance the fall in raw material prices. However, looking at the matter generally, it seems to us clear that prices admittedly fixed by the methods which we have stated give no assurance that they will be reasonable in the interests of the public, whose interests indeed do not seem to be considered at all. Changes in carpet prices for the standard qualities seem to be no more than informed guesses taking into account a large number of factors, many of them not related to costs at all. Prices so fixed cannot fairly be described as other than arbitrary.

We turn to the wholesale list. Its avowed object is to keep brass platers out of the trade, and ten criteria have been laid down by the Federation as the principal factors to be taken into account when judging suitability for admission to the list. We propose to summarise the more important of them. The applicant must have adequate storage space and showrooms, adequate finance and coverage by travellers. His standing in the carpet trade is considered. The size of his carpet turnover is considered and, if it drops to less than £10,000 per annum, he is warned that he may be taken off the list. His general reputation, connexion with the retail trade and the general nature of his business are also among the criteria. Before considering the operation of admissions to and removals from this list, we must give a few statistics. There are at present 193 wholesalers on the list. In their replies to the Registrar’s questionnaire, the Federation stated that, between 1 June 1955, and January, 1959, fourteen applicants to the wholesale list had been admitted, 134 rejected and nine deferred. The reason given for the rejection of this large number was that the applicant was not a proper firm to be admitted to the list. There seems to be an annual review of those on the list in March of each year. Four were removed and ten warned in March, 1957. As a big manufacturing group resigned in March, 1957, no firm was removed in 1958, but fifteen were warned. Six were removed and seven warned in 1959. Some of those warned had for two or three years turnovers substantially below the critical figure of £10,000, and it is difficult to see why such firms were not removed if the general scheme of the wholesale list was really being operated as it was represented to be. However, it is fair to say that (allowing for re-admissions) between 1952 and 1959, twenty-six have been removed for low turnover and ten for other reasons. The question of admission to and removal from the wholesale list is dealt with by the Federation’s Terms Sectional Committee. We have already pointed out that a manufacturer may contract out of this provision (and we have been told fourteen have done so), but he may not want to do so. However, he may want to see a wholesaler on the list but the committee as a whole think otherwise. In that event, the manufacturer is entitled to put that particular wholesaler on a supplemental list and, provided the wholesaler is willing to sign the common form agreement (as to discounts and terms of re-sale to retailers), that particular member, but no

Page 370 of [1960] 1 All ER 356

other, is entitled to treat that particular wholesaler as being on the list. A number of manufacturers have exercised this privilege.

When a wholesaler applies to be put on the wholesale list, he is sent a questionnaire so framed as to enable the committee to consider which of the criteria he satisfies. The matter is then put before the committee. Any member of the Federation may attend these meetings if he is interested, but usually there are fifteen or sixteen members who attend regularly. Two leading members of the Federation have given evidence before us as to the operations of the committee, and the Registrar has called a number of carpet wholesalers and intending carpet wholesalers who have applied for admission to the wholesale list and have been refused. Now we are prepared to accept that admission to the wholesale list when it was first administered by the committee was intended to be regulated so as to keep out the brass plater. However, we are completely satisfied on the evidence that, for some years now, the committee has ruled on applications for admission in an arbitrary manner entirely for the benefit of the manufacturers, and the ten criteria are seldom, if ever, applied in a bona fide way. Their decisions in practice go far beyond the ostensible object of keeping out the brass plater. They keep out quite arbitrarily a number of genuine wholesalers who would satisfy, and well satisfy, the principal criteria, and we saw in the witness-box some wholesalers who, if the ten criteria had been seriously applied, must have been admitted to the list. We were told that these matters were discussed at great length in the Terms Sectional Committee, yet the secretary never recorded anything more than the decision. He made no attempt to record the sense of the meeting or state the reasons for any decision, and the normal practice is never to give to the applicant any reason for the refusal of his application. That in itself indicates a failure to operate the ten criteria for the purposes of which the applicant has laboriously, but so often uselessly, filled in the questionnaire. The truth of the matter is that there is no plan for an efficient wholesale coverage of the United Kingdom based on density of populations in geographical areas at all. Each member present at the committee consults only his own interest; that is to say, if he is not concerned to have an extra wholesaler in the particular area where the applicant happens to have his place of business, the manufacturer will not support his application. If it so happens that no one is concerned to support the applicant for this reason, the applicant, however qualified and deserving, has no chance of election, and that is why such a large number of applicants have been rejected.

The witnesses for the Federation (who, to be fair to them, gave their evidence with great candour) seem to confuse election to the list with the obligation to supply to those on the list. No manufacturer is bound to supply a wholesaler merely because he is on the list. The Federation’s principal witness on this part of the case gave perfectly understandable reasons why he personally would not supply some of the wholesalers called before us by the Registrar. He seemed unable to appreciate the distinction between that and election to the list. Harm has been done to the public by this arbitrary manner of selection to the list. For example, there is no carpet wholesaler in the Channel Islands. Retailers there can, of course, see patterns brought by travellers from the manufacturers or wholesalers, but if a retailer wants to see a display of carpets he must go to the mainland; yet a perfectly genuine wholesaler in Jersey who would have been capable of providing just that service was refused admission to the list. Notwithstanding the post-war introduction of the large pattern trade (that is, where travellers take round a large selection of lithographs and big pattern books), this seems to us a serious drawback to local retailers. The effect of the joint operation of the wholesale list and the wholesale discount is quite obvious. The wholesalers on the list reluctantly accept these low rates of discount primarily because they are on this very select list which diminishes, though it does not destroy, competition, and, secondly, because they hope to make another breach in the rate of discount. The manufacturers have to

Page 371 of [1960] 1 All ER 356

pay only a low wholesale discount and, if they are dissatisfied with the present structure of their selling and distribution organisation, can either actively sponsor an applicant for admission to the list or can put him on the supplemental list.

The Federation supports its case on the restrictions agreed between members of the Federation under s 21(1)(b), (f) and (g) of the Restrictive Trade Practices Act, 1956. It supports its case on the common form agreement with wholesalers under para (b) and para (g) only. We shall consider para (b) first.

We have to decide whether the removal of the restriction would

“deny to the public as purchasers, consumers or users of any goods other specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements or operations resulting therefrom.”

The benefits alleged to be enjoyed by virtue of the restrictions as pleaded and argued before us are as follows:—(i) The existence of the A1 and W1 standards are in themselves of great benefit to the public and to the trade, for they are confidently regarded by the public and by the trade as being constant and undebased in quality at prices which are regarded by the public and by the trade as being proper and reasonable and as indicating a constant and undebased quality. If the scheme is abolished, the substantial benefits and advantages which would be denied to the public are alleged to be that these standards would cease to exist or would become debased and the public would have no confidence in the quality or price of such carpets and would be deprived of a standard of comparison of qualities. (ii) The fixing of prices for A1 and W1 qualities ensures a substantial degree of stability in the price of these and of other qualities which results in a stable distributive trade, creates confidence in stocks on the part of wholesalers and retailers so that they maintain adequate stocks. If the scheme is abolished, the substantial benefits and advantages which would be denied to the public are alleged to be that prices would become unstable, there would be in the distributive trade a lack of confidence and a consequent holding of inadequate stocks for the public, with a resultant lack of choice for them. (iii) The scheme of distribution of carpets ensures that the needs of the public are well served through wholesalers and retailers throughout the country at a low cost. If the scheme is abolished, the substantial benefits and advantages which would be denied to the public are alleged to be that brass platers will enter the trade, discounts to wholesalers would be increased, allowances by way of annual rebates would be introduced, a narrower choice of carpets would be available to the public, the more remote districts would be inadequately served and the cost of distribution would rise. (iv) The scheme ensures the maintenance of “promotional costs“—that is, advertising costs—in connexion with sale of carpets at a low level. If the scheme is abolished, the substantial benefits and advantages which it is alleged would be denied to the public are alleged to be that the joint advertising scheme would be abandoned and greatly increased sums expended by individual firms on advertising, leading to more expensive carpets or a deterioration in quality.

Counsel have quite properly taken each set of restrictions and examined them in turn, and we propose to follow the same course, but in the end we shall review the restrictions as a whole; that is, as a planned system of trading activity. Paragraph (i) and para (ii) of the foregoing paragraphs are directed to the maintenance of a quality/price standard and para (iii) to the arrangements with wholesalers, and we (like counsel) shall so deal with them. Paragraph (iv) stands on its own.

As to para (i), the price cum qualityh standard, we agree that the maintenance of a standard quality well known to the public is an advantage to it (though whether it would be a specific or substantial advantage is a matter on which we

Page 372 of [1960] 1 All ER 356

express no opinion) but, for the reasons that we have given, we are not satisfied that, so far as the general public is concerned, the A1 and W1 standards signify any standard of quality. Nevertheless, we agree that, within the trade, A1 and W1 do indicate a quality standard. They are widely accepted as standards for comparison with other qualities and to that extent make it easier for the retailer to form a judgment. If, therefore, the result of an adverse decision of this court would be to destroy not only the price element but also the quality element (an argument which we shall examine in a moment), would the loss of a standard quality by itself deny substantial and specific advantages to the public? In the circumstances mentioned above, the denial of advantages (if any) to the general public is de minimis. Then, as to the position of the retailer section of the public, if the quality standard disappears it is true he will be deprived of standards of comparison at present available to him; but this is no more than an inconvenience to him. The retailer is in the trade to serve the public, and there was ample evidence that, before the war, experienced retailers were capable of comparing carpets for quality and detecting debasement. If these skills have been forgotten during the post-war control, they must be re-learnt and, until they are re-learnt, retailers who want good quality carpets will have to go to manufacturers or wholesalers of a high reputation. We feel sure that they will not be disappointed. But what if our conclusions are wrong as to the importance of the quality standard to the general public? It was the essence of the Federation’s case that the loss of the quality/price standard would be a serious loss. It is said that if, owing to an adverse decision of this court, the price cum quality standard is abolished, the quality standard must necessarily disappear at the same time because, so it was said, quality not coupled to a price and buttressed by a quarantine was a meaningless phrase. It was urged on us that the abolition of the price standard would lead to debasement almost overnight, and the public would suffer accordingly. Evidence was given as to the position before the war, when it was said that lack of price cum quality control led to hopeless debasement of the Axminster qualities in the United States of America; in England it was said that the Brussels weave was debased to virtual extinction. This evidence, we think, was greatly exaggerated. We draw attention to the fact that, before the war, the industry was an expanding industry and, in fact, the Imperial Axminster quality was upgraded. However, pre-war history is not a reliable guide to post-war events. The position today is that this is an expanding, prosperous and buoyant industry. We were told that large sums out of earnings of the industry have been retained in the industry since the war and used to improve premises, plant and machinery. The manufacturers are jealous of their reputations and trade names at home and, as we shall show later, overseas. Little has been heard of Federation standards lately. Furthermore, there was no evidence of debasement by firms outside the Federation to compete with the latter’s A1 and W1 qualities. If the price cum quality control is abolished, some firms may possibly debase, but we believe that many manufacturers will seize this opportunity to take advantage of the increased standards of living of the public and put on the market, probably under their own trade names, carpets of as high a quality as today, so that there will be readily available to the public a large range of high quality carpets.

Then, as to price, we have already criticised the price fixed by the Federation to retailers as being arbitrary. To suggest, as the pleadings do, that the price is regarded by the public as proper and reasonable, is a meaningless phrase; first, because the public are wholly ignorant of the standard price; secondly, because they have to pay a price arbitrarily imposed on the retailer by a manufacturer and, in addition, whatever mark-up the retailer thinks it is commercially prudent to add. If the pleadings intend to suggest that the retail price charged to the public is regarded by them as reasonable, that was not established by evidence and we do not accept it. We believe that, if the quality/price

Page 373 of [1960] 1 All ER 356

restriction goes, the force of competition will tend to lower prices and that the public will be offered a large range of excellent carpets at competitive prices. We shall deal with discounts when dealing with para (iii).

We have come to the conclusion that the abolition of the price cum quality standard will deny to the public no benefits whatever.

As to para (ii) stability of pricesi, some degree of stability of prices may be sacrificed if the standard quality price is abolished. But, as has been pointed out in earlier cases in this court, that is not necessarily a bad thing. In any event, after an initial shake out, there seems no reason to expect any undue instability of prices and certainly no instability comparable with the incidence of changing purchase tax. Increasing competition in both wholesale and retail trade will compel traders who are determined to stay in business to continue to hold adequate stocks, giving the public a large variety to choose from. Stability of prices confers no benefit on the public in this case.

Then, as to para (iii), which in effect supports the wholesale list and wholesale rate of discountj, the wholesale list is, in our view, the most objectionable feature of the whole scheme. It prevents new and enterprising wholesalers from having an opportunity to purchase a proper range of carpets, for we are satisfied that, though some manufacturers may refuse to supply some newcomers whom they regard as undesirable wholesalers or as competitiors, other manufacturers would do so. The list also prevents many existing and well-established wholesalers who have not been admitted to it from increasing their range of carpets. Those now on the list are not subject to so great a spur of competition as they otherwise would be; in short, their turnover may to some extent be determined not by their efficiency but by their comparative exclusiveness. The only possible excuse for such a list is to keep out the brass plater. Even if the list was operated bona fide in accordance with the ten criteria (which we have found as a fact it is not), those criteria go much further than can be justified for that limited purpose. Furthermore, though we understand the anxiety of the industry in connexion with the brass plater, the problem is one which is not peculiar to this industry but is a common one, particularly in the textile trade. The industry faced it before the war and survived. We have already pointed out that no less than fourteen manufacturers have contracted out of the wholesale list clause, and that is a powerful pointer to the fact that it acts as a drag on freedom of trading. The problem of the brass plater must again be faced and dealt with by the industry, and the remedy lies in the hands of the members. This provision certainly does not fall within s 21(1)(b).

Then, as to the wholesale rate of discount, it is possible that the wholesalers will force an increase in the wholesale rates of discount if the list is abolished. Competition may force members to offer bigger discounts for bulk orders, or give to retailers quantity discounts of some kind based on orders over the year. These are problems common to every industry and, again, this is no case for s 21(1)(b); nor is there any ground for believing that these matters will either increase the price of carpets to the general public or decrease the range of carpets available. A number of members have contracted out of this provision and they, together with outside manufacturers, no doubt give higher rates of discount, yet their prices remain fully competitive. As for inadequate service to remote areas, the evidence, as we have shown, points to exactly the opposite result to that claimed.

As to para (iv), maintenance of promotional costsk, two points arise. One of the witnesses said that, without the maintenance of the restrictions, it would be impossible to maintain co-operative advertising. We do not understand why this should be so. We have already pointed out that the whole object of

Page 374 of [1960] 1 All ER 356

this effort is generally to promote the sale of wool or worsted British carpets regardless of manufacturer or qualities, and if it be worth while to continue the scheme supported as it is by a substantial annual grant, the Federation will, we believe, do so. Secondly, it was said that much greater expenditure on advertising by individuals would be required if the promotional costs effort goes. Even if the abolition of the scheme does lead to greater expenditure on advertising, it by no means follows that the prices of carpets will rise, and we do not think they will. Some outside manufacturers spend very large sums on advertising compared with members, yet their prices at home are no higher. Advertising is undertaken in the expectation that it will be remunerative by increasing turnover in an expending market or obtaining a larger share of an existing market. This, again, is a feature common to all industries and does not satisfy s 21(1)(b).

Then we must look at the scheme as a whole for the purposes of s 21(1)(b). We are prepared to accept the view that the scheme was introduced with the honest intention of giving the public a good service, though plainly the Federation was in nowise neglecting its own interests. As the scheme has been operated, however, the result seems to be as follows: The manufacturers benefit greatly by getting (from their point of view) good prices for their carpets which they fix and by paying a low rate for distribution. The wholesaler fortunate enough to be on the wholesale list has some benefit by reduction in competition. It is a convenience (no more) to the retailer not to have to take some trouble in appraising the quality of carpets, but, on the other hand, he has a less good wholesale coverage. To the general public we can see no benefit at all. They are paying prices which are probably too high and the retailer to whom they go may not have the range of carpets which he otherwise would have. We think the public will continue to obtain an adequate range of carpets of all qualities if the restrictions are abolished. The claim under s 21(1)(b) fails.

Next we must deal with the restriction prohibiting sales to consumers except through retailers. We do not find any justification for this restriction in the pleadings which appear to be directed only to matters which we have earlier discussed in this judgment. Nor have we been persuaded in argument that there is any justification for it to be found in s 21(1)(b). It was said that without it the retailer would refuse to deal in the goods of the manufacturer. We do not accept that for a moment. This restriction is plainly bad.

We next consider the Federation’s case under s 21(1)(f). The Federation have to satisfy us that the removal of the restriction in relation to the home trade would be likely to cause a substantial reduction in the volume of earnings of the carpet trade export business in relation to the whole business, including export business, of the carpet trade. The other alternative in the sub-paragraph is plainly inapplicable. We must start by quoting some statistics, though both the Registrar and the Federation have found it difficult to put reliable statistics before us. Values of export sales ex factory of the whole carpet industry of wool, worsted and mixtures, excluding mohair and tufted carpets, declined steadily from rather over £12,000,000 in 1954 to just under £8,000,000, in 1958. This must be compared to total home and export sales of such carpets which increased from £65,000,000 in 1954 to £71,000,000 in 1958. It follows that the export trade, expressed as a percentage of total sales, declined from 18.5 per cent in 1954 to eleven per cent in 1958. The export trade is steadily and rather rapidly declining, despite the maintenance of the price/quality standards of W1 and A1. During this time, the exports of forty-eight of the Federation’s members (who, however, exported ninety-eight per cent of all Federation exports of woollen and worsted carpets) of A1 quality fell from nearly £5,000,000 in 1954 to just over £3,000,000 in 1958. Exports of W1 during this time were apparently much smaller. During this time the percentage of exports of A1 to total exports of the forty-eight Federation members fell from fifty-six per cent to forty-five per cent  It is clear that in a rapidly declining export market the proportion of exports of

Page 375 of [1960] 1 All ER 356

A1 is also declining. There seems little grounds, therefore, for anticipating that the abolition of the standard quality cum price would be likely per se to cause a substantial reduction in the export trade. The figures suggest that a substantial reduction is likely to occur in any event. This case fails on these figures.

However, we heard some evidence on this matter. Exports to Australasia account for rather more than half of the total exports of United Kingdom carpet manufacturers. It was proved by evidence called by the Federation that the exports of British manufacturers to these Dominions depend on their ability to offer goods of high quality. Since the war, a substantial local carpet manufacturing industry has been built in Australasia. They still use the same symbols as were in earlier days in use in the trade here, such as A1, 2, 3. Moreover, it is clear from the Australian and New Zealand newspaper advertisements that we have seen that these qualities are brought to the notice of the purchasing public in a way that was never, so far as the evidence goes, done in this country. The evidence was that many of the products of Australasian manufacturers, although advertised in various standard qualities, are in fact of lower quality; in other words, debased. British manufacturers have only been successful in exporting to these Dominions, in the face of difficult quota regulations and import duties, by offering a uniformly high undebased quality and there is no doubt that, for example, a British A1 quality stands much higher in the estimation of the Australian buying public than an Australian A1. Furthermore, these newspaper advertisements bring to the notice of the buying public, again in a way which so far as the evidence goes has never been done in this country, the names of the leading British manufacturers as an indication of excellent quality. Exports to Australia and New Zealand have declined from rather under £9,000,000 in 1954 to under £5,000,000 in 1958 and, if this decline is to be arrested, it can only be done by maintaining high and undebased qualities. It is said that this will be impossible, for debasement in the home market will inevitably follow if home restrictions are abolished, and it will then be administratively impracticable to maintain undebased qualities for export. This is contrary to the evidence and to common sense; contrary to the evidence, for it was established, first, that a non-Federation manufacturer who makes little A1 for the home market, makes a substantial line of A1 for export, and, secondly, that the general Australasian taste is for a rather different type of design to the popular lines in the United Kingdom, the lines which sell best there being chintz and floral designs. It is contrary to common sense, for British manufacturers who wish to remain in the Australasian market will so organise their factories as to compete on the only possible basis with the local product, by producing better quality and by enhancing their reputations as leading British manufacturers. If any manufacturer decides to go out of the Australasian market, it will not be because of the abolition of the restrictions at home, but because the export market is proving unprofitable to him on any footing.

Finally, though counsel have dealt with this particular matter when arguing another part of the case, we think that it is relevant to refer to the progressive removal of Federation restrictions in relation to the export market. At the date of the reference in July, 1957, there was a general restriction binding on members that in sales overseas, except to the United States of America, carpets were not to be sold at prices below those for the home market. Then, in December, 1957, Europe was excluded from that restriction. A year later, Central and South America, Canada and parts of Africa were excluded. It seems that the Federation has come to believe that freedom of action is the best policy in the export trade. It is a little difficult to see then why freedom of action in the home market should be said to lead to a substantial reduction in exports. This point fails.

It follows that, as the Federation has failed to establish any case under s 21(1)(b) or (f), para (g) has no application. It also follows that it is unnecessary for us to consider the balancing provisions at the end of sub-s (1), for there is

Page 376 of [1960] 1 All ER 356

no benefit to be weighted in the balance against the detriment to the public. It is implicit in what we have already said that we regard the detriment to the public flowing from the operation of the Federation scheme as very considerable.

There remain two matters with which we must deal. The first is in regard to the restrictions entered into by members of the Federation in relation to their overseas trade. These restrictions are based on and follow substantially the restrictions relating to the home market. Until 26 August 1959, these restrictions all formed part of the “Standards of Trading” and were contained in main cl 3 of those standards. The cardinal provision was that carpets were not to be sold in overseas markets at prices below those for the home market. The home wholesalers are not, so far as we are aware, concerned with exports; so there was no wholesalers list, but there was a provision that no wholesale or retail discounts should be allowed other than those authorised by the Federation. By resolution of the executive committee of 26 August 1959, however, the restrictions were removed bodily from the Standards of Trading and reinstated in what was alleged to be a new agreement. This was admittedly done in case the Federation should lose their case before this court. Their case is that, by removing bodily the provisions relating to overseas trading from the Standards of Trading and reinstating them in another document, they have entered into a new agreement to which the Restrictive Trade Practices Act, 1956, does not apply by virtue of s 8(8) of that Act. The Registrar contends that the alleged new agreement is only a variation of the old agreement (a variation without a difference) and should be entered on the register maintained by him. That is a question which can only be determined by the High Court.

It has been admitted by the Federation that, having regard to s 20 of the Act, restrictions on the register in relation to overseas trading down to 26 August last are justiciable by us and that we have a discretion to adjudge on them if we think proper to do so. But the Federation nevertheless submit that, in the exercise of our discretion, we ought not to do so. The question really is whether we ought to decide on the validity of the whole scheme as registered down to 26 August 1959, or only on the provisions relating to the home trade. We think that we should decide on the whole scheme, for two reasons. First, the old overseas scheme was an integral part of, and depended on, the existence of a scheme for the home market. If the price/quality standard is abolished at home, all reason for a scheme abroad based on home prices seems to go. If any manufacturer at home can charge any price he likes for an A1 carpet, there seems no reason to compel him to charge the same or a higher price for an A1 carpet overseas. There was no evidence to show that the old scheme could have any useful operation abroad in the absence of controlled prices at home, or that it could be justified under s 21(1)(b) of the Act. But there is another reason why we think that we should deal with the whole scheme today. The Federation having, as they put it, severed their overseas trading restrictions from the home trading restrictions by a pair of scissors on 26 August applied to this court for an order that all restrictions relating to the supply of goods by export contained in the registered agreements be excluded from consideration by the court in these proceedings. That application was heard by us on 14 October last and we refused it. The Federation and their advisers, therefore, knew that we might consider the export restrictions and they knew that the Registrar would invite us to do so. They have not in the least been taken by surprise and yet, although the onus is clearly on them, they have elected to call no evidence to justify the continuance of the overseas restrictions; and they must be taken to have decided on that course deliberately. We must declare the restrictions contained in main cl 3 down to 26 August last contrary to public policy. If the High Court decides that the Registrar’s contention is correct and the so-called new severed agreement is in law only a variation which ought to be registered with the Registrar, we see no reason why he should be put to the expense of a fresh reference. In that event, we propose to give him liberty to apply for a declaration of invalidity as to the variation made on 26 August last to

Page 377 of [1960] 1 All ER 356

which, in the absence of any change of circumstances, he will plainly be entitled.

The second matter with which we must deal is an even later last-minute decision to try to avoid the consequences of an adverse finding by this court. On 20 October last, the executive committee of the Federation resolved as follows:

“The committee considered the draft of an agreement between individual manufacturers and their wholesale customers, which had been prepared by the secretariat, at the request of the chairman’s sub-committee, in the form of two draft letters, together with an appendix and an annexure, as a means by which whatever the outcome of the case members of the Federation, if they wished to do so as individual firms, might be able to continue to trade with their wholesale customers under the rules at present embodied in the Standards of Trading for the home market.

“After considerable discussion on the details of the drafts, in which the secretary was instructed to include a section to cover the position of wholesalers with retail connexions, the committee agreed that the draft agreements, as amended, should be sent to the Council of the Wholesale Floor-covering Distributors’ Association for comment; and that subsequently the drafts should be sent to each member of the Federation with a recommendation that each member should, without delay, send letters on the lines of the drafts, to each of his wholesale customers, with a view to establishing individual agreements on terms of trading. A copy of the drafts, as finally amended, is at Appendix ‘B’.”

Members of the Federation have been circularised accordingly. The resolution has been registered with the Registrar. We do not pause to read the drafts at Appendix “B”, for they do in substance carry out the plain intention of the Federation as expressed in the resolution; that is, on the footing that all the present restrictions are found countrary to public interest by this court, the drafts enable individual manufacturers to continue trading with their wholesale customers under the rules embodied in the Standards of Trading. During the hearing we were told that some twenty-eight out of fifty-eight members have acted on this resolution. The resolution is a recommendation to which s 6(7) of the Act is plainly applicable, so that the constitution of the Federation must be construed as though it contained a term whereby members agree to comply with those recommendations. The members, therefore, are deemed to be bound to send out draft letters on the lines of the drafts circulated. Those drafts, as we have said, contain terms similar in substance, though not in form, to the letters which wholesalers are bound to sign as a condition of being entered on the whole-sale list. We have not yet considered those undertakings in detail and we think that the convenient course will be to consider all those matters together.

Accordingly, today we decide that the following restrictions contained in the Standards of Trading are contrary to public policy:—(i) The main price quality standards contained in main cl 1(a). (ii) The restrictions relating to the whole-sale list and rate of wholesale discount contained in main cl 2(a). (iii) The consumer buyer provisions contained in main cl 2(k); and, finally, (iv) The main provisions of the overseas market restrictions contained in main cl 3 down to 26 August last.

[21 December. It was agreed that the subsidiary restrictions must be declared contrary to the public interest. The Federation, however, were still allowed to prescribe A1 and W1 standards, but these must not be related to prices. The Federation stated that the recommendation of 20 October 1959, had been withdrawn since 17 December.]

Declaration accordingly.

Solicitors: Simmons & Simmons (for the Federation of British Carpet Manufacturers and individual carpet wholesalers); Treasury Solicitor.

G A Kidner Esq   Barrister.

Hull v Hull

[1960] 1 All ER 378

Categories:        FAMILY; Children; EQUITY        

Court:        PROBATE, DIVORCE AND ADMIRALTY DIVISION        

Lord(s):        SACHS J        

Hearing Date(s):        10 DECEMBER 1959        

Divorce – Custody – Estoppel – Desertion – Adultery – Wife granted decree in undefended suit on ground of husband’s desertion – Discretion statement by her disclosed adultery with two men – Whether husband estopped in subsequent custody proceedings from asserting wife had deserted him and from alleging adultery with men other than those referred to in the discretion statement.

The wife was granted a divorce on the ground of the husband’s desertion. There was no prayer in the petition for custody of the three children of the marriage. The suit was undefended, the court found that the husband’s desertion was proved and exercised its discretion in her favour. Her discretion statement disclosed adultery with two men. The husband was represented at the hearing on the question of costs, the matter of custody being adjourned to chambers. The husband took out a summons for custody and sought to include in support of it evidence of facts showing that, contrary to the finding of the trial judge, the husband had not deserted the wife but that she had deserted him, and also evidence of the wife’s adultery with men other than the men to whom her discretion statement referred, the evidence having, however, been known to the husband before trial.

Held – (i) the husband was estopped from putting forward evidence to show that the wife had been in desertion, for the doctrine of res judicata precluded him from raising again in relation to custody issues of fact that had been determined against him at the hearing of the petition and on which the decree nisi had been founded (p 384, letter c, and p 385, letter h, post.)

Corbett v Corbett ([1953] 2 All ER 69) distinguished.

(ii) the husband was not estopped from adducing evidence of the wife’s adultery before the decree nisi, for those facts were not raised or pronounced on at the trial and the issue in the custody application (viz, which party was better suited to have custody of the children) was different from an issue whether the adultery barred the petitioner from obtaining relief by decree nisi; moreover the court should not, in custody proceedings, exclude such evidence on the ground of public policy (viz, that it had been known to the husband at the trial and not then raised) since in custody proceedings the welfare of the children was the factor in issue (see p 382, letters a, b and e, post).

Dictum on maintenance proceedings in Duchesne v Duchesne ([1950] 2 All ER at p 791) distinguished.

Notes

As to estoppel as a bar to relief in matrimonial causes, see 12 Halsbury’s Laws (3rd Edn) 294, para 581 and Supplement; and as to estoppel generally, see 15 Halsbury’s Laws (3rd Edn) 176, para 345; and for cases on the subject, see 27 Digest (Repl) 374–378, 3088–3117.

Cases referred to in judgment

AB (an Infant), Re [1954] 2 All ER 287, [1954] 2 QB 385, 118 JP 318, [1954] 3 WLR 1, 28 Digest (Repl) 726, 2326.

Andrews (Infants), Re [1958] 2 All ER 308, [1958] Ch 665, [1958] 2 WLR 946, 28 Digest (Repl) 706, 2152.

Blunt v Blunt [1943] 2 All ER 76, [1943] AC 517, 112 LJP 58, 169 LT 33, 27 Digest (Repl) 429, 3589.

Conradi v Conradi, Worrall & Way (1868), LR 1 P & D 514, 37 LJP & M 55, 18 LT 659, 27 Digest (Repl) 323, 2683.

Corbett v Corbett [1953] 2 All ER 69, [1953] P 205, [1953] 2 WLR 1124, 3rd Digest Supp.

Page 379 of [1960] 1 All ER 378

Duchesne v Duchesne [1950] 2 All ER 784, [1951] P 101, 27 Digest (Repl) 615, 5760.

Finney v Finney (1868), LR 1 P & D 483, 37 LJP & M 43, 18 LT 489, 27 Digest (Repl) 375, 3092.

Lindsay v Lindsay [1934] All ER Rep 149, [1934] P 162, 103 LJP 100, 151 LT 283, 27 Digest (Repl) 614, 5746.

Ord v Ord [1923] 2 KB 432, 92 LJKB 859, 129 LT 605, 27 Digest (Repl) 234, 1882.

Robinson v Robinson [1943] 1 All ER 251, [1943] P 43, 112 LJP 47, 168 LT 158, 27 Digest (Repl) 614, 5747.

Rossage v Rossage (21 January 1959), “The Times” 22 January 1959.

Thompson v Thompson [1957] 1 All ER 161, [1957] P 19, [1957] 2 WLR 138, 3rd Digest Supp.

Winstone v Winstone [1959] 3 All ER 580, [1959] 3 WLR 660.

Summons adjourned into court

This was an appeal by way of summons by the wife, Sarah Hull, from an order of Mr Registrar Forbes dated 13 October 1959, refusing her application to strike out certain paragraphs in an affidavit of the husband, Albert Edward Hull, dated 16 September 1959, alleging desertion and undisclosed adultery by her.

The parties had married in 1944 and there were three children of the marriage born in 1945, 1947 and 1950 respectively. On 30 June 1959, Sir Edgar Dale, sitting as a Special Commissioner, granted the wife a decree nisi in an undefended suit on the ground of the husband’s desertion, the court exercising its discretion in her favour. The wife put in a discretion statement disclosing adultery with two men, and in evidence stated that she had not committed adultery with any other men. There was no prayer in the petition for custody, but the husband, who had asked in his answer for custody, was represented at the hearing for the purpose of questions of custody and costs. The question of custody was referred to chambers with the husband’s consent. On 20 July 1959, the wife swore an affidavit in support of an application by summons for access to the children. On 3 September 1959, the husband took out a summons applying for custody, and on 16 September 1959, he swore an affidavit in support in which he alleged facts which would show that, notwithstanding the finding of desertion against him at the hearing of the wife’s petition, she had, in fact, deserted him; further, there were allegations in the affidavit, some of which referred to statements made tending to show that she had in fact been guilty of adultery with other men than the two mentioned in her discretion statement.

On 6 October 1959, the husband’s summons for custody came before Sachs J in chambers, and at the same time the wife’s application for access was before the court. His Lordship adjourned the case to enable a summons by the wife then pending, by which she asked that the husband’s affidavit of 16 September 1959, should be taken off the file, to be heard. This summons came before Mr Registrar Forbes on 9 October 1959, when it was submitted on behalf of the wife that the husband was estopped from asserting (by facts alleged in paras 3-7, 9, 10, 12 of his affidavit of 16 September 1959) that the wife had been guilty of adultery with men other than those mentioned in her discretion statement and of desertion. Mr Registrar Forbes, on 13 October 1959, refused to strike out those paragraphs in the husband’s affidavit relating to the wife’s desertion and adultery, stating that on the decision of Corbett v Corbett ([1953] 2 All ER 69; [1953] P 605), the husband was not estopped from making allegations which might be relevant on the question of the wife’s fitness to have access to the children. The registrar acceded to the wife’s application to strike out paras 2, 8, 9, 10, 12 and 13 on the ground that they contained hearsay evidence which was inadmissible, relying on Gilbert v Endean ((1878), 9 ChD 259) referred

Page 380 of [1960] 1 All ER 378

to in Rossage v Rossagea. As a matter of convenience he ordered that the husband’s affidavit should be taken off the file, and gave leave for him to file a further affidavit in the form of that of 16 September 1959, omitting paras 2, 8, 9, 10, 12 and 13. On 20 October 1959, the wife took out a summons appealing against the registrar’s decision so far as it permitted the husband to make allegation of desertion and adultery on her part. The husband filed his amended affidavit on 27 October 1959. Sachs J reserved judgment on this summons to be delivered in open court.

J G St G Syms for the wife.

D J Turner-Samuels for the husband.

Cur adv vult

10 December 1959. The following judgment was delivered.

SACHS J read the following judgment. This appeal raises in acute form constantly recurring and much disputed questions as to estoppels in custody proceedings initiated under the Matrimonial Causes Acts: they are of wide importance not least because of the anxieties involved in any point which concerns the welfare of children.

In practice the relevant facts as to which dispute arises normally fall into one of four categories:—

(1) facts which are the subject of express or implicit findings by the trial judge on evidence laid before him; which result in the conclusion that a matrimonial offence has or has not been committed or that a recriminatory plea has or has not been established; and which then form the foundation on which a decree is granted or a prayer for a decree rejected.

(2) facts which are the subject of express findings by the trial judge but which have not been used for the above foundation.

(3) facts as to which no evidence has been adduced at trial but which if established could have formed the basis for the grant of a cross-prayer or a recriminatory plea affecting the discretion of the court.

(4) facts which, if established, would not have provided a basis for relief or a recriminatory plea of the type referred to in category (3), but which might have come somewhat close to so doing and which were either not the subject of evidence adduced before the trial judge or were not the subject of findings by him.

The first category covers not merely a finding that the matrimonial offence, for example cruelty, has been committed, but also any specific findings as to conduct which was held to be cruel, such as any blows held to have been struck. Facts in this category fall within that strict definition by which res judicata is stated to relate to a fact “directly in issue in the case” which has “actually been decided by the court, and appearing from the judgment itself to be the ground on which it was based” (see Ord v Ordb).

The second category, “an example from the run of the chambers work in the court,” would include a finding that a respondent wife chastised a child with undue harshness but that this did not affect the petitioner’s health and that for this sole reason did not constitute part of the cruelty for which a decree was granted. An allegation of promiscuously lascivious conduct short of adultery could fall into the fourth category, as would the almost limitless allegations that could fall within the ambit of matters proper to be considered in relation to the exercise of the court’s discretion as discussed in Blunt v Blunt ([1943] 2 All ER 76 at p 78; [1943] AC 517 at p 525).

The present case is a relatively simple one of a not unusual type. The wife on 30 June 1959, obtained a decree on the grounds of her husband’s desertion commencing in 1950: the suit came into the undefended list after the husband’s answer had on 1 May 1959, been struck out at his own request; and when

Page 381 of [1960] 1 All ER 378

the facts on which the conclusion of desertion were proved in court the husband was represented by counsel in relation to costs and custody. The three children of the marriage have been with the father and his mother since 1950: and between that year and the end of 1956 the wife only saw them on about five occasions, for reasons which she attributes to the husband. Since 1956 she has not seen them at all. In those circumstances the husband on 3 September 1959, issued an application that he be granted the custody of the children: and in support seeks to put in evidence facts showing that contrary to the finding of the trial judge he was never in desertion and that the relevant separation was really due to the wife’s desertion; and secondly that the wife committed before the date of the decree nisi adultery with men other than the man she has now married—the last of such allegations being one which concerned 1957. As regards each of his allegations he relies on matters within his own knowledge at the date of the decree.

The wife claims that he is estopped from alleging either her desertion or her adultery with the other men. The facts set up by the husband as regards the desertion thus fall into the first of the above four categories: and the way he seeks thus in custody proceedings to go behind the decree is typical of attempts to which one becomes accustomed in chambers on applications stemming alike from decrees granted in defended and in undefended causes.

The facts set up by the husband as to adultery fall into the third category and are typical of the allegations made by a spouse who has let a decree be obtained in the undefended list. I am thus here solely concerned with the law relating to those two categories in an instance where the facts sought to be set up were at the date of the trial within the knowledge of the party now alleging them.

On the question of estoppels in custody proceedings under the Matrimonial Causes Acts the industry of counsel has only brought to light one reported casec; and in view of the arguments raised with regard to its effect it seems best first to consider what conclusion I would reach in the light of other authorities dealing with res judicata and estoppel.

At the outset it is to be noted that the jurisdiction of this Division to deal with the custody of children is the creature of statuted and that it only arises when a lis between a husband and wife commences. The custody application is made in the suit—here divorce proceedings: and whether or not a decree absolute has resulted the title of the proceedings remains unaltered (save, of course, in so far as the parties may change their names). Here the application was made before decree absolute and has continued after that decree. In law I cannot here see any distinction between the position before and after the final decree—the application is made in the same suit as that in which the decree is granted, and is for what is usually termed ancillary relief. To the extent the application, whether made in the prayer of the petition or by later summons is, albeit in one sense a separate proceeding, yet made in the same suit, the position is different from that which is the subject-matter of almost all other cases in which estoppels have been considered—and in which the courts have considered in a second set of proceedings what is the effect of what happened in an earlier set of proceedings. It may thus well be that as between the trial of the matrimonial cause and the ancillary custody application an analogy to the trial of separate issues in an action or cause is closer than the analogy to trials of two successive causes.

I will now turn to the position in a custody application of facts that are in the third category (here the adultery allegations). Whether one looks on the custody application as if it were a second cause successive to the trial at which the decree was granted, or whether one looks on it as being a further proceeding in the same suit as that trial, it seems to me completely clear that the matter in

Page 382 of [1960] 1 All ER 378

issue in the custody application is different from that at the trial. At trial the issue is whether a matrimonial offence has been committed or a bar to relief for such an offence established: on the application for custody the issue is which party is the better suited to have custody of the child, having regard to that child’s welfare.

It is true that in establishing that a spouse is less suitable to have the custody of a child it may prove relevant to put in evidence facts which may also establish that the spouse has committed a matrimonial offence: but if the facts which establish that offence were not raised and pronounced on at trial I know of no principle of estoppel as applicable to successive suits or actions which can prevent those facts being put in evidence on the matter in issue in the custody application. A fortiori, they can thus be put in evidence if the truer analogy is to the trial of separate issues in the same set of proceedings. I pause only to note that counsel for the wife in arguing the contrary view was constrained to assert that even if the husband’s case was that for a period immediately before the decree nisi the wife had been living the life of a common prostitute, the husband’s affidavits could not mention that fact and that despite his being obviously able to refer to facts in the fourth category, eg, lascivious and promiscuous conduct short of adultery.

Once it is clear that the law of estoppel cannot for the above reason apply to these third category facts, counsel for the wife can only succeed in shutting out the relevant evidence of adultery if he can show that there should be applied to custody proceedings those passages relating to maintenance proceedings which state that, even where there is no estoppel, a spouse is “for reasons of public policy prohibited from asserting” matters known at the date of trial which if then raised might well have provided an effective answer to the petition or resulted in cross-decrees (see Duchesne v Duchesne ([1950] 2 All ER 784 at p 791; [1951] P 101 at p 113)). To my mind, however, there arises in custody proceedings an additional factor touching public policy—the welfare of the children. That factor is of such importance that plainly the court, whatever be the position as regards maintenance proceedings, should not in custody proceedings exclude on grounds of public policy evidence which would not be excluded under the established rules relating to estoppel.

I would add that in Duchesne v Duchesne, Pearce J dealt with no third category facts and only excluded those in the first category: that the facts excluded in Lindsay v Lindsay, which he cited on the public policy point, were also (as appears from the judgment of Sir Boyd Merriman P ([1934] All ER Rep at p 152; [1934] P at p 168)) first category facts: and that accordingly Robinson v Robinson—the second case so cited—seems to be left as the sole direct authority for the application of this new and controversial facet of public policy to evidence of third category facts—and that case concerned a maintenance application.

In my view the attempt in the present case to exclude the evidence as to adultery accordingly fails, because the doctrine of estoppel does not apply and because it is not on any other ground against public policy to admit that evidence.

That disposes of so much of this appeal as relates to the allegations of adultery. There remain for consideration those passages in the husband’s affidavit that seek to show he never was in desertion—and which fall into what I have called the first category. Here much more difficult questions arise. This much, however, is plain: if the correct analogy is that of successive proceedings, then unless the custody application falls into some exceptional class of the type I will later discuss, the doctrine of res judicata applies. Similarly, unless the application falls into some such exceptional class, no one would be disposed to

Page 383 of [1960] 1 All ER 378

argue that the doctrine of res judicata does not preclude the same court in one set of proceedings being asked in effect to reverse in a later phase of them a finding of fact reached in an earlier portion.

The point propounded with persuasive force by counsel for the husband is that the same sort of exception applies to an application under s 26(1) of the Matrimonial Causes Act, 1950, as applies to issues affecting status tried by this court under s 4 of that Act. That exception stems from the phrases in that latter section commencing “On a petition for divorce it shall be the duty of the court to inquire, so far as it reasonably can, into the facts alleged“e and into certain possible bars to relief. Its effect was discussed by the Court of Appeal in Thompson v Thompson. My attention was particularly directed to those parts of the judgment of Denning LJ which explains how “estoppels bind the parties but do not bind the court” ([1957] 1 All ER at p 165; [1957] P at p 29), and then deals with the manner in which the court can either exercise its discretion to enforce the estoppel or allow parties re-litigation of the relevant facts ([1957] 1 All ER at pp 166, 167; [1957] P at pp 31–33). Such an exception to the long-established rule of res judicata must either derive from statute or exist by reason of some inherent power or duty of the court. Of statutory provisions in relation to custody proceedings the one and only section which counsel for the husband pressed on me was s 1 of the Guardianship of Infants Act, 1925. This provides:

“Where in any proceeding before any court … the custody … of an infant … is in question, the court, in deciding that question, shall regard the welfare of the infant as the first and paramount consideration, and shall not take into consideration whether from any other point of view the claim of the father … in respect of such custody … is superior to that of the mother, or the claim of the mother is superior to that of the father.”

That section, however, does not contain words such as those above cited as being part of s 4 of the Matrimonial Causes Act, 1950. To my mind it deals simply with the weight to be attached to facts once they are proved, and not with the question of what evidence is admissible to prove them. The word “regard” is, to my mind, used in much the same sense as it is in the phrase “having regard to” in s 19(2) of the Act of 1950. Moreover, the provisions of s 1 of the Act of 1925 apply to all courts—and if construed in accordance with counsel for the husband’s submission empower each court to disregard the previous findings of fact not only of its own but of every other court—and, for instance, enable magistrates and county court judges to decide de novo whether decisions of fact made in this Division (whether or not confirmed on appeal) are in their view right or wrong. It is a bold submission: I doubt if it has previously been made during the thirty-four years since the passing of the Act of 1925: and I do not feel able to accept it. Had the legislature intended so far-reaching a result it would surely have used quite different phraseology—perhaps more akin to that used in s 4, or alternatively s 7 of the Matrimonial Causes Act, 1950. If there is some other statutory provision which here frees this court from the rule of res judicata, it has not been cited. (I pause to note that the Matrimonial Proceedings (Children) Act, 1958, does not apply to the proceedings now before me and has not been considered.)

Next arises the question whether a court of this Division can by virtue of inherent jurisdiction in relation to children exercise its discretion to go behind what would normally be res judicata. If it were exercising that delegated power of the Crown as parens patriae which is the origin of the relevant Chancery proceedings relating to infants, the argument might be attractive: but the consistent trend of a whole series of decisions (the latest being that of Upjohn J

Page 384 of [1960] 1 All ER 378

in Re Andrews and of Winn J in Winstone v Winstone) precludes my taking the view that when exercising statutory jurisdiction under the Matrimonial Causes Act, 1950, this court is in precisely the same position as if it were exercising inherent jurisdiction. (The judgment of Lord Goddard CJ in Re AB (an Infant) ([1954] 2 All ER 287 at p 290; [1954] 2 QB 385 at p 396) illustrates from a different angle how careful a court must be before acceding to an argument that it can exercise inherent powers as parens patriae when dealing in relation to infants with questions that arise under statutes.) Moreover, the rules as to res judicata in its strict sense and estoppel, in so far as it derives from or includes that of res judicata, are usually said to be rules of evidence: and it is relevant to mention that, save only in regard to welfare officers’ reports, this court is on custody proceedings bound by the usual rules of admissibility (compare Rossage v Rossagef—as to hearsay). It follows that I find myself unable on general principles to find a ground on which in this custody application the doctrine of res judicata does not apply to facts falling in the first category even if that application is regarded as a successive proceeding rather than a part of one set of proceedings. There remains the question whether authority enables me to say that it does not so apply.

Counsel for the husband naturally pressed Corbett v Corbett on me as being such an authority. Counsel for the wife’s first answer was that the relevant parts of the judgment were obiter—but of course even if that were so I would wish to follow them if I could. More serious is the question what precisely were the facts to which the relevant passages in the judgment relate and the circumstances in which they were spoken.

In that case the respondent wife had on her cross-prayer secured a decree nisi on account of her husband’s cruelty, the court exercising its discretion in her favour in relation to adultery with the co-respondent disclosed in the discretion statement and held to have been conduced to by the husband’s cruelty. The husband then appealed and on appeal moved for leave to call fresh evidence. The fresh evidence was directed to proving, first, that the wife had committed adultery with men other than the co-respondent (one of the affidavits was that of a man who swore he had spent the night with her); and secondly, that although the adultery with the co-respondent was properly disclosed in the discretion statement, the wife’s association with him was longer than therein stated and had its monetary aspect. The object of trying to introduce this fresh evidence was largely to enable the court to say that the trial judge had come to a wrong conclusion on questions of credibility. But from the point of view of a judge dealing with a custody issue if the motion failed (as it did) the only evidence that could on that issue be expected to affect his mind, viz, that relating to the adultery with other men, quite clearly fell into the third category: so probably did the evidence concerning her association with the co-respondent.

In that state of affairs counsel for the husband put forward an ab inconveniente argument that rejection of the motion would affect the custody issue by way of permitting an estoppel to arise. His argument did not apparently reach the stage when authorities are cited. Counsel for the wife does not appear to have been called on to deal with it: it received no mention at all in the leading judgment of Sir Raymond Evershed MR ([1953] 2 All ER at pp 70–72; [1953] P at pp 209–214), and nothing relating to it formed part of the ratio decidendi of that judgment—with which both the other learned lords justices expressly agreed. Birkett LJ however ([1953] 2 All ER at p 73; [1953] P at p 218), said:

“… the question of the custody of the child will, of course, be in the

Page 385 of [1960] 1 All ER 378

complete discretion either of the registrar or of the judge, and he will decide what evidence he will hear and what he thinks relevant to the particular issue which he then has to determine”

—a passage which—contrary to my first impression—does not on reflection seem to me intended to preclude the judge from making decisions on admissibility as well as relevance: and Romer LJ after some observations to which I will later refer, said in conclusion ([1953] 2 All ER at p 74; [1953] P at p 219):

“All I am saying is that for my part I take the view that it should not be regarded as matter to be excluded from his consideration altogether merely on the ground that it did not form part of the evidence in the divorce proceedings.”

It thus appears that counsel for the wife was right in submitting that the references to the estoppel argument were obiter: indeed they partake rather of the nature of guidance from an appellate court to a first instance tribunal related to the special facts of the case under appeal but even so not intended to be a binding direction. In any event Romer LJ’s views related to third category facts; he had not been asked to address his mind to first category facts—and he obviously had not had the benefit of such full and careful arguments on this point as have been before me. Earlier, however, he had stated ([1953] 2 All ER at p 73; [1953] P at p 218):

“Some at least of the evidence contained in these affidavits would, if true, be of some relevance in the custody proceedings, and, in my opinion, it should not be excluded merely because it did not form part of the material on which the issues of divorce were determined. To exclude evidence on a custody application on that ground would result in preventing the court from discharging its paramount duty in matters relating to the care and custody of the children, namely, to ascertain what directions will best serve the interests of the children themselves”,

and it is this passage which counsel for the husband most relied on. It is not unlikely that in using those phrases Romer LJ may have had in mind in reference to third category facts that part of the then relatively recently reported judgment in Duchesne v Duchesne which touched on public policy and which I have already considered. In that event he would by those phrases simply have been negativing its application to custody cases in the same way I have mentioned. It would anyway seem to me to be what Jenkins LJ has spoken of as an “abuse of authorities” to apply those phrases to first category facts and thus to a case “in which the facts and circumstances are entirely different and which raise questions to which their authors were not directing their minds at all”. Accordingly I do not accept the submission that Corbett v Corbett provides even obiter guidance on the way in which the court should here deal with such of the husband’s allegations as fall into the first category.

It follows that it is for me to affirm so much of the learned registrar’s order as concerns third category facts and hold them to be admissible, and to vary his order in so far as he refused to cause to be expunged allegations of first category facts from the affidavit of the husband.

In case, however, this appeal goes further I must naturally consider what would be the course that should here be taken on the footing that the court has as regards first category facts a discretion of the type discussed by Denning LJ in Thompson v Thompson.

It seems to me that where an estoppel exists which binds the parties unless the court says otherwise, the wife is normally entitled before answering her husband’s affidavit to know whether the statements in it that are prima facie inadmissible

Page 386 of [1960] 1 All ER 378

are going to be considered by the court. In the present case that question would conveniently be raised by the application under appeal and would properly be dealt with here and now. A procedure by which a court is in the course of a single set of proceedings asked in effect to stand on its head and come to a diametrically opposite finding of fact to that found and acted on by it earlier therein, involves an exercise which is to my mind somewhat unattractive. It might also quite easily result in the ridiculous situation that on the same day and in the same cause it would act on opposite conclusions of fact in a custody and in a maintenance application. The court’s discretion in favour of such a course would to my mind only be exercised in truly exceptional cases of quite a different nature to the present one. Moreover, where, as here, the children have been in the care of the husband for eight or nine years, the question of “whose was the desertion” is one which counsel for the husband very properly conceded to be “of a weight that would be marginal or negligible”, and in my view it cannot in practice influence the result of this custody application at all. So that evidence, which is solely directed to the point as to who in 1949 or 1950 was in desertion, is either irrelevant or of such nominal importance as to raise a time-wasting issue. On the footing that I have a discretion to let it be admitted I would refuse so to do.

It only remains to mention that both counsel asked me to draw different and indeed opposite inferences from the existence and wording of Matrimonial Causes Rules, 1957, r 54 and r 56, which concern interventions, separate representation, and directions for the initiation of wardship proceedingsg. Suffice it to say that in the present suit no one has intervened and no reason exists why the court should cause those rules to be brought into operation. Here I am dealing with a simple application as between two parties in which one of them has made a commonplace—one might almost say common form—attempt to go behind findings of first-category facts. Until some case arises in which the provisions of those rules are utilised, the question does not arise whether they will provide a safety valve preventing this court in a truly exceptional case from being subjected to undue pressure by the rule as to res judicata.

The result is that I order the parts agreed by counsel for the husband to be solely directed to the question of desertion, in paras 4, 6, 7, 9, 10, 11 and 12 of the revised affidavit of 27 October 1959, to be deleted. That affidavit (which like its predecessor was not drafted by counsel for the husband) cannot be filed as it stands and should be re-sworn and filed after the appropriate adjustments have been made.

In conclusion I repeat my indebtedness to both counsel for their full and helpful arguments coupled with their references to a number of authorities, starting with Finney v Finney ((1868), LR 1 P & D 483) and Conradi v Conradi, Worrall & Way ((1868), LR 1 P & D 514) respectively, in addition to those I have cited.

Order accordingly.

Solicitors: Wainwright & Co (for the wife); Robert K George (for the husband).

N P Metcalfe Esq   Barrister.

Re Little (deceased)

Foster v Cooper and others

[1960] 1 All ER 387

Categories:        SUCCESSION; Wills        

Court:        PROBATE, DIVORCE AND ADMIRALTY DIVISION        

Lord(s):        SACHS J        

Hearing Date(s):        16, 17 DECEMBER 1959        

Will – Execution – Place of signature – Will consisting of several sheets – Nexus between sheets – Signing and attesting below space on last page – Inference concerning testamentary intention – Holograph additions inserted above signature – Wills Act, 1837 (7 Will 4 & 1 Vict c 26), s 9 – Wills Act Amendment Act, 1852 (15 & 16 Vict c 24), s 1.

In September, 1956, the deceased gave instructions to his solicitor to prepare a will, saying that he wished his estate on his death to be held in trust for his three grandchildren. The solicitor prepared a typewritten draft will which was sent to the deceased. It consisted of five foolscap sheets of paper fastened together by a brass fastener. The attestation clause was set out at the foot of the fourth page; the fifth page was a back sheet the inside of which was left blank. In November, 1957, the deceased asked a neighbour and his wife to attest his, the deceased’s, signature to the will. The deceased produced from his pocket a number of foolscap sheets of paper; he then turned over what appeared to the neighbour to be an independent unattached sheet and this sheet which was then blank was left uppermost. Then, pressing the sheets of paper flat on the table with his left hand, the deceased signed his name on this blank sheet leaving the top half of the page blank. While the deceased still pressed down the sheets of paper with his left hand, the two witnesses wrote their own names, addresses and occupations below the deceased’s signature. Towards the end of November, 1957, the five sheets were deposited at the bank in a sealed envelope. In January, 1958, the deceased died. When the envelope was opened in February, 1958, the five sheets were found to be still fastened together by the brass fastener and there was a crease or fold mark in each sheet close to the hole made by the fastener. Above the signatures of the deceased and the attesting witnesses, which were found to have been written on the inside of the back sheet, there were eight handwritten lines setting out bequests of certain specific chattels to the deceased’s daughter. The deceased’s daughter now contended that the will was not executed in accordance with the Wills Act, 1837, and the Wills Act Amendment Act, 1852.

Held – The will would be admitted to probate but without the handwritten additional bequests because—

(i) it was to be inferred that the four typewritten sheets of the will were under the blank sheet on which were written the signatures of the deceased and the attesting witnesses, and that the sheets were fastened (Rees v Rees (1873), LR 3 P & D 84, followed), but if at the time of execution the signed sheet was not fastened to the others, the testator’s pressing the sheets together on the table had provided a sufficient nexus between them to show that there they were a single testamentary document (Lewis v Lewis [1908] P 1, applied); and

(ii) the blank space above the signature of the testator and the attesting witnesses did not invalidate the will and the proper inference was that at the time of execution the testator intended the document to have effect immediately as a testamentary disposition (Gregory v Queen’s Proctor (1846), 4 Notes of Cases, 620, applied).

Notes

As to the execution of a will consisting of several sheets, see 34 Halsbury’s Laws (2nd Edn) 60, para 73; and for cases on the subject, see 44 Digest 253–255, 803–813.

For the Wills Act, 1837, s 9, and for the Wills Act Amendment Act, 1852, s 1, see 26 Halsbury’s Statutes (2nd Edn) 1332, 1354.

Page 388 of [1960] 1 All ER 387

Cases referred to in judgment

Arthur, In the Goods of (1871), LR 2 P & D 273, 25 LT 274, 36 JP 168, 44 Digest 256, 824.

Gregory v Queen’s Proctor (1846), 4 Notes of Cases, 620, 7 LTOS 470, 44 Digest 253, 803.

Lewis v Lewis [1908] P 1, 77 LJP 7, 98 LT 58, 44 Digest 253, 804.

Rees v Rees (1873), LR 3 P & D 84, 29 LT 375, 37 JP 760, 44 Digest 254, 808.

Tiernan, In the Goods of [1942] IR 572.

Probate Action

In this action, the plaintiff, one Foster, claimed to be one of the executors named in the will dated 21 November 1957, of George Edward Little, deceased, and to have the will pronounced for in solemn form. The other executor had renounced probate. The first defendant, Mrs Cooper, was the deceased’s daughter; she had entered a caveat and was one of the persons entitled on intestacy. The second, third and fourth defendants, who appeared by their guardian ad litem, were the deceased’s infant grandchildren and beneficially interested under the will.

The facts, as found by Sachs J were as follows. On 17 September 1956, the deceased went to his solicitor and gave him instructions that since he had amply provided for his daughter and his sons during his lifetime he wished his estate on his death to be held in trust for his three grandchildren. At the end of that month the solicitor sent to the deceased five foolscap sheets. They were typewritten and a carbon copy of the five sheets was kept by the solicitor. The five sheets were fastened together by a small two-pronged brass fastener, the prongs of which were pierced through the sheets and then bent back. The first sheet set out in stock form the commencement of the will, leaving blank spaces for the names of the executors and trustees and for the names and amounts which could be inserted to show who were to be the beneficiaries of specific legacies. The second sheet, after some common form instructions, contained directions for the residue to be accumulated during the lives of the three grandchildren. The third sheet contained the bulk of the disposing provisions and the fourth sheet contained instructions for the trustees. The fourth sheet ended with the words “In witness (etc.)”. The fifth sheet was a back sheet the inside of which was blank, and the outside of which had the words “Draft Will”. On 21 November 1957, this will was signed by the deceased and attested by a neighbour, one Newton, and the neighbour’s wife. Towards the end of November, 1957, the five sheets were deposited with the Westminster Bank in a sealed envelope. The deceased died on 25 January 1958. Shortly thereafter the envelope was opened and photographs were taken which showed that the state of the holes in the five sheets through which the brass fastener was placed was in essence no different from that in which the holes must have been when the sheets left the solicitor’s office: and that close to each hole was a fold mark or crease in each sheet.

As to the contents of the will, on the first sheet there had been filled in the executors’ names and names of beneficiaries and their legacies. On the second sheet there was an alteration, initialled in ink, of the provision relating to the period of accumulation. The third and fourth pages showed no alterations. On the fifth page, however, there was a considerable amount of handwriting: at the top of the page there were set out in some eight lines certain chattels bequeathed as specific legacies to the deceased’s daughter. There was also an attestation clause and the signatures of the deceased and the two attesting witnesses. On the back of the fifth sheet the word “Draft” was struck out before the word “Will”.

By her defence the deceased’s daughter objected to the admission of the will to probate on the grounds (i) that it was written on separate and distinct pieces

Page 389 of [1960] 1 All ER 387

of paper unattached to one another physically or in any way connected with each other by reasonable inference or implication; (ii) none of the pieces of paper was signed and attested so as to conform with the Wills Act, 1837, or its amending Act; (iii) that the handwriting on the first, second and last pages were inserted after the signatures of the deceased and the attesting witnesses.

R J A Temple QC and K J T Elphinstone for the plaintiff.

A Garfitt for the deceased’s daughter.

H S Law and J A P Hazel for the three grandchildren, by their guardian ad litem.

17 December 1959. The following judgment was delivered.

SACHS J. The plaintiff propounds a will dated 21 November 1957, and the deceased died shortly afterwards, on 25 January 1958. There is no plea as to the mind, memory or understanding of the deceased, the sole issue raised is whether the document as executed was so executed as to conform with the Wills Act, 1837, and the amending Act of 1852. The issues which have been so well argued before me centre round the last sheet of the will. I will for convenience call it sheet No 5 because it is in fact the fifth sheet though it was not so numbered. The arguments of mixed fact and law revolve around questions what is the effect if sheet No 5 was at the moment of signature not attached to sheet No 1; and what is the effect of that large space, which now has a considerable amount of holograph writing on it, having been substantially blank at the moment when the deceased and the witnesses put their signatures on it, with particular regard to the deceased’s signature having been so placed as to leave that large space above it. [His Lordship stated the facts and continued:] I should at this stage mention that between 21 November and the date when the document was deposited with the bank the deceased had a conversation with one of the executors, Mr Foster, the plaintiff in the action. Mr Foster also had a further conversation with the deceased apparently on 10 January 1958—that being after the deposit of the will at the bank. In January, 1958, Mr Foster’s note of the deceased’s testamentary intentions was that the whole residue was to go to the grand-daughter, that is to say the daughter’s daughter, when she was twenty-one. I pause to note that, on the footing of that recollection of Mr Foster being right, the deceased had altered his intention since 21 November and at the later date intended that one of his grandchildren should have all the residue and not that it should be shared between three. It is also right to note that, whatever change there may have been in his intentions, it seems clear that in no circumstances was he at that time minded to leave his residue to his daughter, whom he considered to be fully provided for, but who now is the disputant of his will.

I will now turn to the evidence of Mr Newton, one of the two attesting witnesses. The other attesting witness was his wife, who is unfortunately ill, but there has been placed in evidence without objection from any side a statement which she made jointly with her husband in February, 1958. Mr Newton gave his evidence very firmly. Not only did he deal with those points which were mentioned in his statement of February, 1958 (which became evidence under the provisions of Lord Denman’s Acta) but he also dealt with a number of points that are not mentioned in that statement and to which, I infer, he was not asked to direct his mind at that moment, in February, 1958. His account in the witnessbox of the events of 21 November included amongst the salient points that after a telephone conversation the deceased came round to Mr Newton’s house—Mr Newton being a neighbour. The deceased then pulled out of his pocket a number of foolscap sheets, of the order, so far as he could see, of six or so, and, after a motion to which I will later refer, those sheets were placed on a table with a blank sheet uppermost. Mr Newton saw nothing of any of the other sheets. At the moment of placing on the table and thereafter, the deceased, according to

Page 390 of [1960] 1 All ER 387

Mr Newton, made what might be called a trimming movement, rather of the style that is made when one has shuffled a pack of cards. The objective of that movement was clearly to get the papers straight. Then the deceased placed his left hand on those sheets of paper, the top one of which was entirely blank. The blank sheet we now know was the inside of the back sheet. On that back blank sheet the deceased first of all wrote his own name some eight inches or a little more from the top; he then, according to Mr Newton, wrote on succeeding lines the words: “Witness: Address: Occupation:” and did so twice, the topmost of those six lines being some two and a half inches from the bottom of the sheet. Then Mr Newton and his wife with the deceased still holding the various sheets down with his left hand were asked to, and did, subscribe their signatures, addresses and occupations. Then the sheets were again folded up, put inside the testator’s pocket and away he went.

It was Mr Newton’s firm evidence that the folding of the documents, all of which were foolscap, was horizontal both when they came out of the testator’s pocket and when they went back. There is no mark of such a folding, but that does not seem to me conclusive one way or the other. There is in fact only a vertical crease on each of the five sheets. He was equally firm that there were no pencil lines on sheet No 5 when the witnesses put their signature, and, of course, no explanation has been offered, nor can I I think of one, for there not being those lines at that time and yet their being added thereafter. It was equally his firm evidence (though again on a point which apparently had not been put to him in February, 1958), that when the deceased was so to speak in the act of taking the folded sheets from his pocket to place on the table he turned over one of the sheets, which then appeared blank, on top of the others when on the table. Mr Newton was firm that it was so to speak an independent sheet which was being turned over and not one which was attached by the brass fastener. When he gave evidence of the trimming of the five sheets he made a motion which is more usually made in relation to trimming independent sheets, but which, on the other hand, did not seem to me very much different from the motion which would be made if you had to trim four sheets with one which has been folded over. That was Mr Newton’s evidence.

The first and, perhaps, the most important inference which I draw, is to my mind clear. Indeed counsel for the deceased’s daughter, who, in his closing address presented his case with praiseworthy moderation, was not, in the end, prepared to argue to the contrary. The inference which I draw is that under the blank sheet were the four other sheets of this will. I may add, because not only is it obvious but it is common ground, that the present case is one of those in which there is no suggestion of fraud of any sort or kind. Then I turn to the question of fastening. I am disposed to apply the presumption referred tob in Rees v Rees ((1873), LR 3 P & D at p 86) that

“… sheets bound together and constituting the will, as found … were so bound together at the time of the execution and attestation.”

I am disposed to the view that, honest witness though Mr Newton clearly was, this is one of those not infrequent cases where the court takes account of the frailties of human recollection and does not necessarily give effect to that recollection on questions which in essence depend on a balance of probabilities. On this aspect of the matter I have already mentioned the fact that the crease marks were already in existence in February, 1958. Be that as it may, while disposed to take these views on matters which are largely ones of inference, I need not and do not rest the decision in this case on those views.

I will turn to the position that arises on the footing that for some reason or other sheet No 5 was not attached by the brass fastener to the other sheets. First of all, I should mention that no point has been argued, and indeed to my

Page 391 of [1960] 1 All ER 387

mind no point could be argued, that merely because the last sheet was on top of the others that could in any way impugn the validity of a will. The law on that subject is clearly to the effect that whatever place a sheet of paper may have in a given bundle at a given time, if it is intended to be in effect the last sheet, then the law so regards it.

Next I mention that there was clear evidence, wholly undisputed, that, during the period of signing, the five sheets were pressed together on the table by the deceased. In my view, even though there was no mechanical attachment between those sheets, such a pressing provides a sufficient nexus between all five of them for the purpose of establishing that there was a single testamentary document. In that behalf I follow the lead given in Lewis v Lewis where it was stated that two pieces of paper being held together for the moment by the testator’s finger and thumb was a sufficient nexus. I should also mention that junior counsel for the plaintiff in his helpful argument referred to the careful judgment of Hanna J in In the Goods of Tiernan. There, at the end of a close consideration of the English authorities, Hanna J stated ([1942] IR at p 580) that in his opinion they established

“that if a will be written on several separate and disconnected sheets of paper and the last only be attested, although no part of the will may have been seen by the witnesses, it should be admitted to probate on the presumption that the whole will was in the room and under the control of the testator at the time of the execution.”

All that I need to say is that on the facts of the case before me there is no need for the plaintiff to rely on the wider presumption stated by Hanna J and I do not need to have to consider it here. Accordingly, subject to the resolution of the further point of whether or not this document was intended to operate forthwith as a testamentary disposition, I hold that it was properly executed and conforms with the provisions of the Wills Act, 1837.

The further point arises thus: what inference ought to be drawn from the fact that the testator’s signature was placed, and to my mind was deliberately placed, so as to leave a blank of half a foolscap sheet above it? The first inference is that it can hardly have been left otherwise than with an intention to add something above it in addition to the words of the attestation clause. That inference is to my mind supported by the fact that within the very few days before the deposit of the will at the bank the eight lines to which I have already referred were added—eight lines making those minor dispositions of chattels to the daughter of the deceased.

I think moreover that this inference is if anything supported by the words which the testator wrote when addressing Mr Foster in a letter of 1 January. There he refers to his last visit to Mr Foster and says, “Incidentally, following my last visit to you I complete the necessary documents which were duly witnessed and deposited with my bankers in Banstead”. That passage is equivocal in some respects and should not be too much relied on, but it does tend at least to support what I have inferred. It seems to show that these eight lines, which may well have been intended on 21 November or may well have been forming in the mind of the testator on 21 November were probably added not on 21 November itself, but a few days later.

The point that then arises is this: which of two inferences as regards the mind of the testator should be adopted—those two inferences having opposite effects on the question of the validity of the will? Each inference assumes some degree of ignorance of the law applicable to wills on the part of the testator. The first possible inference is that at the moment of signing he was minded that the document should have immediate testamentary effect but was also then minded later to add some words rather in the nature of a codicil. The second inference could be that he intended that the document should have no effect until he had

Page 392 of [1960] 1 All ER 387

added to and thus completed the will. I pause only to note that the mere fact that there is a blank immediately above the signature is of itself no bar to the validity of a will. The Wills Act Amendment Act, 1852, s 1, reads:

“… Every will shall, so far only as regards the position of the signature of the testator … be deemed to be valid … if the signature shall be so placed at or after … the end of the will, that it shall be apparent on the face of the will that the testator intended to give effect by such his signature to the writing signed as his will”,

and that no such will shall be affected by the circumstance that a blank space shall intervene between the concluding words of the will and the signature.

Rees v Rees ((1873), LR 3 P & D at p 86) contains a passage which is a well-known passage of the law of probate.

“If any theory consistent with the validity of the will can be suggested, which appears to the court to be as probable as the theory on which the argument for its invalidity is based, the will as found must be maintained.”

My attention has been called to Gregory v Queen’s Proctor, a case decided in the prerogative court of Canterbury. That was a case in which the solicitor for the deceased found him in his usual sitting room. The deceased thereupon pointed to the table and said, “There, Amos, see what I have done. I have made a new will and the servants have witnessed it in pencil so that we can alter it”. The documents to which the deceased in that case pointed were admitted to probate without there having been on it any further signature of the deceased or any further attesting signature. I take account also of the fact that at the time when this document was executed in the present case nothing was said by the deceased as to any intention that it should not take immediate effect: and counsel for the plaintiff has pointed out that as produced there is a deletion of the word “Draft” before the word “Will”. No case has been cited to me in which blanks in a will have precluded its admission to probate, and it is well known that there are a number of cases in which it has fallen to the Chancery Court to construe wills which have indeed had blanks of no inconsiderable order.

In those circumstances, my view is that the correct inference to be drawn is as follows: that the testator did intend that this document should have effect immediately as a testamentary disposition, but, being ignorant of the law, he intended before long to add something to it in the nature of a codicil. That brings the matter four-square within Gregory v Queen’s Proctor, to which I have just referred, and the result is that the subsequent insertion of the provisions with regard to specific chattels has no more effect than it did in In the Goods of Arthur, where such a disposition was attempted to be made by inserting after the execution of the document a clause in a space very much narrower than the present. The result is that I pronounce for the will as prayed.

The question next arises whether I pronounce for it with or without certain passages which have been inserted in holograph. The authorities on the matter are clear and I do not think that there was any argument about this point. I need only, accordingly, say that I propose to include in the pronouncement those parts which are holographed on p 1; to omit the small holograph alteration on p 2, and to exclude the whole of the disposing provisions as regards chattels on p 5. There will be an order accordingly.

Order accordingly.

Solicitors: Enever, Strong, Freeman & Co (for the plaintiff and for the three infant grandchildren, by their guardian ad litem); Kinch & Richardson agents for Robert H Kerrison & Co, Coulsdon (for the deceased’s daughter).

A T Hoolahan Esq   Barrister.

Re C

[1960] 1 All ER 393

Categories:        HEALTH; Mental health        

Court:        COURT OF PROTECTION        

Lord(s):        DANCKWERTS J        

Hearing Date(s):        18 JANUARY 1960        

Person of Unsound Mind – Settlement of property by direction of the court – Restraint from squandering property – Form of settlement – Law of Property Act, 1925 (15 & 16 Geo 5 c 20), s 171(1), (5), (7).

In March, 1953, an order was made appointing a receiver of the income of a patient in a mental hospital, and in November, 1955, on the patient being discharged from hospital as being “relieved”, the receiver was discharged. The patient then had full control of his property and between the end of 1955 and October, 1958, he dissipated a large amount of his capital. On 29 October 1958, a receiver was again appointed, the patient being again under disability. According to the medical evidence, the prospect of the patient’s recovery was not very great, and, if he did make substantial recovery, his powers of concentration and appreciation were likely to be impaired. Application was made to the court to direct a settlement of the patient’s property under s 171a of the Law of Property Act, 1925. It was proposed that the Public Trustee should be sole trustee of the settlement, with complete power to apply the capital or income of the trust fund for the benefit of the patient while he was under disability; that, in the event of the patient’s recovery, the income of the trust fund should be held on protective trusts for him during his life; and that the patient should have a general power of appointment by deed with the consent of the trustee and a general power of appointment by will. The proposed settlement contained no power of revocation in the event of the patient’s recovery, but the patient would be able to appoint the property to himself under the general power of appointment by deed with the consent of the trustee, or he could apply to the court for an order varying the settlement, under s 171(7) of the Act of 1925, on the ground of a “substantial change in circumstances”.

Held – In the exercise of the court’s general discretion under s 171(1) of the Law of Property Act, 1925, the court would authorise the proposed settlement of the patient’s property to be made because it was expedient in his own interests that he should be restrained from again squandering his property if the receiver were again discharged.

Notes

Section 171 of the Law of Property Act, 1925, is prospectively repealed by s 149(2) of and Sch 8 to the Mental Health Act, 1959, and provisions somewhat similar to those in s 171 of the Law of Property Act, 1925, are contained in s 103 of the Act of 1959. At the time of the decision in the present case only s 1 and s 149 of the Act of 1959 had been brought into operation for certain limited purposes; see Mental Health Act 1959 (Commencement No 1) Order, 1959 (SI 1959 No 1676).

As to the settlement of a patient’s property, see 21 Halsbury’s Laws (2nd Edn) 335–338, paras 582–585; and for cases on the subject, see 33 Digest 168, 537–540.

For the Law of Property Act, 1925, s 171, see 20 Halsbury’s Statutes (2nd Edn) 780.

Case referred to in judgment

CWM, Re [1951] 2 All ER 707, [1951] 2 KB 714, 2nd Digest Supp.

Adjourned Summons

This was an application to the Court of Protection by the receiver of the income of a patient in a mental hospital and two members of the patient’s family,

Page 394 of [1960] 1 All ER 393

asking that, pursuant to s 171 of the Law of Property Act, 1925, the receiver might be authorised and directed, in the name and on behalf of the patient, to execute a settlement of the property of the patient.

The application was heard in open court.

W S Wigglesworth for the applicants.

J A Wolfe for the patient.

18 January 1960. The following judgment was delivered.

DANCKWERTS J. The essential features of the settlement which the court is asked to approve are as follows. The Public Trustee is to be the sole trustee of the settlement, and it is proposed that there shall be complete power, while the patient is under disability, to apply the capital or income of the trust fund of which he is possessed for his maintenance. That will necessarily be done under the directions of the master. If he should recover and therefore be discharged, it is proposed that he shall in effect not be completely master of the trust fund to which he would otherwise be absolutely entitled. It is proposed that he be subject to protective trusts during his life in respect of the income of the property. But it is also proposed that, with the consent of the trustee, he may be able to make a general appointment by deed which, of course, would enable an appointment to be made, with such consent, to make the fund or the property free from restraint on him. It is also proposed that he should have a general power of appointment by will. Finally, there is a power of advancement of capital which is to be retained in the discretion of the trustee of the settlement.

The facts of this case are very unusual and the circumstances are very special. It should first be stated that the general principle followed by the court as a matter of practice hitherto has been that, when a patient is discharged from the control of the receiver of his income under the appropriate Act, he is usually given his property free from any restriction, so that when he recovers sufficiently to be discharged he is able to deal with his own property completely as he wishes. But, as I have said, the circumstances in this case are rather peculiar. The patient was entitled to considerable funds when an order was made for the appointment of a receiver on 27 March 1953. In 1955, however, he was discharged as being “relieved”, and the appointment of the receiver was discharged on 22 November 1955. Thereupon, it appears that the patient, being free to deal with his property, managed to get rid of £14,000, or possibly £18,000. Among other things, he acquired five motor cars, some of them of rather inferior quality, which he left about the streets without having any proper garage to put them in, and he got into trouble over motoring offences and so on, but, it appears, he did take out third-party insurances. These circumstances certainly show that when he was free to deal with his property he was decidedly irresponsible. He was apparently liable to violence. Eventually, on 29 October 1958, a receiver was again appointed for his estate, and he is under disability at the present time. The prospects of his recovery are not particularly great, but, if he did recover, it would seem, having regard to his previous record, that he might be disposed to deal once more recklessly with his property, and the settlement is suggested as the right and proper thing to do to prevent his property being squandered and the capital lost. It is to be noted that the fund produces a fair income which is sufficient for his maintenance at the present time, but, if the capital were to be squandered again, the situation might become extremely unfortunate. Consequently, on the grounds of common sense and prudence, it seems to be a proper thing to restrain the patient from having the opportunity to deal with his property in a reckless manner if he should recover.

The powers on which I am asked to act are contained in s 171 of the Law of Property Act, 1925. By s 171(1):

“The court may direct a settlement to be made of the property of a lunatic or defective, or any part thereof or any interest therein, on such trusts

Page 395 of [1960] 1 All ER 393

and subject to such powers and provisions as the court may deem expedient, and in particular may give such directions … ”

Then follow certain cases in which, in particular, the court may deal by directions. It is not necessary to go through them because the power seems to be perfectly general and those particular directions seem to be intended only to deal with particular cases which do not restrict the generality of the court’s powers. I may mention merely in passing para (b) of the subsection:

“where the property has been acquired under a settlement, a will or an intestacy, or represents property so acquired.”

The property which the patient has is property which he has acquired from somebody else, either by will or settlement, and the larger proportion of it was acquired as a result of a settlement in the Court of Appeal of disputed questions arising on the construction of a will. So that, apart from anything else, this would seem to cover the present case. Another subsection to which I was referred, but which I do not think has much effect in the present case, is sub-s (3), which reads:

“This section applies whether or not the lunatic or defective has executed a testamentary disposition and notwithstanding that it is not known whether he has executed such a disposition or not, but does not apply when he is an infant.”

The patient in the present case is not an infant. Some suggestions were made that the Variation of Trusts Act, 1958, might be relevant because now the matter could be dealt with under that Act, but I do not think that it is of much assistance to me in the present case. As regards the question of a will, the patient has now made a will. The question whether it will be effective when he dies depends on whether it is opposed or not, and whether he was capable of making a will when he made it.

By s 171(5) it is provided:

“Subject to making due provision for the maintenance of the lunatic or defective in accordance with his station in life, whether out of the capital or income of the property settled or other property or partly in one way and partly in another, and to providing, by means of a power of appointment or revocation, or otherwise, for the possibility of the lunatic or defective recovering full capacity, the court may, in making any order under this section, have regard to [certain matters, which I need not go through] … ”

The part to which I propose to refer are the provisions by way of power of appointment or revocation. Finally, s 171(7) provides:

“At any time before the death of the lunatic or defective, the court may, as respects any property remaining subject to the trusts of a settlement made under this section, on being satisfied that any material fact was not disclosed to the court when the settlement was made, or on account of any substantial change in circumstances, by order vary the settlement in such manner as it thinks fit, and give any consequential directions.”

Thus there is a provision under which, if the patient, having fully recovered, ought to secure full dominion over his property and the trustee has not handed it over in circumstances when he obviously ought to do so, the patient can apply to the court for variation under this subsection. The main provisions of this subsection are preserved in s 103(4) of the Mental Health Act, 1959.

Page 396 of [1960] 1 All ER 393

In the present case there is no power of revocation in the settlement, but there is a general power of appointment which would enable the property to be appointed to the patient himself if it was exercised with the consent of the trustee of the proposed settlement. It was held in Re CWM by the Court of Appealb that the court in its discretion was not bound to insist on a power of revocation. Therefore it would appear that the insertion of a power of revocation is by no means essential. Reliance was also placed on the practice, as set out in Heywood & Massey On Court Of Protection Practice (7th Edn) (1954), at p 45, relating to the provisions in the case of a patient so found. In a casec, which is there cited, powers derived from s 105 of the Lunacy Act, 1890 (The Lunacy Act, 1890, is prospectively repealed by the Mental Health Act, 1959, see p 393, letter g, ante.), allowed the court to direct a conditional supersedeas in the case of the recovery of the patient so that restraint could be exercised on his property if the court thought it advisable. In that case, it is statedd, an order was made for supersedeas under s 105

“… on the recovered patient undertaking by his solicitor to execute a settlement in the form of a draft initialled by the judge.”

Then it is said:

“Such a settlement should be framed so as to prevent the recovered patient from obtaining control of the settled fund for his own benefit as the sole object of the trust; the power of appointment of new trustees should be vested in him alone, and any power of revocation should be vested in him (and some reliable person), so that if incapacity recurs recourse must be had to the court for the exercise of those powers.”

That jurisdiction does not apply in the present case. But in exercising the jurisdiction which is conferred on the court by s 171 of the Law of Property Act, 1925, the court is entitled to have regard to the spirit of the exercise of the jurisdiction in cases which come within s 105 of the Lunacy Act, 1890. There is some close analogy between the two cases, that is to say, a case under s 105 of the Act of 1890 and the jurisdiction which I have to consider now.

It seems to me, therefore, that I have a general discretion under s 171 of the Law of Property Act, 1925, and the question is whether I should exercise that discretion in the manner which is suggested by the pesent application. I have come to the conclusion that in the interests of the patient himself it is quite plain that an order should be made by which the settlement in the terms suggested should be executed. It appears that he may recover physically, but that his powers of concentration and appreciation are likely to be impaired. This is a case where it is proper and desirable that the court should restrain the patient if he comes out into the world again, so that he is not able to squander his property to his own detriment. This settlement is for the purpose of preserving and securing that his property shall be available for his maintenance and to secure him against want and misfortune in his financial circumstances: consequently I am prepared to exercise my jurisdiction under s 171 by authorising the settlement on the terms of the draft which has been put before me. Some formal alterations may be necessary, and consequently I propose to make an order in the terms of the draft minutes which have been prepared for me in the office of the master. [His Lordship handed the minutes to counsel. The proposed order, so far as relevant, was that the receiver be authorised in the name and on behalf of the patient “(a) to execute such settlement to give effect to the [draft settlement

Page 397 of [1960] 1 All ER 393

that had been before the court] as the master should settle and approve, and (b) on the certificate of the master of the due execution of the settlement to request [certain trustees] to transfer and pay the investments and cash representing the absolute interest of the patient in the estate of [a deceased testator] to the trustee of the settlement … ”.]

Order accordingly.

Solicitors: A M Longhurst & Butler (for the applicants); Official Solicitor (for the patient).

R D H Osborne Esq   Barrister.

Daws v Daily Sketch & Sunday Graphic Ltd and Another

Darke and Others v Same

[1960] 1 All ER 397

Categories:        CIVIL PROCEDURE: TORTS; Defamation        

Court:        COURT OF APPEAL        

Lord(s):        WILLMER AND HARMAN LJJ        

Hearing Date(s):        16 DECEMBER 1959        

Practice – Consolidation of actions – Libel actions brought by different plaintiffs against same defendants – Plaintiffs in both actions represented by same solicitors – Defences in both actions not identical – Application by defendants on summons for directions in second action for consolidation of both actions – No summons issued in first action – Jurisdiction – Discretion – RSC, Ord 49, r 8.

Two libel actions were brought against the same defendants in respect of the same article. The plaintiff in the first action and the plaintiffs in the second action were represented by the same solicitors. In the first action the defendants admitted that the words complained of referred to the plaintiff, denied that the words were defamatory, and pleaded an offer of an apology in mitigation of damage. In the second action the defendants denied that the words complained of referred to the plaintiffs, and denied that they were defamatory, but did not rely on any offer of an apology. At the hearing of the summons for directions in the second action the defendants, after informing the solicitors for the plaintiffs of their intention, applied for an order for the consolidation of the two actions. No notice was given on summons issued in the first action. The judge in chambers ordered consolidation of the two actions on the ground that the omission to give notice in the first action was a mere technicality. On appeal by the plaintiffs,

Held – (i) In the absence of any summons in the first action the court had no jurisdiction to make an order in the second action purporting to direct how the first action should proceed.

(ii) even if the court had jurisdiction, consolidation would not in the circumstances be ordered since there were not common questions of law or fact in the two actions having sufficient importance in proportion to the rest of each action to render it desirable that the whole of the matters should be disposed of at the same time.

Observations of Scrutton LJ in Payne v British Time Recorder Co Ltd & Curtis Ltd ([1921] 2 KB at p 16) and in Horwood v Statesman Publishing Co Ltd ([1929] All ER Rep at p 558) applied.

(iii) the proper order in the circumstances would be that the two actions be tried consecutively by the same judge and the same jury.

Page 398 of [1960] 1 All ER 397

Notes

As to consolidation of actions, see 26 Halsbury’s Laws (2nd Edn) 57, para 94; and for cases on the subject, see Digest (Practice) 658–660, 2786–2800.

Cases referred to in judgments

Horwood v Statesman Publishing Co Ltd [1929] All ER Rep 554, 98 LJKB 450, 141 LT 54, Digest (Practice) 659, 2799.

Payne v British Time Recorder Co Ltd & Curtis Ltd [1921] 2 KB 1, 90 LJKB 445, 124 LT 719, Digest (Practice) 408, 1084.

Motion

The plaintiffs applied for leave to appeal and for leave to appeal out of time against an order of Havers J in chambers, dated 30 October 1959, allowing an appeal against an order of Master Harwood dated 20 October 1959, and ordering the consolidation of two actions.

On 5 February 1959, one Daws, issued a writ against the defendants, Daily Sketch & Daily Graphic and one Duffy claiming damages for libel in respect of an article in the “Daily Sketch”. The action was numbered 1959 D No 167. The statement of claim in that action was delivered on 27 February 1959, and the defence was filed on 31 March 1959. By their defence the defendants admitted that the words complained of referred to the plaintiff but denied that the words were defamatory of him: they further pleaded that they had offered to publish an apology in terms therein set out but that the plaintiff had not approved the terms, and they denied damage. A summons for directions came before the master in May, 1959.

On 25 June 1959, a writ was issued against the same defendants by one Darke and four other plaintiffs for damages for libel in respect of the same article. That action was numbered 1959 D No 848. The statement of claim was delivered on 27 June 1959, and the defence was delivered on 16 July 1959. By that defence the defendants denied that the words referred or were capable of referring to the plaintiffs and they denied that the words were defamatory of any of the plaintiffs; further in the defence they apologised to those plaintiffs, if any, to whom the words were found to refer and they denied damage. The summons for directions came before Master Harwood on 20 October 1959, when application was made by the defendants that that action (ie, the action brought by Darke and others) should be consolidated with the first action (ie, that brought by Daws). The solicitors for the plaintiffs in the second action who were also solicitors for the plaintiff in the first action were informed that this application would be made, but no summons was issued in the first action. Master Harwood declined to make any order consolidating the two actions. On appeal, Havers J ordered that the second action be consolidated with the first action. On 17 November 1959, the plaintiff Daws and the plaintiffs Darke and others gave notice of appeal on the grounds (i) that the judge had no jurisdiction to make an order consolidating the actions since no notice had been served on the plaintiff Daws whereby he could be present or be represented at the hearing of the summons for directions in the second action, 1959 D No 848; (ii) that the judge erred in principle in the exercise of his discretion; (iii) that the effective issues in action 1959 D No 848 were different from those in action 1959 D No 167.

Gilbert Beyfus QC and L J Belcourt for the plaintiffs.

Neville Faulks QC and David Hirst for the defendants.

16 December 1959. The following judgments were delivered.

WILLMER LJ stated the facts and continued. When it came to the summons for directions in the second action, 1959 D No 848, one of the reliefs asked for was an order consolidating the two actions. The same solicitors acted for both sets of plaintiffs, and there is no doubt that the solicitors appearing

Page 399 of [1960] 1 All ER 397

for all the plaintiffs were duly informed that the application for consolidation was going to be made on the summons for directions in action 1959 D No 848. But no summons in action 1959 D No 167 was issued. I make that observation bearing in mind that a form of summons for use in such circumstances is provided in the Annual Practice (1960 Edn) at p 2374, and appears as form No 4D, 1. No such summons was taken out. When the matter came before Master Harwood he declined to make any order consolidating the two actions. On appeal, Havers J took the other view. He apparently regarded the fact that notice had not been given in the first action, No 167, as a mere technicality, and on the merits of the application he made an order consolidating the two actions. The order was in fact made in action No 848. So far as I know, up to date no order has been made in action No 167. In the absence of any summons in action No 167, I do not see how any order could have been made in that action.

In those circumstances, the first point taken by the plaintiffs is that there was no jurisdiction in the learned judge to make any order at all affecting action No 167. It has been argued before us very forcibly by counsel for the defendants that that point is the merest technicality, that there is no merit in it at all, that the common solicitors knew all about it all the time, and that it would have been the easiest possible matter to cure, and, indeed, to cure even now, by drawing up an order in each of the two actions. But I have drawn attention to the provision of a form suitable for use in a case such as this, and I am bound to say that on this issue in my judgment the plaintiffs must succeed. I think that it is a fatal objection, however unmeritorious it may be, that an order was made in action No 848 purporting to direct how action No 167 should proceed.

I confess that, for myself, I dislike deciding an issue like this on a mere technical ground, and I am therefore consoled by the fact that I am now able to say that in my judgment, on the merits, the case is one in which the learned judge erred in the exercise of his discretion, and, as I see it, erred in principle in such a way as to entitle this court to interfere. The learned judge, we were told, relied very much on the words used by Scrutton LJ in Horwood v Statesman Publishing Co Ltd ([1929] All ER Rep at p 558), words which I think he was repeating from an earlier case of Payne v British Time Recorder Co Ltd & Curtis Ltd ([1921] 2 KB at p 16). The learned lord justice said ([1929] All ER Rep at p 558):

“The result of the later decisions is that you must look at the language of the rules and construe them liberally, and that where there are common questions of law or fact involved in different causes of actions you should include all parties in one action, subject to the discretion of the court, if such inclusion is embarrassing, to strike out one or more of the parties. It is impossible to lay down any rule as to how the discretion of the court ought to be exercised. Broadly speaking, where claims by or against different parties involve or may involve a common question of law or fact, bearing sufficient importance in proportion to the rest of the action to render it desirable that the whole of the matters should be disposed of at the same time, the court will allow the joinder of plaintiffs or defendants, subject to its discretion as to how the action should be tried.”

It seems to me, however, that when we look at the issues raised in the present cases we are far from finding here

“a common question of law or fact bearing sufficient importance in proportion to the rest of the action to render it desirable that the whole of the matters should be disposed of at the same time … ”

The only issue in the two actions which is, strictly speaking, common to both of them is the issue whether the words are defamatory at all, an issue which, as

Page 400 of [1960] 1 All ER 397

counsel for the plaintiffs suggested, might well be one which would not give the jury very much trouble. But there are very distinctive differences between the matters in issue in the two actions, having regard to the different defences put forward, to which I have already referred. In so far, therefore, as Scrutton LJ was setting out any principle on which discretion should be exercised in what he said in Horwood’s case ([1929] All ER Rep at p 558), I do not think that this case falls within that principle, and I am prepared to say that in my judgment the learned judge in this case erred in principle in the order which he made.

The matter, however, does not rest there, for, thanks to the good sense of counsel who appear before us, there has been a certain amount of mutual concession, and both of them, I understand, are disposed to agree that, in lieu of an order for consolidation, it would be a proper case in which to make an order that the two cases be tried consecutively. That would involve action No 848 being expedited so as to follow immediately after action No 167. The only issue which appeared to remain between counsel after having applied their minds to that suggestion was that on one side it was said that the actions should follow each other so as to be tried by the same judge and jury, whereas on the other side it was said that that should be left to the discretion of the judge at the time, because it might be inconvenient to employ the same jury on the hearing of the second action as on the hearing of the first. As to that, speaking for myself, I should have thought it was most important that the two actions should be dealt with by the same jury.

In those circumstances, and especially having regard to the close measure of agreement between counsel, I have come to the conclusion that this is a case in which leave to appeal should be granted, notwithstanding the fact that the plaintiffs are out of time, and that on the appeal the proper order should be that the appeal is allowed, the order for consolidation set aside and replaced by an order that the two actions be tried consecutively by the same judge and jury.

HARMAN LJ. There will be one order in the two actions.

WILLMER LJ. I apprehend that we shall have to make an order in each action, because both actions are before us today.

Beyfus QC: Both actions are before your Lordships today because we have treated the learned judge’s order as valid until set aside, and therefore we have appealed in the consolidated action.

WILLMER LJ. Therefore we shall have to make a new order.

HARMAN LJ. Although we have split them apart again, one order will be for both.

Beyfus QC: I think that is right, my Lord.

HARMAN LJ. I agree, and have nothing to add.

Order accordingly.

Solicitors: Edward Thompson & Co (for the plaintiffs); Swepstone, Walsh & Son (for the defendants).

A T Hoolahan Esq   Barrister.

Practice Direction

(Costs: Taxation)

[1960] 1 All ER 401

PRACTICE DIRECTIONS

Costs – Taxation – Bill of costs – Bills lodged after 1 January 1960 – Rules of the Supreme Court (No 3), 1959 (SI 1959 No 1958), Sch 2, Appendix 2.

The Supreme Court Costs Rules, 1959a, apply to contentious work done after 1 January 1960. All bills for taxation lodged subsequently will be drawn in two parts, one for work done prior to that date, drawn according to Appendix N to the Rules of the Supreme Court, the other for work done after, drawn according to Appendix 2 to the Supreme Court Costs Rules, 1959. In the case of the latter all items in the bill will be identified by inserting the appropriate Appendix 2 item number.

Paul Adams,   Chief Master.

December 1959

Practice Direction

(Chancery Division: Costs: Taxation)

[1960] 1 All ER 401

PRACTICE DIRECTIONS

CHANCERY DIVISION

27 JANUARY 1960

Costs – Taxation – Order – Chancery Division – Application for construction of document, or variation of trusts, or similar application – Form of order.

The following precedent of an order for the taxation and payment of costs has been approved by the judges of the Chancery Division for use on an application by originating summons for the construction of a document or under the Variation of Trusts Act, 1958, or other like application:—

IT IS ORDERED that it be referred to the taxing master

FIRST to tax the costs of an incidental to the said application of the plaintiffs the trustees of the said will

SECONDLY to tax on the common fund basis the costs of the defendants of and incidental to the said application and

THIRDLY to tax on the common fund basis the costs to which the said Legal Aid and Advice Act applies and which have been incurred on behalf of the defendant AB.

AND IT IS ORDERED that the first and secondly mentioned costs be respectively retained and paid out of the fund held by the plaintiffs upon the trusts of the said will

NOTE: Sub-rule (2) of r 1 of the Supreme Court Costs Rules, 1959a contains the following definition:—

“‘costs’ includes fees, charges, disbursements, expenses and remuneration.”

J B H Wyman,   Chief Registrar, Chancery Division.

27 January 1960

Jaquin v Holland

[1960] 1 All ER 402

Categories:        LANDLORD AND TENANT; Other Landlord and Tenant        

Court:        COURT OF APPEAL        

Lord(s):        ORMEROD AND DEVLIN LJJ AND GORMAN J        

Hearing Date(s):        19, 20 JANUARY 1960        

Landlord and Tenant – Repair – Damages for failure to repair – Measure of damages – Determination of tenancy – Premises immediately re-let, owing to housing shortage, after small expenditure on repair – Value of reversion found to have been diminished by more than twice sum expended – Larger sum still would have been required to put premises into good and tenantable repair – Landlord and Tenant Act, 1927 (17 & 18 Geo 5 c 36), s 18(1).

In an action brought by a landlord against her tenant after the end of the tenancy for breach of a covenant by the tenant to keep and deliver up the demised bungalow in “good and tenantable repair” the landlord’s surveyor and the tenant’s surveyor estimated the sum required to put the bungalow into good repair to be £102 16s and £91 13s 6d respectively. The defendant relied on s 18a of the Landlord and Tenant Act, 1927, by which the damages were limited to the amount by which the value of the reversion in the premises was diminished. It was found that the diminution of value of the reversion was £50. At the time there was demand for premises in the neighbourhood and the landlord had immediately re-let the premises at the same rent as the tenant had been paying; she had expended £19 10s only on making the premises presentable for re-letting. On appeal the landlord did not contend that the figure of £50 for the amount of damage to the reversion should be increased.

Held – (i) In assessing damages for the breach of the repairing covenant the test of the measure of damage (viz, in this case, the test established by Proudfoot v Hart (1890), 25 QBD 42) was to be applied without regard to scarcity of and demand for housing at the time, and the fact that the premises were immediately re-let was an extraneous consideration; the damages were not limited, therefore, to the sum of £19 10s (dictum of Lawrence LJ in Hanson v Newman [1933] All ER Rep at p 194, applied).

(ii) the recoverable damages were, however, limited by s 18 of the Landlord and Tenant Act, 1927, to £50, which had been found to be the amount of the diminution in the value of the reversion, though, apart from this limit, they would have been more.

Quaere (per Devlin LJ) whether in determining diminution in value of a reversion it was right to take into consideration a present demand for housing and the consequent possibility that a purchaser would accept a measure of disrepair without reducing the price that he would pay.

Appeal dismissed.

Notes

As to the measure of damages for breach of covenant to repair, see 23 Halsbury’s Laws (3rd Edn) 590, para 1276; and for cases on the subject, see 31 Digest (Repl) 374, 5044, 375, 376, 5049–5052.

For the Landlord and Tenant Act, 1927, s 18(1), see 13 Halsbury’s Statutes (2nd Edn) 902.

Cases referred to in judgments

Hanson v Newman [1933] All ER Rep 193, [1934] Ch 298, 103 LJCh 124, 150 LT 345, 31 Digest (Repl) 373, 5039.

Joyner v Weeks [1891] 2 QB 31, 60 LJQB 510, 65 LT 16, 55 JP 725, 31 Digest (Repl) 373, 5042.

Proudfoot v Hart (1890), 25 QBD 42, 59 LJQB 389, 63 LT 171, 55 JP 20, 31 Digest (Repl) 359, 4900.

Page 403 of [1960] 1 All ER 402

Appeal

This was an appeal by the defendant, the former tenant of a bungalow and garden of which the plaintiff was the landlord, from a judgment given by His Honour Judge Glazebrook at Sevenoaks County Court on 6 July 1959, allowing an appeal by the plaintiff from a judgment of Mr Registrar Leon, given on 15 June 1959, in proceedings by the plaintiff, after termination of the tenancy, for damages against the defendant for breach of the repairing covenant, which included obligation to cultivate the garden, in a tenancy agreement between the parties. By his judgment the registrar awarded £29 10s damages (being £19 10s for disrepair of the bungalow and £10 for failure to cultivate the garden) to the plaintiff. The county court judge set aside the judgment of the registrar and awarded £60 damages (being £50 for disrepair of the bungalow and £10 for failure to cultivate the garden) to the plaintiff.

The facts appear in the judgment of Ormerod LJ.

J M Drinkwater for the defendant, the tenant.

J H Gower for the plaintiff, the landlord.

20 January 1960. The following judgments were delivered.

ORMEROD LJ. This is an appeal from a judgment of His Honour Judge Glazebrook given at Sevenoaks on 6 July 1959. The case arises in these circumstances. The plaintiff in the action is the owner of a bungalow, No 49, Oakdene Road, Sevenoaks, which she had let on a tenancy agreement for a period of one year for the sum of £265 to the defendant. The agreement was dated 18 March 1958, and the only terms in the agreement with which we are concerned are the terms relating to the repair of the premises. By para 4 of the agreement, the tenant agreed with the landlord:

“(c) To keep the interior of the said premises and all blinds windows shutters doors locks fastenings bells and other fixtures fittings and conveniences now belonging thereto in good and tenantable repair (damage by accidental fire storm or tempest excepted) and to cultivate the garden in a proper manner … (k) To yield up the said premises at the end of the tenancy with all additions (if any) thereto and fixtures thereof except tenant’s fixtures in good and tenantable repair (except as aforesaid).”

The tenant entered into occupation of the bungalow on the terms of the agreement, but, at the end of eight months of his tenancy, he wished to vacate the premises. There was some correspondence with the landlord or his solicitors on that matter, and the result was that the tenant was allowed to give up his tenancy, the landlord having found another tenant who was willing to take over the premises. The tenant vacated the premises on 28 November 1958. After the premises were vacated, Mr Coles, the surveyor appointed on behalf of the landlord, inspected the premises and made a schedule of dilapidations which has been before the court. The only matter that I need mention with regard to that schedule is that the total sum came to £102 16s. Mr Platts, the surveyor appointed by the tenant, also inspected the premises and prepared a schedule of dilapidations. The two surveyors attempted to agree the amount of dilapidations, but were unable to do so, with the result that these proceedings were commenced by the landlord against the tenant for damages arising from the tenant’s breach of the covenant to repair.

The matter came before the learned county court judge, and, by agreement, it was remitted by him to the registrar of the county court. The parties appeared before the registrar, who heard the matter and delivered a careful judgment which showed that he had given full consideration to the various matters in question. The hearing before the registrar occupied two days. On one day he heard the evidence which was called by the parties (the evidence being that of the plaintiff and Mr Coles, on the one hand, and of Mr Platts, on the other hand) and, on a subsequent day, he heard legal submissions from the parties and the

Page 404 of [1960] 1 All ER 402

matter was thoroughly investigated by him. The registrar came to the conclusion that the tenant had been in breach of his covenant and that the proper sum to award in damages was the sum of £29 10s, which was the sum of £19 10s for repairs to the house and £10 (a sum which is not in issue now), being the amount which was required to put the garden into proper order after the tenant’s neglect of it. The landlord, not being satisfied with the finding of the registrar, appealed to the county court judge, as he had power to do under CCR, Ord 37, r 5. The matter thereupon came before the county court judge for argument, and the county court judge, having considered it, varied the finding of the registrar and found that the sum to which the landlord was entitled was £60, being £50 in respect of damages for breach of covenant for non-repair of the house and £10 for the garden. It is against the decision of the county court judge that the tenant now appeals.

The claim, in the landlord’s particulars of claim, was for damages for breach of the covenant to repair, and the particulars were set out in the schedule of dilapidations which was attached to the particulars of claim. By his defence, the tenant denied that there was a breach of covenant, and alleged that, if there were, the schedule was unreasonable and the cost of doing the works required was excessive. Further, the defendant pleaded s 18 of the Landlord and Tenant Act, 1927, and it might be well at this stage to refer to the provisions of that section. Section 18(1) provides:

“Damages for a breach of a covenant or agreement to keep or put premises in repair during the currency of a lease, or to leave or put premises in repair at the termination of a lease, whether such covenant or agreement is expressed or implied, and whether general or specific, shall in no case exceed the amount (if any) by which the value of the reversion (whether immediate or not) in the premises is diminished owing to the breach of such covenant or agreement as aforesaid … ”

The second part of the subsection is not material to the issues in this case. The effect of that provision, shortly, appears to be that, whatever may be found to be the cost of doing the repairs rendered necessary by the failure of the tenant to observe his covenant to repair, the damages which the landlord is entitled to recover shall be limited to the diminution in the value of the reversion of the premises.

According to the findings of the registrar, set out in his judgment, the evidence of Mr Coles, the surveyor called on behalf of the landlord, was that there was a want of repair which would cost £102 16s to put right. According to the judgment, Mr Coles said that he prepared his schedule on what he regarded as proper grounds, that is, on the footing that the premises be put into good and tenantable repair on his understanding of the covenant, and he said that he had put into the schedule every possible defect, and that, in his view, that was the correct interpretation of the covenant. In his summary of Mr Coles’s evidence on these matters, the registrar went on to say:

“He also said that with regard to selling the property he would not advise any abatement in the asking price in view of the condition of the house, but he might so advise during negotiations for a sale. He also said that the property was lettable in the condition it was left because the demand was so high.”

The evidence of Mr Platts, according to the registrar, was that in Mr Platts’ view no damages at all were payable by the tenant in respect of want of repair, because there had been no diminution in the value of the freehold reversion. According to the registrar, Mr Platts came to that conclusion for two reasons: first, that the items of non-repair were trivial in themselves, and, therefore, not likely to affect the value, and secondly that the demand for houses was so great in Sevenoaks that these matters were not likely to affect any price which might

Page 405 of [1960] 1 All ER 402

be procured for the sale of the house. But, according to the registrar again, Mr Platts agreed that, if damages were to be paid, and if there had been liability on the tenant for these various items of non-repair, there were a number of items for which he would be liable, and those items are set out in the registrar’s judgment by number in reference to the schedule of dilapidations. According to the registrar, the total of those items is £91 13s 6d. Counsel for the tenant, on instructions, has submitted that that figure of £91 13s 6d is not the correct figure and that there is no evidence to justify it. Whatever the figure was, it was certainly a substantial figure which may or may not have been as much as the registrar calculated it to be, namely, £91 13s 6d. In effect, according to the registrar, what Mr Platts was saying was: “Here no damages should be paid because there has been no diminution in the value of the reversion of the property. But, if I am wrong about that, and there has been diminution, then the amount of items for which the tenant is responsible, I admit, are the items set out by the registrar“—which, according to the registrar, amount to £91 13s 6d. That is the evidence of the two surveyors. In addition, the landlord herself had said that she had spent the sum of £25 11s 2d (which is, as a matter of fact, a wrong figure; the correct figure is £19 10s) on work on the house to put the house in what she called “presentable” condition, and that, after that, she had let the house in that condition for the same rent to the new tenant.

That is how the matter stood when the learned registrar had to consider his findings. He appears to have directed himself correctly on the rule which he had to consider on the question whether or not there had been a breach of the covenant in this case. That was the first matter to which he had to direct his attention. He founded his consideration of that point on Proudfoot v Hart, which is a very well-known case on this matter. It is only necessary for me to read the headnote in that case, which sets out, I think, quite clearly what the rule is as expressed by Lord Esher MR ((1890), 25 QBD at p 52). The headnote runs as follows:

“Under an agreement to keep a house in ‘good tenantable repair,’ and so leave the same at the expiration of the term, the tenant’s obligation is to put and keep the premises in such repair as, having regard to the age, character, and locality of the house, would make it reasonably fit for the occupation of a tenant of the class who would be likely to take it.”

In the present case both parties agreed that this was a covenant which came within the rule in Proudfoot v Hart, and that, before the registrar and before the learned county court judge, that was the rule to be considered in deciding whether there had been a breach of the covenant. The registrar, in his judgment, says:

“I am quite satisfied on the authorities that the test is the cost of putting the property into a condition in which a reasonable tenant would be likely to take the house having regard to its class, character and locality.”

As to that, I think that there can be no quarrel, and I do not think that anybody has quarrelled with that part of the registrar’s judgment. But he then goes on to say:

“Here we find a reasonable tenant actually taking the premises, but with certain work actually done. The cost of this work I calculate at £25 11s. 2d., but I will hear the parties later as to the exact amount of this calculation.”

A little later in his judgment he says this:

“But I have come to the conclusion that the tenant is only liable for the work necessary to make the house lettable. [Perhaps, that is a short way of putting the rule in Proudfoot v. Hart.] I calculate the figure from the

Page 406 of [1960] 1 All ER 402

account at £25 11s. 2d.; accordingly that is the amount the [tenant] is liable to pay to the [landlord] … ”

What, in fact, the registrar did was to say: “Some work has been done on this house by the landlord herself. That work having been done, she was able to let the house. Therefore, the amount which she has spent on the house has been sufficient to put it in a condition which would enable it to be let to a reasonable tenant”. So far as I know, there was no evidence before the court whether the new tenant was a reasonable man or was not, and there was no evidence before the court as to the considerations which had affected the mind of the new tenant when he took the house. The registrar appears to have taken the view that, if £25 was all that was necessary to put the premises into repair so that they could and would be taken by a new tenant, the fact that a new tenant had taken them was evidence that all that was necessary had been done, and, in those circumstances, that was all that the former tenant (the defendant) was liable to pay.

It was contended on behalf of the landlord—and contended with very considerable force here—that what the registrar had done was to take into account the property market, not at what might be regarded as a normal time, but at the present time when, as the evidence showed, there was a very great demand for houses, particularly houses to let, in this particular district. In consequence, the registrar found that the sum of £25 11s 2d (which was later altered to £19 10s) was the figure which he should award as being the cost of putting these premises into repair.

The registrar then had to consider the further question whether that sum was a larger sum than the diminution in the value of the freehold reversion. It was submitted, on the one hand, that the diminution in value was the sum of £102 contended for by Mr Coles, and, on the other hand, that there had been no diminution in value at all, and that was contended by Mr Platts on the ground that the property would be sold for the same price, whether this work was done or not. The registrar did not agree with either of the parties. He said:

“My own view is that the truth lies somewhere between the two views. I think the purchaser might ask for a reduction or the vendor ask for something less. My view is that £50 is the proper figure for the reduction in the selling price at the time of Mr. Coles’s inspection.”

Counsel for the tenant submitted that that was not a finding that there had been a diminution in the value of the reversion to the extent of £50, as in this case it was never intended that this should go on the market. That, I think, is not a proper view. It appears to me that there must be a moment of time when the freehold reversion, unincumbered, is vested in the landlord, and the question is: What is the value of the freehold reversion at that time? It appears to me that the finding of the registrar that there would be a reduction in the selling price of £50 at that time does mean that there would be a diminution of £50 in the value of the freehold reversion.

In those circumstances, the registrar having come to the conclusion that £19 10s, plus £10, was the proper figure, and that that was within the maximum sum of £50 which he found was the diminution in the value of the reversion, he gave judgment for that figure of £29 10s. The matter came before the learned county court judge, and he varied the order of the registrar, and came to the conclusion that the proper figure to which the landlord was entitled was the sum of £50, plus the £10 for the damage to the garden. He put it in this way:

“The registrar further found that the premises had been re-let at the same rent. From a common-sense point of view there is a great deal to be said for what the registrar found. He says that in this case after spending £19 10s. the premises were re-let at the same rent. That, however, is not the diminution in value. Somebody might have taken the premises as they were,

Page 407 of [1960] 1 All ER 402

without anything being done. I think that the registrar made a mistake in going on to consider the letting which had been made.”

Counsel for the tenant contended that the sum of £19 10s was the proper sum in that it was all that was necessary to put the premises into a lettable condition—and that is what the registrar found—and that, as this was a covenant to which the rule in Proudfoot v Hart applied, a proper application of that rule showed that only a sum of £19 10s was due in respect of this breach of covenant. Counsel for the landlord, on the other hand, contended that there was no evidence to justify the registrar in coming to the conclusion that £19 10s was the proper figure: it was true that that was the amount which had actually been spent by the landlord in doing such repairs as she considered necessary to make the house presentable, and that she was then able to let the house at the same figure, but that was not the proper way to apply the test. The test was not whether the house could be let in all circumstances, and whatever the pressure for houses might be in that particular area at any particular time. The real test to apply was the test of the amount that was necessary to put the house into a proper condition for letting in accordance with the terms of the covenant, so that it would be taken by a reasonable man wanting a home in reasonable condition, having regard to the nature and type of house involved. Counsel pointed out that the surveyor called by the landlord had said that the sum of £102 was necessary to put the house in proper repair. The surveyor called by the tenant had said that a lesser sum of £91, or some other approximate sum, would be necessary, if any sum was necessary at all—and that the reason why it was not necessary was because, in these particular circumstances, there had been no diminution in the value of the freehold reversion. The registrar held—and nobody has quarrelled with his finding—that in fact there had been a diminution to the extent of £50. In those circumstances, says counsel for the landlord, the amount to which the landlord is entitled is the sum of £50. But he would be entitled to a larger sum—either £90 or £100—whatever the registrar found in the circumstances necessary—were it not for the restriction imposed by s 18 of the Act of 1927. In view of that restriction and the registrar’s finding, £50 is the largest sum in the circumstances which can be claimed by the landlord.

All that I need say is that I accept that view. It is not correct, in a case of this kind, to take the circumstances of letting and say that, because any house can be let almost in any condition at the present time, then there is no obligation on a tenant to perform his covenant to repair. The rule in Proudfoot v Hart is a guide as to the extent of repair which may be necessary in order to comply with a covenant of this kind. But it is a guide which calls in that useful individual, the reasonable man, acting in reasonable circumstances. In those circumstances, I think that it must be clear from the evidence that a larger sum than the sum which the registrar had awarded would be the sum which would be payable. I am, therefore, of the view that the figure which the registrar should have found is some figure larger than the sum of £50—how much larger matters not for the purposes of this case—but reduced to the sum of £50 because that is the sum which has been found by the registrar to be the diminution in the value of the reversion. In those circumstances it follows that the learned county court judge was right in varying the order of the registrar, and ordering that the sum which should be paid should be the sum of £50 plus the undisputed sum of £10 for the garden. In my judgment, therefore, this appeal should be dismissed.

DEVLIN LJ. Where, at the end of a tenancy, there is a claim for dilapidations, clearly the first thing that has to be done is to draw up a list of the work that it is necessary to do in order to put the premises into “good and tenantable repair”, these words being the words of the covenant in this case. The test that is very frequently applied in order to ascertain exactly what is meant by “good

Page 408 of [1960] 1 All ER 402

and tenantable repair”, and, therefore, to ascertain exactly what work it is necessary to do, is the test that was laid down in Proudfoot v Hart, to which Ormerod LJ has referred. We need not go into the question whether or not that is the universal test. It has not been disputed in this case as being the appropriate test. Accordingly, in accordance with that test, the surveyors on both sides, for the landlord and for the tenant, drew up their lists of dilapidations, and, as I read the judgment of the learned registrar, the conclusion at which he arrived was that the work that it was necessary to do, according to the evidence of the landlord’s surveyor, came out at £102 16s, whereas, according to the evidence of the tenant’s surveyor, it came out at £91 13s 6d

Having ascertained the amount of work that it is necessary to do in accordance with Proudfoot v Hart, and having put a figure on it, that does not necessarily conclude the matter, because s 18 of the Landlord and Tenant Act, 1927, provides that the damages are not to exceed the amount, if any, by which the value of the reversion in the premises is diminished. Therefore, one has to go on to inquire to what extent the value of the reversion has been diminished. That inquiry the registrar made, and he came to the conclusion that the reduction in the selling price amounted to £50, that is to say, he appears to have held that, notwithstanding that it would cost at least £91 13s 6d in his view to put the premises into good and tenantable repair, the damage to the reversion did not amount to more than £50. He arrived at that conclusion because of the shortage of houses in Sevenoaks and the desirability of them from the point of view of buyers. Thus he was saying that a buyer who was making a bid for this house, if it were put on the market, would say to himself: “I will put up with £41 odd of damage to the house, which I shall have to spend on repairs, because houses are short and it is very desirable to get one”. I am not at all sure—and I should like to guard myself against deciding it and reserve the point for consideration when it arises—whether that was the right thing to do. I can imagine, for example, a house that is worth £5,000, which is let, let us say, at a rental of £250 per annum, where at the end of the tenancy £50 worth of damage had been done, and £50 would have to be spent on it in order to put it into good and tenantable repair. That is an appreciable sum, if one looks at it from the point of view of the rent which the landlord is getting. It is twenty per cent of the rent. On the other hand, if one looks at it from the point of view of the capital value of the house, it may not matter very much. Even if there were no particular shortage or particular desirability of houses to be taken into consideration, I can still imagine that an auctioneer might be found who would say: “Well, where the damage is so small a figure as £50, a prospective buyer, in making his bid, is likely to disregard it altogether”. I do not think that it necessarily follows from that that it is the intention of the Act of 1927 that it should be disregarded altogether, or that a landlord will just have to put up with what is, in effect, a real loss. As I say, I would desire to reserve my opinion on that question. It does not arise here, and it does not arise because counsel for the landlord is not asking for the higher figure of £91. He is content, very sensibly, with the figure of £50 which has been found by the learned registrar as the reduction in the selling price. I say “very sensibly” because these are small figures, and there has been a good deal of litigation about them already. Although he contended before the county court judge that £91 was the right figure, the county court judge rejected it, but gave him still something more than the registrar gave him, that is to say, the sum of £50, and he has taken that sum of £50. Therefore, the question does not arise here.

I have said that the learned county court judge gave the landlord something more than the registrar had given him, and that is because the registrar, although he found the reduction in selling price to be £50, did not accept that reduction

Page 409 of [1960] 1 All ER 402

in the selling price as being the true measure of damage. The test which he propounded is set out in his judgment in the following words:

“… The test is the cost of putting the property into a condition in which a reasonable tenant would be likely to take the house having regard to its class, character and locality. Here we find a reasonable tenant actually taking the premises, but with certain work actually done. The cost of this work I calculate at [I substitute the figure which ultimately emerged as being the correct one] £19 10s.”

Therefore, the registrar limited the damages to £19 10s.

The issue between the parties before us, therefore, has been simply whether it should be the reduction in the selling price of £50 which the registrar found, and which the learned county court judge adopted, or whether it should be the lower sum of £19 10s. Counsel for the tenant has supported the registrar’s judgment, and is asking us to reverse the conclusion of the learned county court judge. He is supporting the registrar’s judgment on two grounds. First, he submits that, as the premises were actually re-let in this case, and as on the particular facts of this case the re-letting was, so to speak, stipulated for before the tenancy ended (that is to say, the landlord said that he would not agree to a surrender of the tenancy unless he could succeed in re-letting the premises), therefore what fell back into the landlord’s hands, and what is properly described as the reversion, is the new lease, and that, as the new lease was at the same rent, subject to the payment of £19 10s, £19 10s is the diminution in the value of the reversion. I think that that argument is unsound. There must always be a notional moment of time, even if one lease immediately succeeds the other, in which the estate finds its way back into the hands of the landlord, and the value of the reversion is, therefore, the value of the freehold as it has come back into the hands of the landlord before he lets it out again. That that is what is intended by the meaning of “reversion” in s 18(1) of the Act of 1927 is, I think, made quite clear by the judgment of Lawrence LJ in Hanson v Newman. He referred to the words of s 18(1) of the Act:

“… shall in no case exceed the amount (if any) by which the value of the reversion (whether immediate or not) in the premises is diminished … ”

He then said ([1933] All ER Rep at p 194, [1934] Ch at p 304):

“The expression ‘whether immediate or not’ in that part of the section which I have read is, I think, explained by reference to the case, to which our attention has been called, of Joyner v. Weeks. A reversion may not be a reversion in possession (i.e., it may not be immediate) by reason of the freeholder having granted a reversionary lease, and in that case the reversionary lease is not to be taken into account in assessing the damages.”

That is dealing with the position in which the landlord has already got a reversionary lease before the termination of the one which is being considered for the purpose of dilapidations. In my judgment, the position must be exactly the same whether the second lease is granted before the completion of the first lease or after it. It still has got to be disregarded, and what has to be ascertained as the value of the reversion is the value of the freehold.

Alternatively, counsel for the tenant contended that, if “reversion” must be given this meaning as the value of the freehold, nevertheless the lettable value of the freehold is something which ought to be taken into account in valuing the reversion. That raises, although in a more acute form, the point to which I have already referred, how far market values ought to be taken into account in cases of this sort. In one sense it can be said that the lettable value of a house is a good enough guide to what its capital value is, and, if that is all that is meant by the

Page 410 of [1960] 1 All ER 402

argument, then I see no objection to it. But in this matter of repairs it may assume a very different aspect. Take again the example which I quoted, £5,000 being the value of a house with £50 to be spent on repairs. If one considered lettable value—and taking five per cent of £50, it is only £2 10s—it is extremely improbable that any tenant will say, if he is asked to take it again for £250: “No, I am only going to pay £247 10s, because I shall have to spend £50 on repairs to it”. Moreover, the length of the proposed tenancy might affect the rent. Therefore, I should have thought that, in general, the rent which could have been obtained for the house is not any very valuable guide to the value of the reversion. Clearly, in the way in which the test has been applied by the registrar in this case, it is a wrong one, because he has taken an actual letting which plainly—I think it is clear from the terms of his judgment—was only effected because of the shortage and desirability of houses in Sevenoaks. He has found, in terms, that the diminution of the selling price is £50. If he finds that, notwithstanding that, the house can be re-let at an expenditure of only £19 10s, he must be finding that other considerations besides the diminution in the value of the reversion are affecting the tenant’s mind, those other considerations being the shortage and desirability of a house in Sevenoaks. Those considerations, in my judgment must be extraneous to the true principle on which the value should be arrived at. Therefore, I agree that the learned county court judge took the right view, and that this appeal should be dismissed.

GORMAN J. I also agree, and I desire to say this only. It is quite obvious that the registrar gave the most careful consideration to this matter. He said:

“I am quite satisfied on the authorities that the test is the cost of putting the property into a condition in which a reasonable tenant would be likely to take the house having regard to its class, character and locality.”

There is no question, therefore, that he correctly applied the test laid down in Proudfoot v Hart. But where, in my view, he went wrong is in the next three of four lines of his judgment. He said:

“Here we find a reasonable tenant actually taking the premises, but with certain work actually done. The cost of this work I calculate at £25 11s. 2d. [which was later reduced to £19 10s]”

In my view, the registrar, having stated correctly the principle to be applied, went wrong in restricting the figure, in the circumstances of this case, to the amount of work which had actually been done before the new tenant would take possession of this house. I have nothing further to add.

Appeal dismissed.

Solicitors: Neve, Beck & Co agents for W H House & Son, Sevenoaks (for the defendant); Vallis & Struthers, Sevenoaks (for the plaintiff).

F Guttman Esq   Barrister.

Crowe (Valuation Officer) v Lloyds British Testing Co Ltd

[1960] 1 All ER 411

Categories:        LOCAL GOVERNMENT        

Court:        COURT OF APPEAL        

Lord(s):        MORRIS, WILLMER AND HARMAN LJJ        

Hearing Date(s):        9, 10, 11, 18 DECEMBER 1959        

Rates – Assessment – Gross value – Non-industrial building – Chain and anchor testing house – Hereditament was a factory – Whether used wholly or mainly for “industrial purposes” – Rating and Valuation Act, 1925 (15 & 16 Geo 5 c 90), s 22(1) (a), (b), s 22(4) – Rating and Valuation (Miscellaneous Provisions) Act, 1955 (4 & 5 Eliz 2 c 9), s 5(1), (2), (3).

Statute – Construction – Construing Acts as one – Whether later Act affects the construction of earlier Act – Amendment of earlier Act by subsequent Act.

In the Rating and Valuation (Apportionment) Act, 1928, s 4(2), the term “industrial purposes” means the manufacturing purposes that make the hereditament a factory and accordingly the term when used in s 22(4) of the Rating and Valuation Act, 1925, which was added by amendment in 1955, has the same meaning, since the Act of 1925 is by s 84 of the Local Government Act, 1929, to be construed as one with the Act of 1928 (see p 420, letter i, to p 421, letter a, p 422, letter a, and p 423, letter h, post).

A hereditament was used for the testing of chains and anchors to ensure that they complied with the provisions of the Anchors and Chain Cables Act, 1899. The testing house had been held in 1931 not to be an industrial hereditament within the meaning of the Rating and Valuation (Apportionment) Act, 1928, s 3(1), and the occupiers claimed that it should be assessed under the Rating and Valuation Act, 1925, not to net annual value under s 22(1)(b) but direct to gross value under s 22(1)(a), as a non-industrial building within the definition of that term in s 22(4) added by the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 5(3), on which basis the hereditament would qualify for a measure of relief under the Rating and Valuation Act, 1957. By s 22(4) non-industrial building meant “a building … of any description, with the exception of factories, mills and other premises of a similar character used wholly or mainly for industrial purposes … ”

Held – (Morris LJ dissenting): The testing house was assessable under s 22(1)(a) of the Rating and Valuation Act, 1925, as a non-industrial building within s 22(4) for the following reasons—

(i) the words “used wholly or mainly for industrial purposes” in the exception in s 22(4) qualified the descriptions “factories”, “mills” and “other premises of a similar character” proceding them, and

(ii) though the testing house was a factory, it was not used for “industrial purposes” (which term in s 22(4) bore the meaning stated at letter c, above) and thus was not within the exception.

Grove v Lloyds British Testing Co Ltd ([1931] All ER Rep 242) applied. Appeal dismissed.

Notes

As to hereditaments requiring a gross value for rating purposes, see 27 Halsbury’s Laws (2nd Edn) 383, para 820; and for cases on the subject, see Digest Supp.

For the Rating and Valuation Act, 1925, s 22(1), as originally enacted, see 20 Halsbury’s Statutes (2nd Edn) 127; and for the amended subsection and s 22(4) as enacted by the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 5(1), (2), (3), see 35 ibid, 388.

Cases referred to in judgments

International Bridge Co v Canada Southern Ry Co, Canada Southern Ry Co v International Bridge Co (1883), 8 App Cas 723, 42 Digest 664, 745.

Page 412 of [1960] 1 All ER 411

Cardiff Revenue Office v Cardiff Assessment Committee & Western Mail, etc [1930] All ER Rep 30, [1931] 1 KB 47, 96 LJKB 672, 143 LT 500, 94 JP 146, Digest Supp.

Grove (Dudley Revenue Officer) v Lloyds British Testing Co Ltd [1931] 1 KB 404, revsd HL, [1931] All ER Rep 242, [1931] AC 450, 100 LJKB 271, 145 LT 73, 95 JP 115, Digest Supp.

Preston & Area Rent Tribunal v Pickavance [1953] 2 All ER 438, [1953] AC 502, 117 JP 398, [1953] 3 WLR 242, 3rd Digest Supp.

Case Stated

The valuation officer appealed by way of Case Stated against a decision of the Lands Tribunal (Erskine Simes, Esq QC), given on 24 November 1958 (4 RRC 148), dismissing an appeal by the valuation officer against a decision of a local valuation court of Stafford South Local Valuation Panel.

The respondent ratepayers were the occupiers of a hereditament comprising a testing house and premises assessed at £2,500 rateable value in the valuation list for Dudley County Borough. They contended that the hereditament consisted of one or more houses or other non-industrial buildings within the meaning of s 22(1)(a) of the Rating and Valuation Act, 1925, as amended by the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 5(3), and should be assessed direct to gross value at £2,700 gross value, £2,247 net annual value (for which the appropriate rateable value would be £1,798). The valuation officer contended that the hereditament did not fall within the classes of hereditament referred to in s 22(1)(a) but required to be assessed direct to net annual value under s 22(1)(b). The Lands Tribunal held that the hereditament required to be assessed to gross value under s 22(1)(a). The valuation officer appealed to the Court of Appeal.

W L Roots QC and J R Phillips for the valuation officer.

J P Widgery QC and D G Widdicombe for the ratepayers.

Cur adv vult

18 December 1959. The following judgments were delivered.

MORRIS LJ. This is a Case Stated by the Lands Tribunal for the decision of the Court of Appeal pursuant to s 3(4) of the Lands Tribunal Act, 1949. The question is whether, on the facts as found, the premises of Lloyds British Testing Co Ltd, the respondent ratepayers, are to have their rateable value ascertained under s 22(1)(a) of the Rating and Valuation Act, 1925, as amended, or under s 22(1)(b). The figures which respectively become applicable on the basis of the alternative contentions are not in dispute.

The ratepayers own and occupy a hereditament which is described as testing house and premises in Dudley. They occupy and use the hereditament for the purpose of testing, proving and finishing chain cables and anchors in accordance with the provisions of the Anchors and Chain Cables Act, 1899. Under that Act it is provided that a maker of or dealer in anchors or chain cables shall not sell or contract to sell, nor shall any person purchase or contract to purchase, for use on any British ship, any chain cable or any anchor exceeding 168 lb in weight unless it has been previously proved in accordance with the Act. A contract for the sale of any such chain, cable or anchor carries with it, in the absence of an express stipulation to the contrary, an implied warranty that the anchor or cable has before delivery been proved in accordance with the Act. A chain cable or anchor must be tested and proved by authorities independent of the manufacturer, of whom the Committee of Lloyd’s Register of British and Foreign Shipping for testing establishments is one. The ratepayers had a licence pursuant to the provisions of s 5 of the Act for the testing of anchors and chain cables with a view to their proof. The Act lays down the methods of testing anchors and chain cables, and prescribes the tensile strength and the breaking strain used for the purpose of testing anchors and chain cables. Provision is

Page 413 of [1960] 1 All ER 411

made for the authorising of the maximum charges which may be made by a licensed tester, who must clearly show in his testing establishment both the authorised scale of maximum charges and the charges actually made by him. An inspector of testing establishments is appointed. It is important to appreciate the nature of the work involved in the testing and finishing of chain cables. A statement in regard to it can conveniently be found in the report of a casea concerning the ratepayers, to which case I will later refer. I cite from that report the following passage ([1931] 1 KB at p 405):

“The cables were sent to the occupiers’ works in their manufactured state but unfinished in the respects hereinafter mentioned. In accordance with the provisions of s. 9 of the Act of 1899 a piece of three links was selected and cut out of the length of chain cable. This cutting out was performed by a heavy hydraulic cutter which severed two links one on each side of the piece of three links. The sample piece was then taken to a hydraulic machine and subjected to a test load, called the breaking strain, determined as to load by the provisions of Sch. 2 to the said Act. If the piece selected failed to withstand the breaking strain, a further sample piece was cut out in the aforesaid manner and subjected to the same test. If neither of the samples withstood the breaking strain the whole length was rejected.

“If one of the sample pieces satisfactorily withstood the breaking strain the several parts of the cable length were joined together by a welded link formed and welded at a forge on the premises by the occupiers’ employees. The restored cable length was then placed in its entire length in the chain proving machine and subsected to a reduced test load, as provided by the Act, and termed the tensile strain, and this test resulted in appreciable elongation of the cable and a certain change in shape in each link. The cable was then carefully examined link by link by two separate sets of examiners successively who in the course of examination detected any flaws and removed all scale from the links. In the event of any defective links being found on this examination these were cut out and replaced by welded links formed and joined in the manner above described, and the whole length was then retested. When the said tests had been applied in accordance with the Act the occupiers, as licensed testers, were under obligation to, and did in fact, stamp with a distinctive mark, as laid down in s. 10 of the Act, each cable that had withstood the said strains and was in the opinion of the licensed tester without flaw or material weakness. Thereafter the cable length was drawn into a tank and submerged in hot water. Whilst still hot it was then drawn through a second tank containing an anticorrosive tar preparation and after that it was ready for despatch to the ultimate consignee. These last two processes were necessary in order to make the cable commercially saleable, and if not carried out at the occupiers’ works would have to be carried out at some other place and either by the manufacturer, purchaser or some other person. With regard to anchors, these were similarly received in their manufactured stated from the makers but unfinished in the respects hereinafter mentioned. The anchor was weighed to determine that test load. It was then placed in the anchor testing machine and submitted to the statutory proof strain required. It was then taken to pieces for examination of the various parts, and if satisfactory was reassembled. In some types of anchor, the riveting of heated pins inserted by the occupiers’ workmen was necessary in the process of reassembly. When an anchor had passed the test, the obligations and practice of the occupiers as regards stamping was the same mutatis mutandis

Page 414 of [1960] 1 All ER 411

as in the case of cables. Before delivery to the consignees anchors were painted by hand.

“It was further the obligation under the Act and practice of the occupiers, upon request, to deliver a certificate in respect of any cable or anchor which had respectively withstood the said strains and in the opinion of the occupiers was without flaw or material weakness.

“The hereditament contained heavy machinery and plant both hydraulic and electric for the purpose of carrying out the work above mentioned and also of other work carried out upon the hereditament, which consisted of testing samples of metal, cable, wire rope and other metal substances for other manufacturers, such tests not being in any way connected with the Act of 1899. In the case of such wire rope the method employed was to test to destruction, i.e., to place strain upon the rope until it broke, and the result of such test was communicated to the manufacturers by means of a written statement or formula showing the result of the test. In the hereditament there was machine shop installed with power and machinery in which the manufacture and repair of tools and plant used by the occupiers and the shaping of portions of metal for the above mentioned tests were carried out.”

The Lands Tribunal has found that the hereditament is similarly used today save that the three links for the breaking test are now cut at the maker’s premises and not on the hereditament, and that the amount of “forging” of links has been considerably reduced since 1931 consequent on the use of high tensile steel, which cannot be forged on the hereditament, for cables.

Section 22 of the Rating and Valuation Act, 1925, provided for the method of ascertaining the rateable value of a hereditament for the purposes of the first new valuation list to be prepared under the Act and of any subsequent valuation list. For hereditaments coming under sub-s (1)(a) there was one method of ascertaining the net annual value; for those coming under sub-s (1)(b) there was another. A hereditament was under (a) if it belonged to one of the classes specified in the first column of the table contained in Part 1 of Sch 2 to the Act. A hereditament was under (b) if it was not such a hereditament as mentioned under (a). If reference is made to Part 1 of Sch 2, it will be seen that the first five classes of hereditaments are “houses and buildings without land other than gardens” of varying gross values. But there is an important note to Part 1 of the Schedule which reads:

“For the purposes of this Part of this Schedule the expression ‘houses and buildings’ does not include mills, manufactories or premises of a similar character used wholly or mainly for industrial purposes or hereditaments valued as part of any railway, dock, canal, gas, water, electricity, or other public utility undertaking.”

There was no definition of the word “manufactories” nor of the phrase “industrial purposes”. The words that I have quoted from Sch 2 remained in effective operation until slightly altered in 1955. Were the premises at Dudley a manufactory or were they of a similar character to a manufactory? Where they used wholly or mainly for industrial purposes? The words to which I refer must be given ordinary reasonable meanings. The word “manufactory” was probably in 1925 synonymous with factory or workshop, but, whether this was so or not, I would consider that the testing establishment would aptly be described as premises of a similar character to a manufactory. Were they used wholly or mainly for “industrial purposes”? I would have thought clearly so. As Parliament did not define the phrase, it would be inapposite to seek to do more than to decide whether or not a particular purpose does come within the phrase “industrial purpose”. The phrase denotes a contrast with various other purposes such as, eg, residential purposes, or the purposes of a retail shop. An industrial purpose connotes to my mind a purpose connected with industry. If an industrial

Page 415 of [1960] 1 All ER 411

concern makes and sells chain cables and anchors, and if the concern can only sell them if it pays a testing establishment to prove and test them, I would consider that the premises of the testing establishment were being used either wholly or mainly for industrial purposes.

If I am right in my view of the position under the Act of 1925, then the question arises whether any change was made as a result of any later legislation or as a result of an amendment made in 1955 of the Act of 1925. In 1928 the Rating and Valuation (Apportionment) Act, 1928, was passed. It was required that in valuation lists certain classes of hereditaments were to be distinguished from each other and “agricultural hereditaments”, “industrial hereditaments” and “freight-transport hereditaments” were to be so distinguished. The Act proceeded to prescribe a highly technical definition of an industrial hereditament. Subject to a qualification, it meant a hereditament occupied and used as a mine or mineral railway or as a factory or workshop. The expressions “factory” and “workshop” were “for the purposes of” that Act to have the same meanings as in the Factory and Workshop Acts, 1901 to 1920. The qualification was that, though a hereditament might be occupied and used as a “factory” or “workshop” (those words having for the purposes of the Act their meanings as in the Factory and Workshop Acts), yet it would not be an “industrial hereditament” if it were primarily occupied and used for certain specified purposes or any combination of them. One group of such purposes consisted of the purposes of a public supply undertaking. Another group of such specified purposes consisted of purposes “which are not those of a factory or workshop”. In that context again the words factory and workshop have their attributed meanings.

After the passing of the Act of 1928 and of the Local Government Act, 1929, the ratepayers sought to establish that their hereditament was an “industrial hereditament”. The resultant litigation went to the House of Lords. The final decision was adverse to the contentions of the ratepayers. In the House of Lords it was agreed and it was held that the premises came within the definition of a “factory”. They were within the words “any works, warehouses, furnaces, mills, foundries or places named in Part 1 of Sch 6” to the Factory and Workshop Act, 1901b. Group 13 in Part 1 of that Sch 6 consisted of

“‘Metal and india-rubber works’, that is to say, any premises in which steam, water or other mechanical power is used for moving machinery employed in the manufacture of machinery or in the manufacture of any article of metal not being machinery or in the manufacture of india-rubber or gutta-percha or of articles made wholly or partially of india-rubber or gutta-percha.”

Though the premises came by this rather unanticipated route within the statutory definition of a factory, they failed to qualify as an industrial hereditament because testing, for which the premises were primarily occupied and used, was not, within the definitions of the Act of 1901, a “factory” purpose. The premises qualified to be regarded as a “factory” because there was the manufacture of articles of metal. The premises failed to qualify to be regarded as an “industrial hereditament” because it was for the testing, and not for the manufacture of metal articles, that the premises were primarily occupied and used. “Testing” did not amount to “adapting for sale” and “testing” was not within any statutorily defined factory purpose. Lord Dunedin in his speech in the House of Lords in Grove v Lloyds British Testing Co Ltd ([1931] All ER Rep at p 253, [1931] AC at p 468), said:

“Undoubtedly, there is in these works the forging of links to join up the chains which have been severed, and that forging gives to the premises the character of a factory. The Attorney-General admits this in his case, but then he says: ‘True, it becomes a factory, but it is not an industrial hereditament

Page 416 of [1960] 1 All ER 411

because it is struck at by s. 3(1)(f) of the Act of 1928, namely, being primarily occupied and used for other purposes which are not those of a factory or workshop’. The question, put in this way, was, as I have said, not dealt with in the courts below. In answer to the argument of the Attorney-General, counsel for the [ratepayers] presented an argument to this effect: ‘This is’, said he, ‘admittedly a factory, but this factory has only one purpose, to wit, testing. Therefore, it cannot be said that it is mainly used for a purpose which is not a factory purpose’. This argument is very ingenious and seems, at first sight, difficult to answer, but, on consideration, I am satisfied that it is unsound. One must begin by remembering that, in considering this argument, testing alone is, ex hypothesi, not a factory purpose. The purpose of a particular factory must be gathered from that which makes it a factory. If it was made a factory because it fell within an actual description in Part 1 of the schedule, you must gather the purpose from that description. Here the hereditament is made a factory because of the manufacture of articles of metal. Therefore, so far as this hereditament is a factory, its purpose is the manufacture of metal. But the hereditament is, without doubt, primarily occupied and used for the purposes of testing operations, and such operations are, ex hypothesi, not factory purposes, and, consequently, the case falls within the words of the exception, and the hereditament, although a factory, is not an industrial hereditament.”

The rateable value of the testing establishment was and continued to be ascertained on the basis that it came within s (22(1)(b). That meant that it was treated as being within the words “mills, manufactories or premises of a similar character used wholly or mainly for industrial purposes”. So matters remained for very many years. The ratepayers point out that until 1957 there was, however, no difference from the point of view of what amount the ratepayers would actually have to pay, whether the rateable value was assessed under s 22(1)(a) or under s 22(1)(b). When the Rating and Valuation Act, 1957, was passed, the ratepayers realised that they would be more favourably placed if they could come within s 22(1)(a), and they claimed accordingly. The local valuation court acceded to the ratepayers’ claim and assessed the hereditament under s 22(1)(a), and on appeal by the valuation officer to the Lands Tribunal this basis of assessment was upheld.

The wording of s 22 of the Act of 1925 had been by that time to some extent varied. The amendment was effected by s 5(3) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. The opening words of s 22(1)(a) now read:

“If the hereditament consists of one or more houses or other non-industrial buildings, with or without any garden, yard, court, forecourt, outhouse or other appurtenance belonging thereto, but without other land … ”

It will be seen that the phrase “non-industrial buildings” is introduced. Consequent on that a new subsection (sub-s (4)) was enacted which reads:

“In this section the expression ‘house’ includes part of a house, the expression ‘non-industrial building’ means a building, or part of a building, of any description, with the exception of factories, mills and other premises of a similar character used wholly or mainly for industrial purposes, and of premises valued as part of—(a) a railway, dock, canal, gas, water or electricity undertaking, or (b) any public utility undertaking not falling within the preceding paragraph, and the expression ‘appurtenance’, in relation to a dwelling-house, or to a school, college or other educational establishment, shall be taken to include all land occupied therewith and used for the purposes thereof’.”

It will be seen that the definition of “non-industrial building” has the words of exception closely following the note in the schedule to the Act of 1925 to which

Page 417 of [1960] 1 All ER 411

I have referred previouslyc, and which was in effective operation for the thirty years between 1925 and 1955. Instead of mention of manufactories there is mention of factories. The phrase “industrial purposes” exists as before. A factory is not stated to be a factory as defined in any Act relating to factories. There is no definition of industrial purposes. All the words must, in my judgment, be given their ordinary meanings, and it seems to me that the position is not effectively altered from what it was in the years following 1925. The agreed description of the testing establishment and of the character of the equipment and the nature of the operations leads me to the view that, whether or not it could appropriately be described as a factory, it falls to be described as premises having a character similar to that of a factory. Furthermore, I consider that the premises were used wholly or mainly for industrial purposes. They were used for a purpose connected with the industry of making and selling anchors and chain cables. The view of the Lands Tribunal in the present case was that “industrial purposes” connotes production processes. With respect, I do not agree. The phrase may include production processes but it includes much else.

Though the phrase “industrial purposes” is nowhere defined, it is contended on behalf of the ratepayers that some guidance can be found by considering s 4 of the Act of 1928, and that, if so, assistance is afforded in the determination of the present case because by s 10(2) of the Act of 1928 that Act is to be construed as one with the Act of 1925, and because in s 84 of the Local Government Act, 1929, it is provided as follows:

“In this Part of this Act the expression the ‘principal Act’ means, in relation to places outside London, the Rating and Valuation Act, 1925, as amended by any subsequent enactment, and in relation to London, the Valuation (Metropolis) Act, 1869, as so amended as aforesaid, and the principal Act, the Rating and Valuation (Apportionment) Act, 1928, and this Part of this Act shall be construed as one, and may be cited together as the Rating and Valuation Acts, 1925 to 1929, or as the Rating and Valuation (Metropolis) Acts, 1869 to 1929, as the case may be.”

As to the effect of this, reference may be made to Preston & Area Rent Tribunal v Pickavance. The landlord and Tenant (Rent Control) Act, 1949, provided by s 11(5) as follows:

“This section shall be construed as one with the [Furnished Houses (Rent Control) Act, 1946], and references in this section to that Act shall be construed as references to that Act as extended by s. [7] of this Act.”

Lord Porter in his speech said ([1953] 2 All ER at p 442, [1953] AC at p 575):

“Moreover, it has to be borne in mind that the Act of 1949 does not provide that s. 11 is to be read with s. 5 of the earlier Act: it is to be read with that Act generally, and there are many other provisions of that Act to which that reference is applicable, e.g., s. 2(1) and (3). Such an application seems to me to justify the use of the words ‘read with’ in s. 11 of the Act of 1949, and negatives the necessity of confining the meaning of those words in that Act to a notice such as would be required under s. 5 of the Act of 1946.”

Lord Reid in his speech said in reference to these words ([1953] 2 All ER at p 446, [1953] AC at p 580):

“In my opinion, this means neither more nor less than that s. 11 must be read as if it were a section in the Act of 1946. There is no difficulty about so reading it. It does not alter or amend anything in the Act of 1946. It adds something new, which is materially different in character from anything in the Act of 1946.”

Page 418 of [1960] 1 All ER 411

Lord Tucker in his speech said ([1953] 2 All ER at p 447, [1953] AC at p 582):

“The exact consequence of a provision that one Act is to be construed as one with another, beyond incorporating the definitions contained in the first Act, is not altogether easy to ascertain, because it would seem that, if both Acts are dealing with the same subject-matter, it would in any event in a case of ambiguity be necessary to construe the second Act in the light of the provisions of the first. In the present case, having regard to s. 8 of the Act of 1946, which gives power to make procedural regulations, it would seem that, in order to make it clear that such regulations apply to applications under s. 11 of the Act of 1949, some such provision as that contained in sub-s. (5) was desirable.”

The argument for the ratepayers is based on a consideration of s 4 of the Act of 1928. That section, which only comes into operation if a hereditament is shown to be an “industrial hereditament”, provides that a valuation list must show whether an industrial hereditament is occupied and used wholly or only partly for industrial purposes, and the net annual value must when necessary be apportioned. Here again is the phrase “industrial purposes”. It is not defined. Prima facie, and particularly as the Act of 1928 is to be construed as one with the existing Act of 1925, the phrase must be given its existing or ordinary meaning. In so far as any help in construction may be gleaned from the Act of 1928, it is to be noted that when in s 5(2) the phrase “transport purposes” is being defined there are references to “all purposes connected with”. Section 4(2) proceeds to direct how to determine the proportions in which an industrial hereditament is occupied and used for industrial purposes, or, alternatively, for other purposes. There is a simple test. It is to be “deemed” to be occupied and used for industrial purposes except in so far as any part thereof is, under this Act or under the enactments relating to the regulation of mines, factories and workshops, to be deemed neither to be nor to form part of a mine, factory or workshop.

It is said on behalf of the ratepayers that this section gives guidance as to the meaning of the phrase “industrial purposes”, or, in other words, impliedly defines the phrase. It is said that an industrial purpose is equated with a factory purpose. But, where Parliament has refrained from defining and has used words capable of ordinary interpretation, I cannot think that an indirect definition is to be extracted from the Act of 1928. An industrial hereditament must be either a mine or a mineral railway or a “factory” or “workshop” as these two latter words were statutorily defined by the Act of 1901. Section 4(2) merely says that an industrial hereditament is “deemed” to be occupied and used for industrial purposes except in so far as any part is “deemed” not to be a part. Thus, if a mine is held to be an industrial hereditament, it is deemed to be occupied and used for industrial purposes except in so far as under some enactment relating to the regulation of mines some part is “deemed” not to be a part of the mine. That does not involve equating an industrial purpose to or with a factory purpose: nor does it in any way limit or modify the ordinary meaning of the phrase “industrial purposes”. Under s 3(2) of the Act of 1928, it is provided that, if the “industrial hereditament” is a “factory” or “workshop” (as statutorily defined for the purposes of the Act), then the part within the close, curtilage or precincts used by the occupier for the housing or maintenance of his road vehicles or as stables is to be “deemed” not to form part of the factory or workshop. Another illustration of the way in which a part of a factory or workshop is “deemed” not to form part may be found by reference to s 149(4) of the Factory and Workshop Act, 1901. That subsection reads:

“Where a place situate within the close, curtilage or precincts forming a factory or workshop is solely used for some purpose other than the manufacturing process or handicraft carried on in the factory or workshop, that

Page 419 of [1960] 1 All ER 411

place shall not be deemed to form part of the factory or workshop for the purposes of this Act, but shall, if otherwise it would be a factory or workshop, be deemed to be a separate factory or workshop and be regulated accordingly.”

On the application of that subsection, a part of an “industrial hereditament” was excluded in Cardiff Revenue Officer v Cardiff Assessment Committee & Western Mail, etc.

It was held by the Lands Tribunal that it followed from the decision of the House of Lords in 1931d that the hereditament at Dudley is not used mainly for industrial purposes. With every respect, I do not share this view. The House of Lords held that, though the testing establishment was a “factory” within the statutory definition of that word, it was not, by reason of the proviso to s 3(1) of the Act of 1928, an “industrial hereditament”, because the establishment was primarily used for testing and because testing was not a purpose of a “factory” within the statutory definition of that word. The House of Lords never had occasion to consider s 4 of the Act of 1928, nor to consider the phrase “industrial purposes”.

For the reasons which I have endeavoured to state, it does not seem to me that the “deeming” processes laid down by s 4(2) of the Act of 1928 form any basis for seeking to ascribe to the phrase “industrial purposes” any meaning other than its ordinary meaning. When the phrase was used in the Act of 1928, it could not be that some sort of implied amendment of the Act of 1925 was being introduced. It is said that the Act of 1928 could be resolving an existing ambiguity in the meaning of the phrase as used in the Act of 1925. But it seems to me (a) that there was no ambiguity in the phrase as used in the Act of 1925; (b) that s 4(2) of the Act of 1928 does not equate “industrial purposes” with anything; (c) that if Parliament had been intending to lay down some definition or to remove some ambiguity it would have said so and done so expressly. It is further to be noted that, when in 1955 Parliament amended the Act of 1925 and introduced the phrase “non-industrial building”, Parliament refrained, when defining the phrase, from incorporating the existing statutory definition of an industrial hereditament.

In my judgment, the premises of the testing establishment of the ratepayers should be regarded as being premises of a similar character to factory premises and as being wholly or mainly used for industrial purposes. It is said that, if this view be correct, the ratepayers would have the misfortune to have failed to qualify for some relief after the Acts of 1928 and 1923 and now to fail to qualify under the Act of 1957. But, in my judgment, I must be uninfluenced by this consideration and must only be guided to a conclusion by the statutory words which apply. I would answer the question raised in the Case Stated in the negative, and I consider that the assessment should be under s 22(1)(b).

WILLMER LJ. I differ from Morris LJ with diffidence, but for my part I have come to the conclusion that the Lands Tribunal came to a correct decision in holding that the ratepayers’ hereditament ought to be valued in accordance with s 22(1)(a) of the Rating and Valuation Act, 1925. The effect of this would be that the net annual value would be calculated by reference to a gross value, from which the appropriate deduction would be made in accordance with the table contained in Part 1 of Sch 2 to the Act in order to arrive at the net annual value.

As a matter of history, it should be recorded that in 1931 the ratepayers sought to obtain relief under s 68 of the Local Government Act, 1929, on the ground that the hereditament was an industrial hereditament within the meaning of s 3(1) of the Rating and Valuation (Apportionment) Act, 1928. That attempt failed because, although it was conceded that the hereditament was a

Page 420 of [1960] 1 All ER 411

“factory”, as being within para (13) of Part 1 of Sch 6 to the Factory and Workshop Act, 1901, it was decided by the House of Lords in Grove v Lloyds British Testing Co Ltd that it was not an “industrial hereditament” within the meaning of the Act of 1928. The work of forging links was sufficient to make the hereditament a factory, but it was not an “industrial hereditament” because, in the view of the House of Lords, it was primarily occupied and used for the purpose of merely testing the cables, which was not a factory purpose.

From 1931 onwards until 1957 it made little or no financial difference to the ratepayers whether the hereditament was assessed under para (a) or (b) of s 22(1) of the Act of 1925. By the Rating and Valuation Act, 1957, a measure of relief was accorded in the case of a hereditament, other than a dwelling-house, private garage or private storage space, whose net annual value was calculated by reference to its gross value, ie, in accordance with s 22(1)(a). In the present proceedings the ratepayers have sought to claim the benefit of this relief, and have claimed that their hereditament consists of non-industrial buildings which ought to be assessed under that paragraph. They are met, however, with the contention that their hereditament is excluded by the definition of “non-industrial building” contained in s 22(4), as enacted by s 5(3) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. The material words of the definition are as follows:

“… ‘non-industrial building’ means a building, or part of a building, of any description, with the exception of factories, mills and other premises of a similar character used wholly or mainly for industrial purposes … ”

If the valuation officer’s contention be right, the effect would be that the ratepayers, having been shut out from relief under the Local Government Act, 1929, on the ground that their hereditament was not an industrial hereditament, would now find themselves equally shut out from relief under the Act of 1957 on the apparently diametrically opposite ground that their hereditament is not a non-industrial building. Prima facie this would be a strange result, and it seems to me that the grounds on which the valuation officer’s argument is based require careful examination.

The valuation officer’s contention in the first place is that the building in question is a factory, as conceded in the litigation in 1931, and as found by the House of Lordse. That, according to the valuation officer, is the end of the matter, because it is argued that the word “factories” in s 22(4) is not qualified by any of the words which follow. On this point I find the argument for the valuation officer wholly unacceptable. In my judgment, the words “used wholly or mainly for industrial purposes” must be construed as governing each of the three categories previously mentioned, namely, “factories”, “mills” and “other premises of a similar character”. That is the natural way to read the words. Had the draftsman not intended the words “factories” and “mills” to be so qualified, he could, and I have no doubt would, have made such intention plain, eg, by numbering or lettering the various categories, so that the material words would read: “with the exception of: (a) factories; (b) mills; and (c) other premises of a similar character used wholly or mainly for industrial purposes”.

The valuation officer’s next contention is that, even assuming the word “factories” to be qualified by the words that follow, the expression “industrial purposes” is to be construed in a broad sense as meaning any purposes connected with industry; and the testing of cables, it is argued, is a process connected with the industrial process of producing cables. The ratepayers’ hereditament, therefore, would still fall within the exception, and consequently outside the definition of “non-industrial building”. The ratepayers’ answer to this argument is that the Act of 1925 (as amended in 1955) is to be construed as one with the

Page 421 of [1960] 1 All ER 411

Act of 1928, so that prima facie the same words and phrases should be construed in the same sense in the two Acts. So far the ratepayers’ contention appears to me to be unassailable, for s 84 of the Local Government Act, 1929, provides as follows:

“In this Part of this Act [i.e., Part V, which deals with rating and valuation] the expression the ‘principal Act’ means, in relation to places outside London, the Rating and Valuation Act, 1925, as amended by any subsequent enactment … and the principal Act, the Rating and Valuation (Apportionment) Act, 1928, and this Part of this Act shall be construed as one … ”

I entertain no doubt, therefore, that it is not only permissible but necessary to refer to the provisions of the Act of 1928 in order to construe s 22(4) of the Act of 1925, as enacted by the Act of 1955. I look, accordingly, at s 3(1) of the Act of 1928 for the definition of “industrial hereditament”, which, omitting immaterial words, is in the following terms:

“In this Act the expression ‘industrial hereditament’ means a hereditament … occupied and used … as a factory … : Provided that the expression industrial hereditament does not include a hereditament occupied and used as a factory … if it is primarily occupied and used for the following purposes … (f) any other purposes, whether or not similar to any of the foregoing, which are not those of a factory … ”

By sub-s (2) the expression “factory” is defined as having the same meaning as in the Factory and Workshop Acts, 1901 to 1920. So far, then, the result is that a hereditament, although it be a factory within the meaning of the Factory and Workshop Acts, is not an industrial hereditament—ie, it is a non-industrial hereditament—if it is primarily occupied and used for purposes which are not those of a factory.

The expression “industrial purposes”, which is the expression that we have to construe in this case, occurs first in s 4, which deals with apportionment of the net annual value in the case of an industrial hereditament occupied and used partly for industrial purposes and partly for other purposes. The material part of s 4 provides as follows:

“(1) In every valuation list every industrial hereditament occupied and used wholly for industrial purposes shall be shown as being so occupied and used, and as respects every such hereditament occupied and used partly for industrial purposes, the net annual value thereof shall be shown, in the prescribed manner, as being apportioned between the occupation and user of the hereditament for industrial purposes, and the occupation and user thereof for other purposes.

“(2) For the purpose of determining in what proportions an industrial hereditament is occupied and used for industrial purposes and for other purposes respectively, the following provisions shall have effect: (a) The hereditament shall be deemed to be occupied and used for industrial purposes except in so far as any part thereof is, under this Act or under the enactments relating to the regulation of mines, factories and workshops, to be deemed neither to be, nor to form part of, a mine, factory, or workshop.”

The reference to a hereditament any part of which is deemed not to form part of a factory is clearly a reference to s 149(4) of the Factory and Workshop Act, 1901, whereby it was enacted that a place within a factory, which is used solely for some purpose other than the manufacturing process carried on in the factory shall not be deemed to form part of the factory. “Industrial purposes” are thus contrasted with purposes other than the manufacturing process carried on in the factory, ie, purposes other than those which make it a factory. Reading s 3 and s 4 of the Act of 1928 together, therefore, the conclusion seems to me to be irresistible that the expression in s 3(1)(f) “other purposes which are not those of a factory” must mean purposes which are not “industrial purposes”. This

Page 422 of [1960] 1 All ER 411

explains why it is enacted that a hereditament primarily occupied and used for such purposes, ie, purposes which are not “industrial purposes”, is not an “industrial hereditament”.

In my judgment, therefore, the true effect of s 3 and s 4 of the Act of 1928 is to equate “industrial purposes” with factory purposes—ie, the purposes which make the hereditament a factory—and “other purposes” with purposes other than factory purposes—ie, other than the purposes which make the hereditament a factory. If that is the meaning of the words “industrial purposes” in the Act of 1928, I think that they must be held to bear the same meaning in s 22(4) of the Act of 1925, as enacted by the Act of 1955.

What then is the result in relation to the ratepayers’ hereditament? The House of Lords has decided that the work of testing cables, which is the purpose for which the hereditament is primarily occupied and used, is not a factory purposesf. It is not, therefore, an industrial purpose. Consequently the hereditament does not fall within the exception in s 22(4), for it is not a factory used wholly or mainly for industrial purposes. It is, therefore, a “non-industrial building”, and as such ought to be valued, as the Lands Tribunal held, in accordance with s 22(1)(a).

I venture to think that the construction which I have put on the words “industrial purposes” is not only consonant with common sense, but also ensures consistency between the Acts of 1925 and 1928, which are to be read as one. At least it has the merit of avoiding the absurdity of holding that a hereditament, which has been held not to be an “industrial hereditament”, is at one and the same time not a “non-industrial building”. For these reasons, I am of the opinion that the appeal should be dismissed.

HARMAN LJ. In my judgment also, this appeal should be dismissed. As the court is not unanimous, I shall explain the reasons for my view as shortly as I may. The statute to be construed is the Rating and Valuation Act, 1925, s 22, as amended by the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 5(3). Under s 22 as it originally appeared in the Act of 1925, all real property was described as hereditaments: these were divided into two categories, one described in s 22(1)(a) and the other in (b). Category (a) consisted of hereditaments belonging to one of the classes specified in Sch 2 which were all there described as “houses and buildings”, and (b) of “all other hereditaments”, and by the note to Part 1 of Sch 2 to the Act there were excluded from the expression “houses and buildings”, “mills, manufactories or premises of a similar character used wholly or mainly for industrial purposes”. It will be observed that the word “hereditaments” is used to cover houses and buildings. Apparently it did not matter to the ratepayer whether the hereditament in question came within (a) or (b), the net annual value amounting to the same in either case. It was classed under (b).

In 1928 there was passed the Rating and Valuation (Apportionment) Act of that year designed to give relief to what were there called industrial hereditaments. To these were given certain relief, and the ratepayer sought to bring itself within that relief. The question whether it could do so gave rise to Grove v Lloyds British Testing Co Ltd, which was eventually decided in the House of Lords. The House there held that the ratepayer could not claim relief under the Act of 1928 because the hereditament, ie, the ratepayer’s building, was not an industrial hereditament. It is not for us to question the convenience, still less the good sense, of this decision.

The Act of 1955 amended the Act of 1925, s 22(1)(a), by classifying all the hereditaments included in it as “houses or other non-industrial buildings”, by substituting a new table, and by striking out the note. It also added a new sub-s (4), of which the part here material has already been read by Morris LJ.

Page 423 of [1960] 1 All ER 411

I may say at once that I construe the words “wholly or mainly”, etc, as applying to factories. The ratepayer’s property continued to appear in the list under s 22(1)(b) of the Act of 1925. There was still no advantage to be gained by arguing that it fell within s 22(1)(a). This, however, became a live question after the passing of the Rating and Valuation Act, 1957, which gave further relief to hereditaments of which the net annual value was an amount ascertained by reference to gross value as defined in s 68(1) of the Act of 1925. Now this relief only applied to hereditaments which could be brought within s 22(1)(a) and not to those within s 22(1)(b). The ratepayer applied to the local valuation court, which in 1958 decided in the ratepayer’s favour by classifying its building as being within category (a): on appeal to the Lands Tribunal this decision was affirmed. The valuation officer now appeals to this court.

It will thus be seen that in order to come within category (a) the ratepayer must prove that its building is a “non-industrial building”. These are the words to be construed by the court and not the words “industrial purposes”, though, no doubt, it was the purpose of sub-s (4) to explain the former by the latter. Should the appeal be successful, it would follow that the ratepayer’s building, though not ranking as an industrial hereditament under the Act of 1928 having regard to the decision of the House of Lords, will yet rank as an industrial building for the purposes of the Act of 1925 as amended by the Act of 1955. This would be a most bizarre result, for, after all, a building is only one sort of hereditament, as the Act of 1925 recognises. This word is now used chiefly in connexion with rating, though the conveyancer still not infrequently writes “lands and hereditaments” in his parcels. Hereditaments, of course, originally meant any species of property which would descend to the heir at law, and it is still so defined in the Law of Property Act, 1925. By s 205(1)(ix) of that Act land is said to include buildings and other corporeal hereditaments, and hereditaments to mean any real property which on an intestacy before the Act might have devolved on an heir. In the Rating and Valuation Act, 1925, s 68(1), “hereditament” means “any lands, tenements, hereditaments or property which are or may become liable to any rate … ”. Moreover, the Acts of 1925, 1928 and 1955 are all to be read together as provided by s 10(2) of the Act of 1928 and s 84 of the Local Government Act, 1929, and therefore the expressions in all of them must be construed as if contained in one Act (see per the Earl Of Selborne LC in International Bridge Co v Canada Southern Ry Co ((1883), 8 App Cas 723 at p 727)):

“It is to be observed that those two Acts are to be read together by the express provision of the seventh and concluding section of the amending Act; and therefore we must construe every part of each of them as if it had been contained in one Act, unless there is some manifest discrepancy, making it necessary to hold that the later Act has to some extent modified something found in the earlier Act.”

It follows, in my judgment, that the two expressions “industrial hereditaments” and “industrial buildings” ought to receive the same interpretation in the absence of some manifest discrepancy making a different interpretation necessary. For my part, I can find no such discrepancy, and that is enough, as the Lands Tribunal held, to dispose of this appeal.

The argument for the valuation officer was that the House of Lords in the case in 1931g did not decide that this building was not being used for industrial purposes but only that for the purposes of relief under the Act of 1928 the building was not an industrial hereditament because it was not primarily used for factory purposes. The House held that the only portion of the building used for those purposes was a small portion used as a forge for working metal and that that was not the primary purpose for which the building was used, which was for testing purposes. It was argued that it did not follow from this that the main purpose,

Page 424 of [1960] 1 All ER 411

though not a factory purpose, was not in the ordinary sense of the word an industrial purpose, and reliance was placed on s 4 of the Act of 1928, which has been dealt with by Morris LJ in his judgment. I agree that this is so and that the testing operations, which are the main purpose of the factory and are described in the report of the case ([1931] 1 KB at p 405) might, if there were no other guide, properly be described as industrial as being connected with industry, ie, the industry of making anchors and chains, but this method of reasoning lands the user of it in the absurdity described above and in giving to the same expression used in two Acts which are to be read together a different meaning: quod est absurdum, as Euclid has it. I therefore feel constrained to reject this line of reasoning and to conclude that, read in the light of the Act of 1928, it is right to hold that for this purpose industrial purposes must be tantamount to factory purposes. This is the only way that I can see to construe the two Acts consistently. The principle of interpreting an earlier Act by a later one where both are concerned with the same subject-matter is well established, as appears from Maxwell on Statutes (10th Edn), pp 33 and 35 and the cases there cited.

Appeal dismissed. Leave to appeal to the House of Lords granted.

Solicitors: Solicitor of Inland Revenue (for the valuation officer); Gregory, Rowcliffe & Co agents for Shakespeare & Vernon, Birmingham (for the ratepayers).

F A Amies Esq   Barrister.

R v Burt, Ex parte Presburg

[1960] 1 All ER 424

Categories:        CRIMINAL; Criminal Law        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        22 JANUARY 1960        

Criminal Law – Costs – Magistrates’ court – Police prosecutor – Police not legally represented – Jurisdiction to award costs – Discretion and amount – Costs in Criminal Cases Act, 1952 (15 & 16 Geo 6 & 1 Eliz 2 c 48), s 6, s 17.

P was convicted on a charge, laid by a police constable by information before a magistrate, of not conforming to the indications given by a trafficsign. He was fined £1 and ordered to pay £2 2s costs. The prosecution’s case consisted solely of the evidence of the police constable. The police were not legally represented at the hearing.

Held – (i) Costs may be awarded under s 6(1)(a) of the Costs in Criminal Cases Act, 1952, where a salaried member of the police force has had to spend time on the prosecution.

A-G v Shillibeer ((1849), 19 LJEx 115) followed.

(ii) the reasonableness of an amount awarded as costs, where a police officer has prosecuted, should be viewed having regard to the structure of police administration, not merely to the police officer’s salary and the time spent by him in attending the prosecution; so viewed, two guineas was a reasonable sum in this case.

Per Curiam: the prosecutor for present purposes (having regard to s 17 of the Costs in Criminal Cases Act, 1952) was the Commissioner of Metropolitan Police or the Metropolitan Police Force on whose behalf the prosecuting police constable was acting (see p 428, letter h, post).

Observations on the derivation and meaning of the word “costs”, in different provisions of the Costs in Criminal Cases Act, 1952 (see p 427, letters a to c, post).

Notes

The court did not concern itself with the exact amount of the police constable’s pay apportionable to the work of prosecution. So, too, where civil litigation is conducted for a client by a solicitor employed at a salary, and the client recovers costs, the court does not investigate the question

Page 425 of [1960] 1 All ER 424

whether the costs on taxation (which are not intended to be more than an indemnity) exceed the salary paid for the work unless it is plain that they very probably do exceed it; see Henderson v Merthyr Tydfil UDC ([1900] 1 QB 434) and Galloway v Corpn of London ((1867), LR 4 Eq 90, 94).

As to costs as between parties in criminal cases before magistrates, see 25 Halsbury’s Laws (3rd Edn) 219, para 404.

For the Costs in Criminal Cases Act, 1952, s 1, s 5, s 6, s 12 and s 17, see 32 Halsbury’s Statutes (2nd Edn) 62, 413, 414, 69 and 71.

Cases referred to in judgments

A-G v Shillibeer (1849), 4 Exch 606, 19 LJEx 115, 14 LTOS 273, 14 JP 7, 154 ER 1356, 11 Digest (Repl) 607, 386.

Lord Advocate v Stewart (No 2) (1899), 63 JP 473, 11 Digest (Repl) 619, 360.

Motion for Certiorari

This was a motion by the applicant, David Presburg, for an order of certiorari to remove into the Divisional Court and quash an order made by a stipendiary magistrate on the hearing of a summons alleging that the applicant on 25 August 1958, did unlawfully fail to conform to the indication given by a traffic sign in breach of s 49 of the Road Traffic Act, 1930, which order directed that the applicant should pay a fine of £1 and £2 2s costs. The motion asked also that the conviction of the applicant of the said offence should be quashed, but at the hearing of the motion the issue was confined to the question whether so much of the order as related to costs should be quashed.

The information was laid by a police constable against the applicant for, in effect, driving a car across traffic lights when they were against him. The case was heard on 11 March 1959. The applicant pleaded not guilty. The police were not legally represented. The prosecution’s case consisted solely of the evidence of one police officer. The magistrate found the case proved, fined the applicant £1 and ordered him to pay £2 2s costs. His solicitor asked, “Might I ask why you have ordered costs?” The magistrate replied, “Because I say so”. The solicitor then said, “But the police are not represented”, to which the magistrate replied, “That is my order”. It was deposed by affidavit that earlier on the same day another accused, who had pleaded not guilty to a charge of exceeding the speed limit had been tried by the same magistrate. In that case also the police were not legally represented and only police evidence was called. That accused had been fined £1 and his licence had been endorsed, but no order had been made as to costs. The grounds on which the applicant sought an order of certiorari were that the magistrate’s only jurisdiction to make the applicant pay costs was to make him pay such costs as the magistrate thought to be just and reasonable and that—(a) the prosecution had in fact incurred no costs and the costs awarded were neither just nor reasonable; (b) the costs were awarded as a fine or penalty, and (c) in the premises the magistrate exceeded his jurisdiction. In affidavit evidence the magistrate stated that, after deciding to convict the applicant, he had considered what costs had been incurred by the prosecution, as he thought it was a case in which it would be just to make an order that would make a reasonable contribution to the prosecution for the costs which had been incurred. He appreciated that the prosecution had not been legally represented and that the Metropolitan Police had been involved in the trouble and loss of time inevitably incurred in carrying on the prosecution. In particular he had regard to the fact that for this purpose it had been necessary for the police constable to attend at court and give evidence on the day of the hearing. He estimated that the Metropolitan Police had thus been prevented from employing the police officer on other police duties for half a day. He took the view that it was reasonable in these circumstances to order the applicant to pay the sum of £2 2s as a fair contribution to the costs that had been incurred by the prosecution by appropriation to the case of the time of the police force. Referring to the

Page 426 of [1960] 1 All ER 424

applicant’s grounds for seeking relief the magistrate deposed that he took the view that the prosecution had in fact incurred costs, that he did not make the order for costs as a fine or penalty but as a contribution to the costs which he considered had in fact been incurred, and that he thought that the costs which he awarded were just and reasonable.

J W Miskin for the applicant.

J R Cumming-Bruce as amicus curiae.

22 January 1960. The following judgments were delivered.

LORD PARKER CJ after referring to the nature of the application and stating the facts, continued. It is urged in this court that the order for the payment of £2 2s costs was in excess of the magistrate’s jurisdiction. The argument can be summarised in this way. It is said that costs are no more and can be no more than an indemnity. Before the magistrate exercises his jurisdiction to award costs he must find as a fact that costs have been incurred. That is a collateral fact on which his jurisdiction is founded, and by the wrong finding of a collateral fact he cannot give himself jurisdiction. So far, the argument is, I think, absolutely sound. It is then said that costs cannot include any sum of money as compensation for the salary paid to a police witness. It is said that this police officer was employed; that he was getting his salary whether he was there or whether he was not, and that no expense has been incurred.

Before considering the matter more closely, it is necessary to look at the Act under which the magistrate’s jurisdiction arose. It is the Costs in Criminal Cases Act, 1952, and the relevant section is s 6, which is in the widest possible terms. Subsection (1) provides:

“On the summary trial of an information a magistrates’ court shall have power to make such order as to costs—

(a) on conviction, to be paid by the accused to the prosecutor;

(b) on dismissal of the information, to be paid by the prosecutor to the accused,

as it thinks just and reasonable: … ”

What, then, is included in the word “costs”? One argument addressed to us by counsel for the applicant, to whom, incidentally, the court is indebted for his careful argument, is a reference to other sections of the Act where reference is made to costs and it is stated what costs are there being dealt with. Thus, in s 1(2), which is dealing with costs to be awarded by assizes and quarter sessions out of local funds, it is provided:

“The costs payable out of local funds under the preceding subsection shall be such sums as appear to the court reasonably sufficient to compensate the prosecutor, or as the case may be the accused, for the expenses properly incurred by him in carrying on the prosecution or the defence, [that is to the prosecutor] and to compensate any witness for the prosecution, or as the case may be for the defence, for the expense, trouble or loss of time properly incurred in or incidental to his attendance and giving evidence.”

Pausing there, it is said that that subsection is drawing a distinction in regard to costs being paid to the prosecution and costs being paid to the witness. Costs being paid to the witness are to include not merely expense but something for his trouble and loss, whereas, so it is said, when the prosecutor is being compensated there is no compensation for trouble or loss but only for expenses, which means the actual expenses that he incurs. A similar provision is made by s 5(3) in regard to costs to be awarded out of local funds. It is said, accordingly, that when one comes to s 6, which is dealing with the prosecutor’s costs, the word “costs” there means no more than the costs which could be paid to the prosecution under the earlier provisions dealing with payment out of local funds and, properly construed, cover only actual expenses incurred. It is, I think,

Page 427 of [1960] 1 All ER 424

sufficient to say in answer to that argument that s 1(2) and s 5(3) have their origin in a completely different set of legislation to that from which s 6(1) is derived.

Mr Cumming-Bruce, who has appeared here as amicus curiae, and has assisted the court very considerably, has traced the history of these sections, and whereas the provisions for payment out of local funds can be traced to a series of Acts beginning in 1752 and culminating in the Costs in Criminal Cases Act, 1908, s 6 derives directly from the Summary Jurisdiction Act, 1848, s 18. It is quite clear, in my judgment, that those are two completely separate codes and that there is no reason whatsoever for reading “costs” in one part of the Costs in Criminal Cases Act, 1952, which is an Act made under the Consolidation of Enactments (Procedure) Act, 1949, as meaning the same as “costs” in another part of the Act. Again, reference was made to the fact that in regard to the costs that may be awarded out of local funds, the Home Secretary has power to make regulations. That is derived from s 12 of the Act of 1952, and the regulations, which were made in 1955, the Witnesses’ Allowances Regulations, 1955 ((SI 1958 No 1717)), expressly provide in reg 11(1):

“Notwithstanding anything contained in the preceding regulations, no sum shall be allowed under these regulations in respect of—(a) a member of a police force attending court in his capacity as such; … ”

Counsel for the applicant concedes, as he must, that those regulations are made under the provisions dealing with the award of costs out of local funds; but he can at any rate say this, that police officers are looked on as being in a peculiar position and that so far as those provisions are concerned nothing will be awarded to a police officer attending court as a witness on behalf of the prosecution. As I have said, I do not think that any help is to be derived from those other sections and regulations in construing s 6 of this Act.

What, then, is included in the word “costs”? Must it be confined and confined only to disbursements and expenses properly so called? I confess that I should be surprised if it was necessary to confine the word “costs” in that limited way. An illustration was given in the course of the argument of some of these big stores today who employ private detectives and others to keep an eye on shoplifting. If such an employer uses one of his salaried staff in and about the prosecution of an offender, is it to be said that the employer has been put to no expense? It seems to me that he has been put to expense in that he has employed a member of his salaried staff to do this and thereby lost that man’s labour for the time being, and is put to the expense of having to find another person to perform the work which the first employee would otherwise be doing.

The matter, to my mind, is put beyond argument by an old case—which is none the worse for that—to which we have been referred, A-G v Shillibeer. In that case there was an excise information in which the Crown had the services of the Crown Solicitor. The Crown Solicitor was a salaried employee of the Crown. The Crown succeeded and was awarded costs, and it was said that the Crown by making a special bargain with its solicitor, not employing a solicitor ad hoc, but paying the Crown Solicitor a salary, could not recover the solicitor’s costs which otherwise would have been recovered if an outside solicitor had been employed. The judgment of the court was delivered by Parke B, and I must read some of his judgment. He said ((1849), 19 LJEx at p 117):

“… there was an objection made that the plaintiff was bound under the statute 2 & 3 Will. 4 c. 120, s. 121, which gives costs, and could not charge the ordinary costs against the subject, because the Crown employed the solicitor of the Excise at an annual salary, and did not incur any expenditure in matters depending in the particular suit. We took time to consider the case, and we are clearly of opinion that that argument ought not to prevail,

Page 428 of [1960] 1 All ER 424

and that the Crown is entitled to full costs in the suit … Then it was said that it is the fault of the Crown, because they have made such a bargain with the solicitor that they cannot tell how much salary is paid for the costs of a particular suit since they made such a bargain with the solicitor. We think that objection really has no weight. The Crown has a solicitor, and makes a perfectly fair bargain with him, very much to the benefit of the public, and we think that ought to make no difference in the case.”

To much the same effect was a Scottish case, Lord Advocate v Stewart (No 2).

In my judgment, there is no distinction between that case and the case of the salary paid to a police officer or any other salary which a prosecutor has to pay to a person whose activities are necessary in and about a prosecution. It matters not that, unlike the case of A-G v Shillibeer the person to whom the salary is paid is not a solicitor or a professional man.

Counsel for the applicant, however, goes further, and he says that even if it is right to say that some costs have been properly incurred by the prosecution here, yet the sum of £2 2s which was awarded is so plainly excessive that it appears on its face to be a fine and therefore to have been imposed without jurisdiction. In a case such as this the onus of showing that the collateral facts are such that the magistrate had no jurisdiction, is on him who asserts it, namely, the applicant. The applicant, accordingly, must show that the costs properly incurred could not equal or exceed £2 2s. For my part, the applicant has totally failed to satisfy me on that point. It is quite wrong to make a rough calculation of what the pay of a policeman would amount to for four hours one afternoon. One must look at the whole structure of the police administration and consider the matter in that light. Quite apart from that, a magistrate with very considerable experience has stated in his affidavit that he formed the view that £2 2s was a reasonable contribution to the costs. Further, although he does not say so in his affidavit, he must in his position and with his experience have known that at any rate there were certain disbursements which must have been paid, fees paid on the laying of the information, fees for service, and matters of that sort. In my judgment, it has not been shown that £2 2s in these circumstances is such a sum as could not represent costs properly incurred.

That is really an end of this case, but I would like also to say this, and I should have said it earlier. It has been conceded that although the information was laid by a particular police constable, he must be taken to have been acting on behalf of the Metropolitan Police in laying that information. It would be quite artificial to treat him as a private individual and to say that as a private individual he had been put to no expense or loss or trouble because he himself was being paid all the time. Not only would that be an artificial approach, but if one looks at s 17(1) of the Costs in Criminal Cases Act, 1952, it is expressly provided:

“‘Prosecutor’ includes any person who appears to the court to be a person at whose instance the prosecution has been instituted, or under whose conduct the prosecution is at any time carried on.”

Accordingly, counsel for the applicant conceded, quite rightly, that the prosecutor here and the person entitled to costs, if costs be payable, is the Commissioner of Metropolitan Police or the Metropolitan Police Force. Accordingly, in my judgment, this application fails.

CASSELS J. I agree.

ASHWORTH J. I also agree.

Application dismissed.

Solicitors: Amery-Parkes & Co (for the applicant); Treasury Solicitor (for amicus curiae).

E Cockburn Millar Esq   Barrister.

Stanton and Another v Ewart F Youlden Ltd

[1960] 1 All ER 429

Categories:        QUANTUM        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        MCNAIR J        

Hearing Date(s):        21, 22 JANUARY 1960        

Fatal Accident – Damages – Measure of damages – Funeral expenses – Erection of marble memorial over grave – No dependency within Fatal Accidents Acts proved – Law Reform (Miscellaneous Provisions) Act, 1934 (24 & 25 Geo 5 c 41), s 1(2)(c), s 2(3) – Fatal Accidents Act, 1846 (9 & 10 Vict c 93), s 5.

The funeral expenses recoverable in an action for causing a fatal accident, whether brought for the benefit of the deceased’s estate under the Law Reform (Miscellaneous Provisions) Act, 1934, or brought for the benefit of relatives etc under the Fatal Accidents Act, 1846, may include (by virtue of s 1(2)(c) or s 2(3) of the Act of 1934) such expenditure on erecting a stone over the deceased’s grave as is reasonable for persons in the position of the deceased and of the relatives who are responsible for the actual ordering of the stone; but, in so far as the stone is merely a memorial set up as a sign of love and affection, the cost of erecting it is not part of the funeral expenses (see p 432, letter g, post).

The plaintiff, whose wife died as a result of a road accident for which the defendants admitted liability, claimed damages, the material issue being as to funeral expenses. These included a sum of £194 15s comprising £155 for a marble memorial erected over the grave six months after the death, synagogue fees of £34 10s and £5 5s for letters on the memorial. The plaintiff claimed that there should be also included in the damages £5 paid to the minister of the plaintiff for attending the funeral, £8 for two additional limousine cars at the funeral and £5 for removing the body to the house (£18 in all). The plaintiff had contributed to a funeral expenses scheme by which the other funeral expenses were provided. He had been married to his wife for forty-two years and they had lived in comfortable circumstances. He was her executor. His claim was made both as executor (under the Law Reform (Miscellaneous Provisions) Act, 1934, s 1(2)) and under the Fatal Accidents Acts, 1846 to 1908, personally as widower. The plaintiff had made the payments but had made them in fact, so the court found, on behalf of his wife’s estate, which amounted to about £1,500 net.

Held – (i) The plaintiff was entitled as executor to recover reasonable expenditure on a gravestone for his wife’s grave, and, in the circumstances, an amount of £40 would be included in the damages in respect of the stone.

(ii) the payments, amounting to £18 and specified above, would also be included as funeral expenses in the damages recoverable by the plaintiff as executor.

Per Curiam: a person can recover damages under the Fatal Accidents Act, 1846 (by virtue of s 2(3) of the Law Reform (Miscellaneous Provisions) Act, 1934), in respect of reasonable funeral expenses notwithstanding that he can prove no dependency, but subject to making allowance, where appropriate, for any benefit received in consequence of the death (compare p 431, letter g, post and see s 2 of the Act of 1846).

Notes

The decision in the present case should be considered with that in Hart v Griffiths-Jones ([1948] 2 All ER 729), which was cited to the court, where expenditure on a monument to be erected over a child’s grave was excluded from damages under the Law Reform (Miscellaneous Provisions) Act, 1934, s 1(2)(c). There was quoted in that case (ibid, p 730, letter g) a passage from Goldstein v Salvation Army Assurance Society ([1917] 2 KB at p 297), where a Divisional Court held that the cost of a tombstone was part of “funeral expenses” within the Assurance Companies Act, 1909, s 36 (since repealed), and McCardie J said that the expense allowed must be reasonable, remembering the station in life, the occupation, the creed of the deceased and the general circumstances of the case.

Page 430 of [1960] 1 All ER 429

As to damages under the Fatal Accidents Acts, 1846 to 1959, see 28 Halsbury’s Laws (3rd Edn) 100, 101, para 110 and Supplement; and for cases on the subject, see 36 Digest (Repl) 221–224, 1176–1194.

As to damages under the Law Reform (Miscellaneous Provisions) Act, 1934, s 1, see 11 Halsbury’s Laws (3rd Edn) 256, 257, para 428; and for cases on the subject, see 36 Digest (Repl) 229–232, 1209–1234.

For the Law Reform (Miscellaneous Provisions) Act, 1934, s 1(2)(c), see 9 Halsbury’s Statutes (2nd Edn) 793; and for s 2(3) of the Act of 1934, see 17 Halsbury’s Statutes (2nd Edn) 11.

For the Fatal Accidents Act, 1846, s 2, see 17 Halsbury’s Statutes (2nd Edn) 5.

Action

The plaintiff, Isaac Steingold Stanton, claimed as executor of the estate of his wife, Sarah Steingold Stanton, deceased, damages under the Law Reform (Miscellaneous Provisions) Act, 1934, and in his personal capacity as a widower, damages under the Fatal Accidents Acts, 1846 to 1908, in respect of his wife’s death on 6 February 1956, as the result of the negligent driving of the defendants’ vehicle on 28 January 1956. The defendants, Ewart F Youlden Ltd, admitted liability. The plaintiff was of the Jewish faith. He lived in comfortable circumstances. At the time of the wife’s death he had been happily married to her for forty-two years. Under the wife’s will the plaintiff was the sole beneficiary of her estate which amounted to £1,500. The will was proved on 27 June 1956. In his capacity of executor the plaintiff, in addition to claiming damages for the wife’s loss of expectation of life and damages for her pain and suffering during the nine days she survived the accident, claimed certain funeral expenses. In his personal capacity, the plaintiff’s claim was limited at the trial of this action to funeral expenses which he alleged he, personally, had incurred, although on the pleadings he had made a substantial claim for damages under the Fatal Accidents Acts. Among the items claimed by the plaintiff as funeral expenses under both the Act of 1934 and the Fatal Accidents Acts was the sum of £194 15s, the cost of erecting a memorial stone over the wife’s grave six months after her death. The case is reported on the question whether the cost of the memorial stone, or any part of the cost, was recoverable as funeral expenses of the wife’s estate or of the plaintiff in his personal capacity, and also whether certain other minor items, which are referred to in the judgment of McNair J were recoverable as funeral expenses.

G G Blackledge QC and L J Solley for the plaintiff.

N R Fox-Andrews QC and W H Griffiths for the defendants.

22 January 1960. The following judgment was delivered.

MCNAIR J having referred to the facts and the pleadings, said in regard to the claim for loss of expectation of life that the deceased wife at the time of her death was just approaching seventy years of age and that she had had a mild cerebral thrombosis some time before and had also had some affliction of diabetes. The medical evidence was that both these matters were under control, and that her expectation of life was about five or seven years. His Lordship accepted that estimate of her expectation of life, and in respect of that head of claim awarded the sum of £75.

In regard to the claim for the wife’s pain and suffering during the nine days by which she survived the accident, the facts were that in the accident she suffered a fracture of the pelvis in two places, a fracture of the fourth rib, some cerebral contusion, and severe shock. The surgeon who was responsible for her care whilst she was in hospital, and whose evidence His Lordship accepted entirely, said that for part of the time, the first four or five days, she was confused in her mind and was suffering from some cerebral post-concussional amnesia, but that on the fourth and fifth days there was a marked recovery. He had also said that the sedation given to her did not indicate that she was suffering from very severe pain. On the other hand, both the plaintiff and one of the

Page 431 of [1960] 1 All ER 429

wife’s daughters who visited her frequently deposed to having the impression that all the time she was in severe pain. In His Lordship’s judgment this was not a case where it could be said that for those nine days the deceased wife was in anything like agonising pain. She was severely injured; she was treated in hospital; she remained conscious; she was able to communicate with her relations. In these circumstances, His Lordship assessed the damages for the pain and suffering during that period at the sum of £75. His Lordship continued:

As regards the funeral expenses, the position both in fact and in law is a little more difficult. The Law Reform (Miscellaneous Provisions) Act, 1934, s 1(2), provides, in relation to the damages recoverable by the estate of a deceased person, as follows:

“Where a cause of action survives as aforesaid for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate of that person:—… (c) where the death of that person has been caused by the act or omission which gives rise to the cause of action, shall be calculated without reference to any loss or gain to his estate consequent on his death, except that a sum in respect of funeral expenses may be included.”

I think that it is quite clear, on the construction of that provision, that it enables the court to award damages in respect of funeral expenses to the extent that funeral expenses have been reasonably and properly incurred as a liability of the estate, and I do not think from that point of view that it matters whether the bills were in the first place paid out of the executor’s account as long as it can fairly and properly be said that those funeral expenses were expenses which were a liability of the estate.

As regards the claim for funeral expenses made by the plaintiff on his own behalf under the Fatal Accidents Acts, 1846 to 1908, the position is now governed by s 2(3) of the Law Reform (Miscellaneous Provisions) Act, 1934, which provides as follows:

“In an action brought under the Fatal Accidents Acts, 1846 to 1908, damages may be awarded in respect of the funeral expenses of the deceased person if such expenses have been incurred by the parties for whose benefit the action is brought.”

On that it seems to me that the legal position is that under Lord Campbell’s Acta the plaintiff in this case can claim damages in respect of the funeral expenses which he has incurred, provided they are reasonable, notwithstanding that he has no other claim under Lord Campbell’s Act—notwithstanding that he can prove no dependency—but that his claim for the payment of damages for funeral expenses, like any other claim by a claimant under Lord Campbell’s Act is subject to any benefit which he may have received from the estate other than those benefits which are expressly excluded by the Fatal Accidents (Damages) Act, 1908, namely, recoveries of insuranceb. That seems to me to be the legal position, and I now approach the factual position as regards the funeral expenses in this case.

The plaintiff, the husband, was a member of the United Synagogue Funeral Expenses Scheme, under which in return for an annual payment, in this case of £1 6s a year, the scheme assumed, under law 1, the burden of bearing the cost of a funeral at one of the cemeteries of the United Synagogue of a qualified contributor or his dependants. Accordingly, for that annual subscription the plaintiff claimed the benefit that if either he or his wife were liable for the cost of a funeral at one of those cemeteries, that cost would be borne by the United Synagogue Funeral Expenses Scheme. The funeral having taken place at a

Page 432 of [1960] 1 All ER 429

cemetery recognised by that body, an account was rendered on 8 February 1956, to the plaintiff in respect of the funeral of his wife, in which the only charges made were for two additional limousine cars, £8, and £5 for the removal of the body to the house, making a total of £13. It seems to me that that sum of £13, though paid by the plaintiff himself by cheque, is a part of the funeral expenses which are properly the liability of the estate.

[His Lordship then said that he could not accept the plaintiff’s evidence regarding a number of other items which he claimed as funeral expenses except in so far as those items were confirmed by contemporary documents. His Lordship continued:] There was produced to me in support of the plaintiff’s claim that he had paid his own minister the sum of five guineas in cash for his attendance at the funeral, a cheque in favour of the minister not for five guineas, but for £5. I accept that as evidence that his minister was paid £5 for his attendance at the funeral, and I include that as part of the proper funeral expenses which are a liability on the estate. I do not regard as proved to my satisfaction the following items, to which the plaintiff spoke: First, the five guineas paid in cash to the minister for attendance during the seven days of mourning, which sum, if it was paid, I do not regard as a proper funeral expense; nor am I satisfied as to the payment to the watcher, or the gratuities to the drivers. Accordingly, in my judgment the funeral expenses properly incurred on behalf of the estate amount to a sum of £18 so far.

There remains for consideration an item of £194 15s which was the amount of an account by Messrs J Samuel & Sons, monumental masons. That account was rendered on 27 August 1956, and it covers the following items: “To marble memorial erected over the grave of Sarah Stanton including 120 lead letters, £155; To synagogue fees, £34 10s; to 90 extra letters at 1s. 2d. each, £5 5s”, making a total of £194 15s. That was paid by the plaintiff by two cheques, one for £100, dated 3 September 1956, and the other for £94 15s, dated 10 October 1956.

The question which I have to consider here is whether any part of that account can properly be regarded as funeral expenses, either as funeral expenses of the estate or as funeral expenses reasonably and properly incurred by the plaintiff in his personal capacity. The evidence on this point is extremely scanty. I am quite clear that in so far as the stone is merely a memorial erected some six months later to the memory of the wife, the payment for it, although it is a perfectly proper payment for a man in the plaintiff’s position to make on his own behalf, cannot on any view be considered to be a funeral expense; on the other hand, if the truth be that no stone of any kind was erected over the grave at the time and that some time would have to be allowed for the grave to settle completely, then some part of the payment ought to be considered as a funeral expense. The legal position is that a stone over a grave may properly be considered as part of the funeral expenses if it is a reasonable expenditure for the persons in the position of the deceased and of the relatives who are responsible for the actual ordering of the stone; but in so far as it is merely a memorial set up as a sign of love and affection, then it should not be included.

Making the best estimate that I can, I have reached the conclusion that of this sum of £194 15s the sum of £40 should be allowed in respect of the simple gravestone which would complete the funeral expenses. The result of that is that I do not find that the plaintiff on his own behalf incurred any proper funeral expenses, but that he did disburse on behalf of the estate some £58c in respect of funeral expenses. Accordingly there will be judgment for the plaintiff in his capacity as executor for £208.

[On the question of costs counsel for the defendants stated that the defendants paid into court £200 on 20 May 1957, and a further sum of £160 14s on 3 July 1958, and that the master gave leave for both sums to be paid in without

Page 433 of [1960] 1 All ER 429

allocation between the plaintiff’s claim as executor and the claim in his personal capacity; therefore, from 3 July 1958, £360 14s had been in court in respect of both claims. Counsel submitted that the defendants were entitled to costs since 3 July 1958, and should in the circumstances be awarded costs since 20 May 1957. His Lordship said that he could not, as had been suggested to him, award the defendants costs from 20 May 1957, on the ground that the plaintiff had recovered only a few pounds more than the sum of £200 paid into court on that date. His Lordship gave the plaintiff costs up to 20 May 1957, but in view of the fact that the plaintiff had persisted in his substantial claim for damages under the Fatal Accidents Acts up to the date of the trial and in the witness-box had maintained that particulars in the pleadings supporting that claim were true although under cross-examination he admitted that they were untrue, the plaintiff would receive no costs after 20 May 1957. The defendants would receive their costs from 3 July 1958.]

Judgment for the plaintiff, as executor of his wife’s estate, for £208.

Solicitors: Harold Miller & Co (for the plaintiff); Wm Easton & Sons (for the defendants).

Wendy Shockett   Barrister.

Isaacs and others v Market Bosworth Rural District Council

[1960] 1 All ER 433

Categories:        LOCAL GOVERNMENT        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        18, 19 JANUARY 1960        

Rates – Limitation of rates chargeable – “Occupied for the purposes of an organisation” – Trade union war memorial convalescent home vested in trustees under trust deeds – Home conducted for benefit of union members and their wives – Trustees under strict union control – Whether trustees or union the organisation for whose purposes the home was occupied – Rating and Valuation (Miscellaneous Provisions) Act, 1955 (4 & 5 Eliz 2 c 9), s 8(1)(a).

Premises used as a convalescent home, which was conducted for the benefit of members of a trade union and their wives, were vested in trustees who under their trust deeds were subject to strict control by the executive council of the union, which had full power to make rules and regulations relating to the day-to-day and general management of the home, and which appointed one of its members controller of the home to act in its day-to-day management on behalf of the trustees. The trustees consisted of four officers of the union, one trustee elected by the members of the union, and one trustee appointed by the executive council. By the union rules the governing council of the union had power “to do all things necessary in connexion with the management of” the home. The home had been erected by the union as a war memorial, and the funds for its erection and maintenance were provided partly out of union funds, partly by a levy on union members, and partly by voluntary donations. The trustees had no power to contravene the provisions of the trust deed, even if directed by the executive council to do so. On a claim for partial relief from rates the trustees contended that they were an “organisation … not established … for profit and whose main objects are charitable or are otherwise concerned with the advancement of … social welfare” and that the premises

Page 434 of [1960] 1 All ER 433

were a hereditament “occupied for the purposes of” such an organisation (ie, the trustees) within the meaning of s 8(1)(a) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955a. It was conceded that the main objects of the union did not fall within s 8(1)(a).

Held – The trustees were not entitled to limitation of rates because the organisation “for the purposes of” which the premises were occupied was the union (see p 439, letters b and c, post).

Appeal allowed.

Notes

For the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 8, see 35 Halsbury’s Statutes (2nd Edn) 394.

Cases referred to in judgments

National Deposit Friendly Society Trustees v Skegness UDC [1958] 2 All ER 601, [1959] AC 293, 122 JP 399, [1958] 3 WLR 172, 3rd Digest Supp.

Skegness UDC v Derbyshire Miners’ Welfare Committee [1959] 2 All ER 258, [1959] AC 807, 123 JP 338, [1959] 2 WLR 711, 3rd Digest Supp.

Case Stated

A rating authority, Market Bosworth Rural District Council, appealed, by Case Stated, from the decision of Leicestershire County Quarter Sessions on an appeal under s 4 of the Poor Relief Act, 1743, by the ratepayers, the Trustees of Natsopa Memorial Homes, against a rate made on them in respect of the homes by the rating authority, that the trustees were entitled to a limitation of the rate, by virtue of s 8 of the Rating and Valuation (Miscellaneous Provisions) Act, 1955, on the ground that the homes were “occupied for the purposes of an organisation … not established or conducted for profit and whose main objects are … concerned with the advancement of … social welfare” within the meaning of s 8(1)(a). The facts are stated in the judgment of Ashworth J.

F A Amies and R St G Calvocoressi for the rating authority.

S W Templeman for the ratepayers, the trustees.

19 January 1960. The following judgments were delivered.

LORD PARKER CJ. I will ask Ashworth J to give the first judgment.

ASHWORTH J. This is an appeal by way of Case Stated from a decision of the Court of General Quarter Sessions for the County of Leicester, sitting at Leicester. The present appellants, who were the respondents in the court below, are Market Bosworth Rural District Council, the rating authority, and the present respondents, the ratepayers, are conveniently referred to as the Trustees of Natsopa Memorial Homes. NATSOPA is the condensed title of the National Society of Operative Printers and Assistants, which is a well-known trade union; I shall refer to it as the society. In the court below the trustees appealed against a rate made by the rating authority, contending that the premises in question fell within the ambit of s 8(1)(a) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. The trustees were successful, hence the present appeal.

The hereditaments in question are situate at Bosworth Road, Wellsboro, and are known as Natsopa Memorial Homes. They are vested in trustees on the trust contained in a deed dated 27 September 1920, varied by a later deed dated 6 December 1948, and also by an intervening deed which is not relevant for the purposes of this appeal. The buildings include an administrative block, a dining hall, bedrooms, conference hall, sick bay, a chapel and accommodation for old people, and other services. It is found as a fact that the homes are conducted for the benefit of members of the society and the wives of such members. The society has approximately 43,000 members, and its affairs and

Page 435 of [1960] 1 All ER 433

business are administered by an executive council subject to the control and direction of the governing council, and in r 2 (of the Rules of the Society, 1957) there are set out the objects of the society. It is found in para 2(g) of the Case Stated that

“The main objects of the society are those concerned with the conditions of employment and industrial disputes.”

Rule 2 does, however, include in sub-rules the following “objects of the society”:

“(h) to provide superannuation for old members, and for members of the staff or employees of the society; (i) to provide and maintain a convalescent home for the benefit of members and wives.”

In para 2(h) and (i) of the Case Stated further facts are found in the following form:

“As mentioned in the pamphlet [‘Natsopa Memorial Homes’] the moneys for the erection and establishment of the homes were provided by the society its members and friends. The trustees at present receive an annual sum of £18,000 from the society representing a contribution of 2d per member per week. The trustees receive some income from investments, the sale of garden produce, and the Natsopa Co-operative Society which runs a shop at the homes. The balance sheet relating to the homes shows an excess of income over expenditure for the year ending Dec. 31, 1955, of £605; (i) There is convalescent accommodation at the home for some sixty to sixty-nine members of the society or members’ wives, including members not recovering from illness but in need of a period of residence to prevent a breakdown of health. Applicants are normally admitted for a period of three weeks. Applications for admission in accordance with r. 33F (p. 125) of the society’s rules are made on a form obtained from the appropriate branch secretary of the society, supported by a doctor’s certificate. Only those qualifying as mentioned in the society’s rules under the title Natsopa Memorial Homeb are regarded as entitled to admission. In practice there are sufficient vacancies for all such applicants, and applicants are sometimes admitted although not qualifying as aforesaid, for example members with less than twelve months’ membership of the society.”

It is not necessary, in my view, to read sub-paras 2 (j) or (k) of the Case Stated but the facts stated in para 2(1) may be material:

“At all material times it has been the practice to hold at the homes (i) the annual governing council meeting of the society lasting four days and attended by some ninety delegates, and (ii) two meetings of the executive council of the society, of two days each attended by some thirty members. Accommodation has been provided for persons attending these meetings at the homes at cost. In future these meetings will be held elsewhere.”

The two deeds to which I have already referred are lengthy documents, to which I will now refer only briefly. The first of them sets out the trusts on which the trustees hold the premises. Clause 1 shows that the primary purpose of the purchase, namely, as a memorial for members of the society who fell in the First World War, is followed by secondary and further purposes, namely,

Page 436 of [1960] 1 All ER 433

“for the other purposes in connexion therewith hereinafter more particularly mentioned.”

In cl 2 some of the further purposes are mentioned:

“(i) A sanatorium for consumptive patients being members of the society. (ii) A convalescent home for members of the society recovering from illness of any kind. (iii) A home for aged members of the society who are no longer able to support themselves by working at their trade and for the wives of such members.”

Throughout this deed there are frequent references to the executive council, and it is plain that the trustees are subject to strict control by that body. As examples, I refer to cl 6 and cl 8. Clause 6 provides:

“(i) The home shall be managed by the trustees under the subject to the direction and control of the executive council, (ii) The executive council may appoint a management committee consisting of not more than ten or less than three persons being members of the society whether members of the executive council or not to supervise and control the management of the home … ”

Clause 8 provides:

“(i) The executive council shall have full power to make rules and regulations dealing with all or any of the following matters, namely”

—matters which are lettered from (a) to (e), are incidental matters relating to the general day-to-day management of the home, such as the engagement and dismissal of officers and servants, the rights, duties, remuneration and terms of employment of such officers and servants and the qualification and selection of inmates. Paragraph (e) is a composite provision in these words: “Any other matters relating to the management, discipline and good government of the home”.

The link between the executive council and the trustees which appears from that first deed is, in my view, further emphasised by the provisions contained in the deed of 1948, which provided a new cl 13 as to the appointment of trustees. Clause 13 (i) now reads:

“The present trustees are the two trustees of the society the president of the society the general secretary of the society one trustee chosen by the members of the society by ballot and one trustee being a member of the society appointed by resolution of the executive council.”

Moreover, by this same deed the following sub-clause was added to cl 13:

“(xi) The trustees shall nominate for the decision of the executive council one of their number to be designated ‘controller’ of the memorial home services, and such controller shall act for and on behalf of all the trustees in all matters relating to the day-to-day administration of the memorial home.”

There is one further provision in the 1920 deed to which reference should be made, namely, cl 14, which provides:

“It shall be lawful for the trustees from time to time by deed with the approval of the executive council to make such alterations variations and modifications of the trust powers and provisions of these presents as having regard to the experience acquired in the administration of the trust and the circumstances of the time may seem to be necessary desirable or expedient but so that no such alteration variation or modification shall in any way prejudice or affect the main object of the trust namely the establishment and maintenance of the Natsopa Memorial Home for the purposes hereinbefore expressed.”

Page 437 of [1960] 1 All ER 433

The governing council is dealt with in r 10 of the society’s rules. Sub-rule (3) of r 10 provides:

“The governing council shall have supreme control and management of all the affairs and officers of the society, and its decisions shall be final and binding upon all members.”

By sub-r (4)(i) of r 10 the powers of the governing council are made to include:

“Do all things necessary in connexion with the management of the memorial home.”

The rules dealing with the Natsopa Memorial Home are r 33 (F) and the rules set out under the name of the home at the end of the book of rules, but it is not necessary to refer to them in detailc.

One further document was exhibited to the Case, namely, the pamphlet already mentioned, “Natsopa Memorial Homes”. In it there are statements of considerable importance. It is there stated:

“The necessary funds for the purchase of the land and erection and equipment of the building were raised by a grant of £1,000 from the society’s general fund, by a levy on the membership spread over three years and by voluntary donations from friends. In the first three years the levy produced £24,876, and voluntary donations to date amount to £29,596. Maintenance was provided by allocating to the home fund a percentage of each member’s weekly contribution to the society. The purposes of the homes were set out in a trust deed dated Sept. 27, 1920, which placed the property in the possession of a board of trustees. To ensure that the property was always to be used for the purpose for which it had been created the deed provides [and then are set out four summary statements of the provisions. There follows this paragraph:] It will therefore be noted that the property thought vested in several trustees, is at the same time under the complete authority of the executive council and is created as a permanent memorial.”

That seems to me to emphasise still further the very close link which connects the trustees with the society.

I now turn to the section of the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 8(1)(a). That reads as follows:

“This section applies to the following hereditaments, that is to say—(a) any hereditament occupied for the purposes of an organisation (whether corporate or unincorporate) which is not established or conducted for profit and whose main objects are charitable or are otherwise concerned with the advancement of religion, education or social welfare.”

It was not suggested that either the trustees or the society are an organisation established or conducted for profit, and that issue does not enter into this case.

The rating authority contends, first, that the organisation for the purposes of which the hereditament is occupied is the society, and that its main objects do not fall within the types mentioned in para (a) of the subsection. Secondly, the rating authority contends that even if the trustees are to be regarded as the organisation occupying the hereditament, the main object of the trustees was the provision of the convalescent home for the society, and their main objects do not fall within the qualifying types.

Section 8 of this Act has already been before the courts in a number of cases, and has at least twice been considered in the House of Lords, namely,

Page 438 of [1960] 1 All ER 433

in National Deposit Friendly Society Trustees v Skegness UDC, and Skegness UDC v Derbyshire Miners’ Welfare Committee.

So far as the first of the rating authority’s contentions is concerned, it is in my view clear that one of the crucial issues is the question: What is the organisation for the purposes of which the hereditament is occupied? In Skegness UDC v Derbyshire Miners’ Welfare Committee ([1959] 2 All ER at p 262, [1959] AC at p 823) Viscount Simonds said:

“My Lords, I turn again to the relevant section and note first the curious wording ‘occupied for the purposes of an organisation … whose main objects’, etc. It is by no means clear to me what is the ‘organisation’ whose main objects have to be considered. Is it the ‘Social Welfare Organisation’ set up under the Act of 1952 to which I have already referred? Or is it the body of trustees who appear in fact to manage the holiday centre, or is it a committee, whether the Miners’ Welfare Committee which has been mentioned or some other committee? It is not a satisfactory way of disposing of the case, but I see no alternative to saying that, whatever the ‘organisation’ may be, its main object is nothing else than the provision of a holiday centre such as is described in the Case. If so, the question is whether such a provision is concerned with the advancement of social welfare.”

Lord Denning said ([1959] 2 All ER at p 265, [1959] AC at p 827):

“Such being the facts, if I were asked: ‘For what purpose is this land used? Is it used “for the advancement of social welfare”?' I should probably say ‘Yes’. But I would hasten to point out that the question is not ‘For what purpose is the land used?’. The question is: ‘For whose purpose is it used?’ or more accurately: ‘For the purposes of what organisation is it used, or rather, occupied?’. Many a holiday camp is used for similar purposes to this one. The holiday camps of Messrs. Butlin provide holidays at low cost for people who could not otherwise afford them, but they do not obtain relief from rates on this score. The reason is because that organisation does not qualify under s. 8(1)(a) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. Again, many convalescent homes obtain relief, but only if the relevant organisation qualifies. The convalescent home in National Deposit Friendly Society Trustees v. Skegness U.D.C. did not get relief, because the friendly society did not qualify. And I would add that it is not always right to take the occupier and treat him as the ‘organisation’. In the case of a members’ club, the committee of management occupy the club house, but it is occupied, not for the purposes of the committee-men, but for the purposes of the club itself. The relevant organisation is the club itself—the unincorporated association—and, in order to get relief from rates, the club itself must qualify under s. 8(1)(a).”

It is to be noted that s 8(1)(2) contains no reference to the occupier himself nor, as Lord Denning pointed out, does the section refer to the purpose of the occupation. In order to qualify for relief an occupier must show that his occupation is for the purposes of an organisation falling within the qualifying conditions.

In the course of what, if I may say so, was a careful and persuasive argument, counsel for the trustees contended on their behalf that it was unnecessary to look beyond them since they were in fact the occupiers. He contended that they were an unincorporated organisation and that their occupation was for the purposes set out in the trust deed and that their main objects were either charitable or at least concerned with the advancement of social welfare. He conceded that if the trustees could properly be described as bare trustees the relevant organisation would be the society, and that as indeed is found in the Case Stated

Page 439 of [1960] 1 All ER 433

their main objects were not such as to fall within the subsection; but he urged that these trustees were not bare trustees and that they would have no right to act outside the powers and duties set out in the deed even if the executive council directed them to do so. In my view, the fact that contravention of the provisions of the trust deed may and no doubt would be prevented does not provide conclusive evidence that the trustees are themselves the organisation for whose purposes the hereditament is occupied. For myself, I think that the approach suggested on behalf of the trustees is somewhat narrow and that it does not take sufficiently into account the relevant operative words of the section “for the purposes of an organisation”. If one keeps in mind the following factors, first, the provisions of the deed, secondly, the constitution of the trustees, thirdly, the rules of the society and, fourthly, the statements in the pamphlet, there is in my view cogent evidence to show that the organisation for the purposes of which the hereditament is occupied is indeed the society. I would go further: in my judgment the evidence on this first issue does not admit of any other conclusion but that the organisation for the purposes of which the hereditament is occupied is the society, and on this ground in my view the appeal should succeed. In these circumstances, I do not think it necessary to embark on a discussion of the other issue, namely, whether occupation for the purposes of the trustees would itself justify a claim for relief.

CASSELS J. I agree.

LORD PARKER CJ. I agree and have nothing to add.

F A Amies: My Lord, might I mention the question of the costs in quarter sessions. I have not been able to trace any authority, but could the costs include costs at quarter sessions?

LORD PARKER CJ. No, we have no jurisdiction over those.

F A Amies: I think the position is this: Certainly in an earlier case relating to an appeal from a court of summary jurisdiction this court held that it had no power to make an order for costs, but that was because there is limited provision as regards costs in quarter sessions. I have not been able to find anything authoritative in the White Book.

CASSELS J. This is purely procedural. I should have thought it was perfectly simple. You will go back to quarter sessions and ask for a reversal of their order, and you can then apply for your costs. As you were ordered to pay costs there, that order goes with the decision of this court. Having succeeded, you should have your costs below, and they would have power to reverse their order as to paying the other side’s costs and make them pay your costs.

F A Amies: Yes, I know that has been done in previous cases, but I was thinking of saving trouble in repeating it in this case.

S W Templeman: I do not know whether I can help. There is a reference in the White Book to the fact that the costs of proceedings are in the discretion of the court, by which I take it to mean the Divisional Court, and I think it would be convenient that your Lordships should make that order.

LORD PARKER CJ. I gather you would be perfectly happy if we say: Appeal allowed, costs in this court, appellants to have the costs below to be taxed out of court?

Both parties agreed to this.

Appeal allowed: appellants to have their costs of this appeal, and their costs below to be taxed out of quarter sessions.

Solicitors: Robinson & Bradley agents for Thomas Flavell & Sons, Hinckley, Leicester (for the rating authority); Shaen, Roscoe & Co (for the ratepayers, the trustees).

Henry Summerfield Esq   Barrister.

Official Assignee of The Property of Koh Hor Khoon and others, Bankrupts v Ek Liong Hin Ltd

[1960] 1 All ER 440

Categories:        COMMONWEALTH; Commonwealth countries: BANKING AND FINANCE        

Court:        PRIVY COUNCIL        

Lord(s):        LORD DENNING, LORD JENKINS AND MR L M D DE SILVA        

Hearing Date(s):        9, 10 NOVEMBER 1959, 14 JANUARY 1960        

Privy Council – Singapore – Moneylender – Loans on security of goods stored by firm whose primary business was that of rubber merchants and shippers – Loans only to selected customers – “Moneylender” – Singapore Moneylenders Ordinance (Laws of the Colony of Singapore, 1955, c 193), s 2 (d).

The definition of “moneylender” in s 2 of the Moneylenders Ordinance of Singapore excluded “(d) any person … bona fide carrying on any business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money”.

The respondent company, which was incorporated in Singapore, carried on the business of rubber merchants and shippers and had storage facilities there for goods. The company lent money to its customers, believing that if it did not lend money it would lose customers for its merchant and shipping business. The company had no separate moneylending business, nor did it advertise that it lent money. A firm borrowed money from the company on the security of iron sheets stored with the company. The firm became bankrupt and the official assignee claimed the value of the iron sheets, contending that the security of the company thereon was invalid for want of compliance with formalities required by the ordinance. In the year next before that of the hearing of the action the company had on loan to customers a total of about 1,000,000 dollars out of assets of about 10,000,000 dollars.

Held – Loan transactions which were undertaken genuinely for the purposes of preserving, advancing or otherwise assisting the respondent company’s business of rubber merchants and shippers, though not necessarily undertaken in connexion with its primary objects, were made “for the purposes” of that business within s 2 of the Moneylenders Ordinance (see p 444, letter b, post); accordingly, as the company had genuinely believed that if the loan transactions were not undertaken it would lose customers, it was within the exception from the definition of “moneylender”, the material factor on this question being the genuineness of the belief not its correctness in fact.

Furber v Fieldings ((1907), 23 TLR 362) applied.

Edgelow v MacElwee ([1918] 1 KB 205) explained.

Appeal dismissed.

Notes

The Singapore Moneylenders Ordinance, s 2 and s 5(1) and (3), are similar to the United Kingdom Money-lenders Act, 1900, s 6, and the Moneylenders Act, 1927, s 6, respectively.

As to the meaning of moneylender, see 27 Halsbury’s Laws (3rd Edn) 18, para 26; and for cases on the subject, see 35 Digest 202, 203, 282–291.

For the Money-lenders Act, 1900, s 6, and the Moneylenders Act, 1927, s 6, see 16 Halsbury’s Statutes (2nd Edn) 375, 386.

Cases referred to in judgment

Edgelow v MacElwee [1918] 1 KB 205, 87 LJKB 738, 118 LT 177, 35 Digest 203, 290.

Furber v Fieldings Ltd (1907), 23 TLR 362, 35 Digest 203, 288.

Appeal

Appeal by the Official Assignee of the property of Koh Hor Khoon, Ong Leng Sim, Koh Chwee Geok, Koh Hai Khoon and Loh Seng Chor, bankrupts, from a judgment of the Court of Appeal of the Colony of Singapore (Whyatt CJ, Tan Ah Tah J and Chua J), dated 13 January 1958, allowing an appeal by the

Page 441 of [1960] 1 All ER 440

respondent, Ek Liong Hin Ltd, from a judgment of Knight J in the High Court of the Colony of Singapore, dated 24 June 1957. The facts are set out in the judgment of the Board.

Eustace Roskill QC and Basil Eckersley for the appellant.

C P Harvey QC and I S Hill for the respondent.

14 January 1960. The following judgment was delivered.

MR LMD DE SILVA. The appellant, who is the plaintiff in this case, is the Official Assignee of the property of four persons who had been adjudicated bankrupt on 27 February 1953, and who, before that date, had been trading together under the name of Koh Bian Seng. The firm had borrowed certain sums of money from the defendant company (respondent to this appeal) on the security of a quantity of galvanised iron sheets placed in its possession. In this action instituted in the High Court of Singapore, the appellant asked for the return to him by the respondent of the iron sheets or their value and for certain other relief on the ground that the respondent was a moneylender within the meaning of that term in the Moneylenders Ordinance of Singapore (c 193, Laws of the Colony of Singapore, 1955), that it had failed, when dealing with Koh Bian Seng, to comply with the formalities required by s 5 of the ordinance and that, consequently, the security taken could not be enforced. Section 5 of the ordinance is to the following effect:

“(1) No contract for the repayment by a borrower or his agent of money lent to him or to any agent on his behalf by a moneylender or his agent on or after Jan. 1, 1936 or for the payment by him of interest on money so lent, and no security given by the borrower or by any such agent as aforesaid in respect of any such contract, shall be enforceable, unless a note or memorandum in writing of the contract in the English language be signed by the parties to the contract or their respective agents, or, in the case of a loan to a partnership firm, by a partner in or agent of the firm, and unless a copy thereof authenticated by the lender or his agent be delivered to the borrower or his agent, or, in the case of a loan to a partnership firm, to a partner in or agent of the firm, before the money is lent; and no such contract or security shall be enforceable, if it is proved that the note or memorandum aforesaid was not so signed before the money was lent or before the security was given, as the case may be:”

There is a proviso to this subsection and three subsections, (2), (4) and (5), which have no bearing on the matter under consideration in this case. Subsection (3) reads:

“The note or memorandum aforesaid shall contain all the terms of the contract, and in particular shall show separately and distinctly—(a) the date of the loan; (b) the principal; and (c) the rate of interest per centum per annum payable in respect of such loan or, where the interest is not expressed in terms of a rate per centum per annum, the amount of such interest.”

The respondent admits that the formalities required by the section were not observed, but denies that it is a moneylender. The High Court of Singapore held that it was. On appeal, the Court of Appeal held that it was not. This is an appeal from that decision.

Under s 2 of the Moneylenders Ordinance of Singapore “moneylender” is defined thus:

“‘moneylender’ shall include every person whose business is that of moneylending, or who carries on or advertises or announces himself or holds himself out in any way as carrying on that business, whether or not that person also possesses or earns property or money derived from sources other than the lending of money, and whether or not that person carries on the business as a principal or as an agent; but shall not include … “

Page 442 of [1960] 1 All ER 440

then follow certain exceptions (a), (b), (c), (d), (e) and (f), of which the only one relevant on the facts of this case to the question to be decided is

“(d) any person bona fide carrying on the business of banking or insurance, or bona fide carrying on any business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money;”

The definition is the same as that to be found in s 6 of the English Act 1900a, except that the words “whether or not that person also possesses or earns property or money derived from sources other than the lending of money … ” do not appear in the English Act. The Singapore Ordinance also contains (s 3) the following provision not to be found in the English Act:

“Save as excepted in paras. (a), (b), (c), (d), (e) and (f) of the definition of ‘moneylender’ in s. 2, any person who lends money at interest or who lends a sum of money in consideration of a larger sum being repaid shall be presumed, until the contrary be proved, to be a moneylender.”

The respondent admits that it carries on the business of moneylending, but claims that it is not a moneylender within the meaning of the ordinance on the ground that it is a person, which, in the language of s 2(d) (see above), carries on a

“business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money.”

It has been found by the learned trial judge that

“there is no suggestion that the [respondent] company’s primary object is moneylending—in fact they are rubber merchants and shippers—and the only question for determination is whether these loans were made ‘in the course of their business and for its purposes’.”

It is on this question that the courts in Singapore have disagreed, and it is the only question for decision on this appeal. It is common ground that, if the respondent is held as a result of the answer to the question to be a moneylender this appeal should be allowed, and that, if it is held not to be a moneylender, the appeal should be dismissed.

The respondent is a limited company incorporated in Singapore in 1948 with a nominal capital of 2,000,000 dollars and assets approximately of the value of 10,000,000 dollars. Its primary business, as found by the trial judge, was that of “rubber merchants and shippers”. They had a rubber estate and ships that plied between Singapore and Indonesia. In 1951 they started a godown storage department as a facility for their customers, and in the same year they also started as an additional facility to make loans on the security of the goods stored in their godowns. The audited figures in the balance sheet “at 31 December 1952” show that, out of their total assets of about 10,000,000 dollars, about 1,000,000 was out on loan. They made loans only to selected customers who stored goods with them. They did not advertise the fact that they were willing to lend money. It does not appear to what extent the moneys raised were utilised by the borrowers in connexion with the other branches of the respondent’s business, and it is assumed for the purposes of this judgment that a large part of it was not so used. The learned trial judge opened his judgment with the words “The facts in this case are not in dispute”. No question of credibility arose in this case, and the lowest at which the case for the respondent on the facts can be viewed is that the witnesses called by it believed what they said, even if it can be suggested that they were mistaken in certain inferences of fact which they made.

On the question whether the respondent “lent money (a) in the course of

Page 443 of [1960] 1 All ER 440

their business and (b) for the purposes of their business”, Whyatt CJ who wrote the principal judgment of the Court of Appeal said:

“As regards (a), it is clear from the evidence that these loans were made in accordance with the normal commercial practice of shipping and godown companies in Singapore and therefore it follows, in my view that they were made in the course of the [respondent’s] business. As regards (b), the evidence shows that the purpose of these loan transactions was to prevent the [respondent] losing customers to their competitors and it cannot, in my view, be said that money lent for such a purpose was not lent for the purposes of the [respondent’s] business. As the [respondent’s] godown manager put it: ‘If we did not allow certain customers loans against their goods, we would lose a lot of them. Several of our customers who use our godown storage also use our ships’.”

Their Lordships agree with the conclusions arrived at by the Court of Appeal. It was said for the appellant that the evidence did not warrant a finding that there was “a normal commercial practice” as found. There was evidence that “several other firms do this sort of business which is a useful facility for members of the business community”. So that, even if the practice was not “normal” in the strict sense of the word, it was not infrequent. The moneylending transactions could not properly be regarded as a separate business and, as observed by the learned Chief Justice, it was never suggested in the course of the argument before the Court of Appeal that it was. They were undertaken in the course of the previous business and as a part of its activities as a whole. It also appears from the evidence that they were undertaken by offering facilities to retain the existing customers and to gain fresh ones and thus to preserve and advance the business previously done. They can, therefore, legitimately be said to have been undertaken and carried on for the purposes thereof.

On the question discussed in the preceding paragraph, the learned trial judge said:

“The evidence on this point is very slight. The manager of [respondent] company’s godown department stated that unless they allowed these facilities to persons who stored their goods in the company’s godowns, these customers would go elsewhere. This, of course, might result in a loss to the company’s godown business though I do not see how its primary objects, i.e., rubber trading and shipping, would be affected. It is true the witness inferred that if customers left the company’s godowns they might cease to use the company’s ships—but there is no concrete evidence in this regard whatsoever and mere inference, as I see it, is wholly insufficient.”

It will be seen that the learned trial judge was of the opinion that there was not sufficient material on which he could accept the correctness of the view which, as a matter of business judgment, was held by the respondent, that, if the moneylending transactions had not been undertaken, some of the customers might have ceased to do business with the company in spheres (other than that of moneylending) such as shipping. In their Lordships’ opinion, the correctness of the view held by the respondent is immaterial to their case. The important thing is that it was genuinely held. If it was, then the moneylending transactions were carried out with the object of preserving and advancing the business and, therefore, for the purposes of the business. The trial judge refused to accept the correctness of the view held by the respondent, but he did not hold, and the whole tenor of his judgment indicates that he would not have held, that the view was not genuinely held. Even if the view was incorrect, in the words of the Court of Appeal,

“the evidence shows that the purpose of these loan transactions was to prevent the [respondent] losing customers to their competitors“

Page 444 of [1960] 1 All ER 440

and, therefore, they were undertaken for the purposes of the business. It would be most unsafe to hold that a business view such as the one mentioned was, in fact, incorrect without very much more investigation than has taken place. And, as already stated, correctness was immaterial so long as it was genuinely held. The trial judge seems to have thought that the words “for the purposes whereof he lends money” indicate that the money lent must be shown to have been lent for the purposes of the primary objects of the business. Their Lordships do not think this is the true construction of the subsection. “Whereof” refers to the business and not to the primary objects. It is sufficient, in their opinion, that the moneylending transactions are undertaken genuinely for the purposes of the business, that is, with the object of preserving, advancing or otherwise assisting the business, and not necessarily in connexion with its primary objects.

Their Lordships would observe that the decision of Phillimore J in Furber v Fieldings has followed the same general line of reasoning as their own. In that case the question arose whether the plaintiff was a moneylender within the meaning of the Money-lenders Act, 1900. If he had been, his claim would have failed. He carried on the business of a surveyor, valuer and auctioneer and also lent money. It was argued for him that, by reason of the provision in s 6(d) of that Act (identical with s 2(d) of the Singapore Ordinance), he was not a moneylender. It appeared from the evidence that ((1907), 23 TLR at p 363)

“substantially any person who asked [him] for a loan on the security of chattels would receive that loan if the security were sufficient unless there was some personal objection to the applicant”,

and that

“[His] object in advancing money upon bills of sale was that by that means [he] obtained a valuation fee, in the first instance, and the business also brought [him] in touch with a class of person from whom [he] got other business. [He] charged fifteen per cent. interest as a regular rate. [He] never advertised or paid commissions to people introducing business, and [he] never discounted bills or lent money on personal security.”

It was argued for the defendants that, though the plaintiff was a person who came within the first part of the section as he was a “person who carried on a bona fide business not having for its primary object the lending of money”, yet he did not come within the second part of the section because the moneylending transactions were not “transactions in that business”. It was argued that:

“The large sum lent by the plaintiff’s firm had not been lent in the course of their business of valuers or auctioneers, and to say that the business of advancing money could be run together with and help the other business was a very different thing from saying that the lending of money was a natural incident of the business of an auctioneer and surveyor”

and, further, that, because the business of valuers and auctioneers which the plaintiff carried on was a business which did not involve the lending of money, the moneys lent were not lent in the course of carrying on that business within the meaning of s 6 of the Act. The facts (though not the inferences) as stated in the above argument appear to have been admitted. Phillimore J held that the plaintiff had brought himself within s 6(d), and was not a moneylender within the meaning of the Act. The judgment has not been reported in detail, but it does not appear that the fact that the plaintiff secured valuation fees was the basis of, or a principal point in, the decision.

Edgelow v MacElwee was cited by the appellant. In that case, McCardie J said ([1918] 1 KB at p 208):

Page 445 of [1960] 1 All ER 440

“If the court comes to the conclusion that the solicitor carries on the actual business of a moneylender as well as the vocation of a solicitor, then his professional calling will not free him from the requirement of registration under the Act of 1900.”

(Registration is a requirement of the English Act though not of the Singapore Ordinance.) Their Lordships agree. The mere fact that he carried on the vocation of a solicitor will not have released him. It was necessary to consider whether the primary object of his business was moneylending and, if not, whether the moneylending took place “in the course of and for the purposes” of that business. In the case considered by McCardie J it was found on the facts that ([1918] 1 KB at p 209) the

“vocation as a solicitor, so far as he carried it on, was used as a mere disguise in order to give a colourable professional appearance to the course of ordinary moneylending transactions.”

The primary object of the business was moneylending, and the solicitor could not, therefore, have been heard to say that the provisions of the Money-lenders Act, 1900, were not applicable to him. There are dicta in McCardie J’s judgment on which an argument was based before their Lordships that the exception could not be utilised by a person who had not shown that the money lent was used in connexion with the primary objects of the business. As already stated, their Lordships are of opinion that this argument is not sound. It is sufficient if it is lent in the course of, and for the purposes of, the business as a whole, and not merely of its primary objects.

Figures based on the accounts produced in the case were placed before their Lordships to show that the profits from the moneylending branch of the business for the particular year to which they related were large when compared with other profits. It was suggested that these figures gave an indication of the relative size of the moneylending business when compared with other business done. Their Lordships cannot accept this suggestion. In any particular year the profits from the other business may be very low, or even show a loss for reasons connected with that particular year. Without taking into account (this has not been done) this and other relevant factors, no inference can be drawn. In any case, there is a finding of fact by the trial judge, affirmed by the Court of Appeal, that the primary object of the business is not moneylending and, consequently, the submission loses most, if not all, of its relevance.

For the reasons which they have given, their Lordships will humbly advise Her Majesty that the appeal be dismissed. The appellant will pay the costs of the appeal.

Appeal dismissed.

Solicitors: Slaughter & May (for the appellant); E F Turner & Sons (for the respondent).

G A Kidner Esq   Barrister.

Mungoni v Attorney General of Northern Rhodesia

[1960] 1 All ER 446

Categories:        COMMONWEALTH; Commonwealth countries: CONSTITUTIONAL: Other Constitutional        

Court:        PRIVY COUNCIL        

Lord(s):        LORD TUCKER, LORD DENNING AND MR L M D DE SILVA        

Hearing Date(s):        3, 7 DECEMBER 1959, 25 JANUARY 1960        

Privy Council – Rhodesia and Nyasaland – Northern Rhodesia – Emergency legislation – Detention order – Regulation authorising governor to delegate “powers” under emergency regulations – Whether regulation enabled governor to delegate duty of being satisfied of necessity to exercise power – Northern Rhodesia Emergency Powers Regulations, 1956, reg 16(1), reg 47.

In September, 1956, the Acting Governor of Northern Rhodesia made a proclamation in which he proclaimed that the provisions of the Orders in Council dealing with emergencies should have effect in the Western Province of Northern Rhodesia. At the same time he issued the Emergency Powers Regulations, 1956, of which reg 16(1)a provided that whenever the governor was satisfied that for the purpose of maintaining public order it was necessary to exercise control over any person he might make a detention order against such person directing that such person be detained. By reg 47a the governor was authorised to delegate all or any of the powers conferred on him by the regulations. The governor also issued an instrument delegating many of his powers, including the powers conferred by reg 16(1), to the Provincial Commissioner of the Western Province. The appellant was living in the Western Province and on 16 September 1956, the provincial commissioner made a detention order against him under reg 16, in which it was stated that the provincial commissioner was satisfied that it was necessary to exercise control over the appellant. The appellant was taken to a detention camp, but was discharged by order of the court on 29 November 1956. A restriction order was then made against him by the governor prohibiting him from being in the Western Province except under written permit, which order continued until it was revoked in October, 1959. The appellant claimed damages for false imprisonment for the period 16 September to 29 November 1956, on the ground that the detention order of 16 September 1956, was invalid as the governor could not validly delegate the duty, imposed on him by reg 16(1), of deciding whether he were satisfied that the detention order was necessary before it was made.

Held – The authority to delegate “powers” that was conferred by reg 47(1) enabled the governor validly to delegate not only his power under reg 16(1) to make detention orders but also the performance of the condition necessary for the exercise of the power, viz, the fulfilment of the duty to decide whether he was satisfied of the necessity for the order being made.

Appeal dismissed.

Notes

As to the delegation of statutory authority and duties, see 31 Halsbury’s Laws (2nd Edn) 467, 535, paras 574, 700.

Cases referred to in judgment

Budd v Anderson [1943] 2 All ER 452, [1943] KB 642, 113 LJKB 33, 169 LT 141, 2nd Digest Supp.

Liversidge v Anderson [1941] 3 All ER 338, [1942] AC 206, 110 LJKB 724, 116 LT 1, 2nd Digest Supp.

Mwenya, Re [1959] 3 All ER 525, [1959] 3 WLR 767.

Stewart v Chief Secretary of Northern Rhodesia [1956] R & N 617.

Appeal

Appeal by special leave in formâ pauperis by Edward Liso Mungoni from a judgment of the Federal Supreme Court of Rhodesia and Nyasaland (Tredgold CJ, Lewey FJ and Paterson CJ (Northern Rhodesia)), dated 10 September 1958, reversing a judgment of the High Court of Northern Rhodesia (Mosdell J),

Page 447 of [1960] 1 All ER 446

dated 19 April 1958, whereby the appellant was awarded £25 damages for wrongful imprisonment. The facts are set out in the judgment of the Board.

E L Mallalieu QC, A I Kaufman and J O Haines for the appellant.

B C Roberts and M Heald for the respondent.

25 January 1960. The following judgment was delivered.

LORD DENNING. The appellant, Edward Liso Mungoni, is an African resident in Northern Rhodesia. He claims damages for wrongful arrest and detention. The High Court of Northern Rhodesia (Mosdell J) found in his favour and awarded him £25 damages. That decision was reversed by the Federal Supreme Court of Rhodesia and Nyasaland (Tredgold CJ, Lewey FJ and Paterson CJ (Northern Rhodesia)), who held that he had not been wrongfully arrested or detained. Edward Liso Mungoni now appeals to Her Majesty in Council asking not only that the judgment in his favour should be restored but also that the damages should be increased, because the sum of £25 was, he says, inadequate.

On 11 September 1956, the Acting Governor of Northern Rhodesia made a proclamation in which he said he was satisfied that a public emergency existed and he proclaimed that the provisions of the Orders in Council (those dealing with emergencies) should have effect in the Western Province of Northern Rhodesia. On the very same day, he issued emergency regulations which gave the authorities wide powers, and, in particular, gave the governor power to make detention orders. He also issued an instrument delegating many of his powers to the Provincial Commissioner of the Western Province. At the time when the emergency was declared, the appellant was living in the Twapia African Township, Ndola, which is in the Western Province of Northern Rhodesia. He was an official of the African National Congress. At 6 am on 16 September 1956, police officers came to his house and arrested him. He was arrested for breaking the Emergency Regulations by attending a meeting which had been prohibited. He was not tried on this charge because at 7.30 pm that day the Provincial Commissioner for the Western Province made a detention order against him. It was in these words:

“NORTHERN RHODESIA

THE EMERGENCY POWERS REGULATIONS, 1956.

————

DETENTION ORDER

“WHEREAS it is provided by reg. 16 of the Emergency Powers Regulations, 1956, that whenever the governor is satisfied that for the purpose of maintaining public order it is necessary to exercise control over any person, he may make an order against such person directing that such person be detained;

“And Whereas it is further provided by the said regulation that any person detained in pursuance of the said regulation shall be detained in such place as may be authorised by the governor;

“And Whereas the powers conferred upon the governor by the said regulation have been delegated under the provisions of reg. 47 of the said regulations to the officer for the time being carrying out the duties of the Provincial Commissioner, Western Province;

“And Whereas I am satisfied that for the purpose of maintaining public order it is necessary to exercise control over one EDWARD MUNGONI LISO

“Now, therefore, I, GLYN SMALLWOOD JONES, Member of the Most Excellent Order of the British Empire, Provincial Commissioner, Western Province, do hereby order that the said EDWARD MUNGONI LISO be detained and do hereby authorise the Local Prison, MUMBWA, as the place where the said EDWARD MUNGONI LISO shall be detained.

“Given under my hand at NDOLA this 16th day of September, 1956.

(SIGNED) G S JONES,

Provincial Commissioner.”

Page 448 of [1960] 1 All ER 446

Their Lordships draw particular attention to the fact that it was the provincial commissioner who made the detention order—it was he who said he was satisfied that it was necessary to exercise control over the appellant—and not the governor himself.

In pursuance of the detention order, the appellant was taken to the detention camp at Mumbwa. Fifty-three others were taken as well. On 2 November 1956, Mr Stewart, on behalf of the fifty-four detained persons, applied to the Chief Justice of Northern Rhodesia (Bell CJ) for a writ of habeas corpus ad subjiciendum. On 28 November 1956, the chief justice held that the fifty-four orders of detention were invalid and ordered that the detainees should be discharged forthwith (see Stewart v Chief Secretary of Northern Rhodesia). They were so discharged but the Governor of Northern Rhodesia himself immediately made restriction orders against them. The restriction order against the appellant was dated 28 November 1956, and prohibited him from being in the Western Province except under written permit. It was signed by the governor himself. This order was subsequently continued by further orders, all signed by the governor himself. Then, in 1959, one of the restricted persons named Mwenya applied to the High Court in London for leave to issue a writ of habeas corpus ad subjiciendum. The High Court (Lord Parker CJ, Slade and Winn JJ) held that the courts of England had no jurisdiction to issue the writ (see Re Mwenya), but the Court of Appeal (Lord Evershed MR, Romer and Sellers LJJ), on 13 October 1959, held that the courts had jurisdiction, though they did not determine whether it was proper to exercise it. A week later, on 20 October 1959, the Governor of Northern Rhodesia revoked the restrictive orders. The appellant thereupon became free.

This appeal only concerns the period during which the appellant was detained under the detention order made by the provincial commissioner, that is to say, from 7.30 pm on 16 September 1956, to the time of his discharge on 29 November 1956. The appellant contends that his detention during that period was unlawful and claims damages for false imprisonment. He has in his favour the ruling of Bell CJ in the habeas corpus proceedings, holding that the detention order was invalid, but he, through his counsel, admits that that ruling is not conclusive in his favour. The validity of the detention order can be investigated afresh in this civil action: see Budd v Anderson. And, indeed, it has been investigated afresh by each of the courts. Mosdell J who tried the case at the first instance, thought that the decision of Bell CJ was a proper one and held that the detention order was invalid. Accordingly, he awarded damages for wrongful detention. The Federal Supreme Court thought the decision of Bell CJ was wrong, and that likewise the decision of Mosdell J was wrong also. They held that the detention order was valid and reversed the award of damages. The difference of opinion between the judges arises on this: Bell CJ (and Mosdell J following him), held that, in order for the detention order to be valid, it was the duty of the Governor of Northern Rhodesia himself to be satisfied that it was necessary to exercise control over the appellant. It was his personal duty to be satisfied. He could not delegate it. The governor had not himself performed this duty and the detention order was, therefore, invalid. But the Federal Supreme Court held that it was not necessary for the governor himself to be satisfied. He could delegate this task to the Provincial Commissioner of the Western Province. He had so delegated it and, inasmuch as the provincial commissioner was satisfied, that was enough, and the detention order was valid.

The point at issue is, therefore, to what extent, if any, the Governor of Northern Rhodesia can delegate his functions in respect of detention orders to the provincial commissioner. In order to enable him to delegate, it is necessary to find some express authority in that behalf. Their Lordships recall that, in England, the

Page 449 of [1960] 1 All ER 446

powers of the Secretary of State under reg 18B were personal and could not be delegated. As Lord Wright said in Liversidge v Anderson ([1941] 3 All ER 338 at p 375, [1942] AC 206 at p 265):

“The regulation places on the Secretary a public duty and trust of the gravest national importance. As I understand the regulation, it is a duty which he must discharge on his own responsibility to the utmost of his ability, weighing on the one hand the suspect’s right to personal liberty and on the other hand the safety of the state in the dire national peril in which during this war it has stood and stands.”

But in Northern Rhodesia, the Emergency Regulations contain an express provision enabling the governor to delegate his powers. And the question is how far that enables him to delegate his power to make detention orders. The authority to make detention orders is given by emergency reg 16(1) which is in these terms:

“Whenever the governor is satisfied that for the purpose of maintaining public order it is necessary to exercise control over any person, he may make an order (hereinafter called a detention order) against such person directing that such person be detained, and thereupon that person shall be arrested and detained.”

Their Lordships would pause for a moment to notice that, under the regulation, the governor cannot make a detention order unless he is first “satisfied” of what is there stated. In a sense that puts a duty on him to be “satisfied” before he makes an order. Can this duty be delegated by the governor to someone else? Counsel for the appellant argues that it cannot. The authority of the governor to delegate applies, he said, only to powers and not to duties. He bases this on the words of emergency reg 47, which defines the governor’s authority to delegate:

“The governor may, by writing under his hand, and either generally or specially, depute any person or persons, either by name or by office, to exercise all or any of the powers conferred upon the governor by these regulations, subject to such conditions, if any, as he may specify, and thereupon any person so deputed shall have and exercise such powers accordingly, but no such delegation shall affect or impair the power of the governor to act himself under these regulations.”

Turning back now to reg 16(1), counsel for the appellant said that it contained a duty and also a power. The duty laid on the governor was to be “satisfied” that it was necessary to exercise control over any person. The power was to make an order directing that such person be detained. The effect of reg 47, said counsel, was to authorise the governor to delegate his power to make an order, but it did not authorise him to delegate his duty to be satisfied. He was bound to fulfil this duty himself personally. This would not give rise to any practical difficulty, said counsel, because reg 16(6) enables a police inspector to detain a suspect for twenty-eight days pending a decision whether a detention order should be made against him.

Counsel said that this restriction of the governor’s authority to delegate (limiting it to powers and not extending it to duties) must have been deliberate. He said that reg 47 was in striking contrast to s 28 of the Interpretation Ordinance, which empowers the governor (in the cases to which it applies) to depute both powers and duties. It reads as follows:

“Where by any law the governor is empowered to exercise any powers or perform any duties, he may, unless by law expressly prohibited from so doing, depute any person or persons by name, or the person or persons for the time being holding the office or offices designated by him, to exercise such powers or perform such duties on his behalf, subject to such conditions,

Page 450 of [1960] 1 All ER 446

exceptions and qualifications as the governor may prescribe, and thereupon, or from the date specified by the governor, the person or persons so deputed shall have and exercise such powers and perform such duties, subject as aforesaid: Provided that nothing herein contained shall authorise the governor to depute any person to make rules under the power in that behalf conferred upon him by any law.”

Their Lordships appreciate the significance of this point so made by counsel for the appellant. It is clear that s 28 does not apply to the Emergency Regulations. Regulation 47 was inserted instead. And reg 47—in contrast to s 28—only authorises the governor to delegate powers, not duties. This was the determining factor which influenced Bell CJ in the habeas corpus proceedings. He said ([1956] R & N at p 629):

“The wording of reg. 47 follows so closely the wording of s. 28 that when the two stand side by side the omission from reg. 47 of the delegation of the performance of duties imposed by law is very apparent.”

Their Lordships can now turn to the instrument of delegation itself. It followed the words of reg 47 very closely. It spoke of powers and not of duties. It was in these terms:

“Government Notice No. 221 of 1956.

The Emergency Powers Orders in Council 1939 and 1956.

————

The Emergency Powers Regulations 1956.

————

Delegation of Powers.

“In exercise of the powers conferred by reg. 47 of the Emergency Powers Regulations, 1956, all the powers conferred upon the governor by the provisions of the said regulation, other than the powers conferred by regs. 10, 16(7), 16(9) and 20, are hereby delegated to the officer for the time being carrying out the duties of the Provincial Commissioner, Western Province.

“Given under my hand at Lusaka this eleventh day of September, 1956.

A T WILLIAMS,

Acting Governor.”

Bell CJ regarded that instrument as a valid delegation to the provincial commissioner of the power to make a detention order but no delegation at all of the duty of the governor to be satisfied. That duty remained with the governor himself and was, he thought, a “very proper limitation”; and, as the governor had never fulfilled this duty in regard to the fifty-four detained persons, they must be released. In the key passage of his judgment he said ([1956] R & N at p 629):

“The delegation set out in Government Notice 221/56 is good as far as it goes. The provincial commissioner can make a detention order—but only when the governor is satisfied that it is necessary in terms of reg. 16(1); and no delegation of the duty of satisfying himself has been made by the governor. Without the step of ‘satisfying’ being taken, a detention order is ultra vires. In the result the fifty-four orders of detention, the subject-matter of this application, are, in my opinion, invalid and I have no option but to order the release of the detained persons, which I accordingly do.”

While their Lordships share with the chief justice his concern for the liberty of the subject, they cannot agree with this line of reasoning. The power and the duty under reg 16(1) are so interwoven that it is not possible to split the one from the other—so as to put the duty on one person and the power in another. Whosoever exercises the power, he it must be who has to carry out the duty. It seems clear to their Lordships that, if the governor has any authority at all to

Page 451 of [1960] 1 All ER 446

delegate his functions under reg 16(1), he must be able to delegate both the power and duty together to one and the same person. He cannot delegate the power to another and keep the duty to himself. Even this did not daunt counsel for the appellant. He said that, if the power cannot be split from the duty, then it means that the governor cannot delegate his functions under reg 16(1) at all; for he cannot delegate his duty under it to anyone.

It seems to their Lordships that the arguments for the appellant proceed on this fallacy: they assume that the duty under reg 16(1) is something separate and distinct from the power therein contained. Their Lordships cannot accept this view. In their opinion, reg 16(1) contains not so much a duty, but rather a power coupled with a duty. The power of the governor to make a detention order can only be exercised when he is “satisfied” that it is necessary. The requirement that he is to be satisfied—though in one sense a duty—is, nevertheless, also a condition or limitation on the exercise of the power. And when reg 47 authorises the governor to delegate the power to any person, it authorises him to delegate to such person the fulfilment of all the conditions and limitations attaching to it, even though they be also duties. There are many powers in the Emergency Regulations to which the like applies. They start off “Whenever the governor is satisfied” or “If it appears to the governor”, or the like. Counsel for the appellant was forced to say that, whenever such a condition or limitation was expressed, the governor had to fulfil it himself and could not delegate it. Their Lordships cannot accept this view. A detailed study of the regulations convinces them that it was intended that, in all these cases, the governor should be able to delegate the power together with the fulfilment of the condition precedent to its exercise.

The reason why reg 47 refers only to “powers” and not to “duties” became apparent in the course of the argument. The Emergency Regulations impose no duties on the governor simpliciter—nothing, for instance, which a mandamus would issue to command him to perform. The only duties on him are those which are appurtenant to powers conferred on him and are in the nature of conditions or limitations on the exercise of the powers. All these can be delegated under reg 47 and there was no reason to apply s 28 of the Interpretation Ordinance.

For these reasons, which are substantially the same as those given by Tredgold CJ in the Federal Supreme Court, their Lordships are of opinion that the detention order was valid. No question arises, therefore, about damages. Their Lordships will humbly advise Her Majesty that the appeal should be dismissed. The appellant being in formâ pauperis, there will be no order as to costs.

Appeal dismissed.

Solicitors: Parke, Tattersall & Co (for the appellant); Charles Russell & Co (for the respondent).

G A Kidner Esq   Barrister.

R v Chapman and Pidgley

[1960] 1 All ER 452

Categories:        CRIMINAL; Criminal Law        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        2 FEBRUARY 1960        

Criminal Law – Practice – Probation order – Breach – Matters to be put to prisoner – Case committed by magistrates’ court to quarter sessions – Certificate by magistrate of probationer’s failure to comply with probation order – Certificate admissible but not conclusive evidence – Criminal Justice Act, 1948 (11 & 12 Geo 6 c 58), s 6(4).

Two probationers were found by magistrates’ courts to have failed to comply with a requirement of a probation order and were remanded to quarter sessions. Certificates signed by justices certifying that the probationers had failed to comply with the probation order were sent to quarter sessions. At quarter sessions the probationers were not asked whether they admitted the breach of the probation order. The recorder took the magistrates’ certificates as conclusive and sentenced them to twelve months’ imprisonment for the original offence. On appeal against conviction for breach of the probation order,

Held – Under s 6(4) of the Criminal Justice Act, 1948, the certificates were admissible as evidence but were not conclusive; the alleged breach of the probation order should have been put to the probationers in accordance with the procedure laid down in R v Devine ([1956] 1 All ER 548n) but this had not been done, and accordingly the proceeding was a nullity and the sentences would be quashed.

Appeal allowed.

Notes

As to breach of a requirement of probation order, see 10 Halsbury’s Laws (3rd Edn) 502, para 915; and for cases on the subject, see 14 Digest (Repl) 573, 574, 5738, 5741, 5742.

For the Criminal Justice Act, 1948, s 6(3) and (4), see 28 Halsbury’s Statutes (2nd Edn) 356, 357.

Case referred to in judgment

R v Devine [1956] 1 All ER 548n, 120 JP 238, 40 Cr App Rep 45, [1956] 1 WLR 236, 3rd Digest Supp.

Appeal

This was an appeal by Oliver George Chapman and James George Pidgley against their convictions at Andover Quarter Sessions of having failed to comply with a requirement of a probation order. On 6 February 1958, they were convicted at Andover Quarter Sessions of the larceny of a handbag and contents and were put on probation for three years. In July, 1958, they were both convicted of loitering with intent to steal and Pidgley was also convicted of larceny. They were brought before quarter sessions again and a new probation order was made on 15 July 1958, for three years, with a condition that they should not associate with each other. The recorder told them that if they met by chance they were not prohibited from conversing. On 15 October 1959, Chapman was brought before the Ringwood magistrates’ court and on 22 October 1959, Pidgley was brought before the Salisbury and Amesbury magistrates’ court; and those courts adjudged that each man had been in breach of the last probation order in that they had associated. The probationers were remanded to Andover Quarter Sessions. Certificates in accordance with s 6(4)(a) of the Criminal Justice Act, 1948, signed by a justice, that the probationers had failed to comply with the requirement of the probation order that they should not associate were sent to quarter sessions. On 27 October 1959, the recorder sentenced them to twelve months’ imprisonment. At quarter sessions the original offences were put to the probationers, which they admitted; and it was also put to them that the magistrates’ courts had found they were in breach of the probation order by associating with each other. They admitted

Page 453 of [1960] 1 All ER 452

that the magistrates’ courts had so found. They were not asked whether they admitted that they had associated. In fact their case was that they had not associated but had met accidentally and were conversing. The recorder took the view that the findings of the magistrates’ courts were conclusive and treated the probationers as having been committed to quarter sessions for sentence.

F H L Petre for the appellants.

H J M Tucker for the Crown.

2 February 1960. The following judgment was delivered.

LORD PARKER CJ stated the facts and continued. The question in this case is whether the procedure adopted by the learned recorder was right, and that depends on the true construction of s 6 of the Criminal Justice Act, 1948. By sub-s (3) it is provided:

“If it is proved to the satisfaction of the court before which a probationer appears or is brought under this section that the probationer has failed to comply with any of the requirements of the probation order, that court may without prejudice to the continuance of the probation order, impose on him a fine not exceeding £10 … or may … (b) if the probation order was made by a court of assize or quarter sessions, commit him to custody or release him on bail (with or without sureties) until he can be brought or appear before the court of assize or quarter sessions.”

Pausing there, both magistrates’ courts in this case had it proved to their satisfaction that each probationer had failed to comply with the requirements of the probation order. They did not exercise their right to fine the probationers, but they then remanded them to quarter sessions under para (b). Subsection (4) goes on:

“Where the court of summary jurisdiction deals with the case as provided in para. (b) of the last foregoing subsection then—(a) the court shall send to the court of assize or quarter sessions a certificate signed by a justice of the peace, certifying that the probationer has failed to comply with such of the requirements of the probation order as may be specified in the certificate, together with such other particulars of the case as may be desirable; and a certificate purporting to be so signed shall be admissible as evidence of the failure before the court of assize or quarter sessions; and (b) where the probationer is brought or appears before the court of assize or quarter sessions, and it is proved to the satisfaction of the court that he has failed to comply with any of the requirements of the probation order, that court may deal with him, for the offence in respect of which the probation order was made, in any manner in which the court could deal with him if he had just been convicted before that court of that offence.”

The real question here is whether the certificate which has to be sent forward by the magistrates’ court when this procedure is adopted is conclusive so that quarter sessions cannot go behind it. In the judgment of this court, it is not conclusive. It is not said to be conclusive but merely admissible. Further, by para (b) of sub-s (4) it is the court of quarter sessions that has to be satisfied that he has failed to comply with the requirements. It is suggested that they can be satisfied that the requirements of the probation order have been fulfilled by looking at the certificate and the certificate alone, but as a matter of construction, that is clearly wrong, because para (b) is in the form “where the probationer is brought or appears before the court of assize or quarter sessions, and it is proved to the satisfaction of that court”. Paragraph (a) has already provided that where the probationer is to appear before quarter sessions there has to be a certificate, and yet the paragraph goes on to say that quarter sessions must be satisfied. It is clear from the framework of sub-s (4) taken as a whole that Parliament never intended that the certificate of the justices should be final and conclusive.

Page 454 of [1960] 1 All ER 452

Indeed, looking at the matter from a rather broader angle, if that were right, and the certificate is conclusive, then it would follow that there was no machinery in the nature of appeal from a finding of the magistrate that there had been a breach of probation. It seems to this court that under para (b) while the certificate is admissible, it is for the court of quarter sessions to be satisfied, and for that purpose they can treat the matter as if it was an appeal from the magistrates, hear further evidence and come to their own conclusion in the matter.

It follows that in such a case as this the procedure laid down in R v Devine is applicable. It is true that R v Devine was a case where a probationer was brought before the court that had originally sentenced him; it was not a case which went first to magistrates, but the court there laid down the proper procedure as follows ([1956] 1 All ER at p 548, 40 Cr App Rep at p 46):

“Where a prisoner is brought before a court for breach of a probation order, [the breach alleged] should be put to him … in the clearest possible terms and he should be asked to say whether he admits it or not. The terms in which the matter should be put to him are: first to say where he was convicted and what happened to him, then to tell him how the breach is alleged to have taken place, and, if it be by a further conviction, then to tell him the time of the conviction and the adjudication of the court. He should next be asked to say whether he admits those facts. If that is done, there is no further difficulty. If that is not done, then, of course, it being a trial, albeit without a jury, the prisoner will have to be asked whether he desires to give evidence or call witnesses, and the court will have to pronounce on whether they find the breach of the order has been proved. But it is desirable that the proceedings should begin by the matter being put clearly to the prisoner and for him to be asked whether he admits the allegation with regard to it.”

It seems to this court that that procedure is equally applicable to such a case as the present where the matter has been in the first instance before a magistrates’ court. It follows that in this case there has been a mis-trial at quarter sessions from the outset. It is just as if a trial proceeded without prisoners being asked to plead, and in those circumstances it seems to this court that the proceeding was a nullity, and it would be open to this court to send the matter back for a re-trial. It is to be observed, however, that these probationers have already been in prison since 27 October last, and, having regard to the nature of the alleged breach, the court feels that justice would be done in this case if they merely quashed the sentence and did not send the matter back to quarter sessions. Accordingly, the prisoners are now discharged.

Appeal allowed.

Solicitors: Registrar, Court of Criminal Appeal (for the appellants); Woodford & Akroyd, Southampton (for the Crown).

E Cockburn Millar   Barrister.

Taylor and Others v Munrow

[1960] 1 All ER 455

Categories:        LOCAL GOVERNMENT        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        26, 27, 28 JANUARY 1960        

Local Government – Audit – Surcharge – Rent on de-requisition – Council undertaking full cost of any increases under Rent Act, 1957 – Discretion of councillors not properly exercised – Local Government Act, 1933 (23 & 24 Geo 5 c 51), s 228 – Requisitioned Houses and Housing (Amendment) Act, 1955 (3 & 4 Eliz 2 c 24), s 4(4).

Requisition – De-requisition – Duty of local authority to review rent recoverable under Requisitioned Houses and Housing (Amendment) Act, 1955 (3 & 4 Eliz 2 c 24), s 4(4).

A metropolitan borough council, acting under the Requisitioned Houses and Housing (Amendment) Act, 1955, had de-requisitioned premises from time to time in respect of which the council had subsequently made payments to the landlords pursuant to s 4(4)a of the Act. Under s 4(4) on de-requisition of premises and on the licensee’s becoming statutory tenant the recoverable rent of the premises must not exceed that last payable by the ex-licensee to the local authority “except so far as the local authority may from time to time determine”, and any deficiency from the rent otherwise recoverable must be paid by the local authority to the landlord. The council originally made no determination under s 4(4). Rents of de-requisitioned premises increased in consequence either of the Rent Act, 1957, or of the exercise of powers under the Housing Repairs and Rents Act, 1954. By resolutions of October, 1957, and March, 1958, the council resolved, in effect, that the whole of valid increases in rent of de-requisitioned premises consequent on the Rent Act, 1957, should be borne by the council, that is to say, should be paid out of the general rate fund. Payments were made accordingly. The district auditor surcharged certain borough councillors with a sum of £200, as being unlawfully paid, on the ground (among others) that the council had not properly exercised their discretion under s 4(4). On appeal under the Local Government Act, 1933, s 228, by six of the councillors surcharged, the court found that the council’s decisions were arbitrary, and that the real reasons were that they would not adopt any test of means of the tenants concerned and that they disliked Parliament’s action in passing the Rent Act, 1957.

Held – The surcharge had been rightly made because, in deciding on the payment of money out of the general rate fund, a council must preserve a balance between their duty to the general body of ratepayers and their duty to the particular ratepayers in respect of whom the payment was to be made; in the present case the council were under a duty periodically to review the position relevant for the purposes of s 4(4) of the Requisitioned Houses and Housing (Amendment) Act, 1955, but they had not done so and had not fulfilled their duty to the general body of ratepayers in reaching their decision.

Roberts v Hopwood ([1925] All ER Rep 24) applied.

Appeal dismissed.

Notes

As to powers and duties of an auditor, see 24 Halsbury’s Laws (3rd Edn) 586, para 1078, and as to appeals and surcharge, see ibid, 588–590, paras 1082 and 1083; and for cases on the subject, see 33 Digest 40, 41, 217–228.

As to an owner of requisitioned dwelling accepting a licensee as statutory tenant, see 19 Halsbury’s Laws (3rd Edn) 712, para 1143.

For the Local Government Act, 1933, s 228, see 14 Halsbury’s Statutes (2nd Edn) 474.

Page 456 of [1960] 1 All ER 455

Cases referred to in judgments

R v Roberts [1908] 1 KB 407, 77 LJKB 281, 98 LT 154, 72 JP 81, 33 Digest 40, 217.

Roberts v Hopwood [1925] All ER Rep 24, [1925] AC 578, 94 LJKB 542, 133 LT 289, 89 JP 105, 33 Digest 20, 83.

Thomas v Devonport Corpn [1900] 1 QB 16, 69 LJQB 51, 81 LT 427, 63 JP 740, 33 Digest 90, 597.

Appeal

This was an appeal by six members of the St Pancras Borough Council from a decision of Mr Munrow, district auditor of the borough, disallowing £200, part of an item debited to the Requisitioned Properties Revenue Account for the year ending 31 March 1958, and surcharging that sum jointly and severally on twenty-three members of the council. The other members of the council did not appeal.

Acting under the Requisitioned Houses and Housing (Amendment) Act, 1955, the council had from time to time de-requisitioned numerous properties and in respect of some of them the council had, in accordance with s 4(4) made payments to the owners. The council had been duly notified of and had acceded to rent increases on de-requisitioned dwellings but, apart from a few special casesb, had not made determinations under s 4(4) of the Act of 1955 to increase amounts payable by ex-licensees, with the consequence that the council became liable to make substantial additional payments to house owners. The council had in effect undertaken the burden of the Act of 1957 increases since de-requisition. Three circularsc had been issued by the Ministry of Housing and Local Government urging local authorities to review charges to licensees of requisitioned premises and ex-licensees of de-requisitioned premises. The exhortation in the circulars had been brought to the notice of the council by their officers. No comprehensive review, save in the few special instances previously mentioned had been undertaken. The relevant resolutions of the council are stated in the judgment, p 459, letters d and e, post. The district auditor stated in his statement of reasons for the disallowance and surcharge made under the Local Government Act, 1933, s 226(2) that after carefully considering the wording of s 4(4) of the Act of 1955 and taking due account of the submissions of counsel he had come to the conclusion that a local authority had no such complete and unchallengeable discretion accorded to them by the provisions of the subsection that they might lawfully refrain from making any determination under the subsection regardless of circumstances. The local authority stood in a fiduciary relationship to the ratepayers similar to that of trustees in regard to the property under their control. Therefore in addition to affording all due and reasonable protection to ex-licensees the local authority must also have regard to the interests of the ratepayers. If it were demonstrable that the local authority’s failure to take account of changed circumstances and to make appropriate determination had caused excessive and unreasonable expenditure from rates, which would not have been incurred by any reasonable body of persons, mindful of the ratepayers’ interests, then that excessive and unreasonable expenditure would be contrary to law and would fall to be disallowed and surcharged by the district auditor under s 228(1)(a) and (b) of the Local Government Act, 1933. Further, money paid out of local authority funds in consequence of a failure to act in a reasonable and lawful manner might also constitute a loss due to negligence necessitating surcharge under s 228(1)(d)d.

Page 457 of [1960] 1 All ER 455

After careful consideration the district auditor was satisfied that the council by their omission to make determination under s 4(4) of the Act of 1955 consequent on the coming into operation of the Act of 1957, or to make such inquiries as might properly and reasonably have justified that omission, acted in a manner which was contrary to law and thereby incurred expenditure which it was his duty to disallow and surcharge. He accordingly disallowed and surcharged, as previously stated, the sum of £200.

R Millner for the appellants.

R J Parker for the respondent.

28 January 1960. The following judgments were delivered.

LORD PARKER CJ. The matter comes before this court on appeal under s 229 of the Local Government Act, 1933, and the duties of the district auditor so far as they are relevant to this case are to be found in paras (a), (b) and (d) of s 228(1). Section 228(1), so far as it is material, reads as follows:

“It shall be the duty of the district auditor at every audit held by him—(a) to disallow every item of account which is contrary to law; (b) to surcharge the amount of any expenditure disallowed upon the person responsible for incurring or authorising the expenditure; … (d) to surcharge the amount of any loss or deficiency upon any person by whose negligence or misconduct the loss or deficiency has been incurred … ”

The district auditor found that sums of not less than £200 ought to be disallowed in the accounts for the year ending 31 March 1958, as being contrary to law. He then went on under para (b) to surcharge that sum on the persons responsible for incurring or for authorising the expenditure, whom he held to be among others these six councillors, and under para (d) he held that the loss or deficiency had arisen through the negligence of the appellants.

It is necessary to state the position in a little detail in order to show how this decision came about. Prior to 1955 there was power in the Minister of Health to requisition premises under reg 51 of the Defence (General) Regulations. In practice that power was delegated to the town clerks and, in particular, to the town clerk of the metropolitan borough of St Pancras, and houses were thus requisitioned in the borough and used for housing persons. Those persons were not tenants in the strict sense but were licensees, and the payments that they made under the licence, whether you call them rent or not, were, broadly speaking, equivalent to the maximum rents payable under the Rent Acts or, if there was no controlled tenancy, the rent payable for comparable properties. Considerable discretion had to be exercised in fixing the rents to meet the circumstances. It might be, for instance, that some licensees were being housed in rather expensive property whereas the premises which they normally occupied, and they may well have had to leave owing to enemy action, were of quite a different character. In such a case the licensee was only called on to pay the rent which he would have paid for the premises which he normally occupied. Again, it may be that for administrative reasons a very small family would be housed in rather large premises, when again they would not be asked to pay by way of rent under the licence more than they would pay for premises of the type and size that they would normally occupy. In 1955 the position was changed by the Requisitioned Houses and Housing (Amendment) Act of that year. Under that Act the power of the Minister of Health, who had been replaced for this purpose by the Minister of Housing and Local Government, was brought to an end but his rights of occupation were transferred to the local authorities. By s 1(1) it was provided:

“On the commencement of this Act, any power of the Minister to retain possession of requisitioned houses shall be terminated, and the right to possession of every such house shall vest in the appropriate local authority.”

The appropriate local authority were permitted by sub-s (2) to retain the possession of requisitioned premises until 31 March 1960. It was also provided

Page 458 of [1960] 1 All ER 455

by that Act that the requisitioned premises might be de-requisitioned and handed back to the owner, the landlord, if he was prepared to accord to the sitting licensee, broadly speaking, the status of a statutory tenant. Thus, by s 4(1) it was provided:

“Any local authority may, subject to such directions, if any, as may be given by the Minister, and shall, if so required by the Minister, serve on the owners of such requisitioned dwellings as may be decided by the authority or specified by the Minister, as the case may be (being dwellings of which possession is retained under this Act) a notice inviting those owners to accord to the licensees of the dwellings the status of statutory tenants in consideration of payments to be made by the local authority in accordance with this section by way of compensation for loss of the right to vacant possession on the release of the dwellings.”

By sub-s (2) of s 4, it was providede:

“If within the period specified in that behalf in any such notice of invitation the owner gives to the local authority notice of acceptance in such form as may be so specified, then— … (b) as from the expiration of that period, the Rent Acts shall apply to the dwelling as if the licensee had retained possession by virtue of those Acts after the expiration of a tenancy at a rent equal to the standard rent specified in sub-s. (3) of this section … ”,

on certain terms. Subsection (3) of s 4 then sets out what the standard rent should be, and the material provision for the purposes of these proceedings is sub-s (4) of that section, which is in these terms:

“Except so far as the local authority may from time to time determine, the rent recoverable by the landlord of any such dwelling in respect of any period before Apr. 1, 1965, from the licensee or any statutory successor of his shall not exceed the rent last payable by the licensee to the local authority under the licence; and where the rent so recoverable in respect of any such period falls short of the rent which would be recoverable apart from this subsection, the local authority shall pay to the landlord an amount equal to the difference.”

Accordingly unless and until the local authority otherwise determines, the landlord, while he will get the full standard rent from someone, will only be able to get from the ex-licensee the rent which the ex-licensee had been paying under the licence. The difference between that and the standard rent as fixed by the subsection was to be borne by the local authority. Pausing there, the standard rent as fixed by sub-s (3) of s 4 might be lower or might be higher than the rent being paid under the licence. If it was higher than that being paid under the licence, then by sub-s (4) until the local authority otherwise determined the difference was to be borne by the local authority. On the other hand, in cases where it was lower the landlord was only, of course, entitled to recover that lower rent, and accordingly an ex-licensee whose standard rent was lower than he had been paying would in effect have a reduction in rent and pay less.

The question with which we are concerned in these proceedings is as to the duty of the local authority under s 4(4) to review the position and as to the matters which they are entitled to consider on such a review. It is to be observed, first, that these de-requisitioned premises having become subject to the Rent Acts were, amongst other things, subject to the Housing Repairs and Rents Act, 1954, under which provision was made, broadly speaking, for an increase of rent for improvement in the property. These premises also in due course became subject to the Rent Act, 1957, which, quite generally, throughout

Page 459 of [1960] 1 All ER 455

the country, raised the standard rents which landlords were entitled to get from their tenants.

This council made no determination whatsoever under sub-s (4) of s 4 of the Act of 1955, and, when the Act of 1957 was passed and the matter was brought to their attention not only by Ministry circular but by the town clerk, they refused to determine otherwise within the meaning of sub-s (4) and continued to bear the difference, a difference which had been increased in some cases, by the exercise by landlords of their powers under the Housing Repairs and Rents Act, 1954, and also increased by reason of their powere under the Act of 1957.

The following are perhaps the two most relevant resolutions of the council—certainly they are those on which the district auditor relied. On 9 October 1957, the council had before them a report of the Housing Management Committee of 16 September. They had various cases before them in which they were told that notices of rent increases had been served by the landlord, and perhaps it is relevant that under the Act of 1957 notices of increase in rent which landlords had to serve on their tenants were required also to be served on the local authority. As a result of that meeting the council adopted and approved the recommendation of the housing committee, which was in these terms:

“That the council bears the full cost of any increases in rent between the operative date of any valid notices received and the date on which the council is able to make a formal decision.”

On 5 March 1958, the position was again reviewed by the housing management committee, and they recommended by 7 to 4, as appears in the council’s minute of 19 March 1958:

“That, having regard to the foregoing observations on the position generally, the whole of the valid rent increases under the Rent Act, 1957, in regard to all tenancies of formerly requisitioned properties released to owners under s. 4 of the Requisitioned Houses and Housing (Amendment) Act, 1955, be borne by the council.”

In putting forward that recommendation they put forward a number of reasons for so doing. The matter came before the full council, the motion was put to the vote, a division was taken and by 26 to 20 the recommendation of the housing management committee was adopted.

The district auditor has given his reasons in a long document of some seventeen pages to which are appended various schedules and various extracts from the transcript of the evidence which he took. In my judgment, the district auditor’s reasons are most admirably stated and, as will appear later, not only am I not satisfied that they are wrong but for myself I feel very inclined to adopt them as they stand. He came to the conclusion that this council did not have under s 4(4) of the Act of 1955 what I may call an absolute discretion, but it was a discretion under which they were bound to act reasonably, preserving a balance between the duty which they owed to the general body of ratepayers and the duty they owed to these particular tenants. He went on to hold that this council had never really faced the problem at all within the ambit of their duty, and that the sums which had been paid under s 4(4) were to the extent of £200 at least paid in breach of their duty and, accordingly, were in law unlawful payments. On that, as I have said, he surcharged these six appellants and found them guilty of negligence as well.

The first question that arises is as to the extent of the duty of a council where by statute they are given a discretion. The classic authority on the matter is to be found in Roberts v Hopwood. It is often referred to as the Poplar case. The Metropolitan Borough of Poplar had power under the Metropolis Management Act of 1855 to “employ … such … servants as may be necessary, and

Page 460 of [1960] 1 All ER 455

may allow to such … servants … such … wages as [the council] may think fit.” The council in that case had fixed a minimum wage of £4 for every employee regardless of the nature of the work he was to do and regardless of the fact that the cost of living had fallen during the year from 176 per cent to 82 per cent above the pre-war level. It was held in the House of Lords that the discretion conferred on the council by the statute must be exercised reasonably, and that the fixing by the council of an arbitrary sum for wages without regard to existing labour conditions was not an exercise of that discretion; it was also held that an expenditure on a lawful object might be so excessive as to be unlawful, and that to the extent by which the amount exceeded legality the auditor was bound to disallow it and surcharge the excess on the persons responsible. For my part, I find it unnecessary, certainly at this stage, to read any passages from the speeches in that case. It is enough to say that the nature of the duty must, of course, be ascertained from the words of the section in question and their context, but it was clearly held there that where the matter is something with which the auditor can deal by way of surcharge, in other words, when it is paying money out of a fund provided by the general body of ratepayers, the council must preserve a balance between the duty owed to that general body of ratepayers and the duty owed to the particular ratepayer in respect of whom the payment is made. Accordingly, whatever the exact wording of the section may be—and it is pointed out by counsel for the appellants in his able argument that the wording here is quite different from the wording under the Housing Act, 1957f, where periodical review is provided for—I am quite satisfied that under these words a periodic review is necessary if their duty is to be performed.

Counsel for the respondent has indicated a number of different matters which may from time to time arise, all of which, if the duty of the council is to be performed, must necessitate a reconsideration of the matter. It may be that on de-requisition there ought to be a consideration. Certainly the council must keep abreast of what is happening from time to time and collect information to see what is the position. As the subsection providesg, the benefit thereof devolves on a statutory successor. It is said that the statutory successor may be a son in very affluent circumstances, and that if the duty owed to the general body of ratepayers is properly to be borne in mind, the council must consider at any rate the fact that that statutory successor is in very different financial circumstances. Again, it is said by counsel for the respondent that whenever the controlled rent is raised, whether it be under the Housing Repairs and Rents Act, 1954, or, as in most of these cases, under the Rent Act, 1957, there must be a review. Indeed, it is only right to say that the council themselves realised that the passing of the Act of 1957 and the notices served by landlords as a result did call for a consideration of the matter.

The reasons which the council gave are set out in the minute to which I have referred of 19 March 1958. They said that they felt that they had a moral obligation to treat these tenants in the same way as they treated their council tenants. They drew attention to the fact that the de-requisitioned property was in a very poor condition and provided a relatively low standard of accommodation. They went on to say that the tenants formed a particularly unfortunate section of the population. Finally, they said:

“We consider that the basis on which the rents of these properties was fixed originally was a fair and reasonable one and we see no reason for raising them; having regard to the fact that seventy-five per cent. of the cost will normally be met by the Exchequer until Mar. 31, 1960, we are satisfied that by meeting the whole of these increases the council will not be placing an unduly heavy burden on the rates.”

Page 461 of [1960] 1 All ER 455

Those reasons were introduced by this statement:

“We consider that it is impossible to give consideration to individual cases without investigating the question of the tenants’ income, and this we are not prepared to do. In these circumstances we have agreed that the matter should be dealt with as one of principle.”

So far as the reasons are concerned, the district auditor went through each one of them in great particularity and has made it abundantly clear that there is nothing whatsoever in those reasons; in fact the district auditor’s criticism of them and the facts he found are barely criticised. Indeed, it is I think admitted that the real reason for the decision arrived at by the council was twofold, (i) that as a matter of policy they would never adopt what is referred to as a means test, and (ii) that they thoroughly disliked the action of Parliament in passing the Act of 1957 and raising rents generally throughout the country.

Whatever the council may say as to having taken into consideration the general body of ratepayers, at the end of the day, if I may use that expression, it is a question of what is the true inference behind their determination. There are two passages which I will read, one, if not both, of which created quite clearly an impression on the district auditor. The first one is in the evidence of Councillor Lawrence:

“We feel very strongly about it. As far as we are concerned we consider that this is the crux of the whole business. There is definite interference stemming from three borough councillors who, for the purpose, have transformed themselves into ratepayers; they raised objection at audit and tried to overthrow by this method decisions which they have fought all the time and have been defeated in the council. They do not object merely to the payments in respect of the de-requisitioned tenants, they object to the whole of the council’s rent policy. Our attitude towards the de-requisitioned tenants arises from the policy of this council. We do not believe that the circumstances at the moment justify a local authority imposing rent increases on its tenants. That is our political position, we honestly believe that, we fight for that, and, bearing that in mind, the fact that we have refused to impose or permit to be imposed rent increases on the de-requisitioned tenants follows consequentially.”

Finally, almost at the end of his evidence, the district auditor asks:

“Were you aware, when you came to the decision, that the basis upon which you were dealing with de-requisitioned premises was not being followed by other borough councils in London? (Councillor Lawrence): No, on the contrary, I discussed the matter with a councillor in South London and he told me they were doing the same, and I congratulated him. Subsequently I found they had not done the same, it was a case of fifty-fifty and they lost their nerve. I am a member of the Metropolitan Boroughs’ Standing Joint Committee, this problem of de-requisitioned rents is constantly coming up, and I only wish that all the Labour controlled bodies in London would take the same action as we, and protect the tenants from the Rent Act.”

If that be so, if that was the real reason behind these decisions of the council, in my judgment they were purely arbitrary decisions. They were not decisions arrived at through the council fulfilling their duty to the general body of ratepayers, amongst others. In many ways the position is rather like that in Roberts v Hopwood. One could refer to a number of passages which bear out the similarity, but for my part I will only refer to a passage in the speech of Lord Sumner who, after referring to judgments of Lord Russell CJ in

Page 462 of [1960] 1 All ER 455

Thomas v Devonport Corpn ([1900] 1 QB 16 at p 21) and Farwell LJ in R v Roberts ([1908] 1 KB 407 at p 435), says this ([1925] All ER Rep at p 38, [1925] AC at p 605):

“One of the ways in which a payment may be illegal, is, as LORD RUSSELL, C.J., says, that it is not within the authority or not in accordance with the duty of the council. By questions of policy I understand FARWELL, L.J., to mean such matters as the necessity for a urinal and the choice of its position, provided no public or private nuisance is created [and he refers to certain cases] and similar questions of policy. The word, however, is policy, not politics, and I can find nothing in the Acts empowering bodies, to which the Metropolis Management Act, 1855, applies, which authorises them to be guided by their personal opinions on political, economic or social questions in administering the funds which they derive from levying rates … ([1925] All ER Rep at p 39, [1925] AC at p 606). To my mind, a council acts for a collateral purpose, if it fixes by standards of its own on social grounds a minimum wage for all adults, and is not in so doing acting for the benefit of the whole community.”

I said that I would refer only to a passage in Lord Sumner’s speech, but it is perhaps worth adding a passage from the speech of Lord Atkinson where he was dealing with the view taken by the council, and he says ([1925] All ER Rep at p 33, [1925] AC at p 594):

“Nobody has contended that the council should be bound by any of these things, [by “these things” he was referring to trade union rates, the cost of living, and so on in fixing wages] but it is only what justice and common sense demand that, when dealing with funds contributed by the whole body of the ratepayers, they should take each and every one of these enumerated things into consideration in order to help them to determine what was a fair, just and reasonable wage to pay their employees for the services the latter rendered. The council would, in my view, fail in their duty if, in administering funds which did not belong to their members alone, they put aside all these aids to the ascertainment of what was just and reasonable remuneration to give for the services rendered to them, and allowed themselves to be guided in preference by some eccentric principles of socialistic philanthropy … ”

Then he says this ([1925] All ER Rep at p 33, [1925] AC at p 595):

“A body charged with the administration for definite purposes of funds contributed in whole or in part by persons other than the members of that body owes, in my view, a duty to those latter persons to conduct that administration in a fairly businesslike manner, with reasonable care, skill, and caution, and with a due and alert regard to the interest of those contributors who are not members of the body. Towards these latter persons the body stands somewhat in the position of trustees or managers of the property of others.”

I have come to the conclusion that the district auditor’s findings were abundantly justified and that it is quite impossible to say that he has gone wrong in law. In deference to the argument of counsel for the appellants I should refer to a number of points that he submitted. He said, first, that the district auditor had misconstrued s 4(4) of the Act and the effect of the Act of 1957 on that section. He also said that the various Ministry circulars which had been brought to the attention of the council, to which I find it unnecessary to refer, had themselves misconstrued s 4(4) of the Act of 1955. He points out, as I have already said, that the wording here is quite different from the wording under the Housing Act, 1957, which calls specifically for periodic review. If I understand him aright he is saying that the local authority have no duty at all to

Page 463 of [1960] 1 All ER 455

make any review except in so far as they think that it should be done. That seems to me an absolute discretion which is not to be found there. Indeed, I think he really departs from that argument because he concedes, amongst other things, that the controlled rent from time to time must be a relevant consideration if one is making a determination. If, therefore, what was a relevant consideration, namely, the old controlled rent, has gone up, then one of the matters which was a relevant consideration originally has altered, and it must be necessary for the council then in the performance of their duty to make a review of the matter. In truth and in fact the wording of s 4(4) of the Requisitioned Houses and Housing (Amendment) Act, 1955, calls for periodic reviews, as I have already said, although it does not say so in express words.

Counsel then points to the fact that when Parliament passed the Rent Act, 1957, although they amended certain provisions of the Act of 1955, they left sub-s (4) of s 4 intact. If I understand his argument, it is that if Parliament had intended that a rise in controlled rents was an occasion on which the local authority should review the matter under s 4(4), they would have said so. I do not appreciate that argument. It is quite true that the Act of 1957 does not touch s 4(4) at all. All that means is that whatever was the duty of the local authority before the Act of 1957 remained their duty after the passing of the Act of 1957. He then says that the council in this case were not acting unreasonably, that they were performing their duty, and that all they were doing was to put into action their bona fide policy, which was that on no account would they consider the ability to pay of individual tenants and that there was no occasion for increasing the rents. I have already dealt with what I think was the real reason, and whether you call it policy or politics matters not. The whole question is whether the action, be it policy or politics, was consistent with the duty the council owed to the general body of ratepayers.

There has been much talk about the means test. For my part, I find it quite unnecessary to go into that matter. All that is being referred to by the district auditor is a general ability or inability to pay, and it seems to me that that must be a relevant consideration. Indeed, it is not without interest to see that this council, while going out of their way to say that they would not be a party to a consideration of ability to pay, have and do take that into consideration in fixing the rents of their tenants in council houses. I believe that the real reason as disclosed here is that they felt that the action of Parliament was wrong in the Act of 1957, and they were not going to allow landlords of derequisitioned premises to recover any part of the general increase in rents provided for by that Act.

I think that it is not unfair, in considering whether the council have acted reasonably in the performance of their duty, to consider two matters which have resulted from that action. I have already said that the standard rent fixed under the Act of 1955 might be lower than the rent being paid under the licence, in which case the tenant only paid the standard rent. So determined, however, were this council to consider not individual cases but the matter as one of principle, that they completely omitted to see that they were through the years paying the difference between the two amounts. The standard rent was lower than the rent payable under the licence. When the standard rent went up, they decided to pay the full difference between the old standard rent and the new standard rent. They had no power to do that under sub-s (4) at all because all that they had power to do was to pay the difference between the new standard and something which had been paid under the licence which in these cases was higher than the old standard rent. To that extent they failed entirely to see that they were making ultra vires payments. Another thing that has resulted is this, that it is found, and the council so stated, that in many cases these properties were in a state of disrepair and were cases in which tenants, if they applied, could get certificates of disrepair. If they got those

Page 464 of [1960] 1 All ER 455

certificates of disrepair, a landlord would not be able to get the full increase permitted by the Act of 1957 unless he did certain repairs or undertook to do those repairs. This council, however, decided that they would pay the full difference between the old standard rent and the new standard rent, between the licence rent and the new standard rent which the landlord was demanding. That was the standard rent which on one view of the matter he was not entitled to if the tenant took certain steps in the form of getting a certificate of disrepair. To that extent this policy of theirs resulted in what is really a gift to the landlord in that he was getting something he was not entitled to get if the tenant was encouraged to take and did take the appropriate steps. In my judgment, those are quite relevant matters to consider when one is asking oneself the question: Was this council performing its duty as laid down in Roberts v Hopwood?

Two other small matters were raised by counsel for the appellants. He said, in the first place, that the district auditor was wrong in finding, as he did, that the tenants of these de-requisitioned premises were a fair cross-section during the year of review of the council tenants generally. That was a matter of the construction of the evidence given, I think, by the housing manager, and I find no reason to say that the district auditor was wrong in making that finding. It is also said that at any rate he was wrong in finding that some of these tenants had the ability to pay more, and therefore was wrong in saying that there were excess payments to the extent of £200. For my part, I think that he had ample evidence on which he could arrive at that conclusion and, as the case emerged, it seemed quite clear that the £200 could be justified in whole or certainly to a large extent by reason of the ultra vires payments to which I have referred and payments made to landlords in cases where this council knew that if the tenants took steps to get certificates of disrepair they would not be entitled to them. Those two matters alone produce a figure in the neighbourhood of £200, and it seems to me quite idle to say that the district auditor could not find that at least £200 was an unlawful payment. Indeed I think that he was being very considerate to the councillors.

Finally, it is said that the district auditor was wrong in finding that these appellants were negligent. For my part, I find it unnecessary to go into that. Under paras (a) and (b) of s 228(1) of the Local Government Act, 1933, he was perfectly entitled to disallow this sum and to surcharge these appellants. It is unnecessary, therefore, to go on and consider the further question whether this can be said to be a case of loss or deficiency through negligence. I do not propose to deal with that matter. Accordingly, in my judgment, the district auditor’s reasons were right and this appeal should be dismissed.

CASSELS J. I agree.

ASHWORTH J. I also agree.

Appeal dismissed. Order of district auditor confirmed.

Solicitors: Gaster & Turner (for the appellants); Sharpe, Pritchard & Co (for the respondent).

E Cockburn Millar   Barrister.

The Liverpool (No 2)

Steamship Enterprises of Panama Inc, Owners of SS Liverpool v Owners of SS Ousel and others

[1960] 1 All ER 465

Categories:        SHIPPING        

Court:        PROBATE, DIVORCE AND ADMIRALTY DIVISION        

Lord(s):        LORD MERRIMAN P        

Hearing Date(s):        17, 18, 19 NOVEMBER, 7, 8, 9, 10, 11, 21 DECEMBER 1959        

Shipping – Limitation of liability – Fund paid into court – Claims – Claim by harbour board for expenses of raising wreck, etc – Claim by owners of wreck for liability to harbour board for excess of expenses over proceeds of sale of wreck, etc – Double proof – Duty of harbour board to mitigate loss – Whether owners could claim against fund – Whether harbour board should give credit for amount of owners’ claim – Mersey Docks and Harbour Board Act, 1954 (2 & 3 Eliz 2 c xlv), s 3(3).

On 8 January 1957, the Ousel and the Liverpool were in collision in the River Mersey, for which collision the owners of the Liverpool admitted liability in negligence and as a result of which the Ousel sank. On the same day the Mersey Docks and Harbour Board gave notice under a private Act, the Mersey Docks and Harbour Board Act, 1954, that, pursuant to s 3, the board had taken possession of the Ousel, would raise her, would sell any property recovered and would apply the proceeds in payment of the expenses. Any deficiency, viz, amount remaining after deducting the proceeds of sale from the aggregate expenses, was recoverable under s 3(3)a from the owners of the Ousel, but so that the amount recoverable by the board from the owners did not exceed the amount of the prescribed limit of liability under the Merchant Shipping Act, 1894, as amended. In an action by the owners of the Liverpool claiming limitation of liability a sum of some £106,226 had been brought into court. Claims against this fund included claims by owners of cargo in the Ousel (amounting to some £170,507), and by the board (amounting to some £128,382) for damages and expenses incurred in connexion with the wreck of the Ousel, in which claim the board gave credit for some £60,359 proceeds of sale of cargo in and equipment of the Ousel. Claims were made also by the owners of the Ousel for the loss of the vessel and other damage (amounting to some £70,765) including a claim (item 22) for liability for wreck-raising expenses, namely, the excess of the board’s expenses over the proceeds of sale reduced to the statutory limit of the Ousel under the Merchant Shipping Acts, for which amount (some £10,835)b, the owners of the Ousel were liable to the board under s 3(3). The amount of item 22 had not in fact been paid to the board; the owners of the Ousel had been ready and willing to pay it, but the board had not been willing to receive it. It was contended on behalf of cargo owners that item 22 was the same as part of the board’s claim and that either item 22 should be disallowed or, if it were allowed, the board should give credit for its amount.

Held – The claim of the Ousel (item 22) would be allowed and the board must give credit in their claim for an amount equal to item 22, for the following reasons—

(i) the rule against double proof applied in relation to a limitation fund paid into court under s 503 and s 504 of the Merchant Shipping Act, 1894, and applied in relation to a debt arising by statute (or, semble, arising out of a tort), as it did where a debt arose in contract; accordingly the board were debarred from proving for that part of the loss that they could recover from the owners of the Ousel under s 3(3) of the Mersey Docks and Harbour Board Act, 1954 (see p 472, letters i, a and b, p 473, letter b, and p 475, letter g, post).

Re Oriental Commercial Bank, ex p European Bank ((1871), 7 Ch App 99) applied.

(ii) the board could not recover from the limitation fund more than they

Page 466 of [1960] 1 All ER 465

would have suffered by the Liverpool’s wrong-doing if they had taken all reasonable steps to mitigate their loss, and the amount which they could recover from the fund was accordingly reduced by the amount of item 22 which the owners of the Ousel were willing to pay to the board in full.

Principle stated by Viscount Haldane LC in British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Rys Co of London ([1912] AC at p 689) applied.

Held – Further: if there were analogy between the guarantee of a debt and the liability of the owners of the Ousel under s 3(3) of the Mersey Docks and Harbour Board Act, 1954, the liability of the owners was for the debt constituted by s 3(3) and its proviso combined, and was not a liability for the whole of the board’s deficiency (viz, the difference between the total expenses of raising the wreck etc, and the proceeds of sale received) subject to a limitation of the owners’ liability to the statutory limit (see p 471, letter g, post); accordingly, the position was not similar to that where a surety guaranteed the whole of a debt, subject to a limit of maximum liability, and the creditor was allowed to prove for the full amount of the debt without giving credit for what the surety had paid.

Re Sass, ex p National Provincial Bank of England ([1896] 2 QB 12) distinguished.

Notes

As to limitation of liability in shipping cases, see 1 Halsbury’s Laws (3rd Edn) 63–65, para 126, and 104, para 236; see also for limitation of liability generally, 30 Halsbury’s Laws (2nd Edn) 940, para 1303; and 943, para 1305; and for cases on the subject, see 41 Digest 914–926, 8058–8149 and Supplements.

For the rule against double proof, see 2 Halsbury’s Laws (3rd Edn) 464, para 914; and for cases on the subject, see 10 Digest (Repl) 982, 6764.

Cases referred to in judgment

British Westinghouse Electric & Manufacturing Co v Underground Electric Rys Co of London Ltd [1912] AC 673, 81 LJKB 1132, 107 LT 325, 39 Digest 480, 1025.

Dunkirk Colliery Co v Lever (1879), 41 LT 633, on appeal sub nom Ellis Lever & Co v Dunkirk Colliery Co (1880), 43 LT 706, previous proceedings, sub nom Dunkirk Colliery Co v Lever (1878), 9 ChD 20, 17 Digest (Repl) 108, 225.

Ellis v Emmanuel (1876), 1 ExD 157, 46 LJQB 25, 34 LT 553, 26 Digest 90, 627.

Hoey, Re, ex p Hoey (1918), 88 LJKB 273, 4 Digest (Repl) 364, 3316.

Houlder, Re [1929] All ER Rep 366, [1929] 1 Ch 205, sub nom Houlder, Re, ex p Rabbidge v Eagle Star Dominions Insurance Co, 98 LJCh 12, 140 LT 325, 4 Digest (Repl) 295, 2689.

Mersey Docks & Harbour Board v Hay, The Countess [1923] AC 345, 490, 92 LJP 65, 129 LT 325, 16 Asp MLC 161, 41 Digest 943, 8351.

Morris (B O) v Perrott & Bolton [1945] 1 All ER 567, 172 LT 234, 2nd Digest Supp.

Morrison SS Co v Greystoke Castle (Cargo Owners) [1946] 2 All ER 696, [1947] AC 265, [1947] LJR 297, 176 LT 66, 2nd Digest Supp.

Moss, Re, ex p Hallet [1905] 2 KB 307, 74 LJKB 764, 92 LT 777, 4 Digest (Repl) 299, 2717.

Oriental Commercial Bank, Re, ex p European Bank (1871), 7 Ch App 99, 41 LJCh 217, 25 LT 648, 10 Digest (Repl) 982, 6764.

Payzu v Saunders [1919] 2 KB 581, 89 LJKB 17, 121 LT 563, 39 Digest 571, 1765.

Sass, Re, ex p National Provincial Bank of England Ltd [1896] 2 QB 12, 65 LJQB 481, 74 LT 383, 4 Digest (Repl) 418, 3722.

Staniforth v Lyall (1830), 7 Bing 169, 4 Moo & P 829, 9 LJOSCP 23, 131 ER 65, 41 Digest 462, 2938.

Page 467 of [1960] 1 All ER 465

Stoomvaart Maatschappij Nederland v Peninsular & Oriental Steam Navigation Co (1882), 7 App Cas 795, 52 LJP 1, 47 LT 198, 4 Asp MLC 567, 41 Digest 924, 8135.

See also cases referred to in footnotec, infra, and footnote (11), p 471, post.

Preliminary points of law

Preliminary points of law were raised in an action by the owners of the Liverpool for limitation of their liability arising out of a collision on 8 January 1957, between the Liverpool and the Ousel in the River Mersey, as a result of which the Ousel sank. The defendants before the court were (i) the Mersey Docks and Harbour Board (hereinafter referred to as the board), being claimants in respect of expenses of raising the Ousel, etc, and clearing the river of the wreck, (ii) the owners of the Ousel, and (iii) the owners of part of the cargo formerly laden in the Ousel. On 28 May 1958, a decree limiting the liability of the owners of the Liverpool was made and a sum of some £106,226 (with interest £112,000) was in court in the action. The statutory limit of the liability of the Ousel, under s 503(1)(ii) of the Merchant Shipping Act, 1894, at the date of the collision was agreed to be £10,835 12s by the board by letter dated 23 June 1959, and on behalf of the cargo owners by letter dated 26 June 1959. The facts, which have been briefly summarised in the headnote, appear in the judgment. The questions for determination as preliminary points of law, as amended in the course of argument, were:

(1) Whether item 22 of the claim of the owners of the Ousel should be disallowed on the grounds (a) that in substance it formed part of or the same as part of the claim of the board; (b) that the sum to which item 22 related had not as yet been paid to the board by the owners of the Ousel; and (c) that accordingly unless item 22 is disallowed there would not be rateable distribution of the limitation fund among the several claimants.

(2) Whether, if item 22 were allowed, the board must give credit in their claim for an amount equivalent to the amount of item 22 on the ground that otherwise there would not be rateable distribution of the limitation fund among the several claimants.

The cases noted belowc were cited in argument in addition to those to which reference is made in the judgment.

Eustace Roskill QC and H V Brandon for the owners of part of the cargo of the Ousel.

J R Adams QC and R F Stone for the owners of the Ousel.

J V Naisby QC and G N W Boyes for the Mersey Docks and Harbour Board.

Cur adv vult

21 December 1959. The following judgment was delivered.

LORD MERRIMAN P read the following judgment. On 8 January 1957, the Panamanian tanker Liverpool and the British coaster Ousel

Page 468 of [1960] 1 All ER 465

were in collision in the port of Liverpool. As a result of the collision the Ousel was beached, and on the same day the Mersey Docks and Harbour Board (hereinafter referred to as “the board”) gave notice to the owners of the Ousel that the Ousel, her cargo, furniture, tackle or apparel were, or were likely to become, an obstruction or impediment or danger to the safe and convenient navigation or use of the port of Liverpool or the sea channels leading thereto, and that pursuant to s 3 of the Mersey Docks and Harbour Board Act, 1954 (hereinafter called “the Private Act”)d, and all other powers in that behalf, the board had taken possession thereof and would proceed to raise, remove, blow up or destroy the same as they deemed necessary. The notice also contained the statement that any property recovered would be sold by the board and the proceeds applied as a common fund for the payment of the expenses incurred in connexion with the raising, etc, of the obstruction, and with the detainer and sale of the property, the surplus (if any) being returned to the persons entitled thereto. It added that if the expenses so incurred exceeded the proceeds of sale or other sum payable to the board the difference up to, but not exceeding the amount prescribed by the Merchant Shipping Acts as the limit of the liability to damages of an owner of a ship in respect of loss or damage to vessels, goods, merchandise or other things, was recoverable by the board from the owner.

As between herself and the Ousel, the Liverpool has never disputed that she was wholly to blame for the collision; and by an action proceeding in the Liverpool district registry, the owners of the Liverpool claimed to limit their liability in accordance with s 503 and s 504 of the Merchant Shipping Act, 1894. By para 4 of the statement of claim the plaintiffs admit that the said collision and the damages resulting therefrom were caused by the improper navigation of the Liverpool by their servants.

The plaintiffs offered to pay into court the undisputed sum of £106,226 12s 10d, as being the aggregate amount of £8 per ton on the registered tonnage of the Liverpool, together with interest thereon at four per cent. I was informed that the interest brought the amount to be paid into court up to about £112,000, on payment of which sum into court the usual decree in a limitation action was made by the district registrare.

The claims made against the fund are as follows: The Decca Navigator Co Ltd: £750 in respect of certain radar equipment, agreed at that amount: it will be unnecessary to refer to this claim again. Next there is a claim by the owners of certain cargo in the Ousel for £142,903 11s 3d. This group of cargo-owners are called Messrs Waltons’ clients. There is a further claim for £27,603 18s 11d by other cargo owners represented by other solicitors, but not separately represented before me. Waltons’ clients. There is a further claim for £27,603. These have been called, not very politely, the “hangers on” because in substance their claims stand or fall with those of Messrs Waltons’ clients. Then there is the claim of the board for £128,382 11s 7d for expenses incurred and damage sustained in connexion with clearing the Mersey of the wreck of the Ousel.

It is important to note that this is a common law claim in tort, founded on the admitted negligence of the Liverpool in causing the wreck of the Ousel. It is not disputed that to some extent it covers the same ground as the subject-matter of the board’s claim against the Ousel under the Private Act, by virtue of which they served the notice already mentionedf, and it is right to point out that in this claim the board have given credit for £60,359 14s 3d in respect of the sale of cargo formerly laden in the Ousel and certain of her equipment.

There is also a claim on behalf of the owners of the Ousel for £70,765 5s 1d. Of this sum £59,929 13s 1d, including £58,000 for the estimated value of the Ousel herself, is the total of loss and damage of which particulars are given

Page 469 of [1960] 1 All ER 465

under twenty-one heads g. Finally, the owners of the Ousel claim £10,835 12s under the heading “Mersey Docks and Harbour Board Contingent Claim of Board in respect of wreck-raising expenses; namely, Statutory Limit of Ousel”. It is this claim (hereinafter called “item 22”) which is the subject of the present reference.

Messrs Waltons’ clients attack the inclusion of this item, both in the Ousel’s claim, and, in substance, also in the board’s claim. On behalf of the Ousel it is contended that though the money has not actually been paid, in circumstances which I will discuss later, they have no escape from their liability to pay this sum to the board as being the deficiency referred to in s 3(3) of the Private Act, reduced to the amount of the limitation under the Merchant Shipping Actsh.

The board, on the other hand, claimi that they are entitled to recover in full the amount due under the Private Act, if and when it suits them to do so and also to claim a dividend, if I may so call it, from the fund on the full amount of their claim, with the proviso that the sum recovered from these two sources does not exceed the total amount of the board’s claim against the Liverpool. At the outset of his argument counsel for the board stated emphatically that he stood by this claimi, and the board have never receded from this position.

It was ordered that this dispute should be tried as an issue in the reference, and two questions were agreed before Karminski J in chambers for submission to the court, as followsj:

“It is ordered that the following two agreed questions be tried as separate issues by a judge alone:

“1. Whether item 22 of the claim of the owners of the Ousel should be allowed notwithstanding that the liability to the Mersey Docks and Harbour Board to which such item relates is contingent only.

“2. Whether, if the said item 22 of the claim of the owners of the Ousel is allowed the Mersey Docks and Harbour Board must give credit in their claim for an amount equivalent to the amount of the said item on the ground that otherwise there will not be a rateable distribution of the Limitation Fund among the several claimants.”

During the hearing, as there appeared to be doubt whether the first question was wide enough to ensure that the question of double proof was raised, I allowed that question to be amended in the following terms:

“(1) Whether item 22 of the claim of the claimants the owners of the Ousel should be disallowed on the grounds:—(a) that in substance it forms part of or is the same as part of the claim of the Mersey Docks and Harbour Board; (b) that the sum to which the said item relates has not yet been paid to the board by the claimants the owners of the Ousel; and (c) that accordingly unless such item is disallowed there will not be a rateable distribution of the limitation fund among the several claimants.”

Page 470 of [1960] 1 All ER 465

I allowed this amendment by virtue of RSC, Ord 28, r 12, so as to ensure the determination of the real issue raised by this proceeding.

Counsel for the owners of the Ousel stated that he was specifically instructed not to raise question 2 as against the board. Counsel for the board also disclaimed any intention of arguing question 1 against the Ousel unless he was driven to do so, if question 2 was answered against the board. This mutual abstention from attack on each other by the rival claimants to the fund seemed to me to justify counsel for the cargo owners’ observation that this looked like an agreement that the Ousel should be treated as having paid the board the amount of item 22, but that the board should be treated as not having received that amount. It is only fair to say, however, that the rigidity of this attitude was somewhat modified in the answers to counsel for the cargo owners’ cogent reply, and after question 1 was amended.

On behalf of Messrs Waltons’ clients it was argued by counsel for the cargo owners that the inclusion of item 22 both in the Ousel’s claim and in substance in the board’s claim, gave rise to the issue of double proof, so that either the contingent claim of the Ousel should be disallowed, or, if allowed, that the board should be compelled to give credit against their claim for the same amount. Alternatively, it was contended that the board should deduct item 22 from their claim against the Liverpool, on the principle that they ought, as reasonable persons, to mitigate their loss; or, alternatively, on the ground that their failure to take the reasonable step of recovering the amount of item 22 prevented that part of their loss from flowing from the wrong-doing of the Liverpool.

The rule against double proof is very clearly stated in Re Oriental Commercial Bank, ex p European Bank by Mellish LJ: after saying that the rule applies in the Court of Chancery as well as in the Court of Bankruptcy, and therefore would apply equally where companies are being wound up, he says ((1871), 7 Ch App at p 103.): “It seems to me that the principle is a perfectly sound one”. Then, after an immaterial reference to the application of the rule to joint and separate estates, he continues ((1871), 7 Ch App at p 103):

“But the principle itself—that an insolvent estate, whether wound up in Chancery or in Bankruptcy, ought not to pay two dividends in respect of the same debt—appears to me to be a perfectly sound principle. If it were not so, a creditor could always manage, by getting his debtor to enter into several distinct contracts with different people for the same debt, to obtain higher dividends than the other creditors, and perhaps get his debt paid in full. I apprehend that is what the law does not allow; the true principle is, that there is only to be one dividend in respect of what is in substance the same debt, although there may be two separate contracts.”

This statement of the principle was followed by Horridge and Roche JJ in Re Hoey, ex p Hoey, a case in which the bankrupt had charged his property direct to mortgagees and had conveyed to his wife and another the equity of redemption of the property, with a covenant that he would discharge the mortgage liability within a certain period. This was held to raise the principle of double proof on the ground that he had entered into covenants both with the mortgagee and with his wife, but that they were both to pay the same debt, and if they were both allowed to prove in respect of that debt higher dividends would be paid in respect of that debt than in respect of the debts of other creditors.

There has been a very full and exhaustive examination by counsel for the board of the bankruptcy law relating to contracts of guarantee, the suggestion being that as several of the cases relating to double proof were cases dealing with suretyship, the law relating to such cases could conveniently be applied

Page 471 of [1960] 1 All ER 465

to any case in which the question of double proof arisesk. One such rule is that where the surety guarantees the whole debt with a limit of the amount for which he is to be liable under his guarantee, the principal creditor even though the surety has already paid the limited amount due from him can prove in the bankruptcy of the debtor for the whole of his debt without taking into account that which he has received from the surety; see, for example, Re Sass, ex p National Provincial Bank of England Ltd and Re Houlder. On the other hand, if the surety guarantees part of the debt only the creditor must give credit, in proving against the bankrupt’s estate, for that which he has received from the surety; or, if he is able to prove for the whole amount because he has not yet recovered from the surety, he must account for the proportionate part of the dividend to the surety on payment being made subsequently by the latter. From this it was argued by analogy that the effect of the Private Act in the present case is that the deficiency mentioned in s 3(3) is the whole debt, while a limit is imposed on the recovery by the proviso; thus leading to the conclusion that the board, as creditor, can prove in full against the limitation fund, without giving credit for the amount of item 22. It is true that some of the cases of double proof arise out of contracts of guarantee; but it does not seem to me to follow from this that all cases of double proof are governed by the law relating to cases of guarantee.

In Ellis v Emmanuel Blackburn J delivering the judgment of Lord Cairns LC, Brett J and himself, after a full review of all the cases on the subject, said ((1876), 1 Ex D at p 169):

“I think in such a case it is a question of construction on which the court is to say whether the intention was to guarantee the whole debt, with a limitation on the liability of the surety, or to guarantee a part of the debt only.”

The present case is not one of suretyship at all, but if it is to be treated as such by analogy, and if the construction of the Private Act is to decide whether the intention was to guarantee the whole debt with a limitation on the liability of the surety, or to guarantee a part of the debt only, my opinion is that the latter is the correct view.

The debt which the Ousel in the supposed capacity of surety is to pay under the Private Act is, in my opinion, the debt constituted by s 3(3) and the proviso combined; that is to say, the portion of the deficiency calculated with reference to sub-para (ii) of s 503(1) of the Merchant Shipping Act, 1894l. In my opinion the suggestion that the Ousel as the supposed surety guarantees the whole deficiency under s 3(3) subject to a limit by the proviso arises from the failure to distribute the two senses in which the word “limitation” is used in connexion with the principle of limitation of liability in Admiralty and in the analysis of the suretyship cases by Blackburn J, to which I have referred m

Page 472 of [1960] 1 All ER 465

On behalf of the board it was argued that nearly all the reported cases of double proof were cases in which what was held to be in substance the same debt arose out of contract, though not necessarily out of the same contract. Nevertheless, the object of the principle being to avoid the payment of two dividends in respect of what is in substance the same debt, I do not see why the principle should not apply to a debt arising out of a tort—see Professor Glanville Williams on Joint Torts and Contributory Negligence, p 173, para 49. Nor, on the other hand, does it seem to me to matter that the subject of the rival proof arises out of the Private Act. The point is that item 22 is in effect co-extensive with part of the board’s claim against the fund, and that both arise directly out of the same subject-matter; namely, the wreck of the Ousel in the Mersey and the expense incurred by the board in clearing the Mersey of obstruction by the wreck.

The fact that the board’s claim against the Liverpool is a common law claim in tort, while the board’s claim against the Ousel results from the Private Act, seems to me to be immaterial. It is true that in Re Oriental Commercial Bank, Mellish LJ used the words ((1871), 7 Ch App at pp 103, 104), “although there may be two separate contracts” in respect of what he held to be in substance the same debt, but that was a case of two separate contracts. On the other hand, in Re Moss, ex p Hallet ([1905] 2 KB 307 at p 312), Bigham J quoting with approval the judgment of the county court judge whose decision was under appeal, said:

“… there clearly would be a double proof in respect of the same sum in substance, although the nature of the liability in each case assumes a different form.”

These words are wide enough to cover the present case.

In my opinion there is no obligation to reject one claimant rather than the other in applying rule of double proof. I think that as Lord Uthwatt said in Morrison SS Co Ltd v Greystoke Castle (Cargo Owners) ([1946] 2 All ER 696 at p 717, [1947] AC 265 at p 309) when considering the rival claims of cargo and the carrying ship against the colliding ship in respect of general average expenses, “The reality of the situation dictates the choice to be made”. Here the owners of the Ousel, once the board had served the notice and taken possession under the Private Act, had no escape from the obligation to pay the board the amount of item 22. To debar them, therefore, from proving against the limitation fund the item of loss which plainly results from the Liverpool’s wrong-doing would be harsh indeed. On the other hand, the board, quite rightly and properly, have decided to put in train the enforcement of their rights under the Private Act, and can at any moment receive the fruits of doing so.

In B O Morris v Perrott & Bolton ([1945] 1 All ER 567 at p 569), Lord Goddard, delivering the judgment of the Court of Appeal, says:

“If the causes of action are different, judgment without satisfaction against one is no bar to an action against the other, and this is so even if the plaintiff deliberately refrains from proceeding to execution on the first judgment.”

In my opinion, however, this is not a case of deliberately refraining from proceeding to execution. On the contrary, it is a case of avowed intention to collect item 22, the fruits of the steps that the board has taken under the Private Act, but to postpone collection, if possible, until the limitation fund has been distributed.

I can see no reason why the principle of double proof should not apply to a limitation action, as well as to bankruptcy and winding-up. The desirability of avoiding the payment of two dividends in respect of what is in substance the same debt applies equally to a limitation fund. In this context it is, perhaps,

Page 473 of [1960] 1 All ER 465

worth noting that in Stoomvaart Maatschappij Nederland v Peninsular & Oriental Steam Navigation Co, Lord Selborne LC ((1882), 7 App Cas 795 at p 801, 4 Asp. M. L. C 567 at p 569), treated bankruptcy and the statutory limitation of liability in Admiralty as being on the same footing in equity.

If the rule against double proof applies at all, it seems to me that the reality of the situation indicates that the board should be debarred from proving for a dividend for that part of their loss in respect of which they can recover in full from the Ousel; that is to say, the answer to question 1, both in its original and its amended form, is that item 22 of the claim of the Ousel should be allowed; and the answer to question 2 is that the board must give credit in their claim for an amount equivalent to the amount of item 22.

At one stage of the argument it was suggested that to make this order would be to confiscate the sum legitimately due to the board as the result of the Private Act. This suggestion of confiscation is taken from the opinion of Viscount Finlay in Mersey Docks & Harbour Board v Hay, The Countess ([1923] AC 345 at p 363, 16 Asp MLC 161 at pp 166, 167). But that was a case where the particular claimant had a possessory lien, notwithstanding which it was argued that he must prove as an unsecured claimant. Seeing that it was decided that rateable distribution does not affect priorities and that the respective rights must be considered qualitatively as well as quantitativelyn, to deprive the claimant of his priority and reduce him to the level of an unsecured claimant against the fund would truly have been to confiscate his priority. Reduced from rhetoric to hard fact, it now appears that the so-called confiscation means that the board will get about £1,200 less than the full amount, after taking into account that the amount of item 22 is deducted from the board’s claim on the basis that the board has received, or must be taken to have received, that amount, and that the Ousel is entitled to prove for the amount of item 22. This no doubt is very unfortunate, but so is the fact that there are other innocent victims of the Liverpool’s ability to limit her liability for her admitted wrong-doing. I do not think that I can decide this case solely on an assessment of the comparative merits of innocent victims.

However the matter may stand in connexion with the rule against double proof, there is, in my opinion, a simpler solution to the problem; namely, the obligation which rests on the board to mitigate the loss which they have sustained by the wrongful act of the Liverpool. I was myself responsible for introducing this aspect of the matter into the discussion, but counsel for cargo owners adopted it, and the topic has been fully argued. Let me say at once that this is not a question of one tortfeasor making the hopeless attempt to insist that another tortfeasor shall be sued first, or at all, as a condition of determining his own liability; or, indeed, of the tortfeasor dictating to the board whom else they shall sue, or in what order.

In this case notice under the Private Act was served by the board on the owners of the Ousel on the very day on which, as the result of the collision for which the Liverpool has accepted the sole blame, the Ousel was driven ashore in such a way as to block the Mersey channel, for the upkeep of which the board are responsible. The notice under document I was given in pursuance of the rights of the board under the Private Acto. It has been suggested, indeed it has almost been assumed in the course of the argument, that the Act not merely gives the board the right but imposes the duty to act as they have done. I am not so sure about that; nor in my opinion does it matter. Plainly they have the right, and whether there is also the duty or not the board must at least have an option about the time when the steps laid down in the Act are

Page 474 of [1960] 1 All ER 465

taken. In this case they acted at once, and in doing so they plainly acted of their own volition. From the giving of the notice everything proceeded through the prescribed stages; from the board taking possession of the Ousel, the sale of the cargo, the blowing up of the ship, down to the calculation of the “deficiency”, and, finally, to the reduction of the amount of the “deficiency”, to the amount for which alone the Ousel was liable under the limitation provided by s 3(3) and the proviso combined. On 26 January 1959, the board stated explicitly that it was their intention to enforce liability under the Private Act against the Ousel. About the amount there has been complete certainty since the exchange of documents 78 and 82, and 77 and 83 respectively in June, 1959p. So far, I repeat, the actions of the board were at their own volition and were in no way dictated by any third party. All that is lacking, therefore, is the actual payment of the money.

I find as a fact that from the moment when the amount was ascertained the owners of the Ousel have been ready and willing to pay the money due, but the board have persistently maintained what I regard as the farce of refraining from taking the money. This action also is entirely of their own volition, and the refusal was emphatically repeated in the course of the argument, when counsel for the owners of the Ousel, on behalf of his clients, was instructed to offer immediate payment, or to pay the money into court. Accordingly, as I was advised that there was no machinery for payment into court by a defendant in the course of a reference arising out of a limitation action, it was arranged that Messrs Waltons would act as stake-holders of the amount of item 22 for whom it might concern.

In these circumstances, the question how the matter stands is one of law.

It has been common ground in this case that the classic statement about mitigation of loss by Viscount Haldane LC in his speech in British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Rys Co of London ([1912] AC 673 at pp 688–690), hereinafter referred to as the Westinghouse case, although made in an action arising out of a breach of contract, applies equally, mutatis mutandis, to tort. I will preface the citation from the Westinghouse case ([1912] AC 673 at pp 688–690) by a short passage from the judgment of Scrutton LJ in Payzu v Saunders, when he said ([1919] 2 KB 581 at p 589):

“Whether it be more correct to say that a plaintiff must minimise his damages, or to say that he can recover no more than he would have suffered if he had acted reasonably, because any further damages do not reasonably follow from the defendant’s breach, the result is the same. The plaintiff must take [quoting LORD HALDANE in the Westinghouse case ([1912] AC at p 689)] ‘all reasonable steps to mitigate the loss consequent on the breach’, and this principle ‘debars him from claiming any part of the damage which is due to his neglect to take such steps’.”

After this passage, Viscount Haldane LC ([1912] AC at p 689), quoted James LJ in Dunkirk Colliery Co v Lever ((1878), 9 ChD at p 25) as follows:

“The person who has broken the contract is not to be exposed to additional cost by reason of the plaintiffs not doing what they ought to have done as reasonable men, and the plaintiffs not being under any obligation to do anything otherwise than in the ordinary course of business.”

Lord Haldane continued ([1912] AC at p 689):

“As JAMES, L.J., indicates, this second principle does not impose on the

Page 475 of [1960] 1 All ER 465

plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account even though there was no duty on him to act.”

Then, after citing Staniforth v Lyall, as an illustration of this rule, Lord Haldane continued ([1912] AC at p 690):

“I think that this decision illustrates a principle which has been recognised in other cases, that, provided the course taken to protect himself by the plaintiff in such an action was one which a reasonable and prudent person might in the ordinary conduct of business properly have taken, and in fact did take whether bound to or not, a jury or an arbitrator may properly look at the whole of the facts and ascertain the result in estimating the quantum of damage.”

Both Bankes and Scrutton LJJ in Payzu v Saunders ([1919] 2 KB at p 589) emphasised that the duty imposed on the plaintiff involved a conclusion of fact, to be arrived at on a consideration of all the circumstances of the case.

Applying these observations, the “transaction” is the grounding of the Ousel in the Mersey Channel. The action taken by the board, whether bound to take it or not, under their Private Act was reasonable and prudent, and one which they would ordinarily take in the course of their business. This action has diminished their loss inasmuch as item 22 is receivable by the board in full and is not the subject of proof on which a mere dividend out of the fund is recoverable. If the fact that the board have chosen not to receive the amount of item 22 makes any difference, and they are not to be treated as having received, it, or are not estopped from saying that they have not received it, I regard their refusal to receive payment as unreasonable. They are deliberately refraining from accepting the money so as not to be prevented from alleging, for what it is worth, that they have not received it. Accordingly, to the extent that the amount of item 22 is included in the board’s claim against the fund I do not consider that the fact that they have not actually received it follows reasonably from the wrong-doing of the Liverpool. On the contrary, it flows, in my opinion, from the unreasonable refusal of the board to receive the amount of item 22 from the Ousel. Putting it the other way, they have been able to minimise the damage in the respect at any moment since the precise amount was ascertained and agreed.

For these reasons, also, as well as on the issue of double proof I think that question 2 must be answered against the board.

Order accordingly.

[The terms of the order were, so far as relevant, as follows:—

It is ordered that item 22 of the claim of the owners of the Ousel amounting to the sum of £10,835 12s, against the limitation fund of the Liverpool be allowed.

It is also ordered that [the board] give credit in their claim against the said limitation fund for an amount equivalent to the amount of the said item 22 of the claim of the owners of the Ousel.

It is further ordered that the costs of the owners of part of the cargo on board the Ousel (Messrs Waltons’ clients) also the costs of the owners of the Ousel be paid by [the board].]

Solicitors: Waltons & Co (for the owners of part of the cargo of the Ousel); Weightman, Pedder & Co, Liverpool (for the owners of the Ousel); R H Bransbury, Liverpool (for the board).

N P Metcalfe Esqh   Barrister.

McKinley v McKinley

[1960] 1 All ER 476

Categories:        CIVIL PROCEDURE        

Court:        LEEDS ASSIZES        

Lord(s):        WRANGHAM J        

Hearing Date(s):        14, 15 DECEMBER 1959        

Evidence – Witness – Competency – Clerk to justices – Matrimonial proceedings – Subpoena – Production of notes of evidence – Whether privileged.

In 1955 a wife unsuccessfully took proceedings against her husband before a stipendiary magistrate and the assistant to the magistrates’ clerk took a shorthand note of the evidence in those proceedings. The husband now petitioned against her for divorce in the High Court and the wife wished to adduce in the divorce proceedings evidence of what had occurred in the former proceedings before the magistrate and issued subpoenas against both the clerk and his assistant to attend and bring with them a transcript of those proceedings and the relevant notebooks. On the application of the clerk the district registrar ordered that the subpoenas be set aside on the grounds that the clerk was a privileged person and that the notes of evidence were privileged documents. It was conceded that the clerk would be able to give relevant and admissible evidence. From this order the wife appealed.

Held – There is no rule which prevents a magistrates’ clerk from being compelled to attend and give evidence in a divorce proceeding if there is any relevant and admissible evidence which he can give; accordingly, the subpoena to the assistant of the magistrates’ clerk should stand, but only to order him to bring and produce his note.

Notes

As to the compellability of witnesses in civil proceedings, see 15 Halsbury’s Laws (3rd Edn) 419, para 752; and as to the privilege of judges not to give evidence concerning judicial proceedings before them, see ibid, p 420, para 754.

For cases on the subject, see 22 Digest (Repl) 398, 4261–4267.

Cases referred to in judgment

Ainsworth v Wilding [1900] 2 Ch 315, 69 LJCh 695, 18 Digest (Repl) 118, 1004.

Buccleuch (Duke) v Metropolitan Board of Works (1872), LR 5 HL 418, 41 LJEx 137, 27 LT 1, 36 JP 724, 2 Digest (Repl) 663, 1817.

Dawson v Dawson (Court of Appeal, 20 May 1955), unreported.

Padley v Padley [1953] 2 All ER 1197, n, [1954] P 302, 117 JP 550, n, [1953] 3 WLR 834, 3rd Digest Supp.

R v Baines [1909] 1 KB 258, 78 LJKB 119, 100 LT 78, sub nom R v Baines, ex p Asquith, 72 JP 524, 22 Digest (Repl) 415, 4468.

R v Gazard (1838), 8 C & P 595, 173 ER 633, 22 Digest (Repl) 398, 4265.

R v Harvey (1858), 8 Cox, CC 99, 22 Digest (Repl) 398, 4263.

R v Morgan (1844), 4 LTOS 233, 1 Cox, CC 109, 15 Digest (Repl) 837, 7998.

R v Morgan (1852), 6 Cox, CC 107, 22 Digest (Repl) 403, 4323.

Ramlochan v R [1956] 2 All ER 577, [1956] AC 475, [1956] 3 WLR 117, 3rd Digest Supp.

Rawstone v Preston Corpn (1885), 30 ChD 116, 54 LJCh 1102, 52 LT 922, 18 Digest (Repl) 117, 1000.

J S (an infant), Re [1959] 3 All ER 856, [1959] 1 WLR 1218.

Ward v Shell-Mex & BP Ltd [1951] 2 All ER 904, 22 Digest (Repl) 413, 4450.

Interlocutory Appeal

In 1955 the appellant wife, Lily McKinley, took proceedings against her husband, Alfred McKinley, before the stipendiary magistrate at Kingston-upon-Hull on the grounds of cruelty and desertion which proceedings, after a three days’ hearing, were dismissed. The assistant to the magistrates’ clerk took a shorthand note of those proceedings. The appellant’s husband subsequently

Page 477 of [1960] 1 All ER 476

instituted divorce proceedings against her in the Kingston-upon-Hull District Registry of the High Court on the ground of her desertion. The appellant was defending these proceedings and was herself asking for relief on the grounds of her husband’s cruelty and desertion. She wished to be able to adduce in the divorce suit evidence of what had occurred before the stipendiary magistrate. She therefore issued against the magistrates’ clerk, Thomas Arthur Doubleday, and his assistant, Charles Phillips, subpoenas ad testificandum et duces tecum requiring them to bring to the hearing of the divorce suit a certified transcript of the 1955 proceedings with five copies for the court and the relevant shorthand notebooks. The clerk and his assistant applied to have the subpoenas set aside and by their affidavits claimed (inter alia) that the documents were privileged documents. On 20 November 1959, the district registrar ordered the subpoenas to be set aside and from this order the wife now appealed. The appeal was argued in open court.

R Lyons QC and H H Ognall (A M Hurwitz with them) for the appellant.

John McLusky for the magistrates’ clerk and his assistant.

15 December 1959. The following judgment was delivered.

WRANGHAM J. This is an appeal against the decision of the district registrar at Kingston-upon-Hull setting aside two subpoenas issued to the clerk to the Kingston-upon-Hull justices and his assistant. It raises an important question of general interest and has therefore, on the application of the parties, been argued in open court.

The relevant facts are not really in dispute. They are not, however, very clearly set out in the affidavits—I think because until the hearing the nature of the real issues between the parties was not completely apprehended—and the basis on which this appeal should be decided has been agreed between the parties here. The relevant facts are these: The appellant is the respondent in divorce proceedings in which her husband is petitioning on the ground of her desertion. In 1955 there were proceedings before the stipendiary magistrate for Kingston-upon-Hull against her husband on the grounds of his cruelty and desertion. After a three-day hearing, those proceedings were dismissed. She now wishes to be able to adduce, in the divorce proceedings, evidence of what occurred in the magistrates’ court. There is no doubt that she would herself be able to give evidence of what her husband said before the magistrate and of any other matters that occurred there, provided that they were admissible in the divorce proceedings, if, of course, she could remember them. But far more reliable evidence on the same lines of what took place before the magistrate could be procured from the magistrates’ clerk, not because he has a better memory but because he has got a note from which his memory can be refreshed. The note is one which he is under duty to take for use in connexion with appeals (see the Matrimonial Causes Rules, 1957 (SI 1957 No 619), r 73(3)), so it is bound to be in existence. The note is not directed by any rule to be supplied to parties in divorce proceedings, and parties in divorce proceedings have, in my judgment, no right to have that note produced to them; but the fact that the note must exist because for another purpose it is directed to be taken, is nevertheless a fact of prime importance in this particular appeal. Otherwise, the appeal, which might be equally good in law, would be of less value in practice. In those circumstances there can be no doubt that the clerk would be competent to give, on behalf of the appellant, evidence which would be relevant and admissible, and which could not be excluded on any ground of state privilege or legal professional privilege.

With certain exceptions, such as those of the Sovereign and of some other persons (para 752), whom it is not necessary to mention, all competent witnesses are compellable; and all compellable witnesses can be ordered to attend court by a subpoena issued under Ord 37, r 20 of the Rules of the Supreme Court. It appears

Page 478 of [1960] 1 All ER 476

from R v Baines which has not actually been cited to me, but of which I have some recollection, that a subpoena issued to a potential witness can be set aside on the ground that it is oppressive because the witness has not in fact any admissible evidence which he is in a position to give; but it cannot be set aside on the ground of the status of the witness, even though that status may be very high, unless he is within the category of the specific exceptions, none of which, save perhaps one which I am going to discuss in a moment, applies to this case.

The contention on behalf of the magistrates’ clerk, the respondent to this appeal, is that it would be oppressive to compel him to attend court for a variety of reasons. He does not give as a reason that he would be unable to give relevant or admissible evidence; on the contrary, it is and it must be conceded that he would be able to give relevant and admissible evidence. It might turn out to be valuable, it might turn out not to be valuable. As to that, I have no means of judging. It is sufficient that it would be admissible and relevant. The first reason on which he relies in his affidavit is that attendance at court would be a serious interruption of his public duty as clerk to the magistrates. That may very well be true, but the law does not recognise it as an excuse for failure to attend as a witness. Attendance as a witness commonly involves serious interruption of private or public business. Nevertheless, the law requires such attendance unless there is some other reason for exemption. The second and more substantial reason is, it is contended, that he is a privileged person and that his notes are privileged documents. There is some authority that judges of the superior courts should not be compelled to give evidence of what takes place in cases tried before them. In R v Gazard in 1838, Patteson J before whom a question had been raised whether the chairman of quarter sessions should be examined by a grand jury as a witness on a matter into which the grand jury were requiring, said ((1838), 8 C & P at p 595):

“It is a new point, but I should advise the grand jury not to examine him. He is the president of a court of record, and it would be dangerous to allow such an examination, as the judges of England might be called upon to state what occurred before them in court.”

Later in the case, in reference to another case that was cited before him in which it was stated that this same thing had been done, he said ((1838), 8 C & P at p 595): “I think it is wrong, and that it ought not to be done”. It is clear, therefore, that in 1838, Patteson J took the view that the judges of England ought not to be compelled to give evidence of what had taken place before them in court.

In 1844, in R v Morgan, Gurney B was clearly contemplating, as a proper possibility, the calling of a magistrate as a witness to testify to what had happened before the magistrates in a judicial or semi-judicial proceeding. In another case, also called R v Morgan, in 1852, the matter was carried a little further by Martin B, who said in terms that if a county court judge had been served with a subpoena to attend a trial as a witness in order to prove, apparently, the evidence given by somebody before him in a case that he had tried, he could have been compelled to go; adding that there was in that particular case no necessity to subpoena him.

In 1858, in R v Harvey the distinction implicit in the difference between what Patteson J had said in 1838, and what had been said by Gurney B and Martin B in the two cases called R v Morgan became more obvious for in that case Byles J said that judges of the superior courts ought not to be called on to produce their notes, and added that if he were to be subpoenaed for such a purpose he would certainly refuse to appear. One must assume that what Byles J meant by that was that he would in such a case advise that an application to set aside the subpoena should be made, and that in hisview such

Page 479 of [1960] 1 All ER 476

an application would, or ought to, succeed. In other words that he would be perhaps a competent, but certainly not a compellable, witness. He went on to say that the same objection was not applicable to the judges of the inferior courts; the inferior court in question in this case being the county court. He saw no reason why they should not be called and especially where as in this case the judge was willing to appear. It seemed therefore that in the middle of the nineteenth century, at any rate, the general view was that the judges of superior courts—that is to say the courts which now have become the High Court—were competent no doubt, but not compellable; but that all other judges, except presumably chairmen of quarter sessions, were both competent and compellable.

In Ramlochan v R in 1956, the Privy Council, on an appeal from the Court of Criminal Appeal of Trinidad and Tobago, held that on his second trial for the offence, the accused person could not as of right demand to see the judge’s notes of evidence of the first trial; and that perhaps implied that he could not have caused a subpoena to be issued to the judge to testify with the aid of those notes. The position as it existed in the middle of the nineteenth century is, therefore, consistent with the latest decision in 1956 and is also, I think, consistent with the decision in Duke of Buccleuch v Metropolitan Board of Works, where the matter is discussed by Cleasby B ((1872), LR 5 HL at p 433).

The only other authority on this that I know of is the unreported case, the name of which I believe to be Dawson v Dawsona; but I have not had the advantage of seeing any report of the case which does not, I understand, appear in any of the official law reports. I was given some information about the case from which it appears, assuming as I do that the information is correct, that the Master of the Rolls, in holding that the magistrates’ clerk’s notes of proceedings before the magistrates cannot be admitted in divorce proceedings under the Evidence Act, 1938, pointed out that other proper proceedings could be taken to prove that which it was being sought to prove by such production. The inference seems to be, if not irresistible at least very tempting, that what the Master of the Rolls was contemplating, although he did not say so in terms, was evidence from the magistrates’ clerk; and if he had thought that it was undesirable that magistrates’ clerks should come to give evidence with the aid of their notes as to what had taken place before the magistrates it seems to me to be highly probable that in that case he would have said so.

The conclusion at which I have arrived after consideration of the authorities, is that there is no rule which prevents a magistrates’ clerk from being compelled to attend and give evidence in a divorce proceeding if there is any relevant and admissible evidence which he can give; and that where he has evidence

Page 480 of [1960] 1 All ER 476

which he can give with the aid of his notes as to the proceedings which have taken place between the same parties on the same or very similar issues, there is no reason why he should not be compelled to come and give such evidence. That I think disposes of the point which is really at issue between these parties in this appeal.

Two matters remain to be disposed of. First, it is highly likely that the magistrates’ clerk, in order to avoid the necessity of coming to give evidence on subpoena in the circumstances which I have described, will provide the parties with his note, or a transcript of his note if it was in shorthand, before the divorce proceedings actually come on, in the hope that the note will be agreed between the parties to be an accurate record of what took place so that his attendance at the Divorce Court can be dispensed with. That is a practice which has been widespread and well recognised, and of fairly long standing. Whether it is desirable that rules should be made to define more clearly the position of the magistrates’ clerks, the rights of parties in divorce proceedings, and the production of the magistrates’ clerk’s notes before the proceedings are actually heard or at any particular stage, is a matter which falls to be considered not by me, but by those who are in charge of such matters, and about that I express no opinion. It may be also that the burden on magistrates’ clerks of supplying notes or attendance at court is so heavy that some form of administrative re-adjustment will be necessary. That again is not a matter for me.

The second matter that has to be disposed of is the form of the subpoena which in my judgment should be allowed in these proceedings. For reasons into which it is not now necessary to enter into detail, the appellant in these proceedings issued the subpoenas both to the magistrates’ clerk at Kingston-upon-Hull and to his assistant. It was his assistant who in fact acted as clerk to the stipendiary magistrate on the occasion on which the relevant proceedings were heard. If the clerk to the magistrates had thought fit to reveal to the appellant that a note of the proceedings existed in his possession, but that it would be handed to the assistant if the assistant were to be compelled to come to court I do not think that the appellant ever would have issued any subpoena to the clerk to the magistrates. As it is, it is now plain that the subpoenas to the clerk to the magistrates have become unnecessary—although I do not say they were unnecessary at the beginning. The subpoenas should therefore be set aside. The subpoenas to the assistant, that is to say Mr Phillips, should stand and should stand subject to any argument about their form.

[His Lordship stated that in his opinion the assistant could not be compelled to bring five copies of his notes to court but only the notes which existed. The subpoena duces tecum against the assistant should be amended to order him to bring with him and produce his note of the proceedings.]

Order accordingly.

Solicitors: Pearlman & Rosen, Hull (for the appellant); Williamsons, Hull (for the magistrates’ clerk and his assistant).

G M Smailes Esq   Barrister.

Akerib v Booth & Others Ltd

[1960] 1 All ER 481

Categories:        CONTRACT        

Court:        MANCHESTER ASSIZES        

Lord(s):        JONES J        

Hearing Date(s):        11, 18 DECEMBER 1959        

Contract – Exception clause – Tenancy agreement including agreement for certain services to be performed exclusively by landlord – Landlord not “in any circumstances” to be responsible for damage caused by water – Tenant’s goods damaged by escape of water from cistern in water closet – Water closet in landlord’s possession – Whether landlord exempted from liability for negligence.

By an agreement in writing dated 1 December 1954, the defendants let to the plaintiff four offices on the third floor of premises which they owned, a wareroom on the second floor, and a wareroom on the third floor. They retained in their possession a water closet on the fourth floor. Under the terms of the agreement, the defendants agreed to pack the plaintiff’s goods, at rates agreed on between the parties, in a workmanlike and efficient manner, on and subject to the terms and conditions set out in the schedule to the agreement; and the plaintiff undertook to employ the defendants exclusively in packing his goods, which were defined, for the purposes of the agreement, as all goods bought by or belonging to the plaintiff, or in which he might be interested, or which might come under his control in connexion with his business as carried on on the premises. By para 1 of the schedule to the agreement the defendants accepted no liability for any loss or damage to the plaintiff’s goods in transit to their premises or after the goods had left their premises. Paragraph 2 of the schedule provided that the defendants “shall not in any circumstances be responsible for damage caused by … water … to any goods whether in the possession of the [defendants] or not … ” Between 3 and 5 April, 1958, water escaped from a cistern in the water closet, owing to the negligence of the defendants or their servants, and caused damage to the plaintiff’s goods in the part of the premises let to him. In an action by the plaintiff for damages for negligence, the defendants claimed that they were protected from liability by para 2 of the schedule to the agreement.

Held – The defendants were not liable to the plaintiff in damages, as the words in para 2 of the schedule to the agreement were wide enough to protect them from liability.

A E Farr Ltd v The Admiralty ([1953] 2 All ER 512), and dictum of Phillimore LJ in Joseph Travers & Sons Ltd v Cooper ([1915] 1 KB at p 101) applied.

Notes

The exemption clause in the present case contained the words “in any circumstances” in regard to the exemption from responsibility, but did not contain a reference to causation, eg, “however caused” or “arising from any cause whatsoever”, such as had been held to extend exemption to negligent omissions.

As to agreements excluding or limiting liability, see 28 Halsbury’s Laws (3rd Edn) 86, para 91, and 8 Halsbury’s Laws (3rd Edn) 84, para 144.

Cases referred to in judgment

Alderslade v Hendon Laundry Ltd [1945] 1 All ER 244, [1945] KB 189, 114 LJKB 196, 172 LT 153, 2nd Digest Supp.

Canada Steamship Lines Ltd v R [1952] 1 All ER 305, [1952] AC 192, 11 Digest (Repl) 594, 165.

Farr (A E) Ltd v The Admiralty [1953] 2 All ER 512, [1953] 1 WLR 965, 3rd Digest Supp.

Manchester, Sheffield & Lincolnshire Ry Co v Brown (1883), 8 App Cas 703, 53 LJQB 124, 50 LT 281, 48 JP 388, 8 Digest (Repl) 66, 441.

Rutter v Palmer [1922] 2 KB 87, 91 LJKB 657, 127 LT 419, Digest Supp.

Page 482 of [1960] 1 All ER 481

Rylands v Fletcher (1868), LR 3 HL 330, 37 LJEx 161, 19 LT 220, 33 JP 70, 36 Digest (Repl) 282, 334.

Travers (Joseph) & Sons Ltd v Cooper [1915] 1 KB 73, 83 LJKB 1787, 111 LT 1088, 12 Asp MLC 561, 8 Digest (Repl) 46, 278.

Action

Under the terms of an agreement dated 1 December 1954, the plaintiff was the tenant of rooms on the second and third floors of premises belonging to the defendants, Booth & Others Ltd. Four of the rooms were offices and two were warerooms. The agreement further provided that all the plaintiff’s goods in connexion with the business carried on by him on the premises should be packed by the defendants exclusively. The defendants retained in their own possession a water closet on the fourth floor of the premises. Owing to the escape of water from a cistern in the water closet, the plaintiff’s goods were damaged. The plaintiff brought an action against the defendants for damages for negligence. The defendants relied on a clause in the agreement which provided that they should not “in any circumstances” be responsible for damage caused by water.

J R D Crichton QC and C N Glidewell for the plaintiff.

Fenton Atkinson QC and A K Hollings for the defendants.

Cur adv vult

18 December 1959. The following judgment was delivered.

JONES J. The plaintiff in this action is named Jack Akerib, and the defendants are Booth & Others Ltd. The defendants are the owners of premises at 21, Chorlton Street, Manchester, and by an agreement in writing dated 1 December 1954, they let some rooms in the premises to the plaintiff: four offices and one wareroom on the third floor, and one wareroom on the second floor. They retained in their possession a water closet on the fourth floor. There was a cistern in this water closet, and between 3 and 5 April, 1958, water escaped from this cistern owing to the negligence of the defendants or their servants and caused damage to the goods of the plaintiff in the part of the premises let to him. The defendants now admit the negligence alleged in para (b) and para (d) of the particulars of negligence, which read:

“(b) The overflow pipe from the said cistern was blocked [and was inadequate to take the normal volume or pressure of water coming into the cistern].

“(d) The defendants’ servants failed to turn off the water supply at the said control tap in the basement on the night or nights preceding the said escape although it was their duty so to do.”

The point which the defendants take is that they are protected by an exemption clause in the agreement between the parties.

By cl 1 of the agreement the defendants agree to let and the plaintiff agrees to take four offices and one wareroom on the third floor and one wareroom on the second floor. Sub-paragraphs (a) and (b) of cl 2 are not of great consequence. They provide that the defendants agree to pay all rates and taxes and to supply water and electric current. Clause 2 (c) is important, because it says that the defendants agree to make-up and/or to pack the plaintiff’s goods at the rates from time to time agreed on between the parties in a workmanlike and efficient manner and with all reasonable dispatch, having regard to the defendants’ obligations of a similar nature to other customers and otherwise on and subject to the terms and conditions set out in the schedule to the agreement. That is an important provision, and it makes it clear that this agreement is not only a tenancy agreement but an agreement which provides for other matters. Clause 3 (t) is referred to. The plaintiff thereby agrees that he will at all times during the tenancy duly perform and observe the conditions set out in the schedule to the agreement. Clause 4 is important. It reads:

“The terms of this tenancy are based upon the undertaking of the [plaintiff] (hereby expressly given) to employ the [defendants] exclusively

Page 483 of [1960] 1 All ER 481

in the making-up and/or packing (including the supply of all materials therefor) of all goods bought by or belonging to the [plaintiff] or in which the [plaintiff] may be interested or which may come under his control in connexion with the business of the [plaintiff] as carried on upon the premises all which goods are included in the expression ‘the tenant’s goods’ as used in this agreement.”

There are then two paragraphs in the schedule which are important. Paragraph 1 is as follows:

“No liability is accepted by the [defendants] for any loss or damage to any goods (which word where used in the schedule includes ‘the tenant’s goods’ as hereinbefore defined) where such loss or damage occurs whilst the goods are in transit to any premises of the [defendants] or at any time after the same have left such premises.”

Then there comes para 2, which is the exemption clause. That is the most material clause for the purposes of this case. It reads:

“The [defendants] shall not in any circumstances be responsible for damage caused by fire water [and other matters] to any goods whether in the possession of the [defendants] or not … ”

There are other provisions which I need not read. Counsel for the defendants has taken the point that para 2 of the schedule protects the defendants against liability for negligence, because the defendants could not possibly be liable to the plaintiff for any damage caused by water unless it was caused by the negligence of the defendants or their servants, and that, consequently, no other liability could arise. Apart from that, this exemption clause is a particularly powerful one, because of the presence in it of the words “shall not in any circumstances”.

The rule as to exemption clauses has been laid down comparatively recently in Alderslade v Hendon Laundry Ltd. In that case, articles were sent by the plaintiff to the defendants’ laundry to be washed and were lost. In an action by the plaintiff against the defendants for damages the defendants relied on the following condition to limit their liability: “The maximum amount allowed for lost or damaged articles is twenty times the charge made for laundering”. It was held that, as no liability could arise for loss of articles except through the defendants’ negligence, the condition applied to limit their liability in cases of negligence and applied, therefore, to limit the plaintiff’s damages; in a case where loss might arise from causes other than negligence, such a condition would not apply to limit liability for loss through negligence, unless it was expressly made applicable in clear terms.

In his judgment, Lord Greene MR said ([1945] 1 All ER at p 245, [1945] KB at p 191):

“It was argued before us for the laundry company, the appellants, that the clause did apply and was effective to limit liability for lost articles; and reliance was placed on a well-known line of authority dealing with clauses of this description. The effect of those authorities can I think be stated as follows: where the head of damage in respect of which limitation of liability is sought to be imposed by such a clause is one which rests on negligence and nothing else, the clause must be construed as extending to that head of damage, because if it were not so construed it would lack subject-matter. Where, on the other hand, the head of damage may be based on some ground other than that of negligence, the general principle is that the clause must be confined to loss occurring through that other cause to the exclusion of loss arising through negligence. The reason for that is that if a contracting party wishes in such a case to limit his liability in respect of negligence, he must do so in clear terms, and in the absence of such clear terms the

Page 484 of [1960] 1 All ER 481

clause is to be construed as relating to a different kind of liability and not to liability based on negligence.”

Lord Greene MR then gave some illustrations, which I need not read. There was a short judgment by MacKinnon LJ in which he referred to a passage from the judgment of Scrutton LJ in Rutter v Palmer. MacKinnon LJ said ([1945] 1 All ER at p 247, [1945] KB at p 195):

“The rule or principle is very admirably stated by SCRUTTON, L.J., … in a short passage in Rutter v. Palmer ([1922] 2 KB at p 92), where he said: ‘In construing an exemption clause certain general rules may be applied: First, the defendant is not exempted from liability for the negligence of his servants unless adequate words are used; secondly, the liability of the defendant apart from the exempting words must be ascertained; then the particular clause in question must be considered; and if the only liability of the party pleading the exemption is a liability for negligence, the clause will more readily operate to exempt him’.”

Some difficulty has been occasioned by the decision in Canada Steamship Lines Ltd v R, a case which came before the Privy Council after the decision in Alderslade v Hendon Laundry Ltd. Delivering the judgment of the Board, Lord Morton of Henryton read part of the passage which I read from the judgment of Lord Greene MR in Alderslade v Hendon Laundry Ltd ([1945] 1 All ER at p 245, [1945] KB at p 192), and said ([1952] 1 All ER at p 309, [1952] AC at p 208):

“It appears to their Lordships that none of the learned judges of the Supreme Court regarded this passage as being in any way in conflict with the law of Lower Canada … ”

Summarising the duty of a court in approaching the consideration of such clauses, Lord Morton Of Henryton said ([1952] 1 All ER at p 310, [1952] AC at p 208):

“(ii) If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens in accordance with art. 1019 of the Civil Code of Lower Canada: ‘In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation.’ (iii) If the words used are wide enough for the above purpose, the court must then consider whether ‘the head of damage may be based on some ground other than that of negligence’ to quote again LORD GREENE, M.R., in the Alderslade case. The ‘other ground’ must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it, but, subject to this qualification, which is, no doubt, to be implied from LORD GREENE’S words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are, prima facie, wide enough to cover negligence on the part of his servants.”

Counsel for the defendants submitted that there was no possible ground of liability in the present case except negligence; that, if water had percolated through the cistern, that would not be liability that came within the principle of Rylands v Fletcher, because it has been so held in a number of cases which are summarised in Salmond on Torts (12th Edn) at p 566, in these words:

“The rule in Rylands v. Fletcher is not applicable to the escape of

Page 485 of [1960] 1 All ER 481

things brought or kept upon his premises by the defendant with the consent of the plaintiff. In such cases the defendant is not liable except for negligence. Although not so limited, this principle finds its chief application in those cases in which the different storeys of a building are in the occupation of different persons, and the occupant of a lower storey complains of the damage done by the escape of water from an upper storey. Whether this water is rain-water collected from the roof, or water supplied ab extra in pipes, it is settled law that there is no liability for any such escape in the absence of proved negligence on the part of the upper occupant. For in such cases the water has been collected or brought there for the mutual benefit and with the express or implied consent of both parties; there is therefore no sufficient reason why the risk of accident should lie upon the upper rather than upon the lower occupant, and the only duty is one of reasonable care.”

Counsel for the plaintiff, on the other hand, suggested as other grounds of possible liability, first, the case of a claim by the plaintiff against the defendants if the defendants had packed the plaintiff’s goods badly, in breach of cl 2 (c) of the agreement, and if, in consequence of them being packed badly, they were damaged by water. I am not very clear whether that would be a claim for damage caused by water, or whether it would not really be a claim for damage caused by bad packing. But counsel suggested as another ground of possible liability if the defendants collected water in their upper premises, not of the character which I have just referred to, as being for the use of all the tenants for domestic purposes, but for some other purpose, and then allowed it to escape. In the case of that happening, he suggested that there would be a possible liability for nuisance, or the question of liability under the rule in Rylands v Fletcher. It seems to me that it is possible that some such liability might arise. I am more impressed with the second point which counsel took than I am with the first point, but, even so, I have to consider what is the effect of these very wide words: “The [defendants] shall not in any circumstances be responsible for damage … ” In relation to that, I was referred to Joseph Travers & Sons Ltd v Cooper. The summary of the judgment, as set out in the headnote, is:

“Held, (1) by the whole court, that the onus lay on the defendant, who was in possession of the goods as bailee, of showing that the negligence of his servant in leaving the barge unattended did not cause the loss, and that he had failed to discharge that onus; (2) by KENNEDY and PHILLIMORE, L.JJ., BUCKLEY, L.J., dissenting, that the term in the contract exempting the defendant from liability for damage ‘however caused’ relieved him from liability for damage caused by the negligence of his servant, and that therefore he was entitled to judgment.”

In his judgment, Kennedy LJ said ([1915] 1 KB at p 93, 12 Asp MLC at p 567):

“The general principle was laid down by LORD BLACKBURN in Manchester, Sheffield & Lincolnshire Ry. Co. v. Brown ((1883), 8 App Cas at p 709): ‘When an exception is made, the question is, What is excepted? Custom and ordinary usage says, in bills of lading when the goods are going by sea, “perils of the seas excepted”. Well, the carrier is free as regards them. No one could for a moment argue that if the shipowner’s servants negligently ran upon a rock, or negligently had a collision with another vessel, the owner of the goods carried in his ship would not be entitled to say, “I will bring an action against you for this negligent collision which has done me harm, even though you are not to be made responsible, as an insurer, for a peril of the sea, which is an excepted means of damage.” And so of leakage, and many other things of that sort. But that does not in the slightest degree show that when a man says he will not be responsible for damage however caused, that is to be cut down and

Page 486 of [1960] 1 All ER 481

made, contrary to the intention of the parties, not to include the negligence of his servants’.”

Kennedy LJ went on to say ([1915] 1 KB at p 93, 12 Asp MLC at p 567):

“In the present case, the condition which we have to consider uses the very words of exemption referred to by LORD BLACKBURN in Manchester, Sheffield & Lincolnshire Ry. Co. v. Brown ((1883), 8 App Cas at p 710), ‘damage however caused’; and I see no sufficient reason not to treat them as sufficient to protect the defendant from liability for the negligence of his servant in regard to the carriage of the plaintiff’s goods. On this ground, therefore, whilst, for the reasons which I have stated, I respectfully differ from my brother PICKFORD in regard to the view which he has taken as to the burden of proof upon the question of negligence, I think that in the result the defendant is entitled to retain the judgment in his favour, and that this appeal should be dismissed.”

There is then a passage from the judgment of Phillimore LJ which has been quoted on many occasions. He put the matter in this way ([1915] 1 KB at p 101, 12 Asp MLC at p 569):

“This then is the distinction. It is a fine one, and I am sorry to think that it is so fine; but it seems to be this. If you say ‘any loss’ you are directing attention to the kinds of losses and not to their cause or origin, and you have not sufficiently made it plain that you mean ‘any and every loss’ irrespective of the cause, and therefore you have not brought home to the person who is entrusting the goods to you that you are not going to be responsible for your servants on your behalf exercising due care for them, or possibly even for your own personal want of care. But if you direct attention to the causes of any loss, if you say ‘any loss,’ ‘however caused’ or ‘under any circumstances’, you give sufficient warning, and it is not necessary to say in express terms ‘whether caused by my servants’ negligence’, or in the bill of lading phrase, ‘neglect or default or otherwise’.”

That passage was considered comparatively recently by the Lord Chief Justice when he was Parker J in A E Farr Ltd v The Admiralty. That was a case where the plaintiffs entered into a contract for the construction of a destroyer jetty, and the contract incorporated certain conditions. The work was proceeding under the contract when an Admiralty vessel, due to admittedly negligent navigation by an Admiralty servant, collided with certain parts of the jetty. The plaintiffs were instructed, by the superintending officer under the contract, to repair the damage, which amounted to a certain sum. They claimed that sum from the Admiralty under the contract, which provided that the contractors would recover any expenses properly incurred in complying with the superintending officer’s instructions, or, alternatively, as damages for breach of contract. But the Admiralty relied on the general conditions which provided that

“… the contractor shall be responsible for … any loss or damage [to the works] arising from any cause whatsoever … ”

It was held by Parker J that the words “any cause whatsoever” were as wide as they could be and should be read as including negligent navigation of a ship by an Admiralty servant; that, once that construction was applied to the condition, there was no room for any implied term which would limit the effect of those words; and that the plaintiffs were, accordingly, not entitled to recover the sum claimed. In his judgment he said ([1953] 2 All ER at p 513):

“A number of cases have been cited to me. I do not propose to refer to any of them, because they all depend on their own particular wording, except

Page 487 of [1960] 1 All ER 481

Joseph Travers & Sons, Ltd. v. Cooper, a decision of the Court of Appeal which has often been quoted and approved.”

After referring to the facts of that case and to the passage from the judgment of Phillimore LJ which I have just read, Parker J said ([1953] 2 All ER at p 514):

“It seems to me that the words in the present case are about as wide as they can be and that I must read ‘any cause whatsoever’ as if it included and expressly said ‘including damage caused by the negligent navigation by an Admiralty servant of a ship’.”

It seems to me that the words of the exemption clause in the present case are as wide as they could possibly be, and that they are wide enough, having regard to the decisions to which I have referred, to entitle the defendants to be protected by the exemption clause, and consequently to resist liability for the damage that was done to the plaintiff’s goods. In those circumstances, therefore, there must be judgment for the defendants.

Judgment for the defendants.

Solicitors: Linder, Myers & Pariser, Manchester (for the plaintiff); A W Mawer & Co, Manchester (for the defendants).

M Denise Chorlton   Barrister.

Re Steed’s Will Trusts

Sandford v Stevenson and Others

[1960] 1 All ER 487

Categories:        TRUSTS        

Court:        COURT OF APPEAL        

Lord(s):        LORD EVERSHED MR, WILLMER AND UPJOHN LJJ        

Hearing Date(s):        22, 25, 26 JANUARY 1960        

Trust and Trustee – Variation of trusts by the court – Overriding trustees’ discretion – “Arrangement” substituting absolute beneficial interest for discretionary interest – Approval sought by beneficiary on behalf of possible future husband – Matters to be considered by the court – Arrangement need not be inter partes nor approved on behalf of proposer or trustees – Regard had to views of trustees – Variation of Trusts Act, 1958 (6 & 7 Eliz 2 c 53), s 1.

A testator by his will devised a farm on trust for sale and gave the proceeds of sale on protective trusts for the plaintiff for her life and after her death on trust for such persons as she should by deed or will appoint, with a gift over in default of appointment; and he empowered his trustees to apply capital money for the plaintiff’s benefit, it being his wish that she should have the capital during her life if she needed it. He also bequeathed a legacy of £4,000 to his trustees to use in their discretion for providing a residence for the plaintiff, the residence, if provided, or the legacy to be on the like protective trusts and subject to the like general power of appointment and other powers as the farm. After the testator’s death in 1954 the trustees bought a cafe for the plaintiff to live in and run, but subsequently the plaintiff wanted the cafe to be sold and a house to be provided for her on the farm, which was let at a rent to her brother, it being, however, in question whether he in fact paid any rent. The trustees proposed to sell the farm to a stranger and the plaintiff, who had exercised her general power of appointment in her own favour, issued a writ against the trustees for administration of the trusts and an injunction restraining the trustees from selling the farm. She applied in the action, under the Variation of Trusts Act, 1958, s 1, for approval of an “arrangement”, which she proposed, whereby the trustees would hold the farm and the property representing the legacy of £4,000 on trust for her absolutely. The trustees were not party to the arrangement, and did not approve it.

Page 488 of [1960] 1 All ER 487

Held – (i) The court ought not, in the exercise of its general equitable jurisdiction, to interfere with the discretion of trustees in the absence of mala fides or some other special circumstance showing grave misdirection; in the present case the trustees had done their utmost to discharge the duty placed on them by the testator and there was no reason why the court, out of sympathy with the plaintiff, should disregard the wishes of the testator and overrule the trustees (see p 492, letters b to d, post).

Re Mayo, Mayo v Mayo ([1943] 2 All ER 440) applied.

(ii) in deciding whether to approve under the Variation of Trusts Act, 1958, an arrangement on behalf of a possible future husband of the plaintiff the court should regard the proposed arrangement as a whole in the light of the purpose of the trust as shown by the will and any relevant evidence (see p 493, letter h, post); so regarded the proposed arrangement ought not to be approved since the will manifested an intention that trust property should be available to the plaintiff as a provision for her throughout her life and that she should not be exposed to the risk that she might part with the property if it were handed over to her (see p 494, letter d, post).

Per Curiam: it was not necessary that an “arrangement” within s 1 of the Act of 1958 should be inter partes (see p 492, letter g, post); and in the present case the court did not have to approve it on behalf either of the plaintiff or of the trustees (see p 492, letter i, to p 493, letter a, post), but the court would, in exercising its discretion, have regard to the views of trustees (see p 493, letter a, and p 494, letter g, post).

Decision of Harman J ([1959] 1 All ER 609) affirmed, but dicta not adopted on the matters stated in the per curiam above.

Notes

As to the right of trustees to decide on the exercise of their discretionary powers, see 33 Halsbury’s Laws (2nd Edn) 245, para 433; and for cases on the subject, see 43 Digest 876–881, 3202–3239.

As to the exercise of trustees’ discretionary powers in an administration action, see 33 Halsbury’s Laws (2nd Edn) 268, para 474; and for cases on the subject, see 43 Digest 881, 882, 3240–3247.

For the Variation of Trusts Act, 1958, s 1, see 38 Halsbury’s Statutes (2nd Edn) 1130.

Cases referred to in judgments

Mayo, Re, Mayo v Mayo [1943] 2 All ER 440, [1943] Ch 302, sub nom Re Mayo’s Will Trusts, 112 LJCh 257, 169 LT 205, 2nd Digest Supp.

Appeal

This was an appeal by the plaintiff from an order of Harman J dated 25 February 1959, and reported [1959] 1 All ER 609.

By a writ issued on 9 May 1958, the plaintiff claimed against the trustees of the will of Joshua Owen Steed, deceased, administration of the trusts of the testator’s will and an injunction to restrain the defendants from selling Loft Farm, Cockfield. She applied in the action by summons dated 15 May 1958 (subsequently amended in view of the commencement of the Variation of Trusts Act, 1958, on 23 July 1958) for an order directing the defendants, as trustees of the testator’s will, to abstain from selling Loft Farm, Cockfield, except with the previous consent of the plaintiff, and that an arrangement specified in the schedule to the summons might be approved in pursuance of powers conferred by the Variation of Trusts Act, 1958, and alternatively that the defendants might be empowered and directed pursuant to s 57 of the Trustee Act, 1925, to deal with Loft Farm and the property, investments and cash representing a sum of £4,000 (viz, the legacy given by cl 10 of the testator’s will) in accordance with the provisions set forth in the schedule. The schedule provided (by para 1) that the defendants should stand possessed of Loft Farm on trust

Page 489 of [1960] 1 All ER 487

for the plaintiff absolutely subject only to any rights or liabilities of the defendants arising under or by virtue of any contract for the sale thereof which might have become binding on them prior to the date of the order; and that the defendants should stand possessed of a property known as Melkreme Café, Long Melford in the County of Suffolk and all other property, investments and cash representing the legacy of £4,000 on trust for the plaintiff absolutely.

Harman J dismissed the application. The relevant facts appear in the judgment of Lord Evershed MR.

G H Newsom QC and E W Griffith for the plaintiff.

L H L Cohen for the defendants.

26 January 1960. The following judgments were delivered.

LORD EVERSHED MR. This is in more ways than one, including matters of procedure, a somewhat unusual case, as counsel for the plaintiff observed. It is also in many respects an unhappy case, and I cannot refrain from expressing my own sympathy for the plaintiff on the one side, and for the three defendant trustees on the other.

I propose in this judgment to forbear from entering, except where absolutely necessary, into matters of fact which might only serve to rub salt into existing wounds. Suffice it to say that the plaintiff was one who served loyally and most skilfully for a long period of time the testator and the testator’s wife. In consideration for those services the testator included in his will provisions for her benefit, contained in cl 9 and cl 10. It is quite plain on the evidence that the testator, while anxious to show his gratitude to the plaintiff was no less anxious that she should be well provided for and not exposed to the temptation, which he thought was real, of being, to use a common phrase, sponged on by one of her brothers. I fully realise that the plaintiff’s natural affection for that brother is not a matter which one can in any sense condemn. Blood is, after all, thicker than water, and the happiness of the plaintiff, according to her own view at any rate, is very much linked up with the association with that brother and the brother’s daughter and wife. On the other side, however, are these trustees on whom has been placed an obligation, a duty to give effect to the intentions of the man who provided the money. Counsel for the plaintiff pointed out (and it is an unfortunate aspect of this case) that during the years since the testator died, that is, a little over five years, relations between the plaintiff and these trustees have become somewhat strained because the trustees took a view which the plaintiff thought unkind to her.

The duty of a trustee is not always an easy one. Indeed, I may recall the famous saying of Professor Maitland: “Equity evolved one novel and fertile institution, namely the trust” the effects of which have become internationally famous. Though trustees may sometimes take the easy line, on other occasions trustees may feel that they must try to do, to the best of their ability, the duty cast on them, however distasteful.

I will now state the procedural anomaly in this case. In May, 1958, the present appellant issued a writ against the trustees in which she sought to restrain them from giving effect to a sale of a certain farm which was part of the property, the subject of the trusts I have mentioned. The farm is known as Loft Farm, Cockfield. In extent we were informed it was fifty acres, or perhaps a little over; but since the proceedings were started an added trouble has arisen. The farmhouse appears to have been substantially destroyed by fire. We understand, however, that to nothing with which we are concerned is that really relevant. The writ was issued because the trustees in the exercise of their powers and discretions, to which I will allude more fully in a moment, were on the point of giving effect to a bargain which they had made for the sale of the farm. I have used rather loose phrases deliberately because there is a question whether the trustees are in law bound in any case to the proposing purchaser. It will suffice for me to say, because counsel for the plaintiff conceded so much, that it may be that if the proposing purchaser took the appropriate steps he

Page 490 of [1960] 1 All ER 487

could bring proceedings in respect of the bargain if the trustees did not fulfil it; but he has not done so. He seems to have been a most amiable purchaser.

The proceedings having started, a summons was then taken out in the action in which the equitable jurisdiction of the court to control trustees was invoked. Later still, when the matter came before the court, the summons was by leave and by consent amended so that it now is also entitled “In the matter of the Variation of Trusts Act, 1958” in order to invite the court to exercise the powers under that Act to approve the “arrangement” (according to the word used in s 1 of that Act) which Miss Sandford, the plaintiff, has put forward. It is by way of appeal from the learned judge’s refusal to grant any relief on that summons that the present matter now has come before the court. Nothing now turns on the procedural aspect of the matter, as I conceive, but I have thought it right to refer to it.

I now must make some reference to the trusts, already briefly alluded to, of Mr Joshua Owen Steed’s will. By cl 9 he gave and devised to his trustees (the defendants)

“my farm known as the Loft Farm Cockfield upon trust to sell the same with power to postpone such sale for so long as they in their absolute discretion shall consider desirable and until any sale shall be effected to hold such property and on sale the proceeds of sale thereof upon protective trusts as defined by s. 33 of the Trustee Act, 1925, for the benefit of the said Gladys Louise Sandford [the plaintiff] during her life and from and after the death of the said Gladys Louise Sandford upon trust to hold the said properties or the proceeds of sale thereof in trust for such person or persons as the said Gladys Louise Sandford may by deed revocable or irrevocable or by will or codicil appoint … ”

Then there are trusts in default of appointment. The clause continues:

“Provided nevertheless and I hereby Declare that the settlement of this property upon the said Gladys Louis Sandford is made for the purpose of providing for her during her life but it is my wish that she shall have the use and enjoyment of the capital value thereof if she needs it during her life And I direct that if and when such property shall be sold my trustees may apply capital moneys from such sale to or for her benefit at such times and in such proportions as they may consider to be most to her advantage … provided that they shall consider the necessity for retaining sufficient capital to prevent her from being without adequate means at any time during her life … ”

There followed a clause in which the testator gave a sum of £4,000 to his trustees to be held on trusts similar to those elaborated in the previous clause. That second clause ended with this expression:

“The amount of this legacy is intended as a recognition of the interest which I feel sure the said Gladys Louise Sandford will take in the welfare”

of a named brother, not being the brother whom I have previously mentioned.

The relevant facts can be very briefly stated. The testator died in December, 1954, the plaintiff then being forty-eight years old and unmarried. Some little time after the testator’s death, out of the capital fund, a sum of a little under £2,000 was applied in buying for the plaintiff a café in Long Melford. Unfortunately the plaintiff’s conduct of that business has not been very successful, and she feels she would like to be relieved of it. That may happen, but it is not one of the issues before us. So far as the farm is concerned, at all relevant times, including the time before the testator’s death, her brother, to whom I earlier alluded, was the tenant. So far as this farming enterprise is concerned, the evidence seems to show he has done quite a lot of work on it and may well have improved it. His own financial position, however, appears to be, at times at any rate, precarious (to say the least). There is a question whether he has

Page 491 of [1960] 1 All ER 487

in fact paid any rent, though the evidence indicated that the plaintiff, who would be in effect entitled under the trusts to receive it, has given him receipts.

The trustees came to the conclusion more than two years ago that this farm was not a desirable asset from the point of view of the trusts which they were under a duty to administer. There is a problem about the rent. In addition, and bearing in mind the financial standing of the brother, the trustees were more than a little concerned about the liabilities that might fall on them for capital expenditure in the way of repairs and otherwise to the premises. They took the best advice they could get. They were informed by qualified experts that the value of the farm with the sitting tenant there was something not much above the figure named for probate, £1,300 odd. But the trustees cast about and eventually obtained an offer of £2,500 from the proposing purchaser, which on the evidence before the court, I have no hesitation whatever in saying is shown to be a very good offer indeed, on the footing that the purchaser takes with the sitting tenant in occupation.

Counsel for the plaintiff put forward an argument that the proposed sale was an improvident exercise of the discretion on any footing. He said that if they wanted to get rid of the farm, the thing for the trustees to do was to get rid of the tenant and then sell with vacant possession, when they would get very much more. There is no reliable evidence that they would get very much more if they took that step, and we all know that to get rid of a sitting tenant in these days, particularly where the evidence shows what he has done to his farm, would be no easy matter at all, nor does it come very naturally so to suggest from the advocate for the plaintiff. I cannot, I am afraid, pay much regard to that view.

I think that the matter—and I am not so far saying anything about the Variation of Trusts Act jurisdiction—is really capable of being put in the smallest compass. In what circumstances are the trustees to be overridden in exercising their discretion as they propose by selling, notwithstanding the very firm opposition of the plaintiff? Her interest in the property is not now confined to that of a life interest, for about the time when these proceedings started she exercised her power under cl 9 irrevocably to appoint to herself, so that on her death her estate becomes entitled to the corpus of the trust property. She is at the moment still unmarried, so that there is no other living person who can be ascertained, at any rate, who has any interest in the property. I put it in that form because, of course, the plaintiff may marry. She may marry more than once. So long as the protective trusts survive and are not displaced by an exercise of the jurisdiction under the Act of 1958, the plaintiff is incapable of putting an end to the trusts and requiring that the property be handed over to her.

So, I repeat, the problem seems to be: ought the trustees to exercise their discretion as they propose by a sale, or should they succumb to the plaintiff’s wishes, she being the person who has such an overwhelmingly preponderant interest in the trust property? I put it in that form. It may well be that other trustees might have been, as I earlier indicated, submissive and said: “Well, in all the circumstances, money, as the plaintiff said, is not everything, and we will let the matter stand as it is. If the plaintiff chooses to part with her money, that is her affair,” but they have not taken that line. The line which they have taken has been a deliberate exercise of the discretion and a deliberate discharge of the duty. There is no ground whatever for suggesting that they have done any wrong thing, as that word is ordinarily understood. How, then, can the court now be asked to override the discretion which the testator conferred on them, particularly in the circumstances which, as is proved clearly by the evidence, were in his mind, and for the purposes of preventing which the trusts were imposed?

The learned judge in the course of his judgment ([1959] 1 All ER at p 611, [1959] Ch at p 360) may perhaps have based

Page 492 of [1960] 1 All ER 487

himself on the view that the court had no power to interfere with the trustees’ exercise of their discretion unless the case was one in which a decree for administration or execution of the trusts, if not asked for, at any rate would have been granted on the material before the court if it had been asked for.

Counsel for the defendants has not founded himself on so broad a proposition. He said that in the absence of mala fides or some other special circumstances which would show at least grave misdirection of themselves by the trustees, the court will not interfere, particularly in a case where there is an express trust for sale and where the trusts as declared clearly impose, and are intended to impose, a duty in the discharge of which, as the evidence shows, the trustees have reached their conclusion. Counsel for the defendants cited the language of Simonds J in Re Mayo, Mayo v Mayo which, I think, supports the general proposition as counsel put it. I, therefore, would not desire to base myself on the suggestion which appears to underlie the language of the learned judge ([1959] 1 All ER at p 611, [1959] Ch at p 360). On the other hand, I am quite satisfied on the general principles which are applicable to these matters, that this court ought not to interfere, and will not interfere here with the exercise of the trustees’ discretion. Why, after all, one may ask, when the testator who has given this bounty, has made plain what his purpose is, if the trustees have established that they have done their utmost to give effect to the duty which is imposed on them, should the court disregard the testator and overrule the trustees out of a natural sympathy for the plaintiff? I think the answer to that is, there is no reason whatever. That is all I propose to say on that part of the case.

I now come to what has caused me greater difficulty, viz, the effect of the Variation of Trusts Act, 1958. The relevant language of s 1 is that where property is held on trusts, the court

“may if it thinks fit by order approve on behalf of … (d) any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts …

“Provided that except by virtue of para. (d) of this subsection the court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person.”

There was some discussion of the use of the word “arrangement”. Again, if I may respectfully say so, the language used by the learned judge seems to indicate that an arrangement must be in some sense inter partes, some kind of scheme which two or more people have worked out. I do not myself accept that. I think that the word “arrangement” is deliberately used in the widest possible sense so as to cover any proposal which any person may put forward for varying or revoking the trusts.

In the present case, the proposed variation (ie, the “arrangement”) which the plaintiff puts forward may be most briefly and accurately stated as involving this: in cl 9 of the will the words: “upon protective trusts as defined by s 33 of the Trustee Act, 1925” should be omitted, and similarly in the next clause the word “protective” should be omitted. If those words were omitted, the result would be that the plaintiff would become absolutely entitled to the property, because she would then be the life tenant, having appointed by irrevocable deed to herself the reversion; and that is what she seeks.

The trustees have taken the view that it is not an arrangement which, having regard to their conception of their duties and the wishes of their testator, they should approve. For my part, I do not think that approval on behalf of the trustees is the court’s function in this case, though the court in exercising its

Page 493 of [1960] 1 All ER 487

general discretion will certainly pay regard to what the trustees say and the grounds for their saying it. Nor can I see, if this was the learned judge’s view, that the court is called on by the language of this section to approve the arrangement or proposal on behalf of the proposer; that is to say, whether they think she was wise or unwise to put her idea forward. The duty of the court, as I read the section, on the facts of this case, is, that they must approve it on behalf of the only person or persons who might have an interest under the discretionary trusts and whose presence under the trusts now prevents the plaintiff saying that she can put an end to the settlement.

Having regard to the plaintiff’s age, no doubt it is true to say that she will not and cannot now have children, but she might marry, and marry more than once. She says, with some reason, that having lived for fifty-three years unmarried she does not feel in the least likely to marry now. Well, that may well be right, though many have said that before and subsequent events have proved them wrong. That, however, is neither here nor there. There does exist a discretionary trust, and a future husband of the plaintiff is a person interested under those trusts, on whose behalf the court must now approve the proposal. Having regard to what has happened between the plaintiff and her brother, it is possible that strictly speaking there has been a forfeiture and if so, the future husband or husbands would be within para (b) of the subsection, but if not he or they would be within para (d). Again, I think that does not, for present purposes, matter.

I repeat that the duty of the court is now to consider whether in the exercise of its discretion, which is framed in the widest possible language, it should approve the arrangement on behalf of what has been described in argument as the spectral spouse of the plaintiff. In doing that, what must the court consider? Not, I conceive, merely the material benefit or detriment of such spouse. Certainly not if he is to be regarded as being a person under para (d), though if he is to be regarded as falling under para (b) it is expressly enjoined that the court shall not approve the arrangement unless it is for his benefit. As I have said, I do not so read this Act as to mean that the court’s duty in the exercise of this very wide and, indeed, revolutionary discretion is confined to saying: “Would it really much harm this spectral spouse if we approve the proposal?” Bearing in mind, of course, the admitted possibility that the spouse might cease to be spectral and become a reality, I think what the court is bound to do is to see whether, looked at on behalf of the person indicated, it approves the arrangement. It is the arrangement which has to be approved, not just the limited interest of the person on whose behalf the court’s duty is to consider it. If that is right, it then follows that the court must regard the proposal as a whole, and, so regarding it, then ask itself whether in the exercise of its jurisdiction it should approve that proposal on behalf of the person who cannot give a consent, because he is not in a position to do so. If that is a right premise, then it follows that the court is bound to look at the scheme as a whole, and when it does so, to consider, as surely it must, what really was the intention of the benefactor. That such is a proper approach is at least supported by the provisions of RSC, Ord 55, r 14A (3A) (Annual Practice, 1960, p 1525), which provides that in the case of an application under this Act, where there is a living settlor the living settlor is to be a party before the court. That rule seems to me to reinforce what I conceive to underly this provision, viz, that the court must, albeit that it is performing its duty on behalf of some person who cannot consent on his or her own part, regard the proposal in the light of the purpose of the trust as shown by the evidence of the will or settlement itself, and of any other relevant evidence available.

Having so formulated the duty, I have, for my part, come to the conclusion that it would not be right for the court in the exercise of its discretion to approve this variation or arrangement. I am not uninfluenced in coming to that conclusion by any means by the circumstance that the learned judge obviously

Page 494 of [1960] 1 All ER 487

did not think it was a proposal which should be approved, though it is quite true that, for reasons which I have indicated, it may be said that he was looking at it and basing his jurisdiction on an interpretation of the section which I have not been altogether able to share, ie, that it was his duty to approve it on behalf of the proposer, the plaintiff, and also that the scheme must be regarded as intended to be in some sense inter partes and, therefore, that he had to approve it on behalf of the trustees. Disagreeing, if that is a fair view of his judgment, with that premise, nevertheless it is quite clear, I think, that the judge was by no means unsympathetic to the feelings and views of the plaintiff, but on the other hand was no less clear in his mind that the arrangement was one which so cut at the root of the testator’s wishes and intentions that it was not one the court should approve. After all, if one is asked to approve this proposal on behalf of a spectral spouse (if I may revert to that phrase), one must ask why is the spectral spouse there at all under the trust? If one asks that question, nearly everything else, as it seems to me, follows. There is no doubt why the spectral spouse is there. It was part of the testator’s scheme, made as I think manifest by the language which I have read from the will, that it was the intention and the desire of the testator that this trust should be available for the plaintiff so that she would have proper provision made for her throughout her life, and would not be exposed to the risk that she might, if she had been handed the money, part with it in favour of another individual about whom the testator felt apprehension, which apprehension is plainly shared by the trustees.

For those reasons, therefore, I also conclude adversely to the plaintiff that we should not exercise jurisdiction under the Act of 1958 to approve the arrangement which has been put forward, and which I have tried to define. That is the end of the case. I only repeat the sympathy I have felt in a distressing matter of this kind, both with the plaintiff and with the trustees, whose difficulties in discharging their duty are obvious. I should like to express the hope that perhaps time, the healer, will do much to put an end to these troubles.

WILLMER LJ. I entirely agree, and I do not find it necessary to add any words of my own.

UPJOHN LJ. I also agree. When considering applications under the Variation of Trusts Act, 1958, I agree that this court is not confined to the narrow duty of inquiring into the effect of a proposed scheme on those on whose behalf approval by the court is sought. The court must be satisfied that the scheme, looked at as a whole, is proper to be sanctioned by the court. On that matter, the views of the trustees are entitled to respect, but are not conclusive.

In the circumstances, and for the reasons stated by my Lord, I agree that this is not a scheme that is proper to be approved by the court.

Appeal dismissed.

Solicitors: Field, Roscoe & Co agents for Pretty, Dawson & Butters, Ipswich (for the plaintiff); Sharpe, Pritchard & Co agents for Barr & Co, Cambridge (for the defendants).

F Guttman Esq   Barrister.

Carr and Another v Boxall

[1960] 1 All ER 495

Categories:        QUANTUM: CIVIL PROCEDURE: ADMINISTRATION OF JUSTICE; Legal Aid and Advice        

Court:        CHANCERY DIVISION        

Lord(s):        CROSS J        

Hearing Date(s):        12 JANUARY, 3 FEBRUARY 1960        

Interest – Damages – Unliquidated damages – Interest awarded on damages during period of assessment – Law Reform (Miscellaneous Provisions) Act, 1934 (24 & 25 Geo 5 c 41).

Damages – Legal aid – Costs – Cross orders as to costs between successful assisted defendant and plaintiffs – Set-off – Money paid into court by plaintiffs partly retained there until costs of assisted defendant satisfied – “Means” – Legal Aid and Advice Act, 1949 (12 & 13 Geo 6 c 51), s 2(2)(e), s 3(4) – Legal Aid (General) Regulations, 1950 (SI 1950 No 1359), reg 16, reg 17, as amended by SI 1954 No 166.

Two plaintiffs, C and F, brought an action against B in which C claimed damages for assault and both plaintiffs claimed a declaration that B was not their tenant and an injunction; B counterclaimed, against C, damages for assault and, against both plaintiffs, for a declaration that he was their tenant and for damages for preventing his having access to the premises in question. B was an assisted person. The plaintiffs paid £600 into court against B’s claim for damages. The action was tried on 23 and 24 July 1958. C recovered 40s damages for assault. B recovered 40s damages against C for assault, and obtained against both plaintiffs a declaration that he was tenant and an inquiry as to damages, which was referred to an official referee who, in his report dated 6 November 1959, assessed them at £1,301 14s 3d. The order on further consideration would have to provide for taxation and payment (a) of certain costs by both plaintiffs to B, (b) of other costs by B to both plaintiffs, (c) of certain costs by C to B and (d) of other costs by B to C. By virtue of the Legal Aid and Advice Act, 1949, s 2(2)(e), s 3(4), and the Legal Aid (General) Regulations, 1950, reg 16, reg 17, as amended, B’s liability for costs was not to exceed an amount reasonable for him to pay, and damages and costs awarded to B would have to be paid to the Law Society and would become subject to a charge for so much of B’s solicitor and client costs as was not covered by his contribution.

Held – (i) A set-off of costs (b) above against costs (a) above, and of costs (d) above against costs (c) above, would be directed; and in order to protect the plaintiffs in relation to any balance that might remain due from B (which it was reasonable that he should pay, as the damages recovered formed part of his means within s 2(2)(e) of the Legal Aid and Advice Act, 1949) one-half of the £600 paid into court by the plaintiffs would not be paid out except on an affidavit of B’s solicitor that costs to be taxed under the order and paid by the defendant to the plaintiffs or C had been satisfied.

(ii) under s 3 of the Law Reform (Miscellaneous Provisions) Act, 1934, interest on the damages at four per cent from 1 August 1958, to the date of judgment would be awarded.

Notes

As to directing the taxation of costs of an assisted person, see 30 Halsbury’s Laws (3rd Edn) 505, 506, para 939; as to the discretion of the court over costs, see ibid, 502, para 932; and as to disposal of moneys received by the Law Society on behalf of an assisted person, see ibid, 509, para 946.

As to the statutory power to award interest on a debt or damages, see 27 Halsbury’s Laws (3rd Edn) 10, para 10; 11 ibid, 304, para 493.

For the Legal Aid and Advice Act, 1949, s 2, s 3, see 18 Halsbury’s Statutes (2nd Edn) 535, 537; and for the Law Reform (Miscellaneous Provisions) Act, 1934, see ibid, 525.

For the Legal Aid (General) Regulations, 1950, reg 16, reg 17, and amendments, see 5 Halsbury’s Statutory Instruments 216–218, and Supplement.

Page 496 of [1960] 1 All ER 495

Further Consideration

This was the further consideration of an action tried by Danckwerts J on 23 and 24 July 1958. In March, 1957, the plaintiffs, Mr Carr and Mr Farrell bought a property at Hayling Island from a Mr Brimmer. On part of the property there was a kiosk, of which the defendant, Mr Boxall, claimed that Mr Brimmer had granted him a yearly tenancy for the purpose of carrying on a grocery and greengrocery business. The plaintiffs refused to recognise that the defendant had any rights as against them to occupy the kiosk and on 10 April 1957, they removed from it certain chattels belonging to the defendant. In the course of that operation the plaintiff, Mr Carr, and the defendant came to blows. The writ in the action was issued on 20 May 1957. By the statement of claim the plaintiffs claimed a declaration that the defendant was not a tenant of the kiosk and an injunction to prevent him from entering it and the plaintiff, Mr Carr, claimed damages for assault. The defendant by his defence set up his tenancy and denied the assault and by a counterclaim claimed damages himself against Mr Carr for assault and against both plaintiffs a declaration that he had a tenancy of the kiosk, and an injunction to restrain the plaintiffs from interfering with his use of it and damages for breach of his tenancy agreement and for trespass. The plaintiffs then brought in Mr Brimmer as a third party, claiming that he had sold them the property with vacant possession and that if the defendant’s claim to a tenancy succeeded they were entitled to be indemnified by him. Shortly before the case came on for trial the plaintiffs and Brimmer conceded that the defendant was entitled to the tenancy which he claimed. The trial was confined to the issues of assault. The order in the action, which was not drawn up until 3 March 1959, provided that in the claim the plaintiff, Mr Carr, should recover 40s damages for assault against the defendant and that on the counterclaim the defendant should recover 40s damages for assault against the plaintiff, Carr. It further granted the defendant a declaration that he had the tenancy of the kiosk which he claimed and directed an inquiry before an official referee to ascertain the damages which the defendant had suffered by being prevented from carrying on his business in the kiosk. All questions of costs between the plaintiffs and defendant were adjourned for further consideration, but as the defendant was an assisted person, the order contained a provision for taxation of his costs as between solicitor and client, as required by reg 18(3) of the Legal Aid (General) Regulations, 1950, as substituted by SI 1954 No 166. In his report dated 6 November 1959, the official referee assessed the damages which the defendant had sustained by having been prevented from carrying on his business at the kiosk from April, 1957, until 1 August 1958, when he re-occupied the kiosk, at £1,301 14s 3d. All questions of costs were adjourned for further consideration

I McCulloch for the plaintiffs.

A J Balcombe for the defendant.

M J Anwyl-Davies for the third party.

Cur adv vult

3 February 1960. The following judgment was delivered.

CROSS J read a judgment in which he recited the facts and continued. The parties are agreed that the order on further consideration must provide for the payment by the plaintiffs to the defendant of £1,301 14s 3d, and also a further sum of £50, being agreed damages in tort for the conversion of certain property of the defendant with which the official referee did not deal. The parties are further agreed that in the circumstances and having regard to a payment into court by the plaintiff, Mr Carr, and the fact that the plaintiffs conceded before the trial that the defendant was entitled to a tenancy, the order will have to provide for the taxation and payment (a) of certain costs by both plaintiffs to the defendant, (b) of certain other costs by the defendant to both plaintiffs, (c) of certain costs by the plaintiff, Mr Carr, to the defendant, (d) of certain other costs by the defendant to the plaintiff,

Page 497 of [1960] 1 All ER 495

Mr Carr. All this would give rise to no difficulty whatever if the defendant was not in receipt of legal aid. As it is, however, this matter is slightly complicated by two provisions contained in the Legal Aid and Advice Act, 1949, and the regulations made thereunder. First, there are the provisions contained in s 2(2)(e) of the Act, and in reg 17 of the Legal Aid (General) Regulations, 1950, as substituted by SI 1954 No 166, to the effect that the liability of an assisted person by virtue of an order for costs made against him is not to exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including the means of all parties and their conduct in connexion with the dispute, and, secondly, there is the provision contained in s 3 of the Act and reg 16 of the Legal Aid (General) Regulations, 1950, as amended, under which any damages payable to and costs awarded to the defendant will have to be paid to the Law Society and will become subject to a charge in favour of the Law Society to recoup so much of the solicitor and client costs of the defendant as is not covered by his contribution. I can, of course, direct a set-off of the costs payable by the plaintiff, Mr Carr, to the defendant against the costs payable by the defendant to the plaintiff, Mr Carr, and of the costs payable by both plaintiffs to the defendant against the costs payable by the defendant to both plaintiffs (see s 3(6) of the Act), and this I propose to do. But there may, of course, still be a balance of costs payable by the defendant. The sum of £1,351 odd payable to the defendant by way of damages must, I think, be regarded as part of his “means” within the meaning of s 2(2)(e), and, as this sum must obviously far exceed any balance of costs which may become payable by him to the plaintiffs or the plaintiff, Mr Carr, I have no difficulty in saying that it is reasonable that he should pay such balances (if any). Indeed, the defendant’s counsel did not contend to the contrary; but counsel for the plaintiffs has argued that they ought not to have to pay the damages until after the various sets of costs have been taxed since the solicitor and client costs of the defendant may amount to a substantial sum and the balance of the damages ultimately received by the defendant if they are paid over now might be insufficient to cover the balances of costs payable by him. I should not think that this would be at all likely to happen. But plaintiffs suing a legally aided defendant are entitled to every reasonable protection, and in the circumstances I propose to direct that one-half of the sum of £600 which was paid into court by the plaintiffs against the defendant’s claim for damages, and the whole of which would normally be paid out to the defendant in part satisfaction of the damages awarded, shall not be paid to the defendant except on production of an affidavit by the defendant’s solicitor to the effect that the costs to be taxed under the order and paid by the defendant to the plaintiffs or to the plaintiff, Mr Carr, have been satisfied either by set-off or payment. The order will also give liberty to both plaintiffs and defendant to apply, so that if any difficulty arises hereafter in connexion with any balance of costs payable by the defendant, the matter can be mentioned to the court again.

Another point which was argued before me relates to interest on the sum of £1,301 14s 3d payable by the plaintiffs to the defendant. Under the Law Reform (Miscellaneous Provisions) Act, 1934, s 3, the court is given power in any proceedings for the recovery of any debt or damages to award interest on the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of judgment. Counsel for the defendant has asked me to exercise my discretion by giving his client interest at the rate of four per cent from 1 August 1958, to judgment. Counsel for the plaintiffs and for the third party, on the other hand, while not denying that I have power to award such interest, submit that such interest should not normally be awarded on unliquidated damages, and that in any event it should not begin to run until the date of the report of the official referee which assessed the damages. I cannot accept these submissions. If at the trial on 24 July 1958, Danckwerts J had been able to assess the damages suffered by the defendant

Page 498 of [1960] 1 All ER 495

up to date, and to make an order for their payment, the defendant would have received interest on the judgment so long as the plaintiffs did not satisfy it, while as soon as it was satisfied he would have had the use of the £1,301 odd and the plaintiffs would have ceased to have had the use of it. The fact that the order was not drawn up until March, 1959, and the award of the official referee was not made until November, 1959, will result, if I do not award interest, in the defendant losing the interest which he would, in one form or another, have received if the damages could have been assessed at the trial. I have no reason to think that the plaintiffs were in any way to blame for the delay which took place in drawing up the order or in presenting the inquiry as to damages; but I see no reason why they should reap any benefit from this delay. I therefore propose to direct payment of interest of four per cent on the sum of £1,301 14s 3d from 1 August 1958, down to judgment.

Order accordingly.

Solicitors: Bernard W Main agent for Bliss, Sons & Covell, High Wycombe (for the plaintiffs); Arthur S Joseph & Cates agents for MacDonald, Jacobs & Oates, Portsmouth (for the defendant); Taylor, Willcocks & Co (for the third party).

E Cockburn Millar   Barrister.

Victory (Ex-Services) Association Ltd v Paddington Borough Council

[1960] 1 All ER 498

Categories:        LOCAL GOVERNMENT        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        19, 20 JANUARY 1960        

Rates – Limitation of rates chargeable – Ex-services association – Main object to promote comradeship between and improve conditions and welfare of all ranks of H M Froces – Organisation for the advancement of social welfare – Ascertainment of main object of organisation having written constitution – Rating and Valuation (Miscellaneous Provisions) Act, 1955 (4 & 5 Eliz 2 c 9), s 8(1)(a).

The main object of an Ex-Services Association, which was a company limited by guarantee with no share capital incorporated in 1947, was “to promote comradeship between and improve the condition and welfare of all ranks, both past and present, of the Navy, Army and Air Forces of the United Kingdom, British Dominions, Colonies, India, and such allied nations as the council shall from time to time determine … ” With a view to the furtherance of this object, the association maintained a residential club, in premises which it had acquired from a fund of £300,000 raised by voluntary subscriptions. Membership of the club entailed a payment of 10s and a member of the club was also a member of the association. Membership was restricted, with a few exceptions, to ex-service men and women, and the total membership was about 23,000. The association also provided on the club premises a welfare advice bureau and employment agency for ex-service men and women whether members of the club or not. On the question whether the club was occupied for “the purposes of an organisation … whose main objects are … otherwise concerned with the advancement of … social welfare”, so that the association would be entitled to limitation of rates under s 8(1), (2) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955,

Held – (i) The association was entitled to limitation of rates under s 8 of the Act of 1955, because the words of the main object of the association, “to promote comradeship between and improve the condition and welfare

Page 499 of [1960] 1 All ER 498

of all ranks”, described an object which was for the advancement of social welfare, the purpose of such advancement not being confined to helping those who were in financial need; moreover the necessary element of altruism was present and the class of persons intended to be benefited was sufficiently wide.

(ii) in order to ascertain what were the main objects of an organisation which had a written constitution, the proper approach was to look at the written constitution and only to consider the organisation’s activities if the written objects were ambiguous.

National Deposit Friendly Society Trustees v Skegness UDC ([1958] 2 All ER 601) explained.

Appeal allowed.

Notes

On the distinction between objects in the true sense and clauses directed to the means by which they may be carried out, to which Lord Parker CJ refers at p 501, letter f, post, this case should be considered with North of England Zoological Society v Chester RDC ([1958] 3 All ER 535, [1959] 3 All ER 116). The approach approved in the present case (see (ii) above) to the determination of which of numerous objects is the main object is the same approach as was adopted by Lord Evershed MR in the case cited (see [1959] 3 All ER at p 117).

For the Rating and Valuation (Miscellaneous Provisions) Act, 1955, s 8(1), see 35 Halsbury’s Statutes (2nd Edn) 394.

Cases referred to in judgments

National Deposit Friendly Society Trustees v Skegness UDC [1958] 2 All ER 601, [1959] AC 293, 122 JP 399, [1958] 3 WLR 172, 3rd Digest Supp.

Working Men’s Club and Institute Union Ltd v Swansea Corpn [1959] 3 All ER 769, [1959] 1 WLR 1197.

Appeal

This was an appeal by the Victory (Ex-Services) Association Ltd by way of Case Stated by the Justices for the County of London sitting as an Appeals Committee of Quarter Sessions. On 21 May 1957, the justices found that the appellants were not entitled to limitation of rates under s 8 of the Rating and Valuation (Miscellaneous Provisions) Act, 1955, and dismissed their appeal against a rate made and demanded by the respondents, Paddington Borough Council, in respect of the premises of the Victory Ex-Services Club at 73/79, Seymour Street, W1. The justices found that the appellants were not established or conducted for profit. The facts appear in the judgment of Lord Parker CJ.

J R Willis QC, G N Eyre and A P Fletcher for the appellants, the rate-payers.

J T Molony QC and F A Amies for the respondents, the rating authority.

20 January 1960. The following judgments were delivered.

LORD PARKER CJ. The appellants are a company limited by guarantee with no share capital, and were incorporated on 7 February 1947. In 1944 there had been a public appeal for money to form a fund to commemorate members of HM Forces who had died in the last war, “such memorial to take the form of a residential club in London which would be open to all ex-service members of such forces”. A sum of over £300,000 was raised and the appellants, with that money, acquired premises at 73/79, Seymour Street, Marylebone, and opened the premises under the style of the Victory Ex-Services Club in 1948. Those are the premises with which this appeal is concerned. The club, as I have said, was known as the Victory Ex-Services Club, and, with a few minor exceptions, the membership of the club was restricted to ex-service men and ex-service women. The membership of the club entailed a payment of 10s per head and a member of the club thereupon also became a member of the association. There

Page 500 of [1960] 1 All ER 498

are approximately 23,000 such members. Apart from that part of the premises occupied as a club there is a part where the appellants provide a Welfare Advice Bureau and Employment Agency. That part of the premises is open to all ex-service men and women without charge whether or not they are members of the club or members of the association. The area of the premises made available for the club is, according to the findings in the Case, considerably larger than that part used for the advice bureau and the employment agency. The justices, as I have said, found that the appellants were not entitled to relief. Their opinion is given in para 6 of the Case, which states:

“We were of opinion that the main objects of the appellants were not concerned with the advancement of social welfare within the meaning of the said s. 8(1)(a) and accordingly dismissed the appeal.”

This is yet another of the many cases that have come before the courts of recent years under this section (s 8). The relevant words for the purposes of the present appeal are as follows (sub-s (1)):

“This section applies to the following hereditaments, that is to say—(a) any hereditament occupied for the purposes of an organisation (whether corporate or unincorporate) which is not established or conducted for profit and whose main objects [and the relevant words] are charitable or are otherwise concerned with the advancement of … social welfare.”

Certain matters are quite clear and are agreed in this case. The appellants were the occupiers of the hereditament. The hereditament was occupied for the purposes of the appellants. The appellants are a corporate organisation and they are not established or conducted for profit. Accordingly, the sole question in this case is whether they are an organisation whose main objects are the advancement of social welfare. Their activities, to many of which I have referred, though not in detail, are fully set out in the case, but before one ever comes to a consideration of their activities, it seems to me that one must look at their objects. Prima facie where an association has a written constitution setting out its objects, it is to the written constitution that one looks to see what are the objects and what are the main objects. If there were any ambiguity it would be right to look to see what in practice the society concerned was doing, what their activities were in fact. It is true that in the first case which came before the courts and went to the House of Lords, namely, National Deposit Friendly Society Trustees v Skegness UDC, Lord Denning in the course of his speech said this ([1958] 2 All ER at p 612, [1959] AC at p 320):

“But, in order to ascertain the ‘main objects’ of an organisation, you are entitled, I think, to look not only at its rules but also to consider the way in which it has conducted its affairs.”

That is a very wide and general statement, but as far as I know that has never been the approach except in the case of an ambiguity or in a case such as arose in Working Men’s Club and Institute Union Ltd v Swansea Corpn. There the position was that an organisation, formed a very long time ago, I think in 1862, had by the time when the rating authority sought to levy rates changed its activities very considerably, and it is to be observed that Morris LJ said ([1959] 3 All ER at p 772):

“The objects of the union are set out in r. 2, which I have read. Those objects are numerous and diverse. In considering the applicability of s. 8 it becomes necessary to ascertain which are the ‘main objects’. In my judgment this cannot be discovered merely by reading r. 2 or by construing r. 2. It was legitimate therefore to consider the way in which the union has conducted its affairs. It may be that an organisation will have numerous

Page 501 of [1960] 1 All ER 498

declared objects which over many years will remain its objects, but that in one period one or more of such objects will be the main ones while in another period other objects will be the main ones.”

In the present case, however, as I have said, this company was incorporated in 1947, and there is no suggestion in the Case that its original objects have in practice changed. Accordingly, for my part, I think that the proper approach to this matter is to look, at any rate in the first instance, at the written constitution and only to look at the activities if there is any ambiguity in the objects expressed in the constitution. Under the memorandum of association by para 3 it is provided: “The objects for which the association is established are”, and then a number (A) to (I) are set out. I think that it is necessary for me to read only (A) and (B). They are in these terms:

“(A) To promote comradeship between and improve the condition and welfare of all ranks, both past and present, of the Navy, Army and Air Forces of the United Kingdom, British Dominions, Colonies, India, and such allied nations as the council shall from time to time determine, together with all ranks, both past and present, of the W.R.N.S., A.T.S. and W.A.A.F., and the corresponding services of the British Dominions, Colonies, India and allied nations.

“(B) With a view to the furtherance of the last-mentioned object, to undertake all or any of the following activities, namely:—(i) to conduct a welfare and advice bureau; (ii) to conduct an employment agency; (iii) to establish, own, maintain and conduct a residential club or clubs for such persons as are mentioned in object (A), and for the wives or husbands of such persons as the case may be, and to provide a club-house or club-houses and all suitable conveniences and amenities in connexion therewith.”

I do not read the so-called objects set out in (C) to (I) because I think that it is clear, and indeed I think that counsel admitted, that those are not objects in the true sense but are merely means by which the objects shall be carried out. It also seems to me that 3 (B) which I have read is a means of carrying out the object expressed in (A) because it begins with the words “With a view to the furtherance of the last-mentioned object”. Though the words that follow may be of relevance in construing (A), they are not in themselves in my judgment an object. The main object or objects are to be found in para 3 (A), and they are in these words: “To promote comradeship between and improve the condition and welfare of all ranks, both past and present”, broadly speaking of the past and present members of the forces of the Crown throughout the Commonwealth. It seems to me that the class of persons whom it is intended to benefit are clearly of a sufficiently large and of sufficient public character to enable it to be said that the words “advancement of social welfare”, if otherwise applicable, apply. It is also clear that in so far as it is necessary there is here an element of altruism since the funds of the association were raised by voluntary gifts. The sole question is whether it is proper to say that the words “to promote comradeship between and improve the condition and welfare of all ranks both past and present” of members of the forces can properly be said to be the advancement of social welfare.

Counsel for the respondents has said that the object in para 3 (A) is not a single object but that there are two objects, first to promote comradeship between the members of the forces, and second to improve the condition and welfare of those members. He says that whereas it may be that an object to improve the condition and welfare of members of the forces may be capable of coming within the words “advancement of social welfare”, an object which exists solely to promote comradeship between those members cannot be said to be the advancement of social welfare. He says that however praiseworthy such an object may be, it is not an advancement of social welfare within the meaning of the section.

Page 502 of [1960] 1 All ER 498

One must be careful in these cases to apply, as indeed one always should, a strict construction. It would be quite wrong to say that the appellants’ objects were very worthy objects and to try to stretch the words to give them relief, because in so far as they were relieved the burden would fall on others, namely, the ratepayers in Paddington. It is purely a question of construction whether those words can be brought within the words of the statute, “the advancement of social welfare”.

For my part, I think that there is only one object and a composite object in para 3 (A). It is not divided up. It is framed in a composite form, “to promote comradeship between and improve the condition and welfare of” all ranks of the forces. Read as a composite whole, I can see no reason why those words do not aptly describe the concept of the advancement of social welfare, and I think that some help is to be gained from the activities which it is envisaged will be used for the furtherance of the object contained in that composite phrase. Under para 3 (B), which I have already read, the activities contemplated are the conducting of a welfare and advice bureau, an employment agency, a residential club and amenities, and it seems to me that read as a whole those words in para 3 (A) can perfectly properly be construed as having the object of the advancement of social welfare.

It has been said in some of the cases that the conception is that it should be an activity which benefits the needy but, in my judgment, the reference to the needy in such a concept does not necessarily mean those in need financially. It seems to me that in dealing with the vast number of people who as the result of the many wars are now ex-servicemen and those who are at present serving in the forces there is a need for the sort of activities which this association propose to carry out and in fact have carried out with the object of promoting comradeship and improving the condition and welfare of all ranks. In my opinion, this association fully qualifies for the relief provided by s 8 of the Act. Accordingly, I find it unnecessary to go to a further stage and consider the activities of the association or to consider what are the main or subsidiary activities of the association. It is sufficient to say that they are activities which were contemplated by the memorandum of association as a means whereby the objects expressed in para 3 (A) should be carried out.

So far as the Case is concerned, there is no finding of fact which is binding on this court and would force me to come to a different conclusion. The justices very properly set out the facts of the case. They do not find affirmatively what they consider is the main object. That, as I said, I think at any rate in this case is a pure question of the construction of the memorandum of association, and all they hold is that as a matter of opinion the objects, whatever they are, are not concerned with the advancement of social welfare. In my judgment, the justices came to a wrong decision; the main objects of the association were concerned with the advancement of social welfare, and accordingly this appeal should be allowed.

CASSELS J. I agree.

ASHWORTH J. I also agree.

Appeal allowed.

Solicitors: Speechly, Mumford & Soames (for the appellants); Town clerk, Paddington (for the respondents).

E Cockburn Millar   Barrister.

Horton v Horton

[1960] 1 All ER 503

Categories:        ADMINISTRATION OF JUSTICE; Judiciary        

Court:        PROBATE, DIVORCE AND ADMIRALTY DIVISION        

Lord(s):        LORD MERRIMAN P AND COLLINGWOOD J        

Hearing Date(s):        22, 25 JANUARY 1960        

Magistrates – Husband and wife – No case to answer – Appeal – Re-hearing ordered by Divisional Court – Right to call evidence at re-hearing notwithstanding election at former hearing.

Where a complaint under the Summary Jurisdiction (Separation and Maintenance) Acts, 1895 to 1949, is dismissed by a magistrates’ court after a submission by the husband that there is no case to answer and an election by him to call no evidence, the husband is not precluded in the event of a re-hearing being ordered by the Divisional Court from giving evidence at the re-hearing.

Notes

As to powers of the Divisional Court in matrimonial appeals, see 12 Halsbury’s Laws (3rd Edn) 510, para 1120; and for cases on the subject, see 27 Digest (Repl) 732, 733, 6983–7000.

As to submitting no case to answer, see 12 Halsbury’s Laws (3rd Edn) 387, para 852, note (e); and for cases on the subject, see 27 Digest (Repl) 544, 4921, and 3rd Digest Supp.

Cases referred to in judgment

Preston-Jones v Preston-Jones [1951] 1 All ER 124, [1951] AC 391, 27 Digest (Repl) 320, 2670.

Storey v Storey (20 January 1960), unreported.

Appeal

The wife appealed against a decision of the Bristol magistrates dismissing her complaint under the Summary Jurisdiction (Separation and Maintenance) Acts, 1895 to 1949, that the husband had committed adultery.

The wife’s complaint was that in about June or July, 1959, the husband committed adultery with a woman unknown at a place unknown. At the hearing before the magistrates the husband’s legal representative submitted that there was no case for the husband to answer, and he elected to stand on his submission and to call no evidence. The magistrates ruled that there was no case for the husband to answer and dismissed the complaint. The wife appealed.

Bruce Holroyd Pearce for the wife.

J A Cox for the husband.

25 January 1960. The following judgment was delivered.

LORD MERRIMAN P. I have come to the conclusion that the decision was wrong. In circumstances like the present it would be open to us to find, not only that the submission and the ruling that there was no prima facie case were wrong, but also that the magistrates ought to have made an order on the evidence before them and that we, therefore, ought to make an order on it. Although that would be a possible conclusion I for my part think that it is better that the case should be sent back for a re-hearing, and I think that the reason for that will become apparent as I discuss the details.

In particular I am influenced by the fact that only last week we resisted a submissiona that where an election and a decision to stand on it had been made, we could not send the case back, but must deal with it ourselves because, if we sent it back, the election to give no evidence would still stand and the

Page 504 of [1960] 1 All ER 503

husband would be barred from giving any evidence at all. I do not take that view, and, indeed, we expressly declined to take it in that particular case, because the overriding consideration in these matrimonial matters is that we are dealing with status. I do not need to refer to authority about it, but in one of the cases that has been cited to us, Preston-Jones v Preston-Jones concerning the onus of proof, Lord MacDermott ([1951] 1 All ER at p 138, [1951] AC at p 417), with whom Lord Simonds agreed ([1951] 1 All ER at p 127, [1951] AC at p 401), emphasised the point that these cases deal with questions of status in which the public—the unseen third party, as the public has sometimes been called—has a very great interest. For that reason alone I should be against any attempt to shut out the husband who made this submission and elected to stand on it from giving any of the explanations which may be open to him to give on the re-hearing. I realise that when one orders a re-hearing in these cases it does give both sides a chance to improve their case, and there may be (though I am not going to point them out) places in which the wife could dot the i’s and cross the t’s in the evidence which she produced, and there would be nothing to stop her from doing so. Similarly, it may be open to the husband to give such explanation as he can of the circumstances. [His Lordship then found that on the evidence the wife had established a case which the husband should have been called on to answer. Collingwood J agreed and their Lordships ordered a re-hearing.]

Order accordingly.

Solicitors: Mowll & Mowll agents for Lawrence Williams & Co, Bristol (for the wife); Edward Heal & Smith, Bristol (for the husband).

A T Hoolahan Esq   Barrister.

Inland Revenue Commissioners v Hinchy

[1960] 1 All ER 505

Categories:        TAXATION; Income Tax        

Court:        HOUSE OF LORDS        

Lord(s):        VISCOUNT KILMUIR LC, LORD REID, LORD RADCLIFFE, LORD COHEN AND LORD KEITH OF AVONHOLM        

Hearing Date(s):        11, 12, 14 JANUARY, 18 FEBRUARY 1960        

Income Tax – Return – Incorrect return – Penalty – Treble the tax which he ought to be charged – Whether treble the total amount of tax payable for year of assessment or only treble the amount of tax evaded – Income Tax Act, 1952(15 & 16 Geo 6 & 1 Eliz 2 c 10), s 25(3) (a).

The interest on the respondent’s Post Office Savings Bank account for the year ending with 5 April 1952, was £51 5s 9d. In the return of his income for the purpose of assessing him to income tax for the year 1952–53, which he signed on 19 April 1952, and delivered to the Commissioners of Inland Revenue, he stated that his income from this source for the year was £18 6s. The commissioners made no assessment on the respondent on the basis of his understatement but, after discovering the understatement from sources other than the respondent, they made an assessment on him in November, 1955, under Sch D for £14 5s. In June, 1956, the commissioners brought an action claiming from the respondent under s 25(3)(a) of the Income Tax Act, 1952, the £20 fixed penalty and also “treble the tax which he ought to be charged under this Act”, which sum they computed at £418 14s 6d, being three times his income tax (viz, £125 6s 6d, Sch E, together with the £14 5s, Sch D) for the year 1952–53.

Held – The Crown was entitled under s 25(3)(a) to the full amount claimed, viz, the £20 and £418 14s 6d, as fixed penalties, because, giving the words of s 25(3)(a) their ordinary meaning, the phrase “treble the tax which he ought to be charged” meant “treble the whole tax which the taxpayer ought to be charged for the relevant year”.

A-G v Till ([1910] AC 50) considered.

Quaere whether (a) surtax and (b) income tax at the standard rate deducted at source from dividends or interest were excluded from a computation of treble tax for the purposes of the penalty under s 25(3)(a) (see p 511, letter a, p 517, letter d and p 521, letters d and e, post).

Decision of the Court Of Appeal ([1959] 2 All ER 512) reversed.

Notes

As to the recovery of income tax penalties, see 20 Halsbury’s Laws (3rd Edn) 717, para 1441; as to their recovery before the General Commissioners, see ibid, p 718, para 1444; and as to proceedings for penalties in the county court, see ibid, para 1442; and for cases on the subject, see 28 Digest (Repl) 405, 406, 1802–1812.

For the Income Tax Act, 1952, s 25, see 31 Halsbury’s Statutes (2nd Edn) 37.

Cases referred to in opinions

A-G v Johnstone (1926), 136 LT 31, 10 Tax Cas 758, 28 Digest (Repl) 406, 1809.

A-G v Till [1909] 1 KB 694, 78 LJKB 708, 100 LT 275, revsd HL, [1910] AC 50, 79 LJKB 141, 101 LT 819, 5 Tax Cas 440, 28 Digest (Repl) 405, 1804.

A-G v White (3 March 1931), unreported.

Lord Advocate v McLaren (1905), 5 Tax Cas 110, 28 Digest (Repl) 407, 931.

Appeal

Appeal by the Crown from an order of the Court of Appeal (Lord Evershed MR, Ormerod and Harman LJJ), dated 11 May 1959, and reported [1959] 2 All ER 512, reversing in part an order of Diplock J dated 2 December 1958, and reported [1958] 3 All ER 682, in an action by the Crown for penalties against the respondent, Albert Edward Hinchy, under the Income Tax Act,

Page 506 of [1960] 1 All ER 505

. The facts are set out in the opinion of Lord Keith of Avonholm, p 518, letter f.

The Attorney General (Sir Reginald Manningham-Buller QC), John Pennycuick QC and A S Orr for the Crown.

The respondent did not appear and was not represented.

Their Lordships took time for consideration

18 February 1960. The following opinions were delivered.

VISCOUNT KILMUIR LC. My Lords, this is an appeal from an order of the Court of Appeal (Lord Evershed MR, Ormerod and Harman LJJ) in England, allowing in part an appeal by the Crown from a judgment of Diplock J on the trial of an action for penalties under the Income Tax Act, 1952. Diplock J held that judgment should be entered for the Crown for the sum of £20 without costs, while the Court of Appeal substituted a judgment in favour of the Crown for £62 15s. The Court of Appeal thus added to the sum of £20 treble the tax on the amount which would have escaped taxation had a return made by the respondent formed the basis of assessment. The facts are that, on 19 April 1952, the respondent filled up the prescribed form containing a return of income and claim for allowances for the income tax year 1952–53. In that return he set out the figures of £18 6s as the bank interest. In fact, the correct amount of his income from that source in the year ending 5 April 1952, was £51 5s 9d. In order to appreciate the basis of the judgments of the courts below, it is material to observe that no assessment was ever made on the respondent on the basis of his incorrect return, that the only assessment made on him for the relevant year was made after the correct amount had been discovered, and that this assessment in respect of all the tax for which he was liable for that year was made before the issue of the writ on 13 June 1956.

These facts raise the question of the construction of sub-s (3) of s 25 of the Income Tax Act, 1952, which provides:

“A person who neglects or refuses to deliver, within the time limited in any notice served on him, or wilfully makes delay in delivering, a true and correct list, declaration, statement or return which he is required under the preceding provisions of this Chapter to deliver shall—(a) if proceeded against by action in any court, forfeit the sum of £20 and treble the tax which he ought to be charged under this Act; or (b) if proceeded against before the General Commissioners, forfeit a sum not exceeding £20 and treble the tax which he ought to be charged under this Act, and where he is proceeded against before the General Commissioners, the penalty shall be recovered in the same manner as any other penalty under this Act, and the increased tax shall be added to the assessment.”

The argument for the Crown which was developed before Diplock J and, later before the Court of Appeal, may be summarised as follows. The penalty imposed by the said s 25(3), in the case of proceedings by action in a court, is a fixed penalty which the court (unlike the General Commissioners, in proceedings brought before those commissioners) has been given by the legislature no power to mitigate but which the Commissioners of Inland Revenue or the Treasury may mitigate under s 500 of the Act. The said penalty has been applied by the legislature to a very wide variety of defaults. It embraces cases in which no return has been delivered at all, cases in which an incorrect return has been delivered, and cases (as under s 27, requiring the delivery by employers of lists of their employees) where a duty is cast on one person to deliver a document relating to the tax liability of another, and where default in performing such duty can have no bearing on the ascertainment of the defaulter’s own liability to tax. It applies irrespective of whether there has been fraud on the part of the defaulter and to cases in which there has been a serious, trivial, or

Page 507 of [1960] 1 All ER 505

even no direct, loss of tax to the Revenue. But the penalty applied to all these cases is a single penalty, and, on the true construction of the relevant words in s 25(3) (which must, it was submitted, be given the same construction as the corresponding words applied to proceedings before General Commissioners in s 55 of the Income Tax Act, 1842), such penalty is a penalty of £20 and treble the total tax to which the defaulter is chargeable by direct assessment for the year of assessment in question; the words “ought to be charged” limiting the ambit of the penalty to such tax as could be directly assessed on the defaulter, and there being in this respect a material difference in the wording of s 25(3) and the wording “treble the tax chargeable in respect of all the sources of his income” of para 4(1) of Sch 6 to the Income Tax Act, 1952. It was further contended that the penalty could not be made to work in all the cases to which it is made applicable if it were construed as limited to treble the tax avoided by the default; and that, if the legislature had intended the subsection to bear this meaning, it would have used the phraseology to be found in s 48 of the Act. The Crown’s construction of the words had not, so far as was known, ever been challenged in the period of over a century which had elapsed since the enactment of the Income Tax Act, 1842.

Diplock J took the view that the consequence of the construction of s 25(3) contended for by the Crown seemed to him to be absurd and unjust, and if there was some other possible construction, consistent with the words, which led to results less absurd and unjust, he would be inclined to adopt it. In his view, there was such an alternative construction, for it seemed to him that a reasonable meaning of the words “the tax which he ought to be charged under this Act” was the tax to which the taxpayer ought to be duly assessed but to which he had not been duly assessed by reason of the default; that is to say, the increased tax which, when one looked at the latter part of the subsection, was to be added to the assessment. In this respect, he thought that s 48 of the Income Tax Act, 1952 (dealing with penalties for fraud), expressed in clearer and lengthier language what was intended to be conveyed by the elliptical expression in s 25(3). This construction raised the question of determining at what point of time one must ascertain the amount of tax which the taxpayer ought to be charged, and Diplock J gave the answer of the date at which the proceedings, whether before the court or the General Commissioners, are brought. As, therefore, in the present case the proceedings had been commenced after the respondent had been charged with all the tax for which he was liable, there was at the date of the commencement of the action no tax with which he ought to be charged under the Act and the only amount recoverable was the fixed penalty of £20. Like the Court of Appeal, I regret that I am unable to accept this view as to the point of time. Its result would be that, if the error were discovered before the assessment was made, the making of the correct assessment would eradicate that portion of the penalty arrived at by multiplying the tax. I cannot accept this. The liability to the penalty must, in my view, arise when the offence is committed, that is, when no return is made, when the time for making a return has expired, or, where an incorrect return has been made, when such a return has been received by the commissioners.

The Court of Appeal did, however, approve of the antecedent reasoning of Diplock J and the gist of their view is expressed in the following quotation ([1959] 2 All ER at p 522, [1959] 2 QB at p 378):

“So as a matter of English it seems to us at least a legitimate interpretation of the phrase ‘tax which he ought to be charged’ to limit its significance to that amount of tax with which, at the relevant point of time, the taxpayer ought to be charged but with which he has not been charged by reason of his defective return; in other words, the tax appropriate to the undisclosed income.”

Page 508 of [1960] 1 All ER 505

The difficulty of the view of the Court of Appeal is that this expression appears to predicate that there has been an assessment by which the taxpayer has been charged with the lesser amount by reason of his defective return, and that this forms the basis of the penalty under s 25. It is unfortunate that the Court of Appeal do not seem to have appreciated that there had been no assessment on the respondent on the basis of the incorrect return which could play its part in the quantification of the penalty. In this case, as in many others, there is not, to use the language of the Court of Appeal ([1959] 2 All ER at p 522, [1959] 2 QB at p 378), “tax with which … he [the taxpayer] has not been charged by reason of his defective return”. He has not been charged because the time for charging him has not yet arrived. When that time does come, non constat that the return will have any causative effect on his assessment. The latter may be based on other information and in the case of income under Sch E must be based on his income in the current and not the past year. It is an essential constituent of this problem that, at the time of the commission of an offence under s 25, assessment may be in the future, whereas under s 48 (the fraud section) assessment must be in the past.

Nevertheless, although the concluding reasoning of the Court of Appeal does not, in my opinion, fit the facts of this case or the general procedure of taxation, it would be wrong to ignore what the Attorney General termed the “underlying thought of that judgment”. They considered that the penalty provisions produced minimum penalties wholly unrelated to the extent of the default, so extravagant as to be shocking in a final provision, and at least one anomaly which might well be thought to run quite contrary to ordinary justice. They considered that the penalties were so unfair and unjust and contained variations so numerous and illogical as to produce, in their view, the result that no safe view could be got, from other sections of the Act, in the attempt to construe s 25. Although they did not use the words of Lord Loreburn LC in A-G v Till (5 Tax Cas 440 at p 452), that the penalties were unreasonable or oppressive, yet they clearly considered these to be of that nature. I asked Mr Pennycuick what was his submission as to the law which should guide the court in construing provisions which appeared to be oppressive and unreasonable. His answer was that, if there were any ambiguity, the court would prefer that construction which did not lead to an oppressive and unreasonable conclusion, but if the words were clear then they had to be given full effect, whether or not that effect was unreasonable or oppressive. He submitted that there was no ambiguity in this case.

Bearing this in mind, and also the fact that the respondent was not represented, I have tried to formulate an argument implicit in the words of the section. I remind myself that the effect of the decision of this House in A-G v Till (5 Tax Cas 440) was to rewrite this section in the sense: “A person who neglects to deliver any return or who delivers a return which is not correct is liable to the penalty.” As the section can look to the future, can the words creating the penalty be extended distributively and respectively so that the penalty becomes the sum of £20 and treble the whole tax which he ought to be charged under this Act where he neglects to deliver a return, and, in the case of an incorrect return, the sum of £20 and treble the tax on the amount which would have escaped taxation if the incorrect return made by the respondent had formed the basis of assessment? I cannot give this meaning to the words. So to do would entail the making of an artificial assessment on the basis of the return, the making of the true assessment and the subtracting of the one from the other. I do not pause to speculate on the hypothetical difficulties of policy and procedure which might arise. I am content to say that to add the necessary words would, in my opinion, be legislation and not construction. I also tried to consider whether, on the assumption of an ambiguity, I could gain assistance from the fact that the element of treble tax was attached to penalties after proceedings in court by s 23(2) of the Finance Act, 1923, which also changed the penalty for abettors

Page 509 of [1960] 1 All ER 505

of fraud in what is now s 48 of the Income Tax Act, 1952. Again, I could find nothing to drive me to a recondite secondary meaning. I cannot ignore the fact that a multiplier of the tax with which he ought to be charged was made a constituent of the penalty for the equivalent of this offence by s 118 of the Income Tax Act, 1805. I cannot believe that, in the year of Trafalgar and Austerlitz, Parliament was considering such a refinement as the present argument entails. The more, however, I consider the piece-meal additions of the last 150 years, the more glad I am of the assurance of the Attorney General that the penalties are being reconsidered.

Moreover, although the present point was not argued, it was assumed that “treble the tax to be charged under this Act” meant treble the whole tax for the relevant year by two members of the Court of Appeal and by Lord Atkinson in A-G v Till, by Rowlatt J in A-G v Johnstone (10 Tax Cas 758 at p 762), inferentially by the Court of Session in Lord Advocate v McLaren and by the High Court and Supreme Court of what was then the Soarstat Eireann in the unreported case of A-G v White. It is impossible, in my view, to give the words a different meaning in that part of the subsection which applies to proceedings before the commissioners from that which applies to proceedings in court, although in the case of the commissioners it is a maximum and not a fixed penalty

I have, therefore, come to the conclusion that the words must bear their ordinary meaning and that this appeal must be allowed. At the request of the Revenue there will be no order for costs.

LORD REID. My Lords, if the appellants, the Commissioners of Inland Revenue, are right in their main contention, any taxpayer who makes a mistake in his annual income tax return and has not discovered and rectified it must, if he is sued, be subjected by the court to a penalty of £20 and treble the whole tax which he ought to be charged for the year; that penalty is in addition to the tax which he normally has to pay. It does not matter how innocent the mistake may have been or how large the penalty may be, the court has no power to modify or reduce the penalty, although such a penalty, with the modern rates of income tax, would be ruinous to most taxpayers with moderate or large incomes. The Crown maintains that the only remedy lies with it, and that it is for it in its sole and unfettered discretion (unless the Treasury choose to interfere) to determine what it thinks would be a proper penalty in each case and to reduce the penalty imposed by the court accordingly. The Crown has, in fact, exercised this power for a long time and it is no doubt a tribute to the way in which it has exercised its discretion that this appears to be the first time that the extent of its power has been challenged in court and that it has been possible to delay for so long the revision of the penalty provisions in the Income Tax Acts, although the need for such revision had long been evident. The incongruities and anomalies in these penalty provisions have a very long history. Some had their origins in the Income Tax Acts of 1799, 1803 and 1806, and even in the Act of 1842 there were already serious anomalies. But in those days the rate of tax was low, and penalties based on the total amount of tax payable were probably not oppressive. And this is not the only chapter of the law in which ill-conceived provisions introduced by temporary Acts with limited application have long survived without any radical revision and have to be applied in circumstances very different from those which existed at their origin.

This case turns on the proper construction of s 25(3) of the Income Tax Act, 1952:

“A person who neglects or refuses to deliver, within the time limited in any notice served on him, or wilfully makes delay in delivering, a true and correct list, declaration, statement or return which he is required under the

Page 510 of [1960] 1 All ER 505

preceding provisions of this Chapter to deliver shall—(a) if proceeded against by action in any court, forfeit the sum of £20 and treble the tax which he ought to be charged under this Act; or (b) if proceeded against before the General Commissioners, forfeit a sum not exceeding £20 and treble the tax which he ought to be charged under this Act, and where he is proceeded against before the General Commissioners, the penalty shall be recovered in the same manner as any other penalty under this Act, and the increased tax shall be added to the assessment.”

In a somewhat similar provision in the Act of 1799 the penalty was simply £20. Then, after some amendments, the Act of 1842, s 55, provided:

“And be it enacted, that if any person who ought by this Act to deliver any list, declaration, or statement as aforesaid shall refuse or neglect so to do within the time limited in such notice, or shall under any pretence wilfully delay the delivery thereof, and if information thereof shall be given, and the proceedings thereupon shall be had, before the commissioners acting in the execution of this Act, every such person shall forfeit any sum not exceeding £20, and treble the duty at which such person ought to be charged by virtue of this Act, such penalty to be recovered as any penalty contained in this Act is by law recoverable, and the increased duty to be added to the assessment … ; and every person who shall be prosecuted for any such offence by action or information in any of Her Majesty’s courts, and who shall not have been assessed in treble the duty as aforesaid, shall forfeit the sum of £50.”

In the Act as printed by the Queen’s Printer there is a comma after £20 in the passage “shall forfeit any sum not exceeding £20, and treble the duty … ” An argument was submitted that this comma showed that “not exceeding” only governed “£20” and did not apply to “and treble the duty”, so that the General Commissioners only had power to reduce the £20 and had no power to reduce that part of the penalty which consisted of treble duty. But before 1850 there was no punctuation in the manuscript copy of an Act which received the royal assent, and it does not appear that the printers had any statutory authority to insert punctuation thereafter. So even if punctuation in more modern Acts can be looked at (which is very doubtful), I do not think that one can have any regard to punctuation in older Acts. And, omitting the comma, I would hold that the whole of the penalty was subject to modification under the Act of 1842. There is now no comma in s 25(3)(b) and, in my view, if proceedings are now taken before the General Commissioners they are entitled to reduce the penalty of treble tax. In 1842, if the matter was taken before a court, there was a fixed penalty of £50; with the low rates of tax then in force £50 was presumably thought at least comparable with £20 plus treble tax. Under the Act of 1918, s 107, as originally enacted, the penalty which a court could impose was still only £50, but the rise in the rates of income tax made that an inadequate penalty in many cases and the provision which now appears in s 25(3)(a) was introduced by the Finance Act, 1923, s 23(2).

Before dealing with the crucial question in this case, the proper construction of s 25(3)(a), there are several matters which it may be convenient to deal with at this stage. The Crown submitted that this subsection is governed by s 25(2), so that it only applies if the return or other statement was not true and correct to the best of the judgment and belief of the person making it. We were informed that the Crown never takes action under this section unless it thinks that the declaration required by sub-s (2) was not truly made, but I can find no basis in law for it being a defence to an action to prove that the return or statement was made to the best of the judgment and belief of the defendant. The offence is not delivering a true and correct return, and if, in fact, it is not true and correct the penalty follows as a matter of course. Then it was said that, whatever be the true meaning of “the tax which he ought to

Page 511 of [1960] 1 All ER 505

be charged under this Act”, it cannot include either surtax or tax deducted at source by those who pay dividends, etc. It is not necessary to decide those matters in this case, and I will only say, particularly with regard to surtax, that I am not convinced that these are excluded and that, in any revision of this and other provisions, they ought to be made clear.

In determining the proper construction of s 25(3), one must bear in mind that the subsection applies to other things, as well as a return of the taxpayer’s own income; it applies to any list, etc, which he is required to deliver under a number of other sections. Under s 21, he may be required in certain cases to make a return of another person’s income and to submit to being charged to tax in respect of it. Under s 22, he must render a statement of money received by him on behalf of another person. Under s 23, he must deliver a list of lodgers and inmates of his dwelling-house. And s 30 applies the provisions of s 25 to lists of employees (s 27) and commissions (s 28) and interest paid to others without deduction of tax (s 29).

I do not propose to examine the other penalty provisions in the Act of 1952. It is, no doubt, true that every Act should be read as a whole but that is, I think, because one assumes that, in drafting one clause of a bill, the draftsman had in mind the language and substance of other clauses and attributes to Parliament a comprehension of the whole Act. But where, as here, quite incongruous provisions are lumped together and it is impossible to suppose that anyone, draftsman or Parliament, ever considered one of these sections in the light of another, I think that it would be just as misleading to base conclusions on the different language of different sections as it is to base conclusions on the different language of sections in different Acts. As an example of incongruity, I need only refer to the admitted fact that the penalty in sections dealing expressly with fraud is less than the penalty under s 25 (if the Crown’s construction of s 25 is right) for errors which may only be due to mistake.

I can now state what I understand to be the rival contentions as to the meaning of s 25(3). The Crown contends that “treble the tax which he ought to be charged under this Act” means treble his whole liability to income tax for the year in question (less surtax and tax deducted at source as I have already explained). It is not so easy to state the contrary contention briefly and accurately. Unfortunately the respondent was not represented in this House. That was due to no fault of the Crown, and the Attorney General very properly drew your Lordships’ attention to points on which counsel for the respondent might have relied, but that is not altogether an adequate substitute for an argument for the respondent. Broadly, the contention is that it cannot have been intended that that which would have been chargeable in any event on the inaccurate return which was sent in should enter into the computation of the penalty, that the penalty must have been intended to have some relation to the offence, and that the tax which he ought to be charged must be the additional tax which he ought to be charged by reason of the discovery of the true state of affairs. Otherwise the penalty will often be grossly and extravagantly disproportionate to the offences. A man might be properly chargeable to £5,000 tax on his actual return and properly chargeable to £5,100 tax on the correct return. If the Crown is right, the penalty would be £15,320; if the other view is right, it would only be £320. And even more extravagant cases could arise when the taxpayer’s omission was not in respect of his own income. If he fails to return a correct list of lodgers or employees or money collected for or interest paid to others, the penalty would have no relation to that failure—it would be treble his own income tax although he had made a correct return of his own income and paid the full tax due on it. And an even more difficult case might arise under s 21; under that section, he is chargeable both in respect of his own income and in respect of income belonging to another. If one of the returns which he makes is inaccurate, is the penalty treble the whole tax which he ought to be charged, ie, the tax on both his own and the other income, or can something be read

Page 512 of [1960] 1 All ER 505

in, even if the Crown is right, so as to base the penalty on something less than the whole tax which he ought to be charged under the Act?

Difficulties and extravagant results of this kind caused Diplock J and the Court of Appeal to search for an interpretation which would yield a more just result. What we must look for is the intention of Parliament, and I also find it difficult to believe that Parliament ever really intended the consequences which flow from the Crown’s contention. But we can only take the intention of Parliament from the words which they have used in the Act and, therefore, the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreasonable or unjust the consequences and however strongly we may suspect that this was not the real intention of Parliament. The Court of Appeal found it possible to adopt a secondary meaning for the crucial words. Their conclusion appears to be summed up in a sentence ([1959] 2 All ER at p 522, [1959] 2 QB at p 378):

“So as a matter of English it seems to us at least a legitimate interpretation of the phrase ‘tax which he ought to be charged’ to limit its significance to that amount of tax with which, at the relevant point of time, the taxpayer ought to be charged but with which he has not been charged by reason of his defective return: in other words, the tax appropriate to the undisclosed income”.

I agree with the Court of Appeal that, if it is possible to infer the meaning which they attach to these words, that should be done. One is entitled and, indeed, bound to assume that Parliament intends to act reasonably and, therefore, to prefer a reasonable interpretation of a statutory provision if there is any choice. But I regret that I am unable to agree that this case leaves me with any choice. When I look at the way in which the provisions of s 25(3)(a) were brought into the Income Tax Acts, and at the way in which those provisions must be applied in circumstances other than those contemplated by the Court of Appeal, I find myself unable to hold that the crucial words are capable of the interpretation which they have adopted.

The Act of 1952 is a consolidating Act, and one must presume that such an Act makes no substantial change in the previous law unless forced by the words of the Act to a contrary conclusion. Therefore, in interpreting a consolidating Act it is proper to look at the earlier provisions which it consolidated. The previous law was contained in s 107 of the Income Tax Act, 1918, and s 23(2) of the Finance Act, 1923, to which I have already referred. Section 107 gave the court no power to impose a treble tax penalty and it did not require the General Commissioners to impose the maximum penalty; they could modify the penalty to any extent they might think just. The Attorney General was unable to point to any provision in force before 1923 which required the maximum penalty to be imposed even in cases where there was no fraud; there were certain provisions imposing the maximum penalty if fraud was established. Section 23(2) of the Act of 1923 is in the same terms as s 25(3)(a) of the Act of 1952. If the Crown’s construction is right, then Parliament imposed for the first time in 1923 an obligation to inflict the full treble tax penalty even on innocent though negligent offenders, and did this at a time when the rate of tax (then 4s 6d) made such a penalty oppressive in most cases. It is so contrary to the practice of Parliament to commit in effect unlimited discretion to a branch of the executive as to the amount of penalties to be imposed on persons guilty of no more than negligence that I would not easily hold that this was done in 1923; but I am forced to the conclusion that this was then done and it is idle to speculate whether Parliament, or, indeed, any member of Parliament, understood the full effect of the enactment. I refer to the appellants as a branch of the executive because s 1(2) of the Inland Revenue Regulation Act, 1890 (which does not appear to have been amended or repealed), provides that they

Page 513 of [1960] 1 All ER 505

“shall in the exercise of their duty be subject to the authority, direction, and control of the Treasury, and shall obey all orders and instructions which have been or may be issued to them in that behalf by the Treasury”.

It is proper to add that the present practice appears to be to confine such orders and instructions within narrow limits.

I find it impossible to hold that the words “not exceeding £20 and treble the tax which he ought to be charged under this Act” in s 107(1)(a) of the Act of 1918 meant anything other than treble the whole tax which he ought to be charged for the relevant year. The argument for the more limited meaning adopted by the Court of Appeal is based almost entirely on the extravagant consequences which flow from giving the words in the present Act their natural meaning. But that argument loses almost all its force when applied to the Act of 1918. Under that Act, the General Commissioners, an independent body, had full discretion to modify the penalty, and all that could then be said was that, owing to the increase in the rates of tax, the maximum penalty had become so high as to be extravagant in the great majority of cases. But there was no obligation under the Act of 1918 to inflict the maximum penalty in cases where it was disproportionate to the offence. In 1923, the same words were inserted in s 107(1)(b), but with the omission of the vital words “not exceeding”. Why these words were omitted I do not know, but their omission creates the present difficulty. Normally it would be impossible to hold that, when the same words as those already in one subsection are later inserted in another subsection of the same section, they can be given a meaning different from the meaning of the words which were there already. I do not find it possible in this case to hold either that the words in the original Act of 1918 had a limited meaning, or that they were given a limited meaning by the Act of 1923, or that, after 1923, the same words in sub-s (1)(a) and (b) had different meanings; I cannot avoid the conclusion that these words did not have a limited meaning before 1952 and that, therefore, they do not have a limited meaning now when they are reproduced in the consolidating Act of 1952.

My Lords, I have had an opportunity of reading the speech about to be delivered by my noble and learned friend, Lord Radcliffe. I am in general agreement with it and, in particular, I agree with his account of the methods of tax administration and of the way in which this case has been dealt with, so I need not add further to my own speech already, perhaps, too long. In my judgment, this appeal must be allowed.

LORD RADCLIFFE. My Lords, in my opinion, we are bound to allow this appeal.

It has not been in dispute that, in 1952, the respondent committed a breach of the obligation imposed on him by s 19 of the Income Tax Act, 1952. He did not, when required so to do, deliver to the inspector of taxes a true and correct return of all the sources of his income and of the amount derived from each source for the year preceding the year of assessment 1952–53. In fact, the signed return which he did deliver on 19 April 1952, stated incorrectly that his income for the year 1951–52 from interest on bank deposits, including Post Office and other Savings Bank deposits, had been £18 6s whereas his true income from that source had been £51 5s 9d. Further, it has not been in dispute, that, by virtue of s 25(3) of the same Act, he thereby forfeited, if proceeded against in a court of law, the sum of £20 and treble the “tax which he ought to be charged” under the Act. Such a forfeiture is imposed by the section on anyone who

“neglects or refuses to deliver … or wilfully makes delay in delivering, a true and correct … return … ”

It was decided by this House in A-G v Till that a person who, though not failing to make a return at all, nevertheless makes an incorrect return is within

Page 514 of [1960] 1 All ER 505

the description that I have quoted above. I am bound to say, looking back, that I think that that decision might well have been otherwise and, if it had been, the problem that we are now faced with would not have arisen. But, since it went the way it did, we must now take it that the respondent was a person who neglected to deliver a true and correct return.

The whole question, therefore, is what penalty is attached to his default by the words “the tax which he ought to be charged under this Act”. The Crown says that the meaning of these words is that the defaulter incurs, apart from the £20, a penalty of three times his total income tax bill in respect of all sources of income directly assessable for the year in which the offence is committed. It says that this is the way in which the words have been understood and applied ever since they first appeared in an Income Tax Act (the first use of them in this context was in s 181 of the Income Tax Act, 1805); that whenever their import has been noticed judicially, as in A-G v Till and in A-G v Johnstone, the same meaning has been attributed to them; and that the Income Tax Codification Committee itself, which, in the years before 1939, laboured with so much intelligence and devotion to no eventual result, clearly assumed this to be the correct meaning. All this, I think, is true; and these considerations are persuasive. But, having regard to the extreme severity which might attend such a penalty under present scales of taxation and the fact that in this very case the Court of Appeal have found it possible to impute another and less onerous meaning to the words, I think it better to approach the question of construction without giving any weight to this consideration that, if the Court of Appeal are right, they have discovered in the phrase a significance that has long lain unobserved, and so lain after many persons, it is fair to suppose, have had cause to scrutinise them with somewhat anxious attention.

What, then, are the alternative readings which have been suggested? Diplock J before whom this action came in the High Court, took the view that (i) the point of time at which there should be ascertained the amount of tax which a defendant “ought to be charged” was the date of the initiation of the proceedings for the penalty, and (ii), if, at that date, there had been a correct assessment on the full chargeable income, there was no tax with which it could be said that the defendant ought to be charged and nothing, therefore, recoverable except £20. In my opinion, this view is wrong in its initial assumption. The date at which any penalty incurred is to be ascertained must be the date when the offence is committed; assessment or payment after that cannot affect the liability. Otherwise, every time, an error being detected, a correct assessment is made in order to determine the true tax liability for the year, the penalty by way of multiplied tax automatically disappears. I agree with the learned Master of the Rolls (Lord Evershed) when he says in the judgment delivered in the Court of Appeal ([1959] 2 All ER at p 521, [1959] 2 QB at p 377): “We do not think that this can be right.” In the Court of Appeal itself, a different interpretation prevailed. It was based on the general idea that, when there has been an incorrect return, the tax which the maker of it “ought to be charged” in treble is something which can be called the “excess tax”. This is variously described ([1959] 2 All ER at pp 521, 522, [1959] 2 QB at pp 377, 378) as

“the tax which the taxpayer ought to be charged and was not charged because of his failure to make a true and correct statement of his income”

and as

“that amount of tax with which, at the relevant point of time, the taxpayer ought to be charged but with which he has not been charged by reason of his defective return: in other words, the tax appropriate to the undisclosed income.”

My Lords, I do not think that the words of s 25(3) which are in question

Page 515 of [1960] 1 All ER 505

give any hint of an intention to measure the tax penalty by a computed excess of this sort. It can be done if an appropriate formula is used. Section 48, for instance, does apply such a formula, where the conditions are such that an assessment, though an inadequate one, has been made. Again, s 49 allows treble the excess tax where a false return of Sch D income has led to under assessment, or would have led to it if undetected. But no such formula is used or indicated in the section that we have to consider. Moreover, there is another and fundamental obstacle to the introduction of this “excess tax” idea which the Court of Appeal judgment imports into the meaning of the section. Their definition depends essentially on the existence of a first incorrect assessment, such as they believed to have been made in this case, which assessment can then be compared with the corrected true assessment which emerges when the full facts are known. We were assured by the Attorney General in the course of his argument that, in this case, there had been no such assessment for 1952–53, and, as this misunderstanding contributed to the Court of Appeal’s view of the admissible interpretation of s 25(3), I think it necessary to set out exactly what did apparently happen, because, so far as I can see, the order of events followed here is as likely as not to be typical of the order that will be observed in any other case of untrue or inaccurate returns.

In April, 1952, the respondent made a return purporting to set out all the sources of his income for the year 1951–52 and of the amount derived from each source. This return would afford, of course, valuable information for the purposes of the assessment to be made on him for the year 1952–53, though, in so far as the basis of assessment is the current year’s income, not that of the preceding year, such a return can be informative only, and there is no inherent connexion between the figures it shows and the figures that should be used for the true assessment. It also affords, I suppose, a means of checking by its figures the assessments which have been made for the previous years on that year’s current income. No assessment for 1952–53 was ever made on the respondent on the basis of his statement that his income (I include in this the income of his wife) from Savings Bank interest for 1951–52 had been £18 6s. The only assessment that was ever made on him for 1952–53 was made after the true figures had been established. There was then an assessment for each schedule, Sch D and Sch E, under which he derived assessable income, and these assessments have been put in evidence. The Sch D assessment on “untaxed interest” is not intelligible unless the Sch E assessment is first looked at. The Sch E assessment relates directly only to the respondent’s income from his employment in HM Customs and Excise. But, owing to the practice of “coding in” for the purpose of PAYE deductions, two small items of income which really belonged to Sch D were taken into account (see Part III of the assessment form) for the purpose of arriving at the code number appropriate to the operation of PAYE. By this means, £21 of the Savings Bank interest and £19 of “excess rents” income were taken to reduce by £40 the £396 of allowances which would otherwise have been taken into account in allotting the PAYE code number and, ultimately, in computing the Sch E assessment. The result was that £21 of the untaxed interest was, in effect, taxed under Sch E and recovered through PAYE; and the deduction of £21 from the full amount of £51 “untaxed interest” in the Sch D assessment is merely a recognition of this arrangement, designed to prevent the £21 from being taxed twice over. It does not mean that the respondent’s assessments, when they came to be made, were on anything less than the full sum of £51 for untaxed interest. Considering the way that the matter is dealt with in more than one letter in the correspondence exhibited, I do not wonder that the Court of Appeal took the facts to be otherwise. I still do not know why the figure of £21 was taken for the purpose of adjusting the PAYE code number. It is quite possible that it was related to the £18 6s shown in the inaccurate return of April, 1952; but, even so, PAYE is no more than provisional retention of tax. It is not assessment.

Page 516 of [1960] 1 All ER 505

It appears, therefore, that, in this case, there was never any failure to charge the taxpayer with the true amount of his tax for the year or any inadequate lower assessment induced by his wrong return. There never was any sum, therefore, that could be computed by comparing the tax charged by such a first assessment with the total tax liability when ascertained, nor was there any figure attributable to an additional assessment. As I see no reason to suppose that what happened here represents an unlikely sequence of events, I am afraid that I regard the successive failures of Diplock J and the Court of Appeal to find a maintainable interpretation of “treble the tax which he ought to be charged under this Act” that escapes the onus of trebling the whole tax bill for the year as a very strong indication that there are really no means of escape open. I do not wish, however, to accept this conclusion without giving some attention to another possible interpretation which is indicated by that phrase of the Court of Appeal “the tax appropriate to the undisclosed income”. Can one fairly regard the words of the section as enacting in some disguised way that the basis of computation is to be the difference between what would be the tax on the figures actually shown by a man in his return, whether or not there has been any assessment, and the tax on what he ought to have shown if he had made a full and correct return? This is a device applied by s 49 to certain cases, but it is noticeable that it there applies only to Sch D income. I find it impossible to penetrate this disguise. With all respect to those who may think otherwise, the contents of even a completely full and correct return are no measure of the proper assessment of a man’s income for the year in which he makes it. The assessing authority is not under so much as a presumptive duty to make an assessment according to the return; how could it be when, except for Sch D, the basis of assessment is the current year, which is not dealt with by the return, not the past year, which is? Assessments can be made, even where there is no return. They can be made, whatever a return shows. The contents of a return can be queried and, further, more reliable information extracted. They can be cross-checked and the results amended in consequence of extraneous information available to the surveyor. In other words, the relationship of the figures of the return to the proper assessment of the year is so tenuous that I do not find it possible to suppose that the “tax which he ought to be charged under this Act” can ever have been intended to mean the amount of tax which a person would escape if his inaccurate return were accepted as providing final figures for the purposes of assessment. The basic facts of the administration and collection of tax do not admit any reality to such a conception.

I come back, therefore, to the only construction which is, I believe, open to a court of law. When a man does what the respondent did, sends in what is not a true and correct return, he commits an offence, and the measure of his penalty must be ascertained as the situation is at that date. At that date he will neither have been assessed nor will he have paid any tax for the year except, it may be, some provisional deduction under PAYE. The question what tax he ought to be charged under the Act seems to me to be, in these terms, a simple one. It is the sum of tax for which he will become liable for that year when assessment properly carried out under the Act has imposed liability on him. It could not be anything else when the offence consists of failing or refusing to make a return at all, and I do not see how the meaning of the words can change if the offence takes the form of not making a full return. I appreciate that the view to which the Court of Appeal felt entitled to come was largely encouraged by certain general considerations as to the result of accepting the Crown’s contention in cases of this kind. Personally, I do not find any of these considerations compulsive, in the sense that they can alter the meaning of the words that Parliament has used; but, as I am as well not altogether in agreement with the cogency of some of the things that have been said, I ought, perhaps, to make a brief allusion to them.

Page 517 of [1960] 1 All ER 505

The first point made related to the way the Crown’s claim was computed, which was said to be inconsistent with its own construction of the section. It was said, for instance, that, if the measure was the full tax payable by direct assessment in the year, tax levied by deduction being omitted, it was anomalous to include Sch E tax collected under PAYE. This is not, I think, a valid criticism. Schedule E income remains liable to direct assessment at the instance either of the Revenue or of the taxpayer, though assessment can be dispensed with, and the PAYE deductions are only provisional payments of tax in advance. In this respect, income subject to PAYE is quite different from, for instance, dividend income which is not directly assessable to income tax. Secondly, it was said that the treble tax claimed on the Savings Bank interest had, in fact, been computed only on the undisclosed portion instead of on the whole. This criticism arises from a misunderstanding of the two assessments and the way they worked out and I have already explained what the actual circumstances were. Lastly, the comment was made that, to be consistent, surtax ought to be included in the basic computation as well as income tax. The respondent was not a surtax payer, so the point does not arise here. All that need be said is that, if it does have to be decided at any time, there are arguments for treating the assessment and collection of surtax as carrying their own history and their own penalties and s 25(3) as not including surtax in the “tax” to be computed. In any event, the point has no bearing on what we have now to determine.

Secondly, it is, of course, very true that the penalty provision, as interpreted by the Crown, may not only impose fines which for some taxpayers would require payment of tens of thousands of pounds but also presents striking anomalies when its effect is contrasted with the effect of other penalty sections in the same Act. I do not think it necessary to dwell on these or to illustrate them, because the opportunities of doing so are almost inexhaustible. What I do not perceive, however, is how these considerations can alter the interpretation of the words used by the statute. If it is said that Parliament could not have intended to impose such onerous fines for breaches which, in some cases, may not be blameworthy in any degree, I can only point out that Parliament has imposed just the same penalty where the default is neglect to make any return at all, and yet none of the suggested interpretations of the section achieves any penalty short of treble the whole direct assessment in those cases where there has been neither return nor assessment. Personally, I do not see any marked distinction in degrees of blame between mere carelessness which results in not making a return and that form of carelessness which leads to a return being made which misleadingly appears to be complete when it is not. Again, whatever we managed to say about the meaning of the words in this case, there is no doubt that s 18 of the Act would still impose a penalty of treble the whole tax when a person without just excuse fails to give a notice of his liability to tax; that para 4 of Sch 6 would impose what may be the still more onerous burden of treble the tax on all income from all sources if there is fraud in claiming a relief; and that s 48, s 49 and s 441 would contain provisions which in certain cases involve a charge of three times the full tax.

When it is said, therefore, that we ought to search for a more rational meaning of the words of s 25(3) than that which is offered by the interpretation supported by the Crown, I think that much depends on what you regard as rational in this setting. Most of these penalty clauses have their origin in the Tax Acts of 1803–06, if not in the earlier Act of 1799. Income tax administration in those years was not the huge and efficient system to which we are now accustomed. If the purpose of Parliament at that time was, as I suspect, to impose heavy penalties for any kind of evasion, primarily as a deterrent, there is no reason for surprise that the various penalties are neither adjusted harmoniously to each other nor in themselves proportionate to degrees of blame or threatened losses of revenue. It was as “rational” to hit out blindly and heavily at anyone who was caught

Page 518 of [1960] 1 All ER 505

as to maintain savage and indiscriminate punishments under the criminal code until an effective police force had been established. What is more surprising is that, apart from the small changes made by the Finance Act, 1923, nothing has been done by Parliament ever since to review the whole unsatisfactory set of penalty sections and remodel them in the light of conceptions appropriate to the present day. Such a review has been called for both in the Report of the Income Tax Codification Committee (see Cmd 5131, paras 173–183) and in the Final Report of the most recent Royal Commission on Income Tax (see Cmd 9474, Part VII, cap 33), and the recommendation has, no doubt, reached the destination usually reserved for advice invited by governments from such committees.

LORD COHEN. My Lords, I had commenced writing a full judgment in this case but, before I had completed it, I had the privilege of reading the opinion which has just been expressed by my noble and learned friend, Lord Radcliffe. I agree so entirely with his conclusions and with the reasons he gives for thinking this appeal must be allowed that I shall only detain your Lordships long enough to say that I prefer not to express any opinion whether surtax enters into the calculation of treble tax until that point arises.

I would allow the appeal.

LORD KEITH OF AVONHOLM. My Lords, the judgment of the Court of Appeal would seem to have proceeded on a false premise, namely, that, after the false return was made by the respondent, he was assessed on the return so made and that there was a balance of income undisclosed on which he had not been assessed. But that was not the position. The discovery by the Revenue of the undisclosed income was made after the return had been made and before any assessment was made. The respondent was then assessed, after deduction of due allowances, on the full amount of income subject to assessment, including the Post Office Savings Bank interest which he had failed to disclose. Thereafter proceedings were taken for recovery of penalty in respect of the incorrect return. The Court of Appeal, in my opinion correctly, say that the offence is committed when the false return is received by the commissioners. The liability to penalty necessarily arises at the time of the offence. It is a case of a false return with which we are here concerned, and it will be convenient to set out the relevant and material dates. The return, which was in respect of the income tax year 1952–53, was dated 19 April 1952. It disclosed as arising in the year ended 5 April 1952, untaxed interest on accounts and deposits in banks, including Post Office and other savings banks of £18 6s. In fact, the Post Office Savings Bank interest credited to the respondent and his wife in that year was £51 5s 9d. After several years’ correspondence, an assessment was made on 30 November 1955, of £30 in respect of untaxed interest, tax on which at 9s 6d in the pound came to £14 5s. This amounted to tax on the whole £51 of Post Office Savings Bank interest, for £21, part of his personal allowance, was deducted from the £51, leaving a net sum of £30. On 9 March 1956, a Sch E assessment was issued, in respect of the respondent’s employment, amounting, after allowances, to £427 on which tax was computed of £125 6s 6d. These two assessments, apart from some Sch A assessment, otherwise settled I think by allowances, constituted the respondent’s whole tax liability for the year 1952–53. It may be noted that liability in respect of a Sch E assessment was computed on income arising in the tax year and was the subject of direct assessment. It is not income, as the Court of Appeal seem to have thought, from which tax is deducted at the source. The liability in respect of the Savings Bank interest on the other hand fell to be computed on the income arising in the preceding year, 1951–52. The respondent’s total liability to tax for the year 1952–53, as so assessed and charged, was thus £139 11s 6d, the sum of £14 5s and £125 6s 6d. The next material date to be noted is 13 June 1956, the date of issue of the writ for penalties. The claim made by

Page 519 of [1960] 1 All ER 505

the writ is for £438 14s 6d, being penalty, under s 25(3) of the Income Tax Act, 1952, of £20 and treble the tax of £139 11s 6d.

On one view of the Court of Appeal judgment, it might appear that, if the true facts and sequence of events had been appreciated, they might have decided this case in favour of the Crown. I quote only one passage from the judgment where they say ([1959] 2 All ER at p 521, [1959] 2 QB at p 377):

“There remains the judge’s interpretation of the relevant words (the third view above indicated), viz., that ‘the tax which he ought to be charged’ means what we have called the excess tax, i.e., the tax which the taxpayer ought to be charged and was not charged because of his failure to make a true and correct statement of his income. Where there has been failure to make any return at all, the ‘tax which he ought to be charged’ will, of course, be the total of his tax liability for the relevant period. But where, as in the present case, the taxpayer’s default lay in an understatement of one of his sources of income, then the tax which he ought to be charged will, on this interpretation, mean the tax which he ought to be charged (but was not charged by reason of his default) on the undisclosed income.”

It would seem clear from this passage that the court did not, as I have said, appreciate the true facts of the case. If the court had dealt with the true situation, I am not clear what result they would have reached. There is much in the train of thought in the judgment which suggests that they might still have held that the proper penalty was only £20 and treble tax on the amount which the taxpayer failed to disclose on his return. As the respondent was not represented on the appeal and no case was lodged on his behalf, it is only right that any point that can be advanced on his behalf should be considered. It is partly, I understand, because of the difficulties and uncertainty which the Crown conceive this judgment has created for it in its enforcement of the penalty provisions of the Act that it has brought this appeal.

The claim here is made under s 25(3) of the Income Tax Act, 1952. The point in issue is a short one, namely, what is meant by the words in sub-s (3)(a), “treble the tax which he ought to be charged under this Act”. There are a number of penalty sections under the Act, all of which were referred to in the course of the argument. They do not provide any coherent or intelligent code, and in the confines sometimes of even a single section apparent anomalies can be discovered. It will be convenient to consider these sections in three groups according to the variation of language by which the penalty is imposed.

In the first group I place s 18 and s 25, omitting for the time being the sections to which s 25 applies; in the second group s 48 and s 49; and in the third group para 4 of Sch 6. Sections 18 and s 25 read as follows:—

“18.—(1) It shall be the duty of every person who is chargeable to income tax for any year of assessment to give notice to the surveyor that he is so chargeable at or before the end of that year: Provided that no such notice need be given by any person as respects any year for which he has delivered a statement of his profits and gains in accordance with the provisions of this Act.

“(2) If any person, without reasonable excuse, fails to give such a notice as aforesaid, he shall—(a) if proceeded against by action in any court, forfeit the sum of £20 and treble the tax which he ought to be charged under this Act; or (b) if proceeded against before the General Commissioners, forfeit a sum not exceeding £20 and treble the tax which he ought to be charged under this Act, and where he is proceeded against before the General Commissioners, the penalty shall be recovered in the same manner as any other penalty under this Act, and the increased tax shall be added to the assessment.

Page 520 of [1960] 1 All ER 505

“25.—(1) Any such lists, declarations, statements and returns as are provided for by the preceding provisions of this Chapter shall be in such form as the Commissioners of Inland Revenue shall prescribe, and in prescribing forms under this subsection the commissioners shall have regard to the desirability of securing, so far as may be possible, that no person shall be required to make more than one return annually of the sources of his income and the amounts derived therefrom.

“(2) Any statement of annual value or profits or gains to be charged under Sch. A, Sch. B, Sch. D or Sch. E shall include a general declaration declaring the truth thereof and that the same is fully stated on every description of property, or profits or gains, included in the Act relating to the tax, and appertaining to the person returning the statement, estimated to the best of his judgment and belief, according to the provisions of this Act.

“(3) A person who neglects or refuses to deliver, within the time limited in any notice served on him, or wilfully makes delay in delivering, a true and correct list, declaration, statement or return which he is required under the preceding provisions of this Chapter to deliver shall—(a) if proceeded against by action in any court, forfeit the sum of £20 and treble the tax which he ought to be charged under this Act; or (b) if proceeded against before the General Commissioners, forfeit a sum not exceeding £20 and treble the tax which he ought to be charged under this Act, and where he is proceeded against before the General Commissioners, the penalty shall be recovered in the same manner as any other penalty under this Act, and the increased tax shall be added to the assessment.

“(4) The commissioners shall also proceed to assess or cause to be assessed every such person who makes default as aforesaid.

“(5) If any person who is required to deliver a list, declaration, statement or return on behalf of any other person delivers an imperfect list, declaration, statement or return and declares himself unable, within the time limited, to deliver a more perfect list, declaration, statement or return and states the reasons for his inability, he shall not, if the General Commissioners are satisfied with his explanation and grant further time for delivery, be liable to the penalty prescribed by this section if he delivers, within the further time granted, as perfect a list, declaration, statement or return as the nature of the case permits.

“(6) If a person delivers to any surveyor a list, declaration or statement on a form prepared for the purpose by direction of the Commissioners of Inland Revenue, he shall be deemed for the purposes of this section to have been required by a notice under the preceding provisions of this Chapter to prepare and deliver that list, declaration or statement, and the time limited for the delivery thereof shall be deemed for the purposes of this section to have expired on the date of its delivery to the said surveyor.

“(7) Any list, declaration, statement or return required by the preceding provisions of this Chapter to be delivered to the surveyor shall be made available to the General, Additional or Special Commissioners and their respective clerks, and, whenever necessary, to the assessors for the preparation and making of assessments.”

The provisions of sub-s (2) of s 18 and sub-s (3) of s 25 are in identical terms, apart from the introductory words indicating the nature of the offence struck at by the penalty provision. Section 18 deals with concealment of chargeability to tax for any year of assessment, a reference back to s 1 of the Act. The offence presumably will be committed if the potential taxpayer allows the year of assessment to run out without disclosing his chargeability. Section 25 relates to persons who are known to the surveyor of taxes and are required to make one or other of the returns in s 19 to s 25 of the Act, including persons required (s 19) to deliver true and correct returns of all sources of their income.

Page 521 of [1960] 1 All ER 505

I can see no ground for placing any different construction on the words “treble the tax which he ought to be charged under this Act” in sub-s (3) of s 25 from the meaning they have in s 18(2); or for saying that they have one meaning where the taxpayer neglects or refuses to deliver any return within the stipulated time as required by the Act, and a different meaning when he wilfully makes delay in delivering a true and correct return of his income as similarly required. The decision of this House in A-G v Till is binding authority that delivery of an incorrect return is breach of this requirement. The question of the construction of these words may to some extent be resolved, I think, by asking how it is to be ascertained what tax the defaulter ought to be charged under the Act. The only way, in my opinion, is through the machinery of assessment set up by the Act. The court cannot take on itself this task. It was so held, I think rightly, in an unreported Irish case—A-G v White, under corresponding income tax provisions in Ireland, judgments in which were made available to your Lordships. Can it be said that the words have an ambulatory meaning, so that, if the taxpayer makes an incorrect return, the tax which he ought to be charged under the Act is limited to tax on the amount of the undisclosed income? This is the view, I think, taken by the Court of Appeal. I find it impossible to put such a construction on words which seem to me to be quite unambiguous. So limited, the tax would be only part of the tax which he ought to be charged under the Act. It was conceded by the learned Attorney General that the penalty is to be measured only by tax on income which is the subject of direct assessment, a concession which I am disposed to think could not be withheld. Income from which tax is deducted under Sch D is not income charged to tax in the hands of the recipient. Nor is it contended for the Crown that the tax to be charged includes surtax, for reasons which I do not find it necessary to examine. It may be noted also in passing that the non-fraudulent offender has a method of escape from the stringency of the penalties under s 55 of the Act, which gives opportunity for rectification of returns and other relief.

Section 48 and s 49 of the Act are as follows:—

“48.—(1) Where a person who ought to be charged with tax, as directed by this Act, is not duly assessed and charged by reason that he has—(a) fraudulently changed his place of residence or fraudulently converted, or fraudulently released, assigned or conveyed any of his property; or (b) made and delivered any statement or schedule which is false or fraudulent; or (c) fraudulently converted any of his property, which was chargeable, by altering any security relating thereto or by fraudulently rendering it temporarily unproductive, in order not to be charged for the same or any part thereof; or (d) been guilty of any falsehood, wilful neglect, fraud, covin, art or contrivance whatsoever, such person shall, on proof thereof to the General Commissioners for the division in which he has been charged, or, if he has not been charged, then for any division in which he is chargeable, be assessed and charged treble the amount of the charge which ought to have been made upon him: Provided that, if any charge has been made, but that charge is less than the charge which ought to have been made, such person shall be assessed and charged, over and above the former charge, treble the amount of the difference between the charge which was made and the charge which ought to have been made, such amount to be added to the assessment.

“(2) A person who knowingly and wilfully aids, abets, assists, incites or induces another person to make or deliver a false or fraudulent account, statement, or declaration, of or concerning any profits or gains chargeable, or the yearly rent or value of any lands, tenements, hereditaments or heritages, or any matters affecting any such rent or value, shall for every such offence forfeit the sum of £500.

Page 522 of [1960] 1 All ER 505

“49.—(1) If the Additional Commissioners or the General Commissioners—(a) have made a charge to tax under Sch. D in respect of a sum in excess of the amount contained in either the statement or the schedule of a person to be charged; or (b) discover, from the information of the surveyor, or otherwise, that a charge to tax in respect of a sum in excess of either such amount ought to be made, and an assessment is made, at any time within the year of assessment or within three years after the expiration thereof, they may, unless the person to be charged proves to their satisfaction that the omission by him did not proceed from any fraud, covin, art or contrivance or any gross or wilful neglect, charge that person, in respect of such excess, in a sum not exceeding treble the amount of the tax on the amount of the excess.

“(2) If the person to be charged has neglected or refused to deliver a statement or schedule, the said commissioners may charge him in a sum not exceeding treble the amount of the tax with which, in their judgment, he ought to be charged, and such sum shall be added to the assessment and applied in the same manner as other increased charges are applied.”

The proviso to sub-s (1) of s 48 clearly limits the penalty to treble the tax on the amount of income undisclosed where a charge has already been made on the disclosed amount. There may be observed, however, several new features in the matter of penalty. There is no £20 penalty. There is no provision for proceedings for penalty in a court. The penalty is a fixed penalty of treble tax, not a maximum within which the commissioners have a discretion to operate. Lastly, if the fraud is discovered before any tax is imposed, the penalty is treble tax. Only where tax has been already charged does the taxpayer escape with treble tax measured by what he has fraudulently concealed. It may be doubted whether this section shows any leniency to the fraudulent taxpayer as contrasted with the treatment accorded to a neglectful taxpayer under s 25. The restricted penalty imposed by the proviso, limited though it be by the amount fraudulently undisclosed, may be a very heavy penalty as compared with a discretionary penalty that the commissioners are entitled to impose under s 25. Only in contrast with the penalty imposed by a court under s 25 can it be said that the fraudulent taxpayer who comes under the proviso may escape relatively lightly. That is undoubtedly an anomaly. But it would seem to be no greater an anomaly than that accorded to two fraudulent taxpayers under s 48 itself, according as an assessment has already been made on one and not on the other, a difference in treatment which I confess I find it difficult to understand. Whatever anomalies exist between s 25 and s 48, these provide no ground for reading into s 25(3)(a) the proviso to s 48(1), as the Court of Appeal in effect would seek to do, with the result incidentally of repeating in the case of neglectful taxpayers the anomaly already observed to exist as between fraudulent taxpayers. The reference in the section to “the charge which ought to have been made” as contrasted with the words “the tax which he ought to be charged” in s 25(3) raises another question which seems to me to lead nowhere. It would, I think, make no real difference if the words of s 25 were substituted for the words in s 48 so far as the meaning of s 48 was concerned. Section 49 provides another variation of a penalty clause. It applies only to charges to tax under Sch D. The words “not exceeding” reappear in this section. The penalty in the circumstances to which the provisions of the section apply is a sum not exceeding treble the tax on the amount the taxpayer has omitted to return. Again, there is no question of a £20 penalty.

Lastly, I come to para 4 of Sch 6. It runs as follows:—

“4.—(1) A person who, in making a claim for or obtaining any relief to which this schedule relates, or in obtaining any certificate as aforesaid—(a) is guilty of any fraud or contrivance; or (b) fraudulently conceals or untruly declares any income or any sum which he has charged against

Page 523 of [1960] 1 All ER 505

or deducted from, or was entitled to charge against or to deduct from, another person; or (c) fraudulently makes a second claim for the same cause, shall forfeit the sum of £20 and treble the tax chargeable in respect of all the sources of his income as if such claim had not been allowed.

“(2) A person who knowingly and wilfully aids or abets any person in committing an offence under this paragraph shall forfeit the sum of £500.”

Here your Lordships find a further variation of penalty in cases of fraudulent claims for relief, reflecting often relatively small results in the matter of tax liability. The penalty here is the severest of all. The £20 penalty makes its appearance again; treble tax is mandatory; and it is imposed “in respect of all the sources of his income as if such claim had not been allowed”. It is thus not limited as in s 18, s 25 and s 48 to income subject to direct assessment.

I have referred to these sections because they all disclose in the circumstances to which they apply a variety of penalties which present no intelligible pattern and which, in relation to one another, seem often highly inequitable. Nor does the general power of mitigation vested in the Commissioners of Inland Revenue and the Treasury by s 500, in my opinion, really affect this result. The survey of these sections has, I think, this relevance to the subject-matter of this appeal. It shows that it is impossible to argue from one penalty section to another or to infer because of illogicalities between different sections, or inequitable results that may follow from a particular construction, that, therefore, the legislature cannot have meant what the words of s 25(3) plainly say. I would add that these sections have an ancient lineage dating back more than 150 years and show very little essential change in that period. Section 25(3) shows a greater number of changes evolved during that period, but, in spite of opportunities thus afforded, Parliament has not thought fit to make any substantial change, apart from quantum of penalty, in the form of language by which the penalty was imposed from at least 1805.

In conclusion I would say a word about the effect of s 25 on certain sections of the Act to which it applies. These are notably s 21 to s 23 and s 27 to s 29 inclusive. The results in the view of the Court of Appeal were so startling as to play a large part in their reaching a construction of s 25(3) that would enable them to escape the rigour of a literal construction of its words. For the reasons which I have given, I think, on any view of its effect on the sections in question, that escape would be impossible. But it is a question whether any talk of escape is necessary. In any case in which it was necessary to consider the matter, I would wish to hear argument on two points. First, whether the impact of s 25 on sections like s 21 and s 22 affects tax on the income of any person other than the constituent in respect of whose income a return is made by a person in a representative or quasi-representative capacity. Secondly, whether when a return is made under such sections as s 23, s 27 or s 29, which are not concerned with returns of income but with lists of names of persons who may be chargeable to tax in respect, inter alia, of payments made by the person responsible for the return, there is any basis for a penalty under s 25 other than that of the fixed penalty of £20. In other words, whether there is any income covered by the subject-matter of the return in respect of which it can be said that the person making the return “ought to be charged to tax under this Act”. These are incidental matters which cropped up in the course of the argument before this House, and which, on the view taken by the Court of Appeal of resulting personal chargeability, seem to have weighed heavily with the court. I say no more about these two questions which on any view can, in my opinion, have no effect on this case.

I agree that the appeal should be allowed.

Appeal allowed.

Solicitors: Solicitor of Inland Revenue.

G A Kidner Esq   Barrister.

Oldfield v National Assistance Board

[1960] 1 All ER 524

Categories:        CIVIL PROCEDURE        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        4 FEBRUARY 1960        

Affiliation – Affiliation order – Order not an affiliation order unless it contains direction for payment of money – National Assistance Act, 1948 (11 & 12 Geo 6 c 29), s 44(2) – Affiliation Proceedings Act, 1957 (5 & 6 Eliz 2 c 55), s 4.

In s 44(2) of the National Assistance Act, 1948, which enables the National Assistance Board “if no affiliation order is in force” to apply for a summons the words “affiliation order” are confined to an order that includes an order for the payment of money (see p 528, letter e, post).

A mother made an application under s 3 of the Bastardy Laws Amendment Act, 1872, on 12 November 1956. Paternity was not disputed and the father, O, was willing to pay the mother £100, which she was willing to accept, and which he intended should release him from all further payment for the child. The justices adjudged O to be the father and by consent made no order for any money payment other than court costs of 10s 6d. Assistance having been given in 1959 by reference to the child’s requirements the National Assistance Board preferred a complaint against O. The complaint was heard on 16 March 1959, when, pursuant to s 44(2) of the National Assistance Act, 1948, and s 1 of the Affiliation Proceedings Act, 1957, the justices ordered O to pay 25s a week to the board until the child was sixteen. The father appealed on the ground that there was already an affiliation order in force.

Held – The order of 12 November 1956, was not an affiliation order because it contained no order for payment of money, and accordingly the justices’ order of 16 March 1959, should stand.

Appeal dismissed.

Notes

As to maintenance by a father, see 3 Halsbury’s Laws (3rd Edn) 108, para 168; and as to affiliation proceedings by the National Assistance Board, see ibid, 112, 113, paras 173, 174 and p 128, para 200; and 27 Halsbury’s Laws (3rd Edn) 489, paras 969, 970.

For the Bastardy Laws Amendment Act, 1872, s 4, see 2 Halsbury’s Statutes (2nd Edn) 480; and for the Affiliation Orders Act, 1914, s 7, see ibid, 490.

For the National Assistance Act, 1948, s 44, see 16 Halsbury’s Statutes (2nd Edn) 970.

For the Affiliation Proceedings Act, 1957, s 1, s 4 and s 12(3), see 37 Halsbury’s Statutes (2nd Edn) 37, 40 and 48.

Case referred to in judgments

Williams v Davies (1883), 11 QBD 74, 52 LJMC 87, 47 JP 581, 3 Digest 401, 347.

Case Stated

This was an appeal by Case Stated by the justices for the county of Lancaster and for the petty sessional division of Fylde in respect of their adjudication as a magistrates’ court sitting at Lytham. On 7 February 1959, a complaint was preferred by the respondents, the National Assistance Board, against the appellant, James Terence Oldfield, stating that he was the father of an illegitimate child born on 11 May 1956. Assistance having been given under Part 2 of the National Assistance Act, 1948, on 19 January 1959, and other days, by reference to the requirements of the child, pursuant to s 44(2) of the Act the board applied for a summons to be served on the appellant under s 3 of the Bastardy Laws Amendment Act, 1872. In accordance with s 12(3) of the Affiliation Proceedings Act, 1957, the justices treated the application as an application for a summons

Page 525 of [1960] 1 All ER 524

under s 1 of that Act. The complaint was heard on 16 March 1959, when the following facts were found. On 11 May 1956, the child was born. On 12 November 1956, the justices sitting at Lytham heard a complaint made by the mother under s 3 of the Bastardy Laws Amendment Act, 1872, when counsel for the appellant stated that the parties had consented to an order being made in favour of the mother in terms that the appellant should pay her the sum of £100 and that an order should be made without weekly payments. As a consequence of the statement, the justices adjudged the appellant to be the putative father of the child and the following entry was made in the court register:

“Name of complainant, (the mother). Name of defendant, Jas. Oldfield. Matter of complaint. Bastardy. Minute of adjudication. Order made. No weekly payment. 10s. 6d. court costs.”

The notes of evidence taken by the clerk to the justices at the time read:

“Mother (S.). Child born 11.5.56. Single woman. Defendant, father. Ask for order without payment for £100. Counsel agrees no corroboration required. Order by consent. Order that defendant is father of child. No money payment to be made.”

The appellant paid the sum of £100 to the mother on or about 12 November 1956, with the intention that this payment should release him from all further liability to maintain the child. Assistance was paid by the respondents by reference to the requirements of the child on 19 January 1959, and divers other days. The appellant was the father of the child (the evidence of the mother having been corroborated in a material particular by other evidence to their satisfaction).

It was contended for the appellant that the previous proceedings before the justices pursuant to s 3 of the Bastardy Laws Amendment Act, 1872, and the order made thereon on 12 November 1956, barred subsequent proceedings, there being an affiliation order in force within the intent of s 44(2) of the National Assistance Act, 1948. The order made by the justices on 12 November 1956, was an order made on a complaint pursuant to the Bastardy Laws Amendment Act, 1872. The justices’ jurisdiction in such proceedings to make an order (as opposed to a finding of paternity) was a jurisdiction to make an affiliation order within that Act and whether or not the order that the justices in fact made was such an affiliation order the justices did not thereafter have jurisdiction to deny it was such an order or have jurisdiction to vary, interpret or otherwise reconsider the effect of that order as being otherwise than an affiliation order within the intent of s 44(2) of the National Assistance Act, 1948. By virtue of the decision in Williams v Davies ((1883), 11 QBD 74.), the justices might not adjudicate a second time as to the paternity of the child at the suit of the respondents having done so at the suit of the mother.

It was contended by the respondents that the words “affiliation order” in s 44(2) of the National Assistance Act, 1948, refer to an order made under the Affiliation Proceedings Act, 1957 (or the Bastardy Laws Amendment Act, 1872), requiring a person against whom an adjudication of paternity has been made to pay (i) a sum of money weekly for the maintenance and education of the child; or (ii) a sum in respect of the expenses incidental to the birth of the child; or (iii) the child’s funeral expenses when the child has died before the making of the order. That the justices had jurisdiction to hear and determine the complaint and in particular to make an adjudication of paternity followed by such order referred to in s 4(2) of the Affiliation Proceedings Act, 1957, as they might think fit in all the circumstances of the case. That the order made by the magistrates’ court on 12 November 1956, did not exhaust the jurisdiction of a magistrates’ court under s 44(2) of the National Assistance Act, 1948, as regards the respondents, who were not a party to the previous proceedings and whose right to apply for an order under the Affiliation Proceedings Act, 1957, was a separate and distinct

Page 526 of [1960] 1 All ER 524

right and not co-extensive with any right enabling the mother to institute affiliation proceedings. That the fact that a magistrates’ court had made a previous adjudication of paternity against the appellant in respect of the child on complaint made by the child’s mother did not preclude the justices from making a second adjudication against the appellant in respect of the child in proceedings by the respondents under s 44(2) of the National Assistance Act, 1948. That the effect of the previous adjudication of paternity made on the mother’s complaint irrevocably determined the status of the appellant in relation to the child so that the justices must on hearing evidence in accordance with the provisions of s 4 of the Affiliation Proceedings Act, 1957, adjudge the appellant to be the putative father of the child. That the appellant was estopped by reason of the prior adjudication of paternity from denying that he was the putative father of the child. That even if the justices disregarded altogether the evidence tendered by the respondents as to the proceedings on 12 November 1956, and the adjudication made thereon, there was other evidence tendered by the respondents in support of the complaint sufficient in law to justify an adjudication of paternity against the appellant.

The justices were of opinion that no affiliation order was in force within the meaning of these words in s 44(2) of the National Assistance Act, 1948, by reason of the wording of s 4 of the Bastardy Laws Amendment Act, 1872 (the relevant statute in force on 12 November 1956) which conferred jurisdiction on justices to adjudicate on the paternity, and, if the justices saw fit, to make an order for payment of a weekly sum and certain expenses. The award of costs on 12 November 1956, was made under s 55 of the Magistrates’ Courts Act, 1952, Sch 6 of which repealed that part of s 4 of the Act of 1872 which, prior to 1 June 1953, had contained the power to award costs; and thus, in the opinion of the justices, did not affect the question whether an affiliation order was in force. Williams v Davies ((1883), 11 QBD 74.), did not apply because the justices were of opinion that no affiliation order was in force. The appellant was the father of the child and they accordingly ordered that the appellant should pay the weekly sum of 25s to the respondents until the child should attain the age of sixteen years. The question for the opinion of the court was whether the justices were correct in law in assuming jurisdiction to hear the complaint of 7 February 1959, in deciding that as a matter of law no affiliation order within the meaning of s 44(2) of the National Assistance Act, 1948, was in force; in hearing evidence from the appellant to the effect that he was not the father of the child despite the adjudication of 12 November 1956, to the effect that he was the putative father of the child, and in deciding that Williams v Davies ((1883), 11 QBD 74.) did not apply to the complaint so as to prevent them from adjudging the appellant to be the putative father of the child.

D H Wild for the appellant.

J R Cumming-Bruce for the respondents.

4 February 1960. The following judgments were delivered.

LORD PARKER CJ. This is an appeal by way of Case Stated by justices for the County of Lancaster sitting at Lytham, before whom a complaint was preferred by the respondents, the National Assistance Board, against the appellant, alleging that he was the father of a certain illegitimate child. The justices heard the complaint. They heard evidence on the part of the mother, and they heard the evidence of the appellant, who contested the issue. They found, and the finding as such is not challenged, that the appellant was the father of the child, and they ordered that he should pay the weekly sum of 25s to the respondents direct until the said child should attain the age of sixteen years. It is said that the justices were wrong, for reasons to which I will refer in a moment.

The powers of the National Assistance Board in this regard are to be found in s 44 of the National Assistance Act, 1948. Speaking quite generally for the moment, where assistance has been given under the Act by reference to the

Page 527 of [1960] 1 All ER 524

requirements of an illegitimate child, the National Assistance Board have power to make the putative father pay towards the requirements of that child. Power is given by sub-s (6) of s 44 to apply to the court to have an order, which has already been made, varied so that instead of the money being paid by the putative father to the mother it shall be paid direct to the National Assistance Board. Under sub-s (5) power is given to intervene in any proceedings brought by the mother in order to provide that any payments which she would otherwise get are paid direct to the National Assistance Board, and under the group of sub-ss (2), (3) and (4) power is given to the board themselves to take proceedings against a man alleging that he is the putative father and to obtain the order which the mother might have obtained. Subsection (2), which is the important subsection for the purposes of this case, reads as follows:

“If no affiliation order is in force, the board or local authority may within three years from the time when the assistance was given or accommodation provided make application to a court of summary jurisdiction having jurisdiction in the place where the mother of the child resides for a summons to be served under s. 3 of the Bastardy Laws Amendment Act, 1872.”

The opening words are “If no affiliation order is in force”, and the sole issue with which the court is now concerned is as to the meaning of the two words “affiliation order” in that subsection. That issue arises for this reason. On 12 November 1956, a long time before the present complaint, an application was made by the mother under s 3 of the Bastardy Laws Amendment Act, 1872, and the justices adjudged that the appellant was the father of her child. The father was prepared to pay £100, and the mother was prepared to accept it, and the justices, having been told that, merely adjudged that the defendant, the present appellant, was the father of the child, and they made no order for any money payment other than the court costs of 10s 6d. The father thereafter paid the mother the £100, and the question is whether the order the justices so made on 12 November 1956, was an affiliation order. If it was, then the National Assistance Board have no power under s 44 to obtain the order which they did from the justices at Lytham.

It is convenient, I think, to look first at s 4 of the Bastardy Laws Amendment Act, 1872, (1). I will not read it all, but it is enough to say that on certain evidence being given and the justices being satisfied, they might adjudge the defendant to be the putative father of the bastard child. That was the first step, and then s 4 continued: “… and they may also, if they see fit, having regard to all the circumstances of the case, proceed to make an order on the putative father for the payment to the mother … ” Pausing there, two steps were envisaged; the first was the adjudication that the man was the putative father, and the second, if the justices think fit, was an order for the payment of money. The Affiliation Orders Act, 1914, s 7, defined “affiliation order”; true, it was a definition made for the purposes of that Act. It reada:

“In this Act, unless the context otherwise requires the expression ‘affiliation order’ means an order made under the Bastardy Laws Amendment Act, 1872, or any Act amending the same, adjudging a man to be the putative father of a bastard child and ordering him to pay a sum of money weekly or otherwise to the mother … ”

Finally, by the Affiliation Proceedings Act, 1957, which was a consolidating Act made under the Consolidation of Enactments (Procedure) Act, 1949, it was provided by s 4(2):

“If the evidence of the mother is corroborated in some material particular by other evidence to the court’s satisfaction, the court may adjudge the defendant to be the putative father of the child and may also, if it thinks fit

Page 528 of [1960] 1 All ER 524

in all the circumstances of the case, proceed to make against him an order (referred to in this Act as ‘an affiliation order’) for the payment by him of … ”

money and expenses and the like.

In all those three Acts the words used are a little different. As will be seen, in the Act of 1872 there is no definition but it was contemplated that there should be, as it were, two stages, an adjudication and then what is called an order for the payment of money. In the Act of 1914, the adjudication and the order for the payment of money are together treated as the affiliation order, and in the Affiliation Proceedings Act, 1957, the order for the payment of money alone is treated as the affiliation order. For my part, however, the significant fact is that under all those three statutes adjudication alone is not an order. That being so, the next step is to look at the context in which these words are used. Section 44 of the National Assistance Act, 1948, is a financial section providing for the collecting of money by the National Assistance Board. One would think that “affiliation order” in such a section must mean an order which was more than the mere adjudication of a man as the putative father, and was one which provided for the payment of money. The words “is in force”, in my judgment assist that contention. It would be easy otherwise to say that the board might make an application for a summons to be servedb against any man who had not been adjudged to be the putative father. That is not, however, the scheme; the scheme is that an application can be made if no affiliation order is in force, and by that, I think, is meant no order for the payment of money. If one looks at the structure of s 44, it seems to me that that is borne out, and for that reason coupled with the significance which I attach to the fact that in all the three Acts to which I have referred adjudication alone is nowhere treated as an order, I think that “affiliation order” in s 44(2) is confined to an order for the payment of money. In the present case, as I have already said, there was no order for the payment of money made in 1956. Accordingly, an application did lie under s 44(2). That application was heard by the justices; they dealt with all the evidence, as they had to pursuant to s 44(3), and they adjudged, as I have already said, that the appellant was the father and ordered him to pay 25s a week to the respondents. In my judgment, the justices were right, and this appeal should be dismissed.

CASSELS J. I agree.

ASHWORTH J. I also agree.

Appeal dismissed.

Solicitors: Bower, Cotton & Bower agents for George Davies & Co, Manchester (for the appellant); Solicitor, National Assistance Board (for the respondents).

E Cockburn Millar   Barrister.

Pepper v Pepper

[1960] 1 All ER 529

Categories:        ADMINISTRATION OF JUSTICE; Judiciary: FAMILY; Ancillary Finance and Property        

Court:        PROBATE, DIVORCE AND ADMIRALTY DIVISION        

Lord(s):        LORD MERRIMAN P AND COLLINGWOOD J        

Hearing Date(s):        18 JANUARY 1960        

Magistrates – Husband and wife – Maintenance order – Variation – Order for maintenance of wife and child – Birth of another child – Attachment of earnings order made against husband – Husband’s earnings reduced – Whether magistrates on wife’s complaint to increase order can reduce maintenance to husband’s “normal deduction rate” under Maintenance Orders Act, 1958 (6 & 7 Eliz 2 c 39), s 6(3) – Summary Jurisdiction (Married Women) Act, 1895 (58 & 59 Vict c 39), s 7.

On 12 February 1959, the justices found that the husband had deserted the wife and ordered him to pay £5 10s a week to the wife (namely, £3 10s for her maintenance and £1 each for the two children of the marriage of whom she had custody). On 18 July 1959, the wife gave birth to a third child of whom the husband was the father. The husband having fallen into arrears with his payments, the justices on 11 August 1959, on the wife’s complaint, made an order for the attachment of the husband’s earnings under the Maintenance Orders Act, 1958, and assessed the husband’s “normal deduction rate” under that Act at £2 10s a week. On 13 August 1959, the justices heard an application by the wife to vary the original order and increase the sum paid to her because the third child had been born. There was no cross-application by the husband to reduce the amount of maintenance. The justices made an order reducing the weekly payment by the husband to the wife to £2 10s (namely, £1 in respect of her maintenance and 10s for each of the three children), basing their order on the “normal deduction rate” figure determined on 11 August 1959. On appeal by the wife,

Held – That the justices had no jurisdiction to vary the order without having before them a cross-complaint by the husband for a reduction of the amount of maintenance, on which cross-complaint his evidence could be tested.

Trathan v Trathan ([1955] 2 All ER 701) applied.

Per Lord Merriman P: (i) a finding under the procedure for attachment of earnings is not necessarily binding in proceedings for variation of the maintenance order under s 7 of the Summary Jurisdiction (Married Women) Act, 1895 (see p 533, letter i, post).

(ii) on an application for attachment of earnings the court has no right to consider the potential earnings of the defendant in some other occupation than that in which he earns the remuneration that it is sought to attach (see p 534, letter i, to p 535, letter a, post).

Appeal allowed.

Notes

As to the variation of maintenance orders, see 12 Halsbury’s Laws (3rd Edn) 491–493, para 1091; and for cases on the subject, see 27 Digest (Repl) 726, 727, 6934–6941, 728, 6947–6948 and 3rd Digest Supp.

For the Summary Jurisdiction (Married Women) Act, 1895, s 7, see 11 Halsbury’s Statutes (2nd Edn) 852.

For the Maintenance Orders Act, 1958, s 6(3), see 38 Halsbury’s Statutes (2nd Edn) 461.

Cases referred to in judgments

Bowen v Bowen [1958] 1 All ER 770, 122 JP 202, [1958] 1 WLR 508, 3rd Digest Supp.

Trathan v Trathan [1955] 2 All ER 701, 119 JP 451, [1955] 1 WLR 805, 3rd Digest Supp.

Appeal

The wife, Iris Joan Pepper, appealed against an order of the Melton Mowbray justices dated 13 August 1959, whereby they varied an order made in the wife’s

Page 530 of [1960] 1 All ER 529

favour on 12 February 1959, reducing the sum of £5 10s a week which the husband, James Henry Pepper, had been ordered to pay under the original order (namely, £3 10s a week for the wife’s maintenance and £1 a week each for the then two children of the marriage) to £2 10s a week (namely, £1 a week for the wife’s maintenance and 10s a week for each of the now three children of the marriage), that sum being the “normal deduction rate” under an attachment order made by justices of the same division on 11 August 1959, under the Maintenance Orders Act, 1958.

The facts and the justices’ reasons are set out in the judgment of Lord Merriman P (see pp 532, 533, post).

B Woods for the wife.

G D Lane for the husband.

18 January 1960. The following judgments were delivered.

LORD MERRIMAN P. This is a wife’s appeal against the decision of the justices for the Melton Mowbray petty sesssional division of Leicestershire, given on 13 August 1959, when they had before them a complaint by the wife to vary an earlier order, obtained before the said court on 12 February 1959, based on the husband’s desertion and adultery, for £3 10s a week, and custody of the two children of the marriage as there then were, with maintenance at the rate of £1 a week in respect of each child, a total of £5 10s. Her complaint to vary that order was specifically limited to the following points, that on 18 July 1959, she had given birth to a third child of whom the husband was the father, and she therefore applied for a variation giving the custody to her and for an unspecified sum for maintenance of that child. That, and that alone, was the issue expressly raised by the wife’s complaint.

On that, of course, the magistrates could have found, if it was so contended—but it was not—that the husband was not the father of the child, and that the child was not, therefore, to be dealt with under the Summary Jurisdiction (Married Women) Act, 1895, at all, or they could have found, as they did, that the child was the child of the husband, but nevertheless, for some reason or another, could have refused to give the wife the custody—needless to say, they did not. They gave the wife the custody, and then there arose the question of the maintenance of the child. Now, manifestly they were not bound by any previous figure which had been assessed in respect of the other children; the amount would be at large. They could award a purely nominal amount, or any amount within the permitted range, for this young child, and that, I think, as regards the form of the proceedings, was all that was in issue before the magistrates.

What they have done is something quite different. They have proceeded to re-assess the amount payable to the wife and reduced it from £3 10s to £1, and they have re-assessed the amount in respect of the first two children and reduced it from £1 to 10s, and they have awarded the sum of 10s also in respect of the third child, of whom custody was given to the wife. The wife’s objection to this order is that on a complaint to vary by adding the latest child the magistrates, without any cross-complaint on the part of the husband at all, have entirely reconstituted the original order. Of course, to the original order some variation is essential if you are adding a third child; but the question is, as I see it, whether the magistrates had any jurisdiction without a cross-complaint by the husband to alter the whole basis of the order so far as the wife and the other two children are concerned.

Now, it is said (and I am going to put it in the most extreme form in which it has been put before us) that if application is made to vary an order under s 7 of the Act of 1895, or, to put it in concrete form, if the wife applies, as she did in this case, to add an additional figure, namely, for the third child, to the original order, it follows from this that magistrates may increase or diminish the amount of any weekly payment ordered to be made as long as they stay within the limits. I do not think that is the effect of the section, in that bald form, and I

Page 531 of [1960] 1 All ER 529

certainly do not think that when an application to vary is of a specific kind and for the express reason that a third child has been born, that automatically imports the right to tear up the original order and re-write it altogether. For my part I think that this is a matter which this court has already decided, and I propose to hold that we are bound by the original decision. In Trathan v Trathan, Davies J and I sitting in this court took what we thought was the strict view, and, if I may, I will read one passage from my own judgment, which was repeated, incidentally, in the later case of Bowen v Bowen. The actual point in Trathan v Trathan was that on an application to vary the magistrates had taken on themselves the right to discharge the order, and, in that case I said ([1955] 2 All ER at p 707):

“It is plain on the face of s. 7 itself that separate issues would be raised, and under the Magistrates’ Courts Act, 1952, s. 43, as under the Summary Jurisdiction Act, 1848, s. 1, there must be a complaint which alleges that there should be an alteration and on what ground; or alleges that there should be a variation and on what ground; or alleges that there should be a discharge, and again on what ground, though in that case at least the ground must be based ‘upon fresh evidence’.”

That was, of course, to draw the distinction between complaints which are merely for variation of amount—with regard to which I need only say that it is common knowledge that the requirement of the words “upon fresh evidence” has been removeda—and those cases in which a discharge would almost necessarily involve the calling of fresh evidence. So here, this is a case which can only be brought on fresh evidence, because it is the subsequent birth of the child since the order was made which entitled the wife to ask for the particular variation. But it is said that Davies J who agreed absolutely with my judgment and said so, has said, in a passage which I am going to read in a moment, something which affords authority for the view that on any sort of application to vary, anything may be done by way of variation one way or the other. Davies J said ([1955] 2 All ER at p 708):

“For the reasons which LORD MERRIMAN, P., has given I agree that on an application by a wife for an increase of the amount payable under an order the court has no power, unless proper steps by a cross-summons are taken, to entertain an application to discharge that order. I do not think it is necessary to repeat the reasons that my Lord has given, or to examine the statutes. I should like to add one observation. Speaking for myself, I do not think it is necessary to decide, for the purposes of this appeal, whether on an application to increase the amount of an order, the court has power to decrease it. I do not desire to express any view about that, as I do not think that it is necessary for the purposes of this decision. For we are here concerned with a case where the justices on an application to increase have purported to entertain an application to discharge, and for the reasons that my Lord has given I am satisfied that that is wrong.”

It seems to me that that passage, right or wrong, is a very long way from affording any authority for the sort of case with which we are dealing here, which, I repeat, is an application to vary because of the “fresh evidence” that a child has subsequently been born, and which is said to give justices the opportunity to revise the whole order—maintenance for the wife, maintenance in respect of the other children, and, presumably, to alter the custody order in respect of the other children if they thought fit to do so.

Page 532 of [1960] 1 All ER 529

I do not agree, and I think that we are bound by the decision in Trathan v Trathan to hold that that point is not a good one.

I am now bound to deal with the intervening history between the making of the original order and the order against which appeal is brought, and I must say that I feel very considerable doubt about it, first of all because, as far as I can see, some of the considerations which have been urged before us about it were never even gone into before the magistrates, and because it involves consideration, so far as I know for the first time, of the Maintenance Orders Act, 1958. This case has indeed had rather a chequered history during the last twelve months. The original order, as I said, was made on 12 February 1959. At that time the husband was a bus driver said to be earning £11 a week or thereabouts, and on that sort of evidence there was nothing particularly startling about an order which between the wife and the two children came to something like £5 10s. I presume that the magistrates on that occasion took into account the fact that, so far as we are given to understand, the man was even then living, and still is, with the woman with whom he was charged with adultery. The additional fact has been brought out parenthetically that a child was about to be born, but even that fact, so far as we know, was not known to the magistrates. However, for one reason or another—and I am not going to attempt to judge which of the two versions is correct—the man gave up his earnings as a bus driver and took employment as a farm worker. That had an advantage and a disadvantage. The disadvantage was that the wage was the agricultural wage, which is considerably less than a bus driver’s wage; the advantage was that with the employment went a tied cottage, where he and his paramour have apparently since been living.

In due course the husband, on 21 April 1959, made an application to reduce, on the ground that his wages were now only £7 6s 1d net which he was earning as a farm worker, and he also applied for the remission of a certain sum off whatever was the amount of the arrears at the time, which we have not been told exactly. That application, as I understand it, in both branches was dismissed. Underterred by that dismissal on 21 April 1959, on 29 April 1959, he applied again with a complaint to reduce. That was adjourned from 5 May 1959, to 12 May 1959, and was likewise dismissed, and it is necessary to bear in mind that the court must have had before them at the time the fact that he was still in this farm work and had not resumed his work as a bus driver. We are given to understand, though we have not had the notes before us, that it was contended on the part of the wife that he had the potential earnings of a bus driver as against the actual earnings of a farm worker; but that is as it may be.

Then, on 18 July 1959, the third child was born, and on 7 August 1959, the wife made her complaint, the substance of which I have already read, and the return date for which was 13 August 1959. However, in the meanwhile, though precisely when I am not quite clear but I understand that it was on 21 July just after the child was born, the wife took out an ordinary enforcement summons for committal of the husband in respect of arrears, which were just under £60. The return date for that was 28 July but on the suggestion of the magistrates’ clerk that complaint for enforcement was apparently dropped, and a complaint was taken out for enforcement under the “attachment of earnings” procedure under the Maintenance Orders Act, 1958. That complaint came on, oddly enough, two days before the case with which we are directly concerned, namely, on 11 August 1959, and on that occasion the magistrates, as they were bound to do, went into the two factors which have to be considered under the procedure for attachment of earningsb.

The two factors are these:—first of all, what is the figure for what are called “protected earnings”? I will read the definition of “protected earnings” in a

Page 533 of [1960] 1 All ER 529

moment. It means, putting it shortly, what the man is entitled to keep for himself and anyone for whom he is responsible; and secondly, what is the “normal deduction rate”, meaning the amount which the employer should be ordered to deduct and pay over to the wife, or, in this case, to the collector for the court, in respect of the amount of what is called the “related maintenance order”, in other words, the order which it is sought to enforce and also any sum in respect of the payment of arrears which may be decided on.

The magistrates went into these figures on 11 August 1959. They heard evidence which in substance agreed with what the husband was putting forward when he asked for a variation in his favour in April, 1959, that the gross wages were £7 16s and the net £7 6s 1d. Having ascertained that figure, the question then was what was to be the proportion of that figure which was to be “protected earnings” and what was to be the “normal deduction rate”, and they found that the “protected earnings” were to be £4 16s 1d and the “normal deduction rate” £2 10s. So far so good. I will deal with the detail of that in a moment. This happened on 11 August. On 13 August 1959 (we do not know whether the same magistrates sat on 11 August and on 13 August), the magistrates proceeded, on the strength of being informed about the “protected earnings” and the net wages, to recast the original order so that it conformed to the “normal deduction rate”, and, varied the order for the wife down to £1, with 10s in respect of each child, having in the meanwhile accepted the evidence that the child was the child of the husband and that there were therefore three children to be paid for instead of only two.

In my opinion, this procedure was quite irregular, because I am of opinion still, as we held in Trathan v Trathan, that any order such as that required a cross-complaint on the part of the husband, of which it is admitted there was none. Secondly, even assuming that they had the technical right to act at all in connexion with the alteration of the original order in the sense that I have mentioned, I do not think that they had, strictly speaking, the right to do so merely on the strength of what they or some other magistrates had heard in connexion with the attachment of earnings order two days before. This matter must in any case go back to the justices so that they may have the questions at issue put on a proper basis. In other words, I think that the husband ought to issue a complaint for reduction of the order, in whatever sense he can make good by evidence, and his evidence must be subject to being tested.

Though I agree that there is some force in the argument, I am not convinced that there is an estoppel as between these two parties about the man’s means merely because of the form the attachment of earnings order took two days before, but I do realise, and I think that this must be stated plainly, that a great deal of what I have said, if strictly accurate so far as the Act of Parliament is concerned, may prove to be more or less academic. I say so for this reason. On any ordinary application to vary either up or down, assuming the application to be supported by a proper complaint on proper grounds, the basic, though not the only, thing that has to be ascertained is what the means of the parties are. Now that the words “upon fresh evidence” are no longer applicablec in connexion with mere variations of amount, whether up or down, that is all that has to be ascertained. There is ample authority for that, which I do not propose to repeat. What is to be taken into account in the magistrates’ court is, what the husband’s earnings are, what his responsibilities are, whether the wife is earning money, and so forth, balancing one thing against another and arriving at a right figure.

I have said that in my opinion a finding under the attachment of earnings procedure is not necessarily binding on any such inquiry, but I am going to read the words governing the calculation of the “normal deduction rate” which appear in s 6(3) of the Maintenance Orders Act, 1958, namely:

Page 534 of [1960] 1 All ER 529

“An attachment of earnings order shall—(a) specify the normal deduction rate, that is to say, the rate at which, after taking into account any right or liability of the defendant to deduct income tax from payments made under the related maintenance order, the court making or varying the attachment of earnings order thinks it reasonable that the earnings to which that order relates should be applied from time to time in satisfying the requirements of the maintenance order, not exceeding the rate appearing to that court to be necessary for the purpose of—(i) securing payment of the sums falling due from time to time under the maintenance order; and (ii) securing payment within a reasonable period of any sums already due and unpaid under the maintenance order and any costs incurred in proceedings relating to the maintenance order which are payable by the defendant.”

Pausing there, I wish to reserve the point which has been taken which is said to be the subject of some other intended proceedings in this court, that in this case, seeing that the related order was for a total sum of £5 10s as soon as the magistrates went into the figures and saw that only £2 10s was going to be available at all—in passing, I mention that I know that it is suggested that they reserved the question of outstanding arrears to be dealt with on another occasion—it at once became apparent that any order which they might make would not secure “payment of the sums falling due from time to time under the maintenance order”, because by no known procedure can £2 10s be made sufficient to pay £5 10s or secure payment of the “sums already due and unpaid” under the maintenance order. I express no opinion on that until I have heard the point properly argued.

Under s 6(3)(b) of the Maintenance Orders Act, 1958, an attachment of earnings order must

“specify the protected earnings rate, that is to say, the rate below which, having regard to the resources and needs of the defendant and the needs of persons for whom he must or reasonably may provide, the court aforesaid thinks it reasonable that the relevant earnings within the meaning of the schedule to this Act should not be reduced by a payment made in pursuance of the attachment of earnings order.”

I stress the words “and the needs of persons … ” to the end of the quotation. The “protected earnings rate” is the sum of £4 16s 1d at which the justices arrived under the attachment of earnings procedure. When it is said in arriving at that that they have had “regard to the resources and needs of the defendant and the needs of persons for whom he must or reasonably may provide”, that seems to me to be something very like a definition of or at least a pointer to the various factors which a court should take into account in considering the means of the parties, and it is much too late in the day for any court to say “We only considered the husband and the wife. We ignored the claims of the second or unofficial wife and the second or unofficial family” as the case may be. It is too late in the day to say that the court shall take that rigid view, and therefore it seems to me that the words “for whom he must or reasonably may provide” would impel the court to consider the means of the parties, not, indeed, to prefer the paramour and her expected child to the needs of the wife and her children, but to take into account the fact, as was said, I think, in the Report of the Royal Commission on Marriage and Divorced that there just is not the money to go round, and to find the fairest way that they can of apportioning the money. And that is why I say at the end of it all that when this rather tangled skein is sorted out and put on a regular basis the magistrates may get back very nearly to where we started with this, as I say, irregular order. But that is the inevitable result so long as this attachment of earnings order holds the field. I want to make it plain that I reject the suggestion that in an attachment of

Page 535 of [1960] 1 All ER 529

earnings case the magistrates have any right to consider the potential earnings of the defendant in some other occupation than that in which it is sought to attach his earnings. That will not do. The attachment of earnings procedure works by directing to a particular employer an order to pay out of the wages which he is paying to the husband in respect of a particular employment a specific sum either to or for the benefit of the wife, and in that calculation the question whether the husband has a potential capacity to earn greater wages does not come into the picture at all.

It may be that the proper course in this case, apart from putting the husband right in the way in which he can bring his side of the matter before the court, is that the wife may be advised, if it is possible, to get rid of this attachment of earnings order and go back to the ordinary enforcement procedure, and, if she is able, to base it not only on his actual earnings but on his potential earnings; but I express no opinion about that because it is not my business. It may be, and again I express no opinion, that although subsisting enforcement proceedings are got rid of by s 8 of the Maintenance Orders Act, 1958, if she reverts to the procedure of ordinary enforcement, then that notice will vacate the attachment of earnings order, and the matter might then be dealt with on that basis. But, as I say, we have got so little real information about the way in which this matter stands from that point of view that I do not propose to lay down any dogmatic view on that subject.

I end, therefore, as I began, by saying that in my opinion in its present form this order cannot stand, and the wife’s complaint must be remitted to the justices for the whole matter to be put in order, so far as it can be put in order, and dealt with on a proper basis.

COLLINGWOOD J. I agree. The only matter before the justices in this case was the wife’s complaint dated 7 August 1959, asking for an increase in the amount of maintenance payable to her by her husband.

The original order under which maintenance was payable was made on 12 February 1959, and that order was made on the grounds of the husband’s desertion and adultery for the payment of £3 10s weekly to the wife and £1 weekly in respect of each of two children, a total of £5 10s per week. The grounds on which the wife asked for an increase were these. On 18 July 1959, another child was born, and in her complaint of 7 August the wife asked for an order for custody of that child, and also that maintenance should be payable to her by her husband for that child. On 13 August 1959, the justices made an order which is the order from which this appeal is brought, and thereby they varied the original order by reducing the payment to the wife to £1 a week and they made an order in respect of each child, now three children, for 10s a week, a total of £2 10s.

The reason which they put forward for making that order is this. Only two days before, before the same court (when I say the same court I do not mean the same justices, because they speak of their being informed of the matter) an order had been made for the attachment of the husband’s earnings under the Maintenance Orders Act, 1958. That order had specified the “normal deduction rate” as £2 10s a week, and the husband’s “protected earnings” as £4 16s 1d, these figures being based on the net earnings which the husband had put forward as being £7 6s 1d a week. What the justices have done, therefore, is to substitute the figures which they have found to be the proper figures on inquiry under the attachment order for the original order which the wife had obtained in February, 1959.

Now, counsel for the husband has urged before this court that that is within their powers, because once a wife asks for a variation that opens the door to justices to vary either up or down, just as they like, that they are not restricted to varying upwards, although that is the only thing the wife was asking for. If that is correct, what it involves, in my opinion, is that every application by a wife for an increase in maintenance imports an implied application by the husband

Page 536 of [1960] 1 All ER 529

to reduce, and vice versa. That is to say, without there being any necessity for notice being given to the wife that such application is to be made she is faced with the possibility of a reduction. In my opinion that is not correct, and that it is not correct is clear, I think, from the judgment of Lord Merriman P, in Trathan v Trathan ([1955] 2 All ER, see at pp 703–707), and I cannot see any justification for drawing the conclusion which counsel for the husband would have us draw from the reservation made by Davies J in his judgment in that case ([1955] 2 All ER at p 708).

In my opinion the justices were mistaken in the course which they took here. They had no power to vary the order in the way in which they did on the application which was then before them, and I agree that the case should be remitted as my Lord has said.

LORD MERRIMAN P. The appeal is allowed, and the order set aside save as to custody of the third child, the wife’s complaint is remitted to a fresh panel of the justices for the Melton Mowbray petty sessional division, and the husband is to have leave to make at the time any cross-complaint that he may be advised to make.

Appeal allowed. Order accordingly.

Solicitors: Barradale, Blacket Gill, Silkin & Young agents for Latham, New & Smyth, Melton Mowbray (for the wife); Dawson & Co agents for H P Rushton, Grantham (for the husband).

N P Metcalfe Esq   Barrister.

Note

Re Wring

Re Cook

[1960] 1 All ER 536

Categories:        CONSTITUTIONAL; Civil Rights and Liberties        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ AND DONOVAN J        

Hearing Date(s):        9 FEBRUARY 1960        

Habeas Corpus – Practice – Application for habeas corpus in criminal matter – Application by person in execution – Right of applicant to be heard in person.

Notes

In so far as the present case establishes that an application for a writ of habeas corpus may not be made in person it re-establishes a long-standing practice prior to Practice Note [1947] WN 218, which extended to prerogative writs in terms. The practice stated in that note and followed in R v Staff Sub-Committee etc ([1956] 1 All ER 753) is accordingly confined to applications for prerogative orders.

As to purposes for which a writ of habeas corpus will not be granted, see 11 Halsbury’s Laws (3rd Edn) 35, 36, paras 62, 63.

As to applications which only counsel can make, see 3 Halsbury’s Laws (3rd Edn) 18, para 22, and 11 Halsbury’s Laws (3rd Edn) 37, para 66.

Cases referred to in judgments

Featherstone, Re (1953), 37 Cr App Rep 146, 3rd Digest Supp.

Greene, Re (1941), 57 TLR 533, 2nd Digest Supp.

Motions for habeas corpus

The applicants, Bryan John Wring and Albert Samuel John Cook, applied in person for writs of habeas corpus. Each of the applicants was serving a sentence of imprisonment passed on him by a court of competent jurisdiction and each claimed that the sentence was invalid and that he was, therefore, unlawfully detained. The applications were made, in the first instance, by letters to the

Page 537 of [1960] 1 All ER 536

court, but neither of the applicants had made an affidavit in support of his application.

The applicants appeared in person.

9 February 1960. The following judgments were delivered.

LORD PARKER CJ. The court has considered these two applications made by prisoners in person for habeas corpus. The court is quite clear that there is nothing in the grounds raised which would enable this court to make the order.

The court would like to take this opportunity of setting out the position in regard to these applications. The Divisional Court of the Queen’s Bench Division has repeatedly stated that habeas corpus is not to be regarded as a means of appeal against conviction or sentence. As the court stated in Re Featherstonea:

“The court does not grant, and cannot grant, writs of habeas corpus to persons who are in execution, that is to say, persons who are serving sentences passed by courts of competent jurisdiction. Probably the only case in which the court would grant habeas corpus would be if it were satisfied that the prisoner was being held after the term of the sentence passed on him had expired.”

Accordingly, a prisoner who wishes to challenge either his conviction or his sentence, should apply to the Court of Criminal Appeal or to quarter sessions, as the case may be. If the prisoner none the less persists in his desire to apply for habeas corpus, the courses open to him are: (a) to consult a solicitor about the possibility of instructing counsel to make an application on his behalf; or (b) to ask someone to make an application for him or arrange for one to be made, and in either case to swear the necessary affidavit; or (c) to apply to the local committee of the Law Society for legal aid for the purpose of making an application.

There is no right of access to the Divisional Court otherwise than by the means described above. As a concession, however, the court is prepared to consider any written statement by the prisoner setting out the grounds on which he considers that he is unlawfully detained and sent by letter to the Master of the Crown Office. This is not an application, since it is not in accordance with the Supreme Court Rules, but the Divisional Court (or in vacation the vacation judge) does, as a matter of practice, consider the letter and statement in order to see whether the prisoner has an arguable point. If he has, the court arranges for the Official Solicitor to instruct counsel to make a formal application under the rules on the prisoner’s behalf. If the court is of opinion that there is no arguable point, the prisoner is informed that the court sees no reason to depart from the formal procedure, leaving it to the prisoner to proceed in accordance with the rules. Prisoners will not be permitted to make such an informal approach more than once.

The Divisional Court has ruled that no applicant for a writ of habeas corpus can be heard in person unless some exceptional ground is shown for departure from the established practice. Compare Re Greene. A prisoner, therefore, is not produced for the purpose of making an application in person unless the court so directs. As I have said, these applications are refused.

DONOVAN J. I agree.

Applications dismissed.

F Guttman Esq   Barrister.

Mounsdon and Another v Weymouth and Melcombe Regis Corporation

[1960] 1 All ER 538

Categories:        TOWN AND COUNTRY PLANNING        

Court:        QUEEN’S BENCH DIVISION        

Lord(s):        LORD PARKER CJ, CASSELS AND ASHWORTH JJ        

Hearing Date(s):        20, 21 JANUARY, 2 FEBRUARY 1960        

Town and Country Planning – Enforcement notice – Appeal against notice – Notice founded on breach of condition of grant of planning permission – Whether appellant could maintain that there had been no development and that no permission had been necessary – Development more than four years before notice – Town and Country Planning Act, 1947 (10 & 11 Geo 6 c 51), s 23(1), (4).

Planning permission to use land as a caravan site was granted to M on 9 April 1952, on a condition, among others, that only three caravans should be sited on the land. In August, 1952, eleven caravans were on the site; in July, 1954, fourteen and in July, 1958, twenty-six caravans were on the site. On 30 August 1958, the local planning authority served on M an enforcement notice alleging that there had been development within four years preceding the date of the notice and that the development consisted of a material change of use by using the land as a site for caravans exceeding three in number; the notice alleged that the condition of the planning permission to develop land had not been complied with as the land was used as a site for more than three caravans. M appealed under s 23(4) of the Town and Country Planning Act, 1947, seeking, by complaint, that the enforcement notice should be quashed. On appeal from dismissal of his complaint,

Held – The enforcement notice should be quashed for the following reasons—

(i) an essential element in an enforcement notice was that development should have taken place, and an enforcement notice based on breach of a condition on which planning permission was granted could be quashed on the ground that the development alleged had not taken place, or on any other of the three grounds mentioned in s 23(4)(a) of the Town and Country Planning Act, 1947 (see p 542, letters d and e, and p 543, letter f, post).

Eastbourne Corpn v Fortes Ice Cream Parlour (1955) Ltd ([1959] 2 All ER 102) applied.

(ii) M was not precluded by having obtained planning permission in 1952 from contending now that planning permission had not been needed (see p 543, letter h, post).

Swallow & Pearson v Middlesex County Council ([1953] 1 All ER 580) applied.

(iii) the development alleged by the enforcement notice was an increase in the number of caravans beyond three and, as that had taken place more than four years before the service of the enforcement notice, the development alleged within that four years (which was necessary to found a valid enforcement notice under s 23(1)) had not been established (see p 544, letter a, post).

Appeal allowed.

Notes

The principle stated at (i) above may be found to be equally applicable to limitations and non-compliance with limitations where an enforcement notice is served, under s 38 of the Town and Country Planning Act, 1959, for such non-compliance.

For the Town and Country Planning Act, 1947, s 23, see 25 Halsbury’s Statutes (2nd Edn) 524.

Page 539 of [1960] 1 All ER 538

Cases referred to in judgment

Eastbourne Corpn v Fortes Ice Cream Parlour (1955) Ltd [1958] 2 All ER 276, [1958] 2 QB 41, 122 JP 324, [1958] 2 WLR 886, revsd CA, [1959] 2 All ER 102, [1959] 2 QB 92, 123 JP 277, [1959] 2 WLR 630, 3rd Digest Supp.

Guildford RDC v Penny [1959] 2 All ER 111, [1959] 2 QB 112, 123 JP 286, [1959] 2 WLR 643.

Swallow & Pearson v Middlesex County Council [1953] 1 All ER 580, 117 JP 179, [1953] 1 WLR 422, 3rd Digest Supp.

Case Stated

This was an appeal by Case Stated from a decision of the justices for the borough of Weymouth and Melcombe Regis given on 12 December 1958, dismissing complaints preferred by the appellants, Mr and Mrs Mounsdon, on 25 September 1958, against two enforcement notices issued by the respondents under s 23 and s 24 of the Town and Country Planning Act, 1947, dated 30 August 1958, and duly served. Each notice contained the following recitals:

“Whereas it appears to the Mayor Aldermen and Burgesses of the borough of Weymouth and Melcombe Regis … that development of certain land at … consisting of the making of a material change in the use thereof by using the same as a site for caravans exceeding three in number has been carried out within the four years preceding the date of this notice”

and

“whereas the aforementioned change of use constitutes a development within the meaning of the above Act and the conditions set out in a notice of permission to develop land granted in respect of the said land and dated Apr. 9, 1952, under the provisions of Part 3 of the said Act, have not been complied with inasmuch as the land to which the permission relates has been used for siting more than three caravans.”

By each notice the appellants were given notice to

“discontinue the use of the said land as a site for caravans exceeding three in number and to remove all the caravans exceeding three in number and each of them from the said land … ”

The following facts were found. The land referred to in the notices was.37 of an acre in extent. Two caravans were placed on the land during the winter of 1945–46 and in the summer of 1946 there were three caravans on the land. During the winter of 1946–47 there were eighteen caravans on the land and during the summer of 1947 six of these caravans remained on the land and the remainder were moved to caravan sites elsewhere. At the end of the summer of 1947 the appellants placed a further fifteen caravans (making a total of twenty-one) on the land and these remained there unoccupied throughout the winter. On 1 July 1948, eight of these caravans remained on the land and were let for occupation by holiday makers. On or about 26 June 1951, an enforcement notice dated 25 June 1951, was served by the respondents on the appellants ordering them to cease to use the land as a camping site and for stationing or storing caravans. An appeal against this enforcement notice was lodged and set down for hearing on 23 October 1951. The appellants asked for an adjournment pending an application being made for planning permission and the appeal was withdrawn in April, 1952. On 9 April 1952, a notice of the grant of planning permission was issued by the local planning authority. The conditions imposed included (a) that not more than three caravans should be sited on the land (b) that this permission referred to the use of the land as a caravan camping site for the period commencing at Easter and ending on 30 September inclusive each year. No appeal was lodged against the conditions imposed. In the course of visits of inspection by employees of the respondents the number of caravans on the land on the following dates were: 2 and 3 August, 1952—eleven caravans; August, 1953, thirteen caravans; July, 1954, fourteen caravans;

Page 540 of [1960] 1 All ER 538

8 September 1955, seventeen caravans; 17 August 1956, seventeen caravans; 26 July 1958, twenty-six caravans; 17 November 1958, twenty-seven caravans.

It was contended for the appellants (among other contentions) that they had an established user of the land for siting caravans as at 1 July 1948, and required no planning permission to continue to use the land for that purpose, and that the enforcement notices ought to be quashed under s 23(4)(a) of the Town and Country Planning Act, 1947. That the enforcement notices must be construed strictly and against the council where ambiguous. That the number of caravans was first increased above three before 1 July 1948, and was not therefore development within s 12 of the Act and that the notices should be quashed. Alternatively that the enforcement notices were ineffective in so far as they related to breaches of condition outside the period of four years before service.

It was contended by the respondents that the appellants had not appealed against or objected to the planning permission of 9 April 1952. That the increase in the number of caravans amounted to material change of use and hence to development as defined by s 12(2) of the Act of 1947. That the justices must accept the statement in the enforcement notice that development had taken place and could not inquire into the facts relating to the alleged change of use to decide whether or not it constituted development. That the period of twenty-eight days in every year during which the General Development Order, 1950, permitted land to be used for certain purposes without planning permission had been greatly exceeded. That the enforcement notice might require more to be done than was necessary having regard to the requirement as to the period within which a notice must be served under s 23(1) of the Act of 1947.

The justices decided that permission was granted as shown in the notice of permission dated 9 April 1952, and in the enforcement notice for not more than three caravans to be sited on the land; that permission was required in respect of any further development and that such permission had not been granted. The justices dismissed the appellants’ complaints.

Michael Albery QC and C I Poole for the appellants.

J S Daniel for the respondents.

Cur adv vult

2 February 1960. The following judgment was delivered.

ASHWORTH J read the judgment of the court. The piece of land with which the case is concerned is situate in the Borough of Weymouth and is a little over one-third of an acre in extent. In the winter of 1945–46 two caravans were placed on the land and thereafter the number of caravans increased, though it varied as between winter and summer. On 1 July 1948, the number was eight, such caravans being let for occupation by holiday makers. In June, 1951, the respondents issued enforcement notices requiring the appellants to cease to use the land as a camping site; proceedings by the appellants for the purpose of setting aside these notices were withdrawn in April, 1952, as the appellants had meanwhile applied for and obtained planning permission to use the land as a caravan site, subject to certain conditions under which the number of caravans was limited to three and the period during which the land might be used as a camping site was limited to the period between Easter and 30 September in each year.

The appellants did not observe these conditions. In August, 1952, there were eleven caravans on the land, in August, 1953, there were thirteen and in July, 1954, there were fourteen. In July, 1958, the number of caravans had risen to twenty-six. On 30 August 1958, the respondents issued the enforcement notices now in question. In the first recital of these notices it was alleged that development of the land in question

“consisting of the making of a material change in the use thereof by using the same as a site for caravans exceeding three in number has been carried out within the four years preceding the date of this notice.”

Page 541 of [1960] 1 All ER 538

The second recital was in these terms:

“Whereas the aforementioned change of use constitutes development within the meaning of the Act and the conditions set out in a notice of permission to develop land granted in respect of the said land and dated Apr. 9, 1952, under the provisions of Part 3 of the Act have not been complied with inasmuch as the land to which the permission relates has been used for siting more than three caravans.”

The notices then required the appellants to discontinue the use of the said land as a site for caravans exceeding three in number and to remove all the caravans exceeding three in number from the land within seven days from the expiration of twenty-eight days after service of the notices.

On 25 September 1958, the appellants preferred complaints with the object of setting aside the notices dated 30 August 1958, and these complaints were dismissed on 12 December 1958. It is only fair to the justices who heard them to state that at that time the Court of Appeal had not heard the appeals in Eastbourne Corpn v Fortes Ice Cream Parlour (1955) Ltd and Guildford RDC v Penny. The decision of this court in the first of these cases (which was subsequently reversed by the Court of Appeal) was cited to the justices and was duly regarded by them as binding.

On the hearing of the present appeal the main issue between the parties raised the following problems: If a local planning authority serves on a person an enforcement notice alleging a breach of the conditions subject to which permission to carry out development was granted, is it open to that person in proceedings under sub-s (4) of s 23 of the Town and Country Planning Act, 1947, to contend that permission was not required and that there has been no development?

It is in our view clear from the decisions of the Court of Appeal in the cases already cited that if an enforcement notice merely contains an allegation that development has been carried out without permission, it is open to the person aggrieved by the notice to contend that no development within the meaning of s 12 has taken place. Although the problem raised by the present appeal might, as it seems to us, have been brought before the courts in Guildford RDC v Penny since a limited permission was in fact granted in that case, there is no direct reference to it in the judgment of the Court of Appeal. It was contended for the respondents that throughout s 23 there is to be found a clear distinction between a case in which no permission was sought or granted and a case in which a conditional permission was granted. Thus by sub-s (1) a planning authority is given power to serve an enforcement notice in either of two situations: (a) if development has been carried out without the grant of permission required in that behalf, or (b) if any conditions subject to which such permission was granted in respect of any development have not been complied with. By sub-s (2) the notice is to specify the development alleged to have been carried out without such permission or, as the case may be, the matters in respect of which it is alleged that any such conditions have not been complied with. By sub-s (4) para (a) a court is directed to quash the notice if satisfied (i) that permission was granted for the development to which the notice relates or (ii) that no such permission was required in respect thereof, or (iii) as the case may be, that the conditions subject to which such permission was granted have been complied with. By para (b) a court is directed to vary the notice if though not satisfied under para (a) it is none the less satisfied that the requirements of the notice exceed what is necessary for restoring the land to its condition before the development took place or for securing compliance with the conditions, as the case may be. It is to be observed that the phrase “as the case may be” appears in sub-s (2) and in paras (a) and (b) of sub-s (4). This phrase was

Page 542 of [1960] 1 All ER 538

relied on by counsel for the respondents as emphasising and so to speak maintaining the distinction drawn in sub-s (1) between absence of permission and conditional permission. Accordingly, he says, when para (a) of sub-s (4) is considered, the first two grounds are appropriate to a case in which absence of permission is alleged whereas the third ground, prefaced by the words “as the case may be”, is appropriate to a case in which non-compliance with conditions is alleged.

The respondents’ argument, however, involves one further step, namely, that the distinction between the first two grounds in para (a) of sub-s (4) and the third ground is a distinction for all purposes. That is to say, a person aggrieved by a notice alleging non-compliance with a conditional permission is limited to the third ground if he seeks to have the notice quashed.

While we accept the argument that in s 23 a distinction is drawn between absence of permission and conditional permission we are unable as a matter of construction to interpret para (a) of sub-s (4) as both drawing a distinction and imposing a limitation. The phrase “as the case may be” seems to us to have been inserted for the purpose of clarification and not for the purpose of restricting a court’s right to quash a notice alleging non-compliance with conditions. An essential element in an enforcement notice is that development should have taken place, and in our view if an aggrieved person is to be precluded from challenging this point in the case of a notice alleging non-compliance with conditions on which permission to develop was granted, clearer provisions are required than those contained in para (a) of sub-s (4). Before the decision of the Court of Appeal in the two cases already cited, it was open to a planning authority to argue that an aggrieved person could not challenge the allegation of development, whichever of the three grounds mentioned in para (a) was relied on by him for the purpose of setting aside the notice. Such an argument can no longer be put forward when either of the first two grounds is relied on and in our view to allow it to be raised when the third ground is relied on involves a result so much at variance with what appears to be the general sense of the section that we should avoid it unless clearly compelled otherwise.

This conclusion appears to us to be in accord with the reasoning of the Court of Appeal. In Eastbourne Corpn v Fortes Ice Cream Parlour (1955) Ltd ([1959] 2 All ER at p 106, [1959] 2 QB at p 106) Lord Evershed MR said:

“I return to the vital language of s. 23(4) of the Act of 1947, and, in my judgment, much assistance towards a proper solution is to be found in the last seven words ‘ … the development to which the notice relates’. For properly expounded by reference to the earlier sub-s. (1) and sub-s. (2), these words must, in my view, mean (and I am again indebted to Mr. Megarry in the Guildford case) ‘the development which is alleged to have been carried out without the grant of permission required in that behalf under this Part of the Act.' In my judgment, it is the use of the word ‘alleged’ derived from sub-s. (2) that provides the all-important clue. It is, as I think, an essential requirement of the enforcement notice that it should allege development carried out without permission; and I can see no compelling reason for holding that the only subject of the ‘allegation’ is the absence of permission, the development itself (that is, the requirement) being assumed.On the contrary, it appears to me more natural to treat the allegation as being, as it were, a double allegation—an allegation both of the development (requiring permission) having been carried out and of the absence of permission; and, if so, that the justices’ powers conferred by the formula in question involve inquiry whether no permission under Part 3 of the Act was required on the ground that there had been in fact no development either after 1948 or at all, no less than on the ground that, though

Page 543 of [1960] 1 All ER 538

post-1948 development had occurred, it was of a kind that did not require permission.”

And in Guildford RDC v Penny he said ([1959] 2 All ER at p 112, [1959] 2 QB at p 123):

“This appeal raises two questions, namely—first, whether the justices at Woking had jurisdiction under the Town and Country Planning Act, 1947, to inquire into and determine whether there had in fact been development on the land owned and occupied by the appellants, within the meaning of s. 12 of the Act; and second, if so, whether they were entitled to conclude, as they did, that there had not been any development.

“The facts appear from the Case Stated and may be briefly summarised as follows. The appellants, Mr. and Mrs. Penny, are the proprietors of 1 1/2 acres of land within the jurisdiction of the respondents, the Guildford Rural District Council, as the appropriate local planning authority. On July 1, 1948—the date of the coming into operation of the Town and Country Planning Act, 1947—the land was being used (as it had been before that date and as it has continued to be used since) as a site for residential caravans. On July 1, 1948, the number of such caravans appears to have been eight, but thereafter the number steadily increased. In 1955 and 1956 recourse was had to the powers and jurisdiction of the local planning authority and (on appeal) to the Minister, the result of which was that the Minister permitted twenty-one caravans to be placed on the land. The appellants, however, were not satisfied with the scope allowed by this determination on the part of the Minister; and it is not now in doubt that, in spite of the time and the trouble taken, we must determine the question before us without regard to what was then done.”

Although, as already stated, the question was not argued in Guildford RDC v Penny whether the jurisdiction of the justices in a case where conditional permission was granted was limited to the third ground mentioned in para (a) of sub-s (4), we can hardly think that if that limitation (for which the respondents now contend) were imposed by the section, it would have passed unnoticed.

In our judgment, therefore, if an aggrieved person seeks to set aside an enforcement notice alleging non-compliance with the conditions on which permission to develop was granted, it is open to the justices to quash the notice if satisfied of any of the three grounds set out in para (a) of s 23(4).

The respondents further contended that even if they were wrong on the major issue already considered the appellants had “put themselves within the planning net” by applying for and obtaining permission after the enforcement notices issued in 1951. In passing, it may be noted that counsel for the respondents conceded that these notices were defective in form and of no effect. It was contended that, having obtained planning permission, the appellants could not now argue that it was unnecessary and it was suggested that Swallow & Pearson v Middlesex County Council was distinguishable on the ground that planning permission was not obtained in that case whereas in this case it was. We do not think that the distinction affects the principle applied in that case and in others to which reference was made in the course of the argument. In our view the appellants are not precluded from raising the issue as to development by reason of the grant of planning permission in 1952.

The last point taken on behalf of the respondents was that on the facts the appellants had not done enough to satisfy the justices that permission was not required. In this connexion it is to be noted that by s 23(1) the planning authority is limited to a period of four years after alleged development has taken place, within which an enforcement notice can be served. In the present case the enforcement notice was issued in August, 1958, and expressly referred to

Page 544 of [1960] 1 All ER 538

development alleged to have been carried out within a period of four years preceding the notice. The development complained of in the enforcement notice is an increase in the number of caravans beyond three, but as the number of caravans in 1954 was fourteen, the development alleged was carried out before that date. In these circumstances the alleged development was not established.

Having regard to the interpretation of the Act prevailing at the time when the justices considered this case, we can well understand how they reached their conclusion, but in our judgment, for the reasons which we have endeavoured to state, it was wrong and accordingly this appeal should be allowed. The case should be sent back to them with a direction to quash the notices.

Appeal allowed.

Solicitors: Peacock & Goddard agents for Hollowell & Bollam, Weymouth (for the appellants); Sharpe, Pritchard & Co agents for Town clerk, Weymouth (for the respondents).

E Cockburn Millar   Barrister.

Gould v National Provincial Bank and Another

[1960] 1 All ER 544

Categories:        CIVIL PROCEDURE        

Court:        CHANCERY DIVISION        

Lord(s):        RUSSELL J        

Hearing Date(s):        3 FEBRUARY 1960        

Discovery – Default of appearance – Defendant in default of appearance – Defendant not a proper party to action – Whether discovery should be ordered against defendant.

G executed a legal charge on his house and entered into three guarantees with National Provincial Bank with the object of securing the repayment of £1,325 owed by his son-in-law, J, to the bank. G brought an action against the bank and J claiming a declaration that these documents were invalid and should be set aside. He alleged that he had been induced to enter into them by a false representation, allegedly made by an employee of the bank, that J had a “nice profitable business”. J did not enter an appearance and, at a time when he was in default of appearance and defence, G applied for discovery of documents against J.

Held – Discovery would not be ordered because

(i) J was not a proper party to the action, as he was neither legally nor equitably interested in any part of the relief claimed, and

(ii) J not having entered an appearance, there was no issue at the time between the plaintiff and J in relation to which discovery should be ordered.

Notes

As to discovery against parties to the proceedings where there are questions to be decided between them, see 12 Halsbury’s Laws (3rd Edn) 9, para 9; as to defendants for discovery only, see ibid, pp 10, 11, para 11.

Cases referred to in judgment

Codd v Delap [1906] WN 57, on appeal CA, [1906] WN 78, 18 Digest (Repl) 209, 1811.

Heatley v Newton (1881), 19 ChD 326, 51 LJCh 225, 45 LT 455, 18 Digest (Repl) 9, 47.

Procedure Summons

Mr Herbert Gould, the plaintiff, issued a writ against National Provincial Bank and Mr Harold James Jefferies claiming a declaration that a legal charge dated 20 October 1951, made between the plaintiff of the one part and the defendant bank on the plaintiff’s house and three guarantees dated 20 October 1950, 11 May 1951, and 1 September 1952, executed by the plaintiff were invalid and ought to be set aside; and claiming further or in the alternative rescission and delivery

Page 545 of [1960] 1 All ER 544

up of the documents for cancellation. The purpose of the legal charge and the three guarantees was to secure the repayment to the bank of a sum of £1,325 owed by Mr Jefferies, who was the son-in-law of the plaintiff, to the bank. By his statement of claim the plaintiff alleged that he was misled into executing these documents by a representation by a bank manager employed by the defendants that Mr Jefferies “has a nice profitable business”. He alleged that this was a fraudulent misrepresentation and he also alleged undue influence and abuse of a relationship which involved a duty on the part of the bank to the plaintiff. The bank by their defence denied these allegations. Mr Jefferies did not enter an appearance. The plaintiff applied under the summons for directions for discovery of documents relating to his business against Mr Jefferies.

Charles Sparrow for the plaintiff, Mr Gould.

R H W Dunn for the first defendant, National Provincial Bank Ltd.

The second defendant was in default of appearance.

3 February 1960. The following judgment was delivered.

RUSSELL J stated the nature of the action and continued. The plaintiff wants discovery from the second defendant of documents relating to his business on the ground that such documents would be relevant to an issue on the pleadings, wherein the plaintiff alleges that the bank’s representative said that the second defendant’s business was a nice profitable one and that that was not the fact because the business was at all material times in serious difficulties. The plaintiff says that the documents in the possession, power or control of the second defendant will assist the court in determining whether that allegation is or is not correct. It is the first essential step in the allegation of fraudulent misrepresentation by or on behalf of the bank.

I was referred to certain rules of court. RSC, Ord 31, r 12, reads:

“Any party may … apply to the court or a judge for an order directing any other party to any cause or matter to make discovery on oath of the documents which are or have been in his possession or power, relating to any matter in question therein.”

Counsel for the plaintiff says that the second defendant is a party and so is the plaintiff, and that there is nothing in that rule which provides that it shall not cover a case where one of the parties is in default of appearance and defence. He also points out that RSC, Ord 13, r 12, is in these terms:

“In all actions not by the rules of this order otherwise specially provided for [which would be, for example, an action of this character] in case the party served with the writ does not appear within the time limited for appearance, upon the filing by the plaintiff of a proper affidavit of service, and if the writ is not specially indorsed under Ord. 3, r. 6, of a statement of claim, the action may proceed as if such party had appeared … ”

Counsel for the plaintiff says that that means that the action in all respects may proceed as if the party had appeared and, therefore, equally in that order there is nothing to suggest that discovery cannot be obtained against the party who is in default of appearance.

In my view, there is in this case what I may describe as a special and earlier point. If the second defendant be not a proper party to the proceedings, the question is should discovery anyway be ordered against him because he has in fact remained a party. If he is not a proper party, I am clearly of opinion that discovery should not be ordered since it would mean this, that he would be being retained as a party for no purpose other than discovery. I consider that the second defendant in this case is not a proper party.

The relief claimed is first “a declaration that the legal charge … and the three guarantees aforesaid … are invalid and ought to be set aside”. The second defendant is not a party either to the legal charge, which is between the plaintiff and the bank, or to any of the three guarantees, which are guarantees

Page 546 of [1960] 1 All ER 544

of the second defendant’s overdraft with the bank. The second claim is: “Further or in the alternative rescission of the said documents or the respective transactions effected thereby”. The third is: “Delivery up of the said documents for cancellation”. The second defendant, in my view, has no legal or equitable interest in either the legal charge or any of the three guarantees. I think that can be tested by inquiring whether, should the plaintiff and the bank choose as a matter of agreement between them to tear up the guarantees or the charge by way of legal mortgage, the second defendant could have no say in the matter at all either in law or in equity. If that is so, I cannot see how he can be concerned in an action whose only purpose in effect is to seek on the one hand the tearing up or destruction of these documents, or on the other hand the preservation and establishing the validity of the legal charge and the three guarantees.

It is suggested by counsel for the plaintiff that the second defendant is interested in this way, that it is his banking account which is being guaranteed and the legal charge is in support of those guarantees. Of course, in a sense he is interested: but it seems to me that, for a person to be a proper party to an action of this nature, it is essential that he should be legally or equitably interested in some part of the relief claimed. That view of this particular case seems to me to represent the justice of the matter and satisfies me that an order for discovery should not be made against the second defendant.

There is another aspect of the matter which is more general. Counsel for the bank also says that no discovery should be ordered against a defendant who is in default of appearance since ex hypothesi there is no issue between the plaintiff and the second defendant. No part of the statement of claim has been put in issue by the second defendant, and that must apply to any such case as this. He says that, if there is no issue between the plaintiff and the second defendant in these proceedings, discovery cannot be ordered as between the plaintiff and the second defendant. Counsel for the plaintiff says that that is not so unless there has been in some shape or form a submission to the claim or an admission of the facts. In this connexion reference was made to two cases. The first is Heatley v Newton. That was a case in which the plaintiff, who had bought property at an auction and paid a deposit to the auctioneers, brought an action against the vendors and the auctioneers to have the contract rescinded, the deposit repaid with interest, the costs of the action paid, and for damages. The statement of claim alleged that all, or nearly all, of the biddings previous to that of the plaintiff were fictitious, and were either biddings by the vendors or their agents, or were announced by the auctioneer without any bidding having in fact been made. The auctioneers applied for liberty to pay the deposit into court, and to have the action dismissed against them on such payment being made. The Master of the Rolls made an order that, the vendors undertaking to pay the auctioneers their costs of the action without prejudice to how they should ultimately be borne, and to pay any interest and damages to which the plaintiff might be held entitled, and the auctioneers undertaking, in the event of the vendors not carrying out their undertaking, to pay to the plaintiff interest on the deposit up to the time of payment into court, and the costs of the action up to and including that application in the event of the court holding the plaintiff entitled to such interest and costs, the auctioneers should be at liberty to pay the deposit into court, and that all further proceedings against them should be stayed. It was held on appeal that the order must be discharged, the auctioneers not having submitted to give the plaintiff all the relief which he could in any event be entitled to against them, for if the allegations in the statement of claim were established the plaintiff would be entitled to have judgment against them for the deposit with interest, and to have an order for costs of the action against all the defendants.

Page 547 of [1960] 1 All ER 544

Pausing there, it is to be observed that in that case the auctioneers were simply saying that the proceedings should be stayed against them on terms which would be less than the full relief to which the plaintiff would be entitled if he should succeed in the action. Two passages in the judgment were referred to in argument before me. The first is in the judgment of Baggallay LJ where he said this ((1881), 19 ChD at p 336):

“Another point, upon which I do not feel so clear, was strongly pressed by Mr. Crossley, that the plaintiffs were entitled to keep Fox & Bousfield before the court, apart from any question of personal pecuniary responsibility, upon the ground alone of being able to obtain discovery from them which would enable them to establish their case as against the other defendants. I am not prepared to admit, as a general principle, that a plaintiff is entitled to have persons kept before the court as defendants, that they may aid him in obtaining discovery from the other defendants, but here the two things are so mixed up together that, as it appears to me, enough has not been done on the part of Messrs. Fox & Bousfield, as regards the plaintiff’s interest, to entitle them to be dismissed from the suit, or to entitle them to have the proceedings stayed against them.”

That passage seems to me rather neutral, but Lush LJ says ((1881), 19 ChD at p 337):

“Now, the order in question exonerates Messrs. Fox & Bousfield from the time they made the payment into court from all liability except interest and costs up to that time, and it compels the plaintiff to take the undertaking of the vendors that they will be answerable for all damages to which the plaintiffs may be held entitled. I do not think that the court has a right to do this, seeing that the auctioneers were originally properly joined as defendants in the action. I quite agree that you cannot claim to retain parties as defendants in a suit merely because you want to interrogate them; but it appears to me that where they are properly made defendants it is a ground for not letting them off summarily, that there is a very great advantage accruing to the plaintiffs from being at liberty to interrogate them instead of simply calling them as witnesses at the trial.”

Then he continues to deal with the matter in relation to the form of discovery which is involved in interrogatories rather than that which is involved in the ordinary discovery of documents.

The other case, referred to by counsel for the bank, was Codd v Delap. That was a case in which the plaintiff sued Delap and others for a declaration that the plaintiff was beneficially entitled to fifty fully paid-up shares in a certain railway company. The statement of claim set out (amongst other things) the plaintiff’s title to the shares, and alleged that the shares were at the commencement of the action registered in the books of the company in the name of the defendant Stevens as mortgagee, and that the defendant Delap claimed to be beneficially entitled to them as against the plaintiff. The defendant Stevens (who was the solicitor of the defendant Delap, and was made a defendant only with respect to these shares) by his defence admitted the allegations in the statement of claim in relation to these shares, and disclaimed all interest whatever in them. An application by the plaintiff, by summons in chambers, for leave to administer interrogatories to the defendant Stevens with respect to these shares and other matters having been dismissed by the judge, the plaintiff now moved to discharge the order. It was argued that the defendant Stevens was properly made a defendant, and could not avoid giving discovery by saying that he now claimed no interest in the shares, and that it was impossible for the plaintiff to get on unless he could obtain answers from Stevens as to what he said and did

Page 548 of [1960] 1 All ER 544

on certain occasions. Farwell J refused in his discretion to grant the application, saying ([1906] WN at p 58):

“There was now no issue between the plaintiff and Stevens, but the plaintiff desired to interrogate Stevens to see if his answers would help him. If the interrogatories were answered, the plaintiff could not read the answers at the trial against any of the other defendants. The plaintiff, in fact, was seeking to obtain from Stevens a statement on oath of what his evidence would be at the trial of the action. It was a novel application, and must be dismissed with costs.”

This was also a case involving interrogatories rather than a mere discovery of documents, but I certainly find support in what Lush LJ said for my decision to decline to order discovery of documents having regard to the fact that the second defendant, in my view, is not a proper party and, therefore, cannot be retained as a party merely for the purposes of discovery. Lush LJ said ((1881), 19 ChD at p 337):

“I quite agree that you cannot claim to retain parties as defendants in a suit merely because you want to interrogate them … ”

On the other hand, it does not seem to me that either of those questions are quite in point on the question here, whether discovery can be ordered against a defendant who is in default in appearance and so long as he is in default in appearance. As suggested by counsel for the bank, there cannot be any issue between the parties on which discovery against the second defendant should be granted and, therefore, there should not be any discovery. Counsel for the plaintiff points out that there is nothing in Bray on Discovery on whether discovery can be ordered against a defendant who is in default in appearance. He has also argued that, since the court in such circumstances would have power to make the full order claimed in default of defence, then that power to make the greater order must include the power of making a lesser order, such as the order for discovery. For my part, I do not follow that at all. It seems to me that an order for discovery is to be considered like any other order of this type. On the supposition that the court in such circumstances is in a position to make a full order and to grant the full relief claimed against the particular defendant, it seems to me as between the plaintiff and that particular defendant no relief by way of discovery is required. Although it is not actually necessary for my decision in this case, the right view is, I think, that, if a defendant is in default of appearance, there is no issue at that stage between the plaintiff and that defendant, and therefore there is nothing in relation to which discovery should be ordered. It is perfectly clear that at a later stage the defendant might get leave to enter appearance and deliver a defence on terms, but if he were to do so it seems to me that at that stage there would be an issue and at that stage discovery could be ordered.

In my view, the application for discovery against the second defendant should be refused.

Application refused.

Solicitors: Hewitt, Woollacott & Chown agents for Southall & Co, Birmingham (for the plaintiff); Wilde, Sapte & Co (for the first defendant).

E Cockburn Millar   Barrister.

Taylor v Ellis and Another

[1960] 1 All ER 549

Categories:        LAND; Mortgages        

Court:        CHANCERY DIVISION        

Lord(s):        CROSS J        

Hearing Date(s):        9, 10 FEBRUARY 1960        

Mortgage – Possession of mortgaged property – Mortgagor not in occupation – Power of leasing only with consent in writing of mortgagee – Tenancy granted by mortgagor – No evidence of consent in writing – Mortgagee having knowledge of tenancy – Mortgagee going without interest for many years – Whether mortgagee entitled to recover possession against tenant as trespasser – Law of Property Act, 1925 (15 & 16 Geo 5 c 20), s 99.

A mortgage dated 27 October 1924, provided that no lease of the property or any part of it made by the borrowers during the continuance of the security should have effect by force or virtue of s 18 of the Conveyancing and Law of Property Act, 1881, unless the lender “shall consent thereto in writing”. On 19 September 1940, the surviving mortgagor granted a tenancy, determinable by one month’s notice on either side, to H. The surviving mortgagor died in 1943. Up to 5 October 1950, interest was duly paid under the mortgage but not after that date. The mortgagee died on 21 July 1957, having had knowledge of the tenancy and having allowed the tenant to remain in possession. There was no evidence whether written consent to the tenancy had ever been given. The plaintiff, the executrix of the mortgagee, took proceedings for possession.

Held – The plaintiff (as mortgagee) was entitled to possession because (i) the onus of proving written consent to the tenancy lay on the tenant, who could not discharge it, and

(ii) knowledge by the mortgagee of the tenant’s occupation of the property and the fact that the mortgagee had refrained from taking possession himself for many years did not preclude the mortgagee from treating the tenant as a trespasser when the mortgagee chose to do so, neither did the mere fact that for some years the mortgagee had been content to go without interest.

Notes

As to a mortgagee’s right to possession, see 27 Halsbury’s Laws (3rd Edn) 277, para 511; and as to leases granted by a mortgagor ultra vires, see ibid, pp 255, 256, paras 464, 468; and for cases on the latter subject, see 35 Digest 335–339, 776–816.

For the Law of Property Act, 1925, s 99, see 20 Halsbury’s Statutes (2nd Edn) 641.

Cases referred to in judgment

Joseph Constantine SS Line Ltd v Imperial Smelting Corpn Ltd [1941] 2 All ER 165, [1942] AC 154, 110 LJKB 433, 165 LT 27, 12 Digest (Repl) 436, 3333.

Hepworth v Pickles [1900] 1 Ch 108, 69 LJCh 55, 81 LT 818, 31 Digest (Repl) 187, 3194.

O’Rourke’s Estate, Re (1889), 23 LRIr 497, 35 Digest 336, 783 o.

Parker v Braithwaite [1952] 2 All ER 837, 3rd Digest Supp.

Adjourned Summons

On 27 October 1924, William John Eillis and Albert Edward Ellis granted a mortgage of a property at Etchingham to Thomas Taylor to secure the repayment of £250 with interest. There was an express agreement and declaration in the mortgage

“that no lease made by the borrowers of any of the said premises or any part thereof during the continuance of this security shall have effect by force or virtue of s. 18 of the Conveyancing and Law of Property Act, 1881 [now s. 99 of the Law of Property Act, 1925] unless the lender shall consent thereto in writing.”

Mr W J Ellis died in 1936, leaving Mr A E Ellis the sole mortgagor. On 19 September 1940, the surviving mortgagor granted a tenancy of the whole of the

Page 550 of [1960] 1 All ER 549

premises to Mr William Hayler, the second defendant, and as from that date the second defendant was in occupation under this tenancy, which was determinable by one month’s notice on either side. On 11 November 1943, the mortgagor died. His legal personal representatives were a Mrs Jeffrey and Mr Lionel Charles Ellis, the first defendant. Mrs Jeffrey died in 1947 and on 18 August 1954, a grant of probate of the will of the mortgagor was made to the first defendant. No repayment of the principal sum had ever been made but up to 5 October 1950, interest was duly paid under the mortgage. No interest had been paid since that date. On 21 July 1957, the mortgagee died. The plaintiff, his widow and executrix, on 5 August 1959, issued a summons against the first defendant, who did not enter an appearance, and the second defendant, asking for possession of the premises.

N C H Browne-Wilkinson for the plaintiff.

B J H Clauson for the second defendant.

The first defendant was not represented and did not appear.

10 February 1960. The following judgment was delivered.

CROSS J stated the relevant facts and continued: The issue between the parties, of course, is whether or not the tenancy granted by A E Ellis on 19 September 1940, to William Hayler is or is not binding on the plaintiff. It was in quite normal terms, and undoubtedly would have been binding on the mortgagee if in fact he consented to it in writing. There is nothing in the terms of the tenancy which would prevent it being an exercise of the statutory power of leasing.

The first point which arises is whether or not the mortgagee gave his consent to it in writing. Normally, in cases of this sort there is not the least difficulty in saying whether or not consent in writing was given, but difficulty has arisen in this case as both the mortgagee and the mortgagor who created the tenancy are dead.

The way the matter stood on the affidavit evidence was that a Mr Geoffrey Hurst Serres, who is an assistant solicitor with a firm of solicitors, Andrews & Bennett, who are acting for the plaintiff in these proceedings, said in para 7 of his affidavit that neither the mortgagee nor any person on his behalf ever gave his consent to the grant of such a tenancy. It has emerged, and it is common ground between the parties, that there really is not any positive evidence that the mortgagee never gave his consent in writing to the tenancy as, for example, there would have been had Mr A E Ellis, the deceased mortgagor, told Mr Serres that he had never asked for or obtained any consent from the mortgagee. If that had been proved, there would, of course, have been positive evidence that there was no consent. The matter simply rests in this way that the firm of Andrews & Bennett were acting in 1940, when the tenancy was granted, both for the mortgagee, and for the mortgagor, and that there is no record in the firm’s papers of any written consent by the mortgagee to the creation of the tenancy. There is no positive evidence that the mortgagee did not give his consent and it remains possible that he may have done so. On those facts the point that has been argued is on whom does the onus lie to establish that the mortgagee either gave or did not give his consent in writing.

The matter can best be decided by asking oneself how the point would be pleaded in an action of ejectment. The mortgagee in his statement of claim against anybody in possession of the land would have to do no more than set out the mortgage, which showed that he had the immediate legal estate, and claim possession. It would not be necessary for him to allege that the defendant claimed to be in possession as a tenant, but that the tenancy was not binding on him. It would be sufficient for the mortgagee to say that he had the legal estate as mortgagee, and that he claimed possession. I did not understand counsel for the second defendant really to dispute that.

Then there comes the question of defence. Counsel for the second defendant suggests that it would be sufficient for the defendant to plead the tenancy by

Page 551 of [1960] 1 All ER 549

way of defence without asserting that the mortgagee had consented in writing to its creation, and that that would raise (as it were) a prima facie case on his side, which would force the plaintiff by way of reply to make a negative allegation that the mortgagee had never consented in writing to the granting of the tenancy. If that is the case, the plaintiff in this case would not be able to establish that proposition.

In my judgment that is not the right way of looking at the matter. I think that it can be tested in this way: suppose that there had been in the mortgage deed, as there might well have been, an absolute prohibition on the granting of any leases. Even so, it would always have been perfectly possible that the mortgagee might have so conducted himself as not to be able to rely on that absolute prohibition. He might, notwithstanding that, have waived his rights or consented in some way to the lease. If, however, a tenant was going to allege that in the face of an absolute prohibition, he would, I think, clearly have to set it out in his defence. It seems to me that in the same way here, where the provision in the mortgage is that a lease will only be binding on the mortgagee if the mortgagee consents thereto in writing, the defendant would have to show that there had been a consent in writing. It is an additional argument in favour of that way of looking at the matter, that the courts lean somewhat against imposing on any party to litigation the burden of proving a negative. This appears from various obiter dicta in Joseph Constantine SS Line v Imperial Smelting Corpn Ltd. I would refer particularly to the dictum of Lord Russell Of Killowen ([1941] 2 All ER at p 180; [1942] AC at p 177):

“In coming to this conclusion, I am influenced by three considerations. First, the proving of a negative, a task always difficult and often impossible, would be a most exceptional burden to impose upon a litigant.”

In my judgment, therefore, on the first point the plaintiff is right and in the absence of any evidence that the mortgagee did consent in writing—and indeed the evidence as far as it goes strongly suggests that he did not, because if he had consented in writing one would have expected the document to be available—I think that it must be taken that to begin with this tenancy was not binding on the plaintiff.

Then the question arises: did the mortgagee become bound by the tenancy by reason of subsequent events? It is quite common for a mortgagee who is previously not bound by a tenancy to consent to take the mortgagor’s tenant, whom he could have treated as a trespasser, as his own tenant. The commonest way in which that happens is that if the mortgagor fails to pay the mortgage interest the mortgagee serves a notice on the tenant to pay the rent to him, and a new tenancy is created between the mortgagee and the mortgagor’s tenant. All that happened in this case was that for a great many years Mr Hayler was allowed to remain in occupation of the property. Then comes the curious circumstance that from 5 October 1950, onwards no mortgage interest was paid. Apart from that second point, it does not seem to me that the fact that the tenant of the mortgagor, who could be treated by the mortgagee as a trespasser, is allowed to remain in possession for a long period could itself in any way preclude the mortgagee from treating the tenant as a trespasser if and when he desires to do so. After all, as long as the mortgage interest is being paid the mortgagee may perfectly well be content to allow the tenant to remain in possession. The only way in which he could turn him out of possession is by going into possession himself, which is a thing a mortgagee is generally unwilling to do. It would be quite wrong to infer merely from the fact that the mortgagee allowed the tenant to remain in possession, having knowledge of the tenancy—there is no doubt in this case, and it is accepted, that the mortgagee knew of the tenancy—that the mortgagee has consented to take the tenant as his tenant.

Page 552 of [1960] 1 All ER 549

In that connexion I entirely agree with what Monroe J said in Re O’Rourke’s Estate. The passage which I am going to read was quoted by Danckwerts J in his judgment in Parker v Braithwaite ([1952] 2 All ER 837 at p 841). What Monroe J said was ((1889), 23 LRIR at p 501):

“I certainly cannot infer the creation of a new tenancy between the tenant and the mortgagee merely because the mortgagee takes no active steps to disavow a tenancy created by the mortgagor. The mortgagor, while in possession, and bound to keep down the interest on his mortgage, is at liberty to manage the lands as he pleases. It is not for the mortgagee to interfere with that management unless he choose to go into possession. He treats the tenancy as one binding on the mortgagor, but in no way binding upon himself if he find it afterwards for his interest to repudiate it.”

On this part of the case counsel for the second defendant referred me to Hepworth v Pickles which turned on the question of waiver of a right to enforce restrictive covenants. The facts are set out in the headnote:

“By a conveyance dated in 1874, a certain plot of land was conveyed subject to a covenant that no dwelling-house, shop, or other building to be erected on the land should at any time thereafter be used as an inn, tavern, or beerhouse. Shortly after the date of the conveyance beer and spirits were sold in one of the houses erected on the land, and continued to be openly sold for upwards of twenty-four years … ”

It was held that by reason of his knowledge of that course of dealing the person entitled to enforce the restrictive covenant had waived or released his rights.

That case does not seem to me to have any relation at all to a case of this sort. There is not here a covenant by the mortgagor that he will not part with possession of the mortgaged premises or purport to create any tenancy binding between himself and the tenant. There is no covenant which the mortgagee can enforce; his only way of protecting himself or preventing the creation of a tenancy binding as between the mortgagor and the tenant is to go into possession himself. As I have said, I do not think that it can for one moment be inferred from the fact he does not go into possession that he is in any way waiving his right to treat the tenant as a trespasser.

Then one comes to what is certainly a very curious feature of this case, namely, the fact that from October, 1950, onwards no interest has been paid under the mortgage. It is when interest ceases to be paid under the mortgage that one looks with an expectant eye to see if there has not been some recognition by the mortgagee of the mortgagor’s tenant as his tenant, because you would expect him then to serve a notice saying “I want the rents”. But there is absolutely no evidence here that anything happened at all. The mortgagee was apparently content to go without his interest until he died in 1957 and his executrix went without the interest down to the issue of the summons. If they had gone on going without the interest for twelve years they would have lost their rights altogether, but only nine years have elapsed. I cannot infer simply from the fact that no interest was paid anything against the mortgagee or the plaintiff as his executrix. It does not seem to carry the matter any further.

So in my judgment on the second point also the plaintiff is right. The result of that would be that the plaintiff is entitled to an order for possession.

Order accordingly.

Solicitors: Gouldens agents for Andrews & Bennett, Burwash (for the plaintiff); Spenser Limbrey & Co (for the second defendant).

E Cockburn Millar   Barrister.

Re Boulton's Will Trusts

Public Trustee v Robb and Others

[1960] 1 All ER 553

Categories:        TAXATION; Estate Duty        

Court:        COURT OF APPEAL        

Lord(s):        LORD EVERSHED MR, WILLMER AND UPJOHN LJJ        

Hearing Date(s):        21, 22 JANUARY 1960        

Estate Duty – Incidence – Property not passing to the executor as such – Death of life tenant – Assignment by life tenant and reversionary life tenant of one-third of Income to contingent reversioner of one-third of trust fund – Estate duty levied only in respect of other two-thirds of trust fund – Whether duty rateably borne by whole estate – Finance Act, 1894 (57 & 58 Vict c 30), s 9(1).

By his will a testator gave his residuary trust fund on trust (in the events which happened) for Clara for life, then for Margaret for life and subject thereto equally for each of three named cousins, including FR, who were living at the death of the survivor of Clara and Margaret and the issue then living of any of the said three cousins then dead such issue to take equally between them per stirpes their parent’s share. All three cousins died before both Clara and Margaret, each of them leaving issue. Major R was the only child of FR. In 1950 Margaret assigned her reversionary life interest (subject to a reservation which she later released) to the trustees of the residuary trust fund so that any income which would after Clara’s death be payable to her should be held on trust for the persons entitled when the income accrued as if she, Margaret, were dead. In 1951 Clara assigned to Major R her life interest in one equal third part of the trust fund. On 8 February 1958, Clara died, Margaret and issue of each of the three named cousins of the testator (including Major R) being still living. Estate duty was claimed in respect of two-thirds only of the residuary trust fund, it being accepted by the Inland Revenue that one-third did not then pass because Major R enjoyed one-third of the trust fund or its income to the same extent both before and after the death of Clara. The question arose whether the estate duty should be borne wholly by two-thirds of the trust fund in exoneration of the one-third enjoyed by Major R, or should be borne rateably by the whole trust fund.

Held – Inasmuch as estate duty appeared to have been levied, and to have been levied justly, on the two-thirds of the trust fund other than the third in which Major R was interested, the duty constituted, by virtue of the Finance Act, 1894, s 9(1), a charge on those two-thirds and, therefore, ought to be borne by them, not by the whole trust fund.

Appeal dismissed.

Notes

As to property out of which duty is payable, see 15 Halsbury’s Laws (3rd Edn) 131, para 269; and for cases on the subject, see 21 Digest 33, 34, 210–213.

Adjourned Summons

This summons was issued by the sole trustee of the will of Matthew Ernest Boulton, deceased, for the determination of the question referred to below relating to the incidence of estate duty.

By his will dated 13 December 1912, the said Matthew Ernest Boulton (hereinafter called “the testator”) directed his trustees to hold his residuary trust fund on trust (so far as relevant) for his sister Clara during her life and (in the events which happened) thereafter for his sister Pauline Margaret (hereinafter called “Margaret”) during her life and subject thereto for such of his three cousins Major General Frederick Spencer Wilson Robb, Montagu Caesar Robb and Geoffrey Charles Napier Sturt as should be living on the failure of the previous trusts or should have previously died leaving issue then living, such issue to take their parent’s share in equal shares per stirpes. The testator died on 14 July 1914.

Montagu Caesar Robb died on 30 November 1920, leaving three children surviving, of whom two were living at the date (referred to below) of the death of the said

Page 554 of [1960] 1 All ER 553

Clara. Frederick Spencer Wilson Robb died on 8 February 1948, having had one child, namely, Major Robb, who was still living at the date of Clara’s death.

By an assignment dated 2 January 1950, made between Margaret and the trustees of the testator’s will it was provided that if Clara should die in the lifetime of Margaret the trustees should pay to Margaret during the rest of her life the income of an appropriated part of the testator’s residuary trust fund sufficient to produce £3,000 per annum and Margaret assigned to the trustees all the annual income to arise during her life from the residuary trust fund (except the income of the appropriated fund) on trust to pay or apply each instalment of such income as and when it was received by the trustees to the same persons and in the same shares as the same would have been payable or applicable under the testator’s will if Margaret had died immediately before such instalment of income had commenced to accrue.

By an assignment dated 12 July 1951, made between Clara and Major Robb, Clara assigned to Major Robb her life interest in one equal third part of the testator’s residuary trust fund to the intent that such life interest might so far as the law permitted merge in the reversionary interest of Major Robb in the premises and be extinguished.

Geoffrey Charles Napier Sturt died on 20 July 1952, leaving two children one of whom was living at the date of the death of Clara, and the other of whom was then dead leaving issue then living (and were all infants). By an assignment dated 27 May 1955, Margaret assigned to the (then) sole trustee of the will of the testator the annual sum of £3,000 and all other income to which she might be entitled out of the funds mentioned in the assignment dated 2 January 1950, to be held on the trusts of the latter assignment with regard to the income thereby assigned.

On 8 February 1958, Clara died. Margaret was then still living. She died on 4 May 1959. Estate duty was claimed by reason of the death of Clara in respect of the two-thirds of the residuary trust fund (ie, the whole fund except the one-third in which Major Robb was interested) and the question arose whether the duty ought to fall exclusively on the two-thirds in which Major Robb was not interested in exoneration of the one-third to which he was contingently entitled (and of which he was in receipt of the income pursuant to the assignments of 2 January 1950, and 27 May 1955) or rateably on the whole fund.

John Pennycuick QC and H Hillaby for the appellants.

E I Goulding for the plaintiff, the respondent trustee.

B L Bathurst QC and E W Griffith for other respondents.

22 January 1960. The following judgments were delivered.

LORD EVERSHED MR. The point raised in this appeal is one of novelty and not free from difficulty. For reasons which will presently appear, it might in certain circumstances have strange consequences. [His Lordship referred to the will of the testator, Matthew Ernest Boulton, and to a pedigree, and continued:] The two sisters that have been mentioned have been called in this case (and I hope I may, without disrespect to their memory, continue to call them) by their Christian names, respectively Clara and Margaret. The first trust was to pay the whole income to Clara for her life, and, in the event (as happened on 8 February 1958) of her death unmarried, to pay the whole income to Margaret for the residue of her life. Margaret died unmarried on 4 May 1959. All three named cousins had predeceased Clara. The appellants are certain of the issue of what I will call the Sturt stirps, and one member of Mr Montagu Caesar Robb’s family, a Miss Esme Robb. On the other side are the remainder of the Caesar Robb stirps and the one child (still living) of General Robb, namely, Major Eustace Robb, and I shall refer to them as the “the respondents”.

In the events which have happened, the corpus of the estate is now divisible in the shares indicated in the pedigree. Thus, Major Eustace Robb, as the sole member of the General’s stirps, takes a third, the issue of Caesar Robb take between them another third, but not in equal proportions because they belong

Page 555 of [1960] 1 All ER 553

to two generations; that last observation applies also to the issue of Mr Sturt. The complication and the present problem have arisen because of the dealings with their respective interests which the two sisters, Clara and Margaret, undertook. In point of time, the first transaction was one of Margaret, whereby she, in 1950 by appropriate deed, provided that her life interest when it came to enjoyment, should be held so that the persons who would have taken on each distribution date, were she then dead, should between them and in the appropriate proportions take the income of the estate, subject to the qualification that she retained for her personal enjoyment an annual sum of £3,000. Then next came an assignment, dated 12 July 1951, by Clara, and it is that assignment which is particularly relevant to the present problem. Before I read it, it will be convenient to say that after the date of that assignment, Margaret, by a later deed in 1955, in effect released the retained interest which she had previously created in her own favour to the extent of £3,000 a year. Clara, after very long and elaborate recitals of the will and subsequent events in reference to the estate, then proceeded to assign to Major Robb all

“the life interest of the assignor [Clara] in one equal third part of the trust fund and in any property hereinafter representing or substituted for the same.”

Then there followed a reference to certain specific property, which, as I understand from counsel for the appellants, then in part represented the estate. The relevant clause of the deed finished:

“To the intent that the life interest of the assignor in the premises … hereby assured may so far as the law permits forthwith merge in the reversionary interest of the assignee in the same and be extinguished.”

The intent was plain, and, as I shall presently state, has, I conceive, been acted on in practice, but as a matter of law was (as counsel for the appellants observed) strictly ineffective, and was so for this reason. Major Robb, the assignee, only had at the date when Clara executed this instrument a contingent reversionary interest. In order to take any share of corpus, he had to survive both Clara and Margaret. Therefore, in strictness, it was incompetent for Clara by this instrument to cause any merger of an appropriate part of the income interest in the estate with what Major Robb might take, did he survive the date of distribution. That was the instrument, and I assume that in accordance with it, from its date in 1951 until Clara’s death on 8 February 1958, Major Robb received one-third of the income of the estate. There was, as appears from the evidence, no kind of appropriation of any part of the assets, and, therefore, it is correct to say that he received one-third of the total income, notwithstanding (as junior counsel for the respondents pointed out) that the actual terms of the assignment purported to relate to the income of one-third of the estate. When Clara died Major Robb continued in fact to receive a similar share.

It will be recalled that by the joint effect of the two assignments made by Margaret, the income was then periodically distributed among the persons who would have been entitled to it had she died at the date of the income distribution, and at every relevant date there were representatives of all three stirpes and Major Robb was the sole representative of the General’s stirpes. Thus he continued to enjoy a third of the income. Finally, when Margaret died, a similar state of affairs existed, so that Major Robb became entitled to one-third of the corpus.

This case relates to the estate duty which became leviable on the death of Clara. So far as the evidence goes, it is apparent what happened and, as I think, what view the Estate Duty Office took of their right to charge duty. In para 22 of the affidavit of Mr Worthington of the Public Trustee Office, it is stated:

Page 556 of [1960] 1 All ER 553

“In consequence of the said assignment dated July 12, 1951, estate duty has been claimed by reason of the death of the said Clara Gertrude Boulton in respect of two-thirds only of the residuary trust fund”,

and a figure is then given of the amount of the duty. The question is, as Mr Worthington then states, whether the duty should fall exclusively on the two-thirds of the fund in which Major Robb is not interested in exoneration of the one-third of which (it may be said) he has at all relevant times enjoyed the interest; or whether the whole amount of duty ought to be borne rateably by the persons interested in the whole subject-matter of the estate.

The argument of counsel for the appellants is, if one may say so (and as one would expect), clear, and certainly founded on legal propositions which may be difficult to controvert as such. What he says is this: Clara was only competent to dispose of that which she had, viz, an interest in the whole income of the estate during her life. She could, of course, dispose of the whole of it or any part of it she liked and for such period as she chose. What she could not do, says counsel, was, by any such assignment, to cause the subject-matter of the trust estate to be severed into distinct proprietary subject-matters. Therefore, he says, whatever the amount of the duty (and the office may be right or wrong in their assessment), it is a duty leviable on the property, incapable of severance, and not in fact severed, which passed at her death. As he stated clearly in his reply, the property which passed on Clara’s death was the whole property. True it is that Major Robb enjoyed a third of the income of the property before Clara died, and it so happened that he enjoyed a similar fraction of the income immediately thereafter and now has a right to a third of the corpus; but that fractional identity is accidental and does not affect the proposition which I have tried to state.

It will be observed that the argument at once raises a somewhat alarming prospect which has, not unnaturally, impressed itself on the minds of those who have resisted the appellants’ case; because it is said, or feared, that if that proposition is right, and that if the truth is, that the whole property passed, it may well be that the Estate Duty Office’s charge or levy has been so far for a less sum than it ought properly to have been. Counsel for the respondents said, I have no doubt quite correctly, that if as a result of anything that is said in this court that fear should be realised, then if the appellants won, what with the amount of the additional duty and the increased rate, everybody, including the appellants, would be worse off than they are now. Whether that is right or wrong is a matter irrelevant to the decision of this case. But the fear having been expressed, I have formed the view that perhaps the less I expatiate on this matter the better.

I do not at all dissent from the general proposition that, strictly speaking, and certainly to the eye of the conveyancer, a person having an interest such as Clara had in a trust fund like this cannot sever the trust fund into distinct properties. But I do not, with all respect to the argument, think that is quite the problem which we have to decide. On the evidence, to which I have already made allusion, it seems to me quite plain what has occurred. The Estate Duty Office have claimed to levy duty on two-thirds only of the residuary estate. They have taken a view which, whatever might be said against it by a conveyancer, at any rate corresponds quite manifestly with common sense and, I should be inclined to think, with justice. They have said, “If you look at the facts as they were when Clara died, it appears that two-thirds of the estate then passed and one-third did not; and the one-third did not pass because Eustace enjoyed both before and after the death to exactly the same extent, one-third of the trust property or its income.” The claim, therefore, was one made, so far as I can see, in respect of two-thirds of this trust property and no more.

Page 557 of [1960] 1 All ER 553

If that is right, what is the result? In my judgment, the result is that which s 9 of the Finance Act, 1894, enjoins; for by the terms of sub-s (1) of that section it is provided that

“A rateable part of the estate duty on an estate, in proportion to the value of any property which does not pass to the executor as such, [as this did not] shall be a first charge on the property in respect of which duty is leviable.”

It may be a question whether the duty was leviable in respect of something else, but I have little doubt that it was levied in respect of two-thirds, and it seems to me that the short answer to this case, therefore, is that the duty should be rateably borne by the two-thirds of the estate in respect of which it was levied. Counsel for the respondents drew attention to the change in language between s 1 and s 9, which I note. Counsel for the appellants’ argument has been founded, as I have already said, on the proposition that you cannot avoid the circumstance that the property which passed was the whole property. I think, for my part, that there may be some help to be gained by considering later enactments in pari materia, including the terms of s 43 of the Finance Act, 1940, as amended. It does at any rate appear from that section that where someone with an interest such as Clara had disposes partly of such an interest, then the statute seems to contemplate that the subject-matter so disposed of will or may be the subject of exemption as being in some sense a distinct item of tax subject-matter (I avoid using the word “property”). However that may be, I confess that I take the view, as did the learned judge, that if it is assumed, as I think it must be—and I am far from saying the assumption is not well founded—that the Estate Duty Office have properly performed their duties in making a levy for tax, then they have levied tax on a two-thirds of the estate which excludes that fraction in which Major Robb was interested. If that premise is right, then it seems to me that the conclusion must follow under s 9(1) of the Act of 1894 that the burden should be borne by the two-thirds which attracted the levy. Agreeing, therefore, with the learned judge in this respect, I would, without saying more, and for reasons which I have indicated, dismiss the appeal.

WILLMER LJ. I agree, and have nothing to add.

UPJOHN LJ. I also agree.

Appeal dismissed.

Solicitors: Radcliffes & Co (for the appellants); Lawrence, Graham & Co (for the trustee); Payne, Hicks Beach & Co and Wild, Collins & Crosse (for the remaining respondents).

F Guttman Esq   Barrister.

R v Dawson

R v Wenlock

[1960] 1 All ER 558

Categories:        CRIMINAL; Criminal Law        

Court:        COURT OF CRIMINAL APPEAL        

Lord(s):        FINNEMORE, DAVIES AND HINCHCLIFFE JJ        

Hearing Date(s):        18, 19, 20, 21, 22, 25, 26, 27, 28, 29 JANUARY, 2 FEBRUARY 1960        

Criminal Law – Conspiracy – Indictment – Several conspiracies included in the same count – Whether conspiracy should also be charged where these are substantive charges in relation to the same conduct.

Criminal Law – Practice – Alternative counts – Duty of court to look at realities of position and convict on count showing plainest evidence of guilt.

Criminal Law – Evidence – Bankruptcy – Public examination – Part of appellant’s public examination in bankruptcy admitted on charge of fraudulent conversion – Evidence inadmissible – Larceny Act, 1916 (6 & 7 Geo 5 c 50), s 43(3).

Criminal Law – Obtaining of credit by fraud – Sale of goods – Goods not delivered – Whether an obtaining of credit – Debtors Act, 1869 (32 & 33 Vict c 62), s 13(1).

An indictment on which two appellants, D and W, were charged with other accused included fifteen counts. Fourteen of these charged various fraudulent offences on dates in and between 1955 and 1957. The first count charged conspiracy to defraud between 1 November 1954, and 31 December 1957. The conspiracy was charged against all four accused and as a conspiracy with others named. The transactions which were the subject of the other fourteen charges were within the purview of the conspiracy charge. Both appellants were convicted on the conspiracy charge. D was convicted also on other counts; of these (a) counts 7 and 8 charged respectively obtaining a valuable security by false pretences and obtaining credit by fraud in relation to the same matter; (b) count 11 charged fraudulent conversiona, and part of the public examination of D in bankruptcy was admitted in evidence in relation to it; and (c) count 14 charged obtaining credit by false pretences, based on a transaction of sale of goods by D to a purchaser at a time when D had not all the goods in question but would have to obtain some to make up the quantity sold. On appeal against convictions,

Held – (i) count 1, the conspiracy count, was unnecessary, lengthened the case enormously and had in fact worked injustice; moreover it was a charge of several conspiracies, not one conspiracy, and accordingly the convictions on count 1 would be quashed (see p 564, letter h, post).

R v Luberg ((1926), 19 Cr App Rep 133) applied.

(ii) counts 7 and 8 were really alternatives and it had been wrong to convict on both; in such circumstances it was the duty of the court to have regard to realities, and, as there was plain evidence of the false pretences charged, conviction on that count (count 7) should stand, although it was not the lesser offence (see p 565, letter e, post).

R v Smith ((1915), 11 Cr App Rep 81) and R v Johnston ((1913), 9 Cr App Rep 262) considered.

(iii) on count 11 evidence from D’s public examination in bankruptcy was inadmissible by reason of s 43(3)b of the Larceny Act, 1916, but the

Page 559 of [1960] 1 All ER 558

evidence should not have had any effect on the jury and the conviction on count 11 would stand as there had been no miscarriage of justice (see p 566, letters f to h, post).

(iv) the convictions on count 14 would be quashed because D had sold goods but had not delivered them and that, as distinct from an arrangement whereby delivery on a sale should be postponed although the price was paid, was not an obtaining of credit (see p 567, letters c and d, post).

Osborn v Barton ((1949), 66 (Pt 1) TLR 115) and R v Ingram ([1956] 2 All ER 639) explained.

Per Curiam: the proper approach to an indictment containing a conspiracy charge and substantive charges is to deal first with the substantive charges and then to proceed to see how far the conspiracy count should be there at all and whether it is made out (see p 564, letter c, post).

Observations on the inclusion of conspiracy charges together with substantive charges in an indictment (see p 563, letters e to g, post).

Appeal of W allowed; appeal of D allowed in part.

Notes

As to conspiracy generally and the form of indictment in criminal cases, see 10 Halsbury’s Laws (3rd Edn) 310–314, paras 569–571; and for cases on the subject, see 14 Digest (Repl) 121–124, 851–860; 126, 878–881; 131, 941, 947; 135, 980–982, 984; 335, 3251; 338, 3309.