Judgment on 16 July 2003

16 July 2003

Lord Justice Thorpe

1
Mr Babar married his first wife, Iris, on 22nd June 1989. The marriage lasted until 1997. When they
separated in August of that year Mr Babar, the husband, purchased a home at Wavertree Court, and
in the following month Iris purchased a home at Pearce House. Divorce proceedings followed in
1998, leading to a decree absolute on 14th December 2000. Between the commencement and the
completion of the divorce the husband visited his homeland and entered into a marriage on 12th July
1999, to a lady named Anika, who was the daughter of a close family friend.

2
The financial proceedings flowing from the divorce between the husband and Iris resulted in a
compromise which was the subject of a draft consent order settled by solicitors. It was a clean break
and its terms were relatively simple. The husband was to transfer to Iris all his interest in Wavertree
Court on discharge of the outstanding mortgage. In return Iris was to transfer to the husband all her
interest in Pearce House on the discharge of the current mortgage. The agreement provided that,
pending these reciprocal transfers, the husband should have exclusive possession of Wavertree
Court and the wife should have exclusive possession of Pearce House. By subsequent oral variation
the rights of occupation were reversed, so that Iris was to get Wavertree Court and to have rights of
exclusive occupation pending its transfer, whilst the husband was to have exclusive rights of
occupation of Pearce House pending its transfer. The mortgage in relation to Wavertree House was
discharged relatively promptly and the consequential transfer to Iris was effected. The mortgage in
relation to Pearce House is likely to run until the year 2012. Accordingly, Iris holds that property on
trust for the husband, who is entitled to exclusive occupation pending its absolute transfer to him in
or before the year 2012.

3
Accordingly, when Anika arrived in this jurisdiction, having overcome certain immigration difficulties,
she moved into Pearce House with the husband. There is a complete conflict as to the relationship
between them following her arrival here. She says that they cohabited as husband and wife. He says
that the marriage has never been consummated. What is common ground is that their residence
under one roof was of brief duration, the husband vacating Pearce House on 11th August 2002.
Once he had gone he apparently communicated to Iris his surrender of his rights of occupation,
urging her to find a commercial tenant and to apply any resulting rent to the acceleration of the
discharge of the mortgage. Certainly within a month of his departure Iris had written to Anika
requiring her immediate vacation of the premises. Anika did not vacate, and accordingly on 11th
October 2002 Iris issued particulars of claim in the Wandsworth County Court seeking possession.
The claim was supported by particulars, to the truth of which Iris swore. On 3rd January 2003 the
husband filed a witness statement supporting her claim. He set out the property arrangements
agreed between them on the breakdown of their marriage. He said that he expected to become the
legal and beneficial owner of Pearce House in the year 2012, "but do not claim any equitable interest
at the present time." He went on to deal with his marriage to Anika. He said that it had been entered
into under pressure from their respective families, that it was not of any significance in English law, it
being a void marriage since at the date of its celebration he was still married to Iris, and insofar as it
was valid according to the law of Pakistan as a polygamous marriage, that did not run in this
jurisdiction, since: "I am a British citizen and domiciled in Britain." Finally, Iris swore a short witness
statement, in which she said little more than that she had read the witness statement of her former
husband and confirmed the facts so far as they were within her knowledge.

4
The action came for trial before Miss Recorder Bazley on 30th January 2003. She was obviously
faced with a complex situation, but with Iris appearing in person and Anika represented by counsel,
Mr Halstead, an agreement was reached that the case would be decided, as the Recorder said, on
submissions. Mr Halstead has this morning told us that, in effect, the agreement was that the case
would be decided on the statements filed and that rights of cross examination would not be pursued.

5
The Recorder, who delivered an admirably clear and succinct judgment, said that any
pronouncement as to the validity of a marriage was a serious matter: jurisdiction is reserved to the
High Court, not something to be lightly undertaken. The husband was not a party to the proceedings
although he had made a witness statement, and accordingly it would be wrong for her to purport to
make a declaration as to the validity of the marriage. She then continued to consider the respective
rights of Iris and the husband in relation to Pearce House. She concluded, in my judgment correctly,
that Iris held the legal title in trust for the husband, a trust that recognised both his rights of
occupation and then his entitlement to absolute ownership on discharge of mortgage. She said at
the conclusion of the judgment:

"Accordingly, I find that Mr Babar was occupying the flat as someone with a beneficial interest under
a trust, the terms of that trust having been varied by agreement between the parties allowing him so
to occupy the premises."

So far so good. What follows seems to have decidedly less foundation, for the Recorder concluded
her judgment with this brief passage:

"As the position stands at present, therefore, as indeed it is common ground was the position when
she came to this country, the defendant occupies the property as her matrimonial home.

Accordingly, the claimant has failed to establish that Anika is in occupation of the flat as a
trespasser."

Whether that conclusion is well founded in law has been the subject of much debate today.

6
When directing an oral hearing on notice with appeal to follow if permission granted, I observed that
the case required both family and Chancery expertise. Unfortunately, the court as presently
constituted does not command the Chancery field. So I have had some anxiety lest the resolution of
the listing today should emerge to be dependent upon Chancery expertise. We have heard
submissions from Mr Twomey, very clear and able submissions as to the law of nullity, as to the
effect of an ancillary relief compromise that has not been made the subject of a court order, and as
to the equitable rights of both the husband and Anika.

7
Equally, Mr Halstead has stoutly advanced his client's entitlement. He says that there is no doubt
that she was married in Pakistan in 1999. He asserts that there was subsequent cohabitation,
although of course that is hotly disputed. He continues that the combination of ceremony of marriage
followed by cohabitation leads to a strong presumption in law that can only be displaced by
compelling evidence, and he further asserts statutory rights under sections 30 to 37 of the Family
Law Act 1996. He asserts that those statutory rights all derive from equitable rights which he asserts
Anika holds by virtue of her relationship with the husband.

8
There are two primary areas which require both investigation and legal determination. The first is the
mixed issue of fact as to whether, according to the law of this jurisdiction, Anika was or is a wife of
the husband. There is a lesser factual issue as to whether the marriage has ever been
consummated and whether the parties have ever cohabited as husband and wife. Then there are the
issues of property law and equity, as to whether Anika has rights derived from the rights of the
husband that would enable her to successfully resist Iris's claim to possession.

9
There is an underlying reality. This is a sad situation for Anika. She has made good use of her
occupation of Pearce House by finding employment here, but that achievement is overhung by the
absence of any right of residence and the likelihood of imminent return to Pakistan at the behest of
the Home Office. There is obviously the need for a reckoning between her and the husband. He has
in his witness statement acknowledged that to the extent of saying that he would be prepared to pay
her passage back to Pakistan and to make some short term financial provision for her.

10
It seems to me that the practical disposal is to grant permission, to allow the appeal to the extent of
finding that the Recorder, whilst understandably chary of making any declaration as to the validity of
the marriage between the husband and Anika, should alternatively have undertaken an investigation
of Anika's status in order to determine whether or not section 30 of the Family Law Act 1996 was
engaged. I would remit the case to the county court and to the Recorder, if available, to carry out that
investigation and to make the necessary findings. That seems to me the more practical course, since
were we to adjourn this hearing to a fuller court, including a Lord Justice with Chancery expertise on
the next occasion, I suspect that the legal analysis would be frustrated by the absence of any
resolution of these fundamental underlying questions of fact.

11
Returning again to the reality, both counsel have recognised that the remitted hearing in the county
court may never be necessary. Either Anika's sojourn in this jurisdiction will be terminated by the
immigration procedures or some sort of sensible compromise will be agreed between the husband
and Anika. That is the disposal I propose.
Lord Justice Sedley

12
I agree. I add my tribute to the clarity of the Recorder's judgment. It is understandable that she
preferred not to decide an issue which is ordinarily one for declaratory judgment in the High Court
but, like my Lord, it seems to me that the issue is one ineluctably for her to decide. In my judgment,
she had jurisdiction to do so. When the issues of fact and law which were set on one side have been
resolved by her, or in her absence another judge, it will be possible for the court below to proceed to
a fresh conclusion on the issue my Lord has delineated, if meanwhile a compromise has not been
reached.

ORDER: Application for permission to appeal allowed; appeal allowed to extent indicated in
judgment; matter to be remitted to the county court, to the same Recorder if possible, for
determination of issues identified in the judgment; public funding assessment.

Judgment on 31 August 2003

16 July 2003

Lord Justice Mummery

1
This is a renewed application for permission to appeal, permission on the papers having been
refused by Brooke LJ on 7th July 2006. It is a second appeal and therefore is subject to the
requirement that permission ought only to be given if the appeal raises an important point of principle
or practice, or if there is some other compelling reason why permission to appeal should be granted.

2
The orders which we are concerned with arose in relation to a trial of an action against a firm of
brokers bought by the claimant. The trial of the action and I shall say a few words in a moment
about the issues in it started on 16th January 2006 but was adjourned after two days because the
expert evidence that was required in the case relating to underwriting was not in a proper state of
preparation.

3
It was after the trial was adjourned that on 13th February 2006 His Honour Judge Knight QC, sitting
in the Central London County Court, heard applications to re-amend pleadings. The application to
re-amend the particulars of claim was granted without opposition. The application by the defendant
brokers to re-amend their defence was opposed and was refused.

4
There was then an appeal, which was heard by David Steel J on 12th April 2006. He allowed the
defendant's appeal against the judge's refusal of permission to re-amend and he made the following
order. I read 2, 3, 4 And 5 of his order:
"2. The [defendant brokers] have permission to re-amend its Amended Defence in the form of the
draft attached hereto. The Appellant to pay the costs of and occasioned by such re-amendment.

3. The Respondent pay the costs of the Appellant's costs of the Appeal and of the Application for
permission to Appeal, such costs to be costs to be the subject of a detailed assessment if not
agreed.

4. The Respondent do by 4.00 pm on the 26th April do pay to the appellant the sum of 6,000 on
account of the costs order at paragraph 3.

5. The costs below of the Appellant's Application to re-amend be reserved to the trial judge, to be
dealt with at the conclusion of the preliminary issue trial."

5
5. It is submitted by Mr Butler, on behalf of the claimant, that three important points of principle and
practice arise in relation to the order of David Steel J. He says, first, that the judge failed to address
the distinction and observe the distinction on such an appeal between a review and a rehearing. He
had improperly reheard the matter and substituted his decision by granting permission to re-amend.
Secondly, he says that the point raised by the re-amendment relates to the characterisation of the
insurance loss and he submits that, on proper analysis and as a matter of law, the point is an
irrelevant one and has no reasonable prospect of success. He points out also that the re-
amendment pleads a case that is inconsistent with the case that had been initially pleaded in the
defence. He says that to allow that re-amendment will be to perpetuate a misconceived view of the
legal position. Thirdly, he says that the judge was wrong in principle to order the claimant to pay the
costs of the appeal. His submission on this point was that, although he accepted the judge had a
discretion on costs, the position was this: that the claimant was entitled to oppose the late
application for permission to re-amend, and he was entitled to oppose it without running risk of any
sanction in costs. That principle applied not only to opposition at first instance to the application for
permission to re-amend, it also applied on an appeal by the defendant, who had been refused
permission to amend. Putting it another way, he said he was entitled to oppose the appeal as much
as he was entitled to oppose the original application for permission to amend. The order that the
judge should have made was, in his primary submission, an order that he got the costs of the
appeal, even though the other side had succeeded or, alternatively, the judge should have reserved
the costs of the appeal in the same manner that he had reserved the costs before His Honour Judge
Knight. Those are the three points.

6
I have to say a little more about the case in order to see whether Mr Butler is correct in his
submission that these three points raised important points of principle or practice, or disclose some
other compelling reason why he should have permission to appeal. The action is by the claimant. He
is a hotel owner and he is suing his insurance brokers.

7
The reason for the claim is that there was a fire in the hotel and the underwriters refused to pay out
on the insurance policy. They said that the risk had been misrepresented to them, specifically in
relation to who was going to be living in this hotel; that it was represented to them that the people
living in it would be elderly people, when the truth was that they were homeless people of all ages.

8
The underwriters purported to void the policy. The claimant did not sue the underwriters, he sued the
brokers on the basis that the brokers were guilty of the misrepresentation or non-disclosure. That
was a breach of duty on their part. That breach of duty caused loss. That loss took the form of the
loss of the benefit of an otherwise valid insurance policy for the hotel.

9
9. It was also argued, alternatively, that a result of the breach of the duty of the brokers was that the
underwriters were, by reason of the brokers' acts, given a legitimate opportunity to void the policy.

10
The defence put the claimant to proof that he would have had a valid claim under the underwriters.
He denied that their actions had resulted in the loss of an otherwise valid policy. It was denied that
the claimant had ever said that the property was lived in by asylum seekers. It was denied that there
had been any misrepresentation or non-disclosure in a material way on their part.

11
Before the trial started there were further amendments to the pleadings. At the trial, as I have said,
the judge adjourned it after a couple of days because the expert evidence was not in a suitable state
of preparation. After it had been adjourned the brokers asked for permission to re-amend. They
wished to plead that, if the underwriters were not entitled to avoid the policy, for reasons other than
those canvassed by the claimant, then the underwriters were liable on the policy. So, as Mr Butler
points outs, that is a contradictory plea to the original plea.

12
The position was that the judge allowed the re-amendments to the particulars of claim but refused
the re-amendments to the defence. He did so without the benefit of the view of the experts, who
made a report after the ruling by the judge on the question of amendments. Their report was they did
not regard as material the issues of non-disclosure and misrepresentation that were raised in the
pleadings by the claimant and the defendants. So it is difficult to see on what legitimate basis the
underwriters could have declined liability or purport to void the contract.

13
That is, in very general terms what the action was about and what the state of play was when the
appeal was heard by David Steel J. David Steel J was, in my view, perfectly well aware that the
ruling given by His Honour Judge Knight on the question of amendment was a case management
decision, which was predominantly a matter for a trial judge and not for the judge hearing an appeal.
I refer to what he said in paragraph 18 of the judgment:

"I am fully conscious, as Mr Butler helpfully reminded me, that this is a case management dispute
which the judge was well placed to grapple with."
He referred to a general principle, in relation to the amendment of pleadings, of getting the real
dispute between the parties, before the court has to adjudicate upon it. Then, in paragraph 27, the
judge said, in the second sentence:

"I appreciate that, as I have already indicated, the dispute before me is largely a case management
issue which the judge is well placed to consider."

He then went on to say why he was interfering with that decision.

14
A judge, when he is exercising an appeal jurisdiction of this kind, does not have to incant, in order to
give a valid judgment, the very words of the rules or the pronouncement of judges on the
interpretation of the rules. It is good enough for the judge to indicate that he was well aware of the
nature of the jurisdiction that he is exercising. There is no doubt in my mind that an experienced
judge like David Steel J was well aware, as he indicated in those two pages, that he was reviewing a
case management decision and it was a decision of a kind which would not be lightly interfered with
by a judge on an appeal.

15
Next, the judge said that he had a difficulty, which I share, in ascertaining what the reasons were
why His Honour Judge Knight had refused permission to re-amend the defence. The position before
him on 13th February was that the administration of justice in relation to this case was already
disrupted because, for a different reason than an amendment. The case had already had to be
adjourned. I have indicated it was a reason to deal with evidence by experts. It was nothing to do
with a late application for an amendment. I am not able to be confident why the judge refused
permission to re-amend.

16
Next, and this was no fault of the judge, there was a development after he had given his ruling,
which does have an impact on the case and the way it is going to be fought. That was the report
following the meeting of experts that they did not consider that the questions raised by the parties
about non-disclosure or misrepresentations were material. This is something which David Steel J
was entitled to take into account in the appeal, which Judge Knight had not been able to take into
account because it had not happened at the time when he made his ruling.

17
I do not think that there is any demonstrated prejudice to the claimant in this re-amendment being
allowed. That was the view of David Steel J. It was one that he was entitled to reach. Any prejudice
there was one that could be compensated by costs. As I have said, the trial was disrupted already
because the parties were not properly prepared for it.

18
As for the position between the parties, I think that David Steel J was also entitled to take into
account that the point which the defendants wished to put into their pleading by re-amendment had
already been anticipated by the claimants in the re-amendment, which they have been allowed to
make to their particulars of claim. It seems rather strong to me, as it did to David Steel J, to allow a
claimant to amend a pleading anticipating a point to be made by a defendant and then to prevent the
defendant from making it. There is, in my view, validity in David Steel J's reasoning on this point to
justify allowing the appeal. He said that the judge had not taken allthe points on board. In my view,
that is correct and, when seen in the absence of a good reason for refusing permission to amend, I
think that it is conclusive.

19
I have therefore reached the conclusion that this is one of the cases in which, on an appeal from a
case management decision, a judge is entitled to interfere and to allow permission to re-amend
which the trial judge has refused. As I repeat, the trial judge had not given any convincing reason for
refusing the amendment and he did not have the benefit of the views of the two experts on the
underwriting questions that arose in the case. David Steel J was entitled, in the exercise of his
discretion, to reverse the trial judge.

20
That leaves the question of whether this is a good plea or not. All I would say on that is that is not a
point to be dealt with in this appeal. It may be a good point, it may not be. But that is a matter which
is to be decided now that is going to be pleaded. Evidence is going to be given that it is relevant to it
and there will be legal argument. This is not so obviously a bad point that it should not be allowed to
enter into a pleading.

21
Finally, that leaves the question of costs. It was accepted that the judge has a discretion on this. He
could, quite properly, have exercised that discretion to make an order that the costs of the appeal
should be dealt with in the same way as the costs below, but he decided not to do that. It seems to
me that it cannot be said that he was plainly wrong in ordering the unsuccessful respondent to pay
the successful appellant's costs of that appeal. I do not think there is any rule that, because a party
is entitled to oppose an amendment without running the risk of costs, he is also entitled to oppose an
appeal against the ruling on that amendment without risk as to costs. The general rule on appeals is
costs follow the event. That rule can be displaced by the particular factors that arise in the case.
Another judge might have made the order suggested by Mr Butler that the costs of the appeal be
reserved, but it was not a mis-exercise of the judge's discretion to make the normal rule that as this
appeal on the amendment succeeded then the respondent should pay the costs.

22
For all those reasons, I do not think that there is any important point of principle or practice in this
case, or any other reason why this should be allowed to go to a full appeal. The parties' efforts and
costs would be far better spent on getting this case to a trial than in delaying matters further by
having an appeal on points which I do not think there is any real prospect of them succeeding on any
way.

23
These were all matters which were correctly dealt with by David Steel J. I would refuse permission to
appeal.
Lord Justice Tuckey

24
I agree.