THERE AREN’T EIGHT DAYS A WEEK: HIGH COURT’S CONCERNS ABOUT CASE MANAGEMENT AND TIMING ISSUES

It is rare for a judgment to begin with the judge setting out a series of concerns on the way that the case has been conducted. This is the situation in the judgment of HH Judge Saffman (sitting as a High Court judge) in Wood -v- Lowe [2015] EWHC 2634. It is these concerns that warrant a close look at the judgment.

THE CASE: FROM ME TO YOU

The claimant Trustee in Bankruptcy brought an action for a declaration of the bankrupt’s proprietary interest in a large number of items (a lot of which were musical items or Beatles’ memorabilia). Two further respondents were brought into the action (the bankrupt’s wife and daughter) as they claimed ownership of some of the items in dispute and that some items had been gifted to them.

KEY POINTS HERE, THERE AND EVERYWHERE

  • It was a matter of concern that all those claiming ownership of items were not parties to the action. The fact that they were witnesses in this action was not enough and there could be inconsistent findings.
  • There had been insufficient efforts to categorise the numerous items in dispute and the court was called upon to make individual findings in relation to each item.
  • A party who complained about insufficient time to conduct their case should have applied for an adjournment or made submissions during the trial and not in closing submissions.
  • No attempt had been made to value the items in dispute. Such a valuation would have been likely to pare down the litigation and possibly dispose of matters altogether.
  • The applicant had been litigating on the basis of a mis-assumption as to the burden of proof and where certain presumptions lay. The burden remained on the applicant to establish its case on the basis of the evidence before the court.

THE JUDGE’S CONCERNS

First concern: Within You Without You

  1. It is one of the many matters in this case that is unsatisfactory that other persons who assert ownership of some of the items have not been joined into the proceedings. As well as the Second and Third Respondents, the Bankrupt’s other daughter Emma Lowe Marshall, his son-in-law Stephen Marshall and his father-in-law Lawrence Ratcliffe also assert that they have proprietary rights in some of the items. Their absence as parties is a significant omission which I was at pains to point out to counsel at the commencement of this hearing. Because at least Emma Marshall Lowe and Stephen Marshall as well as the Second and Third Respondents were to give oral evidence in any event and Mr Ratcliffe had filed a witness statement and the parties were anxious for the hearing to proceed, not least because significant costs had been incurred in connection with it, and the parties were anxious for the position to be resolved, I was persuaded to hear the application but on the basis that it could not compromise the position of those who have not been joined in but should have been namely Emma Lowe Marshall, Stephen Marshall and Lawrence Ratcliffe.
  2. I am conscious of the fact that this is far from ideal and may well significantly compromise the finality of this judgment. It may for example be the case that I find that the Bankrupt may have had the sole proprietary interest in a particular item and that the Third Respondent had none. That would however not prevent her sister, Emma Lowe Marshall from asserting that she owns that item and that thus it does not form part of the Bankrupt’s estate. As I made clear, the fact that she appears as a witness cannot in my view provide a basis for a court to determine the extent of her ownership in an item. As a witness she has no opportunity to question witnesses as she would have if the question of determination of interests were dealt with as one would have expected, viz where every putative owner is a party.
  3. In his final submissions Mr Cochran, counsel for all the Respondents draws attention to the ramifications that findings about the Bankrupt’s interest in various items may have on Non Party witnesses. I had hoped that my observations in court and the steer I gave as to what a recital to the order must contain to protect the rights of Non Party witnesses would have met any concerns in so far as it was possible to do so without losing the hearing, an eventuality that the parties did not want. I trust that paragraph 5 above makes it clear what the position is.
  4. Lest it be thought otherwise, I appreciate that this may lead to inconsistent determinations. In the example I quote above, as a result of this hearing the bankrupt may be found to own an item (which therefore vests in his Trustee) and the Third Respondent does not yet in subsequent proceedings it may be found that he does not own the item and it is owned by Mrs Lowe Marshall. That is unfortunate but if that is how the evidence pans out as a result of questioning of the witnesses on behalf of Mrs Lowe Marshall then that is how it pans out. In that event the later determination must take precedence in so far as it affects those who are not respondents to this application because that is the one reached in circumstances where the person asserting ownership is actually a party.

Second Concern: Every Little Thing

  1. A second significant concern about this case is related to the number of items about which the court is asked to make a determination. The schedule initially contained 213 items, some of which are generic for example item 144 is “assorted electrical hand tools” which description itself actually encompasses a variety of individual tools some apparently owned by different people. Even in its abridged form the schedule runs to 102 items not including subcategories.
  2. The parties appear to have envisaged that this could be dealt with in 2 days when, as it turns out, there appears (subject to some exceptions) to have been no easy way of categorising items by identifying say a sample item where a determination about that would apply equally to others in the same category[1]. The effect is that the written closing submissions from Mr Passfield, counsel for the Trustee run to 35 pages of which 20 relate to submissions on the items by reference to the schedule while those of Mr Cochran run to 63 pages of which 41 relate to submissions on each item[2].
  3. The fact is that no time at all was devoted by counsel in the course of questioning the parties to many of the items about which a determination is expected and only a cursory amount of time was spent on others. The point is made by Mr Cochran in paragraph 18 of his closing submissions that the
Court has simply not had adequate time to deal with each item properly at the hearing
and, at paragraph 19 that;
“(the process) is a wholly inadequate basis for what the applicant requests: in effect summary judgment against the Respondents’ property rights”.
  1. Nevertheless, no application was made by Mr Cochran either at the outset of the case nor during it for an adjournment, even an adjournment part heard and indeed at the conclusion of the evidence he was as clear as Mr Passfield that ideally he expected the Court to make a determination on each item. Both counsel may have gleaned that their expectation that every item would be dealt with was met by me with some surprise, hence my observation to both counsel that if they expected that then I would expect the closing submissions to address each item

Third concern: A Day in the Life

  1. A third area of concern arises from Mr Cochran’s observations in paragraph 45 to 47 of his closing submissions. I have referred above to his concern that the court has had insufficient time to deal with this matter justly. At paragraph 45 to 47 he suggests that the respondents have not had enough time either. It is helpful to reproduce what he says
45. As noted earlier, the Respondents have been severely disadvantaged by the manner in which this application has been conducted. The Respondents have conducted a considerable amount of this litigation without the benefit of legal advisers and have only had the services of Counsel for the present hearing.
46. By the order of HHJ Raeside QC on 5 March 2015, the Respondents had until 31 March 2015 to file and serve evidence from any party asserting a right in the Taken Items or the Inventoried Items. When the order was made, the Respondents and the Non-Party Witnesses faced a schedule of over 180 items to tackle and a limited amount of time to provide their evidence accordingly. It was only on the afternoon prior to the hearing, long after their evidence was due in, that the Applicant decided to reduce the scope of his enquiry.
47. The result of this has been that the Respondents have had limited time to bring forward evidence of ownership of the goods in question- the task facing them on 5 March 2015 was truly enormous. It is no great surprise that the Respondents have not provided more receipts, particularly when many of the goods in question are of modest value and are years- or even decades- old. Notably, despite having full access to the Respondents’ documents and electronic records and extensive resources, the Applicant has also provided a paucity of invoices and receipts to demonstrate their case that the First Respondent (and consequently the Trustee in bankruptcy’s) owned the goods in question.
  1. I feel constrained to remark once again that at no time was I presented with an application to adjourn because the manner in which the application had been conducted by the Applicant or his advisers had caused insuperable difficulties for the Respondents. As I remarked in paragraph 4 above, the impression I derived was that indeed I should hear the case notwithstanding my concerns about the absence as parties of relevant players in it.

Fourth concern: Money: that’s what I want

  1. The fourth area of unease about this case, raised initially at the beginning of the case was that it came before me when no effort had been made to value the items on the schedule. I am aware that ownership is not dependent on value and that there is no rule that states that items of less than a certain value do not vest in the Trustee on his appointment. Nevertheless it is most surprising that no effort has been made to ascertain what this argument is worth if for no other reason than that it may have helped to pare down the schedule even more, even if it had not disposed of the litigation altogether.
  2. The Trustee argued that no valuation had been undertaken because he has no funds to commission one because there have to date been no realisations. In fact however he confirmed that to date the expenses of the bankruptcy are about £0.5m. One might have thought that the cost of a valuation in these circumstances is a drop in what seems to be an ever-expanding ocean. I observe that the Trustee’s evidence about this matter filed in support of his application is his 17th witness statement in this bankruptcy. I appreciate that the Trustee’s position is that the bankrupt has consistently been evasive, dishonest and obstructive and it is this that has given rise to the need for numerous applications and an inability to deal with matters without recourse to the Court. Nevertheless, in my view there ought at the very least to have been a valuation of the items. Its absence is a highly regrettable omission.

Fifth concern: All I’ve Got to Do

  1. There is a fifth area of unease. Mr Passfield asserts that there is a presumption that the items on the schedule belong to the Bankrupt because the four that have been taken away by the Trustee and those that remain at Springwood Hall or Lower Grange are or were, before removal, situated in one or other of those properties and he is the sole proprietor of those properties.
  2. He cites South Staffordshire Water Company v Sharman [1896] 2 QB 44 and Re Cohen [1953] Ch 88 as authority for the proposition that there is a presumption that chattels on premises belong to the owner of the premises. His position therefore, repeated in paragraph 11 of his closing submissions, is that
where any other person claims a proprietary interest in any of those items the burden is on that person to rebut that presumption
  1. On the basis of paragraph 10 of his closing submissions, Mr Passfield is under the impression that Mr Cochran accepts that that presumption is applicable in this case and that accordingly the Trustee need prove nothing other than that the items were in the Bankrupt’s home (or Lower Grange) at which point the burden shifts to the other members of the family to prove their ownership. In fact it is clear that Mr Cochran’s position is thatSouth Staffordshire and Re Cohen are of no great assistance in this case.
  2. In South Staffordshire the question was whether 2 gold rings obviously lost by an unidentified third party on land belonging to the Water Company were owned by the finder of the rings or the Water Company. The court held they belonged to the water company as owner of the land.
  3. In Re Cohen bundles of money had been secreted away in the home of Mr and Mrs Cohen. Mr Cohen died. The home passed to his wife. Ultimately she died and the money was found. In whose estate did the money repose? The husband’s or the wife’s? The court held that it must belong to the wife’s estate because the property in which it was found was hers. It was a decision that the court reached with obvious reluctance. At page 94 Vaisey J said:
Nobody can say, as between the husband and the wife, to which of them the lawful possession must be attributed; and it is suggested and submitted that the principle which I have indicated, which depends, I think, largely upon the authority of the South Staffordshirecase, strange though it may appear and slight as may be the straw which has to be grasped by the swimmer in this sea of ambiguity, must determine the issue in the matter, as there is nothing better to depend on.
I adopt this principle with reluctance, because it seems to be a somewhat inhuman way of approaching the problem… As I have said,we know nothing of the facts; …my emphasis) but, in any case, the notes were in the flat when the wife died; and if they were placed there in the husband’s lifetime then they were placed by one of two spouses on and in the property which belonged to one of them; and I think that I must decide that these notes and coin were the property not of the husband but of the wife.
  1. Mr Cochran distinguishes both these cases from the instant case. In South Staffordshire it was a question of who had better title between a finder and a landowner and in Re Cohen the court was forced into adopting the principle because the court “knew nothing of the facts” and could not discern them because both protagonists were dead. He argues that it is far removed from this case where the court is in a position to discern the facts. Accordingly, at paragraph 70 of his final submissions Mr Cochran submits that:
The Court must determine for each item whether the Applicant or the Respondents have produced the better evidence to establish the identity of the true owner; the Court will not need to fall back on a presumption based on the ownership of the Property”
  1. He also raises a further point in his closing submissions, not raised earlier so far as I have recorded, to the effect that even if, contrary to his primary position, there is a very weak presumption, as he describes it in paragraph 69, then it can only be of relevance in respect of the items in the properties owned by the Bankrupt at the date of his bankruptcy on 13 November 2013 and not at the date that the Trustee searched the property and found the scheduled items in it, namely 21 January 2015.
  2. It is a matter of concern to me that counsel may, as it turns out, therefore have been approaching this matter at cross purposes in that Mr Passfield has been under the impression that, as regards those items that were not discussed in evidence in any detail then, by virtue of the presumption, the Trustee is entitled to a declaration that these were the Bankrupt’s immediately before his bankruptcy and so vest in the Trustee whereas Mr Cochran’s position is that there is no basis for making such a declaration where no evidence has been adduced to suggest that the particular item in question actually belongs to the Bankrupt and/or it has not been established that the items were in the Bankrupt’s property at the date of his bankruptcy.
  3. Let me say about the presumption that I see much merit in Mr Cochran’s observations that South Staffordshire and Re Cohen are of minimal relevance. The circumstances of both these cases are very distant from the circumstances of this.
  4. I find it hard to accept that for example where a family live in a house owned by say the father there is a presumption that everything in it is owned by him. I appreciate the argument that Mr Passfield makes that it is an easily rebuttable one so for example, the presumption that he is the owner of his wife’s wardrobe of clothes is readily rebutted by the fact of the nature of the clothes. I also appreciate that in this case many of those who assert an interest do not actually live in the house. However, there are other scenarios which are less obvious in respect of which such a presumption could lead to injustice. If A lends a valuable book to B who refuses to return it is it open to B to say that the very fact that it is at his house gives rise to a presumption that it is his? I apprehend the court would be exclusively concerned with the evidence about the provenance of the book, why it might have been lent etc and would decide the matter on the evidence rather than falling back at all on such a presumption.
  5. In any event, even if I am wrong and there is such a presumption in this case I have concluded that it is indeed a very weak one and that the question of ownership in such circumstances as this is, as Mr Cochran suggests at paragraph 70 of his closing submissions, dependent on whether the Applicant or the Respondent have produced the better evidence to establish the identity of the true owner.
  6. However having said that I acknowledge that Mr Passfield may have felt that he had no need to offer more than a brief justification for the presumption if he felt that that was common ground. He will, no doubt, make such representations as he feels appropriate (and proportionate) before this judgment is handed down if he takes the view that the interests of the Applicant have been materially compromised by his possibly misplaced belief that the presumption was common ground. A close analysis of the conclusions I reach may, I hope, cause him to conclude that such representations need not be made.

THE JUDGE’S VIEW ON CREDIBILITY: WITH A LITTLE HELP FROM THEIR “FRIENDS”

The judgment is also interesting because the judge rejects a large part of the evidence brought by both parties, in particular the estranged “friends” of the bankrupt.  Nevertheless a clear view is taken in relation to ownership of all of the items concerned.

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