England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MR JUSTICE HOLLAND)

		Royal Courts of Justice Strand London WC2A 2LL Wednesday 24 July 2002

1. LORD JUSTICE CHADWICK: There are before me two applications. The first is a renewed application on behalf of Mr Hugh Neave for permission to appeal from an order made on 26 April 2002 by Holland J in proceedings brought against Mr Neave by his mother, Mrs Margaret Neave. The second is a renewed application on behalf of Mrs Neave from an order made on 15 May 2002 providing for the costs of those proceedings. The applications have been listed for hearing consecutively, and it is convenient to give a single judgment.
2. Mrs Margaret Neave is the widow of Mr Tubby Neave who died in March 1983. She was the sole beneficiary under his Will. For many years before his death Mr Tubby Neave had been associated in business with Mr George Totty, who conducted a breaker's yard at Langley in Hertfordshire, under the name Rush Green Motors. In the course of that business a large number of motor vehicles were acquired, as would be expected. Mr Totty died in 1987. He had provided in his Will that, in the event (which was the case) that Mr Tubby Neave predeceased him, his estate, which was substantial, should vest in Mrs Neave and her son, Mr Hugh Neave, in equal shares. That reflected the close relationship between Mr Totty - who was described by the judge as a recluse - and the Neave family, who had looked after him.
3. By a deed of family arrangement made in 1989, the dispositions made under Mr Totty's Will were varied so as to provide that all his business assets should go to Mr Hugh Neave. Clearly he was regarded as the heir to the business. Thereafter Mrs Neave was and is beneficially entitled to assets comprised in the estate of her late husband at his death in 1983; and Mr Hugh Neave was, and is, entitled to business assets in the estate on the late Mr Totty at his death in 1987. Formally, those assets would have vested in the executors; and title would not pass to the beneficiaries unless and until there had been an assent. But that technicality does not seem to have occurred to anyone. It may be that either there has been an assent, or that the parties were themselves executors.
4. It is common ground that the assets (motor vehicles) in dispute in these proceedings must have belonged to either Mr Tubby Neave or to Mr Totty. The issue for the judge was which of those two was the owner of the particular vehicles in question; or, more specifically, which vehicles were owned by Mr Tubby Neave at his death in 1983?
5. The determination of that issue was made difficult by the fact that the relationship between Mr Tubby Neave and Mr Totty - although, as the judge found, one of unbroken mutual loyalty and trust - was characterised by a very high degree of informality. The documentation generated by Rush Green Motors was limited and haphazard. There was no systematic record keeping; and, until 1977 or thereabouts, following investigations by the Customs and Excise and the Inland Revenue, there were not even any accounts.
6. The claim in the proceedings fell into two parts: first, there was a claim in trespass to land and conversion in respect of five vehicles which had been in Mrs Neave's possession since the death of her late husband. They had been stored in a shed at their home, Trees, Langley - at which she continued to reside - since at least 1970. Those five vehicles were removed from Mrs Neave's property on 5 March 1998 by her son without her permission; and, it seems, without any warning at all.
7. Conversion is a tort against possession. The defence to the claim in conversion, was a claim by the son to title; that is to say, a better right to possess. It was said by the son that those five vehicles had been business assets of the late Mr Totty trading as Rush Green Motors and had passed to him on the death of Mr Totty under the Will and the deed of family arrangement. There could be no defence to the trespass, but there was a dispute as to the quantum of damage.
8. Secondly, there was a claim by Mrs Neave to a further four vehicles which had not been in her possession. Those vehicles had been in the possession of her son since, I think, the death of Mr Totty.
9. That claim, also, was met by the son with a claim of title. As the judge correctly identified, the circumstances in which the two claims arose were such that it was for the son to prove title to the five vehicles which he had removed from Mrs Neave's possession on 5 March 1998; but it was for Mrs Neave to prove title to the four vehicles of which she had not had possession. The judge referred to this at paragraph 14 of his judgment of 26 April 2002:

"I draw attention to the respective burdens of proof because I place emphasis on their significance. It is common ground that the relationship of the respective parties to these vehicles was legally resolved as at the death of Totty if not at the death of Tubby, that is, between 14 and 19 years ago. It is further common ground that the two persons with direct knowledge pertinent to the matter are both dead - and neither left any contemporaneous record specific to ownership as between himself and his erstwhile associate. The parties are thus forced to rely upon the circumstantial evidence as afforded by dim memories and surviving documentation as pointing 'yea or nay' to the probabilities. I do not decry this approach (it is indeed the only one that is available) but I treat it with great caution. The nature of the relationship between Totty and Tubby as described above militated against respective contemporaneous concerns about individual ownership and I am hesitant to draw inferences decades later from incidents which had no necessary connection with ownership and the exercise of its rights."

10. The judge went on to describe a re-registration exercise which was undertaken in 1983, or 1984, in the context of replacing vehicle log books by computer records at DVLC Swansea. The judge identified that as the single occasion on which it might be thought that the parties were addressing their minds to the question of ownership. It was, therefore, the matter to which he needed to give particular regard. He said this:

"Of course I shall look to such probabilities as can be drawn from the other material but my main attention is upon this event, each time by reference to the prevailing burden of proof."

11. In relation to the five vehicles removed on 5 March 1998, the judge rejected the son's account as to the re-registration process and accepted the account of Mrs Neave, supported by her three daughters. In particular, he placed considerable weight on the fact that she was in possession of log books relating to four of the five vehicles taken in March 1998. At that time it was thought that the log book of the fifth vehicle had been lost. The judge found that it was more probable than not that the reason Mrs Heave had those log books was that her late husband had given them to her for safe keeping; and that he was concerned for their safe keeping because he had acquired those vehicles during his lifetime from Mr Totty by way of purchase for cash or other considerations. Accordingly, the judge found, essentially on that inferential basis - that Mrs Neave succeeded on her claim to those five vehicles.
12. In relation to the other four vehicles, of which she had not had possession - and in relation to which the burden of proof of title was on her - Mrs Neave succeeded as to one and failed as to two of the others. As to the fourth, a Morris Oxford Saloon, HAN 1, the judge said:

"Photograph 1257 shows what is left of this vehicle - in effect it no longer exists. An action in conversion, whether aimed at a return or at damages is absurd and I do not propose to consider this part of the claim further."

13. Accordingly, he ordered a return of six vehicles and dismissed the claim in respect of the other three. He awarded Mrs Neave £3,000 damages for trespass.
14. It is important, however, to note his concluding remarks. After setting out the overriding objective in CPR 1.1, he said:

"It is plainly difficult to reconcile this litigation with that objective. Granted that the 'raid' of March 1998 should never have taken place; granted that the five vehicles should never have been removed; and granted that Mrs Neave has proved ownership with respect to one more vehicle, this litigation in so far as it goes beyond a simple claim in trespass is a nonsense deserving of no significant allotment of the Court's resources, that is, of public expenditure. Turn back to photograph 1290: the object of the litigation is to restore that status quo of derelict hibernation, presumably with the additional vehicle SH 294 dumped somewhere else, all seemingly out of sentiment and pique. The essential feature is not an interest in historic vehicles suddenly kindled in mother and son after thirty years of inactivity, but another chapter in an appalling family rift giving rise to the mutual desire to hurt and wound that was distressingly obvious in the course of the hearing before me and which had no doubt been a dominant feature of the protracted county court hearing. It would be nice almost certainly naive to think that this litigation has helped the Neave family; my guess is that in addition to absorbing vast amounts of its precious funds it has served irretrievably to perpetuate the rift. Let us hope that I am wrong in this but if I am proved to be right then we have this added dimension: the public expenditure has been not only to no avail but indeed counter productive. This litigation should never have got under way - the only thing that should could and should have been offered by the court is Alternative Dispute Resolution. Further, once underway it could and should have been resolved by constructive agreement - and not countered, as has been the case, by the Defendant's aggressive short-sighted intransigence. Throughout this family has needed - and still needs - constructive disinterested help: is it too large to find and act upon such?"

15. The proceedings had been commenced in the county court. The hearing occupied ten days in that before being adjourned. They could not go back to the judge who had been hearing them in the county court because she was indisposed. They were then transferred to the High Court and came before Holland J as an adjourned hearing - that is to say, he completed the hearing which had been commenced in the county court. Nevertheless, between the two hearings a considerable amount of court time has been expended at, no doubt, considerable expense to the parties.
16. The judge's remarks at the end of that passage seem to have gone unheeded. In support of Mr Neave's application for permission to appeal, counsel has submitted representations in writing which extend over 60 pages. I declined to describe that as a skeleton argument, although it bears that heading.
17. In developing his submissions orally, counsel has for Mr Neave directed his arguments, principally, to one vehicle, a Napier registration SH 294, in relation to which Mrs Neave established title, although it had been in the possession of her son. The judge recognised that it presented more difficulties than the others; and he had some hesitation in reaching the conclusion which he did. Nevertheless, he set out five facts which he found in relation to that vehicle. The most significant of which at (b), is that at some stage prior to his death Mr Tubby Neave had lodged the log book with Mrs Neave - in other words in respect of that that vehicle, in common with four of the five vehicles which were in her possession - there was the fact that she had the log book. That must have been lodged with her for some purpose. In the light of what he had said earlier in his judgment, the judge took the view that the purpose must have been the assertion of a claim of ownership by Mr Tubby Neave during his lifetime. The only sensible explanation for that claim was that he had purchased the vehicle from Mr Totty at some stage.
18. Mr Matthias, in his submissions on behalf of the applicant, asserts that the judge failed to say why he came to that conclusion in relation to the Napier. I reject that submission. It seems to me clear that the judge reached that conclusion because of the weight that he attached to the fact that the log book was lodged with Mrs Neave. But, it is said that the judge failed to deal with evidence that had been before him which favoured the defendant's account of ownership.
19. I have been taken through the witness statements which are said to contain that evidence. I have not been taken to the evidence given orally, in particular under cross-examination, on the matter. That may be either because there was no challenge in cross-examination; or, more obviously, because the transcripts are not available. The evidence of Mr Rataj, Mr Snookes, Mr Parker and Mr Cook takes the evidence no further. In particular, the evidence of Mr Cook is that his father sold the car to Mr Totty back in 1958. But the judge was plainly proceeding on the basis that the cars had originally been acquired by Mr Totty. The question was whether they had been sold or transferred by Mr Totty to Mr Tubby Neave during the course of their long association. Mr Snookes says, baldly, that he knew that the green Napier was Totty's, but he does not indicate why he knew that. Mr Parker states that, after Mr Tubby Neave had died, Mr Totty had tried to sell him the Napier, and Mr Rataj says that at some stage while he was a schoolboy, Mr Tubby Neave had said Mr Hugh Neave, "For heaven sake show him that Napier, but don't let George [Totty] catch you". That takes the matter no further because, when that conversation took place, the car may well have still belonged to Mr Totty.
20. In support of the claimant's case, there is a photograph of the family, while the children were still young, around, or on, the car in question. In my view, the judge was plainly entitled to focus, as he did, on the importance of the log book and to discount evidence of incidents which did not go to questions of title. The judge said, in the passage to which I have referred:

"I am hesitant to draw inferences decades later from incidents which had no necessary connection with ownership and with exercise of rights".

21. He plainly recognised that - in a relationship of this kind - it was not likely that questions of ownership as between Mr Totty and Mr Tubby Neave would play much part; unless there was actually a need to consider them, as arose at the time of the re-registration.
22. Similar criticisms, but with much less force or detail, are made in relation to the judge's conclusion on the five vehicles which had been in Mrs Neave's possession until March 1998. The question there was whether Mr Neave had satisfied the judge on the balance of probabilities that title had passed to him. Clearly, the judge took the view that he had not overcome that hurdle. In my view there is no real prospect that this court would interfere with the judge's findings on the material before him as to the discharge of the burdens of proof in this case.
23. To meet that difficulty, Mr Matthias seeks permission to adduce further evidence on an appeal. The further evidence upon which he relies are three witness statements, and a witness statement of his client explaining the circumstances in which those three witness statements were obtained. The first is a witness statement of a Mr Morley, as to which Mr Hugh Neave says:

"In respect of Frederic Peter Morley, I knew that Mr Morley might be able to give important evidence at the trial because of the references which were given in the witness statements of my mother, Margaret Neave and my sister, Gloria Neave. These references were based upon diary entries and I knew that their diary entries were inaccurate in the sense that Mr Morley had not in fact offered to purchase the Napier in 1983. Accordingly I telephoned him on a number of occasions, both prior to and during the course of the trial but he refused to discuss the matter with me or become involved in any way."

24. It is then said that Mr Morley has since had an unexplained change of heart. The circumstances in which Mr Morley's evidence is put forward do not begin to satisfy the requirements which would lead the Court of Appeal to give permission to adduce fresh evidence. It was evidence that was available at the time and was not given because Mr Morley refused to give it.
25. The other two witnesses are Mr Percy Podger and a Mr Mornington (Monty) Webster. They are both motor dealers known to Mr Hugh Neave, but from whom he took no steps to obtain information prior to the trial. His explanation is that he did not know that they had any information to give and that they have come forward after the trial in the light of press reports which they had read. Mr Podger gives evidence about the Schneider. Mr Webster solves the mystery of the missing Rolls Royce log book, which is in his possession. He says it was handed to him at an auction so that he could check out the year of the manufacture and the chassis number. Although aware of Mr Totty's death shortly thereafter, he never returned the log book to Mr Totty's executors or beneficiaries.
26. Had the judge known of Mr Webster's possession of the Rolls Royce log book, it might have carried weight assessment of where title to that vehicle lay. Whether or not it would have led him to hold that Mr Hugh Neave had discharged the burden which he needed to discharge in respect of that vehicle is a matter of speculation. Further, it is difficult to understand how Mr Webster could have retained a log book for so many years without making any contact with any one who might, at least prima facie, have a title to the car which he himself does not assert.
27. Whether to give permission to adduce new evidence is a question of discretion. In exercising that discretion, it is necessary to have regard to the overriding objective in CPR 1.1. That requires the court to consider, amongst other factors, whether this case has had allotted to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases. If the new evidence in relation to the Rolls Royce log book were before the Court of Appeal, and the court were persuaded that that evidence was such that it could lead to a real doubt whether the judge would have come to the same conclusion in relation to the Rolls Royce as he reached in relation to the other four vehicles in Mrs Neave's possession, the only course open to the court would be to order a new trial. It would be impossible for this court to make a decision whether or not Mr Hugh Neave had discharged the burden of proof which is upon him in relation to that vehicle in isolation of all the other evidence which the judge had heard, and without testing Mr Webster's evidence in cross-examination.
28. To embark on a course which might lead to a new trial in relation to that one vehicle, seems to me wholly disproportionate. It would fail to recognise that this case has already occupied a very significant share of resources both in the county court and in the High Court. In those circumstances, I would not think it right to give permission to adduce the evidence of Mr Podger or Mr Webster. Accordingly that application fails.
29. It follows that I refuse the applications for permission to appeal made on behalf of Mr Hugh Neave. That leaves the second application before me, an application on behalf of Mrs Neave to appeal the order which the judge made in respect of costs. The judge ordered that Mrs Neave should have one third of her costs of the case on a standard basis to be assessed if not agreed. He made two other orders in relation to the costs of a particular hearing, which I do not need to consider specifically.
30. The judge gave a separate judgment as to costs on 15 May 2002. He reminded himself of the provisions in CPR 44.3; and of the general rule that an unsuccessful party will be ordered to pay the costs of the successful party. That general rule is subject to the power of the court to make a different order if, in the exercise of judicial discretion, it thinks a different order is appropriate. The judge took the view that this was a case in which the circumstances displaced the general rule. It is clear when his costs judgment is read in conjunction with the judgment on the claim - and in particular with that passage in paragraph 41 of the earlier judgment in which he said that the motivation for this litigation was not an interest in historic vehicles suddenly kindled in mother and son, but another chapter in an appalling family rift giving rise to the mutual desire to hurt and wound - that he was indicating why he took the view that the general rule should not be applied in the case before him. If the judge was right to take that view of the parties' conduct, it seems to me he was entitled to direct himself that this was not a case in which he should be bound by the general rule but should look at the matter more broadly. He went through each of the factors listed under CPR 44.3(4) and (5) in deciding what costs order he should make and came to the conclusion that the claimant should receive one third of her costs.
31. Had the matter remained there, I would take the view that there was no real prospect that the Court of Appeal would think it right to interfere with the exercise by the judge of the powers entrusted to him. It is immaterial that, had this court been seized of the matter, it might not have reached the same view. The relevant question is whether the judge was entitled to reach the view that he did having regard to the wide margin of discretion which must be allowed in relation to costs.
32. But the point does not rest there. There were, in this case, offers made under Part 36 of the Civil Procedure Rules by solicitors on behalf of the claimant, both on 26 April 2001 and on 26 July 2001. The claimant offered a compromise on the basis that five vehicles should be returned to her and four vehicles should be retained by the defendant. There is no exact correlation between the vehicles which were to be returned under that proposed compromise and the vehicles of which she had had possession until March 1998.
33. One of the vehicles which she wanted returned to her, a Norton Motor Cycle, registration HGN 1, was not the subject of the judge's order. It may be that the registration number, HGN 1, which includes the initials of the defendant, had some influence in the decision not to accept that. To make an offer which required the defendant to hand back the vehicle, which had always been in his possession and whose registration number bore his initials, may be thought calculated to inflame the situation. Nevertheless, CPR 36.21 applies where the judgment against the defendant is more advantageous to the claimant than the proposals contained in the claimant's Part 36 offer.
34. The judgment in this case had the effect that the claimant recovered four out of the five vehicles that she was seeking under her Part 36 offer, and two more vehicles which she had not been seeking under the Part 36 offer but she had been prepared for the defendant to retain. There is, therefore, a question whether the judgment was more advantageous than the proposals; a question which may have to be determined by a comparative valuation exercise as at the date when the offers were made.
35. The judge does not seem to have addressed himself to that point. He simply observed that the offer did not match the judgment. But the question was not whether the offer matched the judgment; the question is whether the offer was more or less advantageous to the claimant than the ultimate result. Had the judge reached the conclusion that the judgment was no more advantageous than the offer, then he would have been obliged to order indemnity costs from the date on which the offer could have been accepted and interest at 10 per cent on any money recovered unless he considered it unjust to do so. In considering whether it was unjust, he was required to take into account the matters in CPR Part 36.21(5). His costs judgment is open to the criticism that he does not seem to have addressed either of those points expressly; save in the short observation that the offers did not match the ultimate judgment.
36. Prima facie, therefore, I would think it right to give permission to appeal on the costs, limited to the question on whether the judge ought to have made an order under CPR 36.21. But it is said on behalf of Mr Hugh Neave, that the offers made in April and July 2001 were offers to compromise on the basis that the claimant's costs to the date of the offer be paid by the defendant. It is said that the order which the claimant ultimately achieved was an order for only one third of her costs. Therefore, the judgment cannot be said to be more advantageous than the offer.
37. There is least one difficulty arising from that submission. It is by no means clear that one third of the costs after a 10 day trial in the county court and a three day trial in the High Court is going to be less than 100 per cent of the claimant's costs would have been in April 2001. But before reaching a final conclusion on the question whether the inclusion of a provision as to costs in the offer letter takes the offer outside CPR 36.21, however, I would like to remind myself of recent authority in these court on the approach that should be adopted in circumstances where a Part 36 offer contains a provision as to costs. Subject to that question, I would give permission to appeal limited to the issue which arises under CPR 36.21.
38. I direct that my order should not drawn up before 26 July 2002, on the basis that if there is further authority which bears on that question counsel will have an opportunity to draw it to my attention in writing. If it persuades me that some other order should be made, I will make arrangements for oral submissions, if counsel wishes to address them in the light of that further authority.

Post judgment note:

39. I have had the opportunity to consider further the question identified in the penultimate paragraph, in the light of Mitchell v James [2002] EWCA Civ 997 and the further submissions made to me in writing. I am satisfied that the reasoning in Mitchell v James does not compel the conclusion that the inclusion of a provision which reflects CPR 36.14 does not take the offer outside CPR 36.21.
Order: Permission to appeal on limited basis indicated.