England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT LIST
(Mr Justice Stanley Burnton)

		The Royal Courts of Justice The Strand London Tuesday 9 July 2002

Tuesday 9 July 2002

1. LORD JUSTICE LATHAM: This is an appeal against the refusal by Stanley Burnton J of an application for permission to apply for judicial review of a decision of the Lloyd's Settlement Offer Panel, made in its letter of 26 September 2001, offering to reduce the applicant's liability in respect of her indebtedness to Lloyd's to £59,300.
2. The circumstances in which the indebtedness arose were that the appellant had been a Lloyd's Name. She was one of the minority of Names who rejected a resettlement offer (known as the Reconstruction and Renewal Offer) made to Names in 1996 when Lloyd's was in substantial difficulties. Reconstruction involved a reinsurance arrangement which was compulsory and required payment of a premium, which in the claimant's case was £253,100.67. The claimant did not pay it; and on 17 March 1999 judgment was obtained against her in that sum. A statutory demand was later issued based upon that judgment debt and a bankruptcy order has been made against her. The bankruptcy proceedings have, however, been stayed pending the outcome of these proceedings.
3. The position was that in respect of those Names who had not accepted the offer in relation to the reconstruction, and against whom Lloyd's had taken proceedings as indicated in this case, arrangements were made for further assistance to be given by the setting-up of a hardship panel which would consider the extent to which Lloyd's would, in effect, provide assistance to those who were considered not to have sufficient means to pay the whole or any of their indebtedness. The applicant applied to Lloyd's for consideration by the hardship panel of her position. She provided a financial statement in which she indicated that essentially she had no significant assets: she had cash in the bank of £2,000, she had a car worth £5,000, she had outstanding liabilities, a relatively small pension and no further assets. She disclosed, in the section dealing with disposition of assets, that in August 1995 she had sold her quarter share in 17 Holly Walk London NW3 to her husband for £59,300 and indicated that the proceeds, together with the proceeds of other assets, had been used for general living and medical expenses. On considering that material, the hardship panel considered that she should receive assistance to the extent that would require her ultimately to pay £59,300. It is that decision which she seeks to challenge in this court.
4. Before His Honour Judge Stanley Burnton, substantial argument took place as to the jurisdiction of the courts to hear the application. At that hearing Lloyd's was represented. A significant proportion of the judge's judgment dealt with that issue of jurisdiction. He concluded that the court did not have jurisdiction. However, he also came to the conclusion that in any event the applicant was unable to put before the court any material which could justify the conclusion that, even if it had jurisdiction, the court would interfere with the decision of the hardship panel.
5. It seemed to us that in a case such as this it is appropriate to look first at the issue of underlying merit, because it would be unfortunate if a jurisdictional argument, however good, was in the end held to defeat what might otherwise be a good claim.
6. Mr Bergin, on behalf of the applicant, has sought to persuade us that the decision of the hardship panel was Wednesbury unreasonable, and that the panel failed to apply the tests which it was required to apply in circumstances such as these. His argument is that throughout all the documentation relating to the setting-up of the panel, it is apparent that the underlying concept to be applied by the panel is the concept of ability to pay. He submits that that can only mean, in its proper context, the ability to pay today. The position of the applicant in 1995, when her share in the house was realised, he submits was irrelevant. That, he submits, clearly was not the view taken by the panel because the sum that was required to be paid by the applicant was based upon the realisation of that capital asset.
7. The terms of reference of the panel, he submits, clearly indicate that ability to pay is the underlying concept. However, paragraph 2 of the terms of reference states as follows:

"The Panel will set down criteria to be taken into account in assessing Names' ability to pay their liabilities under the Offer. In setting the criteria the Panel shall take into account such of those factors as it believes to be relevant which were used to assess means related assistance for Names who accepted the R&R settlement offer or who have subsequently settled with Lloyd's on the basis of their ability to pay, together with any changes in circumstances since R&R. These factors shall include, without limitation and so far as is practicable, consideration of the needs of Names for reasonable housing and reasonable minimum income."

8. There is no doubt that, as Mr Bergin submits, the general underlying concept is ability to pay. But, reading that paragraph in its context, it is quite apparent that the panel would be perfectly entitled to take into account, if it thought fit, the history of any financial dealings that the particular applicant for assistance may have had, particularly during the period leading up to and after the circumstances in which the offer was made. The position of members of Lloyd's was clearly uncertain from the early 1990s, and it seems to me that the panel was perfectly entitled to take into account the extent to which those who clearly were at risk of being required to pay monies during the period of uncertainty had obtained and dealt with any assets. I do not take the view that it is arguable that the panel took into account an irrelevant consideration. It seems to me that it was entitled to take it into consideration, and took it into consideration in a way which was appropriate in all the circumstances.
9. It follows that, even if one were to conclude that this court had jurisdiction to interfere with the decision of the panel, the result would inevitably have been that this application would have been refused. I would therefore refuse this application for permission.
10. LORD JUSTICE SIMON BROWN: Stanley Burnton J, having spent a full day hearing this applicant's application for permission to apply for judicial review, rejected it, not least on the merits. As to them he said:

"I do not think that the Claimant has an arguable case on the merits. It is clear from paragraph 2 of the Terms of Reference of the Panel, and the information required in the financial statement, that the Panel was entitled to take into account past dispositions of assets by the Claimant. Indeed, it would be extraordinary if this were not the case. It would mean that the Panel would, for example, have to ignore a disposition by a wife to her husband of substantial assets at an under value, made with a view to avoiding those assets being used to meet liabilities to Lloyd's. It has not been suggested before me that any such thing happened in this case. Nonetheless, Lloyd's would have been guilty of gross naivety if it had not taken such possibilities into account in formulating its most recent settlement scheme and in arranging for the work of the Panel."

11. Laws LJ, on the initial consideration of the present application on the documents, refused permission to appeal against Stanley Burnton J's order in these terms:

"Even if it is arguable that the Lloyd's decision in question is amenable to judicial review, I consider that the applicant has no case whatever on the merits. The Panel was plainly entitled to consider matters beyond the applicant's actual ability to pay: not least the sale to her husband of assets to the value of £59,060, none of which were used to diminish her liability to Lloyd's."

12. The applicant has been nothing if not persistent in her efforts to avoid all liability for her Lloyd's losses and she has renewed her application to this court. I need say no more than that I wholly agree with what Stanley Burnton J said below, with what Laws LJ said when he considered this application on the documents, and with what my Lord, Lord Justice Latham said in his judgment this morning.
13. The application is dismissed.
ORDER: Application refused