England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2012

CONTENTS	Paras
INTRODUCTION	1-5
STRUCTURE AND ADMINISTRATION OF THE UNION	6-11
A. THE BARBICAN FLAT ISSUE	12-169
(1) Pre-Retirement	13-135
Narrative	13-107
Analysis and Conclusion	107-134
Conclusion	135
(2) Post-Retirement: Ratification	136-161
Consideration of the Barbican Flat by the NEC	136-151
Analysis	152-161
(3) Estoppel	162-166
Conclusion	167-169
B. FUEL	170-177
C. SECURITY	178-182
D. ACCOUNTANCY COSTS	183-185
THE UNION'S CLAIM FOR EQUITABLE COMPENSATION	186-191

The Hon. Mr Justice Underhill :

INTRODUCTION

1. The Defendant, Mr Arthur Scargill, was employed as Area Compensation Agent of the Yorkshire Area of the National Union of Mineworkers ("the Union") from 1 July 1972. He became President of the Yorkshire Area in 1973. On 4 December 1981 he was elected President of the National Union^[1], with effect from 5 April 1982. From that date until his retirement on 31 July 2002 he was an employee of the National Union.^[2] Following his retirement Mr Scargill was appointed Honorary President; but in that role he was not an employee of the National Union. Relations between him and the current leadership of the Union have deteriorated in recent years.
2. The issue in the present proceedings is whether Mr Scargill remains entitled following his retirement to various benefits which he enjoyed during the period of his employment by the Union; and if so to what extent. The benefits in question can be summarised as follows:

(A) The Barbican flat. In June 1982 Mr Scargill took a three-year lease from the Corporation of London of a flat on the Barbican estate. The lease was renewable and has been renewed regularly thereafter. The Union agreed from the start to pay the rent and other running costs of the flat and did so - with the exception of one substantial period with which I deal below - for the remainder of his employment; it also continued to do so following his retirement until the quarter ending in June 2011, at which point it declined to make any further payment. The annual cost was then approximately £33,000. Mr Scargill claims that the Union is obliged to continue to pay those costs until his death and that of his widow if he should leave one. Although he says that the flat is his primary residence, he also has a house in Yorkshire.

(B) Fuel. The Union has a tradition of supplying coal to its officials free of charge, and on a life-long basis - reflecting the concessionary coal traditionally supplied to mineworkers and other staff by the National Coal Board (latterly the British Coal Corporation); where the official's home is not heated by coal, a cash allowance may be paid. It is common ground that Mr Scargill is entitled to such an allowance in relation to his house in Yorkshire, which is heated by gas; but there is an issue as to whether his entitlement is capped at the equivalent of the price of ten tonnes of coal or covers the entirety of his gas bill whatever it may be.

(C) Security system. During Mr Scargill's employment the Union paid the annual costs associated with the security system installed at his house in Yorkshire. The issue is whether it remains obliged to do so following his retirement. Payments were in fact made until early 2010.

(D) Accountancy charges. During Mr Scargill's employment the Union paid the cost of the preparation of his annual tax return by its accountants. Again, the issue is whether it continues to be obliged to do so following his retirement.

3. Those issues have been the subject of substantial inter-solicitor correspondence since May 2010; but in order to bring matters to a head the Union on 9 May 2011 brought the present proceedings, in which it seeks both declaratory relief and an order, characterised as being by way of equitable compensation, for repayment of amounts paid to Mr Scargill since May 2005. Mr Scargill counterclaims declarations that he remains entitled to the disputed benefits, and an order for the payment of the sums withheld.
4. The Union has been represented before me by Mr Nicholas Davidson QC, leading Mr Damian Brown QC. Mr Scargill has been represented by Mr Timothy Pitt-Payne QC.
5. The witnesses called by the Union were Wayne Thomas, General Secretary of the South Wales Area; Chris Kitchen, the Union's National Secretary; Paul Hardman, an Executive Officer employed by the Union; James Kelly, a former member of the National Executive Committee; Ian White, the Union's Finance Officer; and Ken Hollingsworth, the General Secretary of the Colliery Officials and Staffs Area. Mr Scargill, in addition to giving evidence himself, called a former member of the National Executive Committee, George Rees. I have had before me an extensive and well-organised bundle of documents. There was also a daily transcript of the evidence, to which I will refer as T, followed by reference to the day, page and (sometimes) lines.

THE STRUCTURE AND ADMINISTRATION OF THE UNION

6. The National Union of Mineworkers was established in 1944 as a federation of a number of pre-existing trade unions or associations. As regards mineworkers these constituent associations were defined by reference to geographical districts and were known as Areas, although there were also "Areas" defined by reference to particular trades or occupations. The Areas remained trade unions in their own right, with strong individual identities and with their own trustees, rules and officials. This remained the position until the mid-1990s, when as a result of a series of formal "transfers of engagement" the federal constitution of the Union was replaced by a unitary model. However, the Areas retained a high degree of local identity, and some funds were ring-fenced and continued to be administered by Area trustees. ^[3]
7. The Union's Rules have been amended from time to time, but the essentials of its constitution, so far as relevant for present purposes, remain the same. Rule 8 of the 1978 Rules, essentially reproduced in all subsequent versions, reads as follows:

"The Government of the Union shall be by Conference as provided for in Rule 23. In the periods between Conference the National Executive Committee ["the NEC"] shall administer the business and affairs of the Union and perform all duties laid down for it by resolution of Conference, and it shall not at any time act contrary to, or in defiance of, any resolution of Conference."

For most of the period with which I am concerned Conference has met annually, although more recently it has become biennial. There is also provision for Special Conferences. The NEC has the power to appoint sub-committees. The principal sub-committee is the Finance and General Purposes Sub-Committee ("the FGPC"). The Union's funds were at all material times vested in trustees.

8. Until 1992 there were three national officials, the President, the Vice-President and the Secretary, of whom the President and the Secretary were full-time and employed by the Union, the Vice-President being a "lay official". The position of National Secretary was abolished in 1992 but reinstated (though initially as "General Secretary") from 2002, in a reorganisation following Mr Scargill's retirement. The national officials during the period with which we are concerned were as follows. Mr Scargill's predecessor as National President was Mr Joe Gormley (later Lord Gormley). When Mr Scargill retired in 2002, the post of President was dispensed with; Mr Ian Lavery became Chairman, though the title of President re-emerged in 2008. At the time of Mr Scargill's appointment the National Secretary was Mr Lawrence Daly. He was succeeded from 1984 to 1992 by Mr Peter Heathfield. After the gap to which I have referred the Secretary from 2002 to 2007 was Mr Steve Kemp. His successor was Mr Kitchen. I was not given full details about the position of Vice-President, but Mr Mick McGahey was in post at the time of Mr Scargill's appointment: his successors were, or included, Mr Frank Cave and Mr Keith Stanley.
9. It was at all material times a rule that the remuneration of full-time national officials should "be determined by Conference upon recommendation of the NEC".
10. The Rules provide for minutes to be kept of, inter alia, all meetings of the NEC and sub-committees, with express provision that the signed minutes constitute prima facie evidence (latterly, conclusive evidence) of the matters stated in them. It is clear from the papers that I have seen that those responsibilities were taken seriously and that there was a culture within the Union of attendance to constitutional formalities. It is an express obligation of the President to:

"… see that the business of the Union is conducted in a proper manner and according to the Rules, and that in the conduct of affairs of the Union the Rules are duly and properly carried out."

11. The original headquarters of the Union were in the Euston Road in London. But at the Conference in July 1982 it was resolved to move out of London; and the head office moved to Sheffield in the summer of 1983. Such a move was already very much on the cards at the time of Mr Scargill's election at the end of 1981. That that was so could have been inferred – such decisions are not taken without a lot of prior planning and discussion – but it was in any event confirmed in evidence by Mr Rees, who was a member of the NEC at the time [T5/158-9]. In 1994 the head office moved again, to Barnsley.

A. THE BARBICAN FLAT ISSUE

12. The written contract of employment first signed by Mr Scargill, in November 1982, made no mention of any right to have the rent of the Barbican flat paid by the Union, but such an entitlement is included in three later versions, dating from 1992, 1999 and 2002.^[4] It is the Union's case that none of those later contracts was made with, in the relevant respect, the authority of the NEC. That is not accepted by Mr Scargill. He accepts that NEC authorisation was necessary, but it is his (primary) case that it gave the relevant authority at or about the time that he took up office as National President in 1982, albeit that the right did not find its way into the original written contract; alternatively, he says, such authorisation was given subsequently during the course of his employment. He also pleads that, even if no authority was given during his employment, the NEC ratified the 2002 contract following his retirement. A further alternative case based on estoppel is also pleaded. I will consider first the issues arising in relation to the pre-retirement period, followed by the issue of ratification. I will then consider the estoppel case.

(1) PRE-RETIREMENT

Narrative

Introductory

13. In relation to this period it will be necessary for me to set out a narrative of the history of the arrangements about Mr Scargill's accommodation and his contracts of employment, making findings on the various disputed issues of primary fact, before attempting a legal analysis. Regrettably this will be a laborious process since the history covers events over a period of over twenty years about which the evidence is often far from clear. Much of the narrative can be derived from the surviving documents. But there are several gaps or obscurities as to which the only evidence is the testimony of Mr Scargill. I must therefore say something about his reliability as a witness. His witness statement, which gives every appearance of having been drafted by himself, is very full and covers matters of detail which occurred thirty or more years ago. He likewise gave his oral evidence with confidence and authority. He is a man of great ability and intelligence, with a head for detail. Nevertheless I do not believe that his recall is as comprehensive or as accurate as he would have had me believe – or, it may be, as he himself believes. As will appear, there are several episodes (most clearly in connection with the genesis of the 2002 contract) on which his evidence about events is impossible to reconcile with the contemporary documents or is otherwise implausible; and I believe that he suffers to a high degree from the common tendency to reconstruct his recollection in a manner favourable to himself. Thus even where his evidence is uncontradicted by the documents I am not prepared to accept it uncritically.

Accommodation for Officials: the Position before 1982

14. From the creation of the National Union in 1944 it was its practice to provide accommodation for the President and Secretary. Typically this was done by buying a house in which the official in question could live rent-free, or in any event at a heavily subsidised rent. This practice may to some extent have reflected the fact that on appointment national officials would have to move to London, or at least within commuting distance, from a home in the coalfield; but since the provision of accommodation for senior officials was also widespread in the Areas, where the need to move home would not generally have arisen, it seems to have reflected a more general understanding that accommodation was a benefit of the job for senior Union officials.
15. More pertinently for present purposes, it was also the practice of the Union that officials who were provided with accommodation in this way were entitled to continue to occupy it on favourable terms in retirement – and that this right extended to their widows. There was at first some variation in the terms offered, and on 11 October 1967 the FGPC discussed the issue. The minute reads (so far as material):

"PROVISION FOR NATIONAL OFFICIALS UPON RETIREMENT

Reference was made to the differing procedure in the past in the provisions made for National Officials upon their retirement. The view was expressed that some standard provisions should be made, which would apply to all National Officials irrespective of circumstances or personalities.

It was pointed out that the finding of suitable living accommodation could be a problem as some National Officials might not wish to continue living in London after their retirement. …

It was agreed:

We recommend that upon retirement, National Officials shall be given the option of:

(i) remaining in their residence at an annual rental value equal to 2% of the capital outlay on the property (exclusive of rates), or

(ii) living in another property of comparable value (purchased by the Union) at an annual rental equal to 2% of the capital outlay on the property (exclusive of rates), or

(iii) purchasing his present residence from the Union at the book value of the property at the date of retirement."

Note: in the case of options (i) and (ii), it is intended that whichever is chosen will apply to the widow (during her widowhood) of a National Official."

That recommendation was reported to the meeting of the NEC the following day and was "accepted and approved".

16. The benefits so specified are self-evidently very valuable. If on retirement the official chose either of the two rental options – that is, option (i) or option (ii) – the rent would inevitably be below market level, although the extent of the difference would depend on when the "outlay" had been incurred. But the purchase option – option (iii) – would also be valuable because of the low valuations at which the properties in question appeared in the Union's books. A report prepared by the accountants Peat Marwick Mitchell & Co. ("PMM") in 1982, to which I refer below, shows that at that date there was not only no practice of revaluing residential properties periodically but that they were depreciated at a rate of 5% p.a. for the first ten years and 2.5% p.a. thereafter (see para. 5.4.1 of the report). It is not clear for how long that had been the practice^[5], but I can assume that the price at which officials would be entitled to purchase their homes on retirement would be at a very considerable discount to market value.
17. In accordance with that practice, each of the four National Presidents between 1944 and 1982 lived in a house in London or on its outskirts provided by the Union and continued to occupy it after retirement. Mr Gormley was provided with a house in Sunbury-on-Thames. He took option (i) on retirement, which resulted in him paying an annual rent of £92^[6]. That rent continued to apply until his widow's death in 2009 (though at some point in the interim they had moved, by agreement with the Union, to a property bought for them in Wigan). The same was the case for Mr Daly, who was provided with a house in Berkhamsted, and for his two predecessors as National Secretary. Only one of those officials took advantage of option (iii), namely Mr Paynter, who was National Secretary from 1959 to 1968. There was some discussion before me as to why the others had not done so, given the apparent financial advantages, but in truth it is impossible to know: it may or may not be significant that the standardisation of the policy which I have set out above occurred only a year before Mr Paynter's retirement.
18. There was also a separate practice of the Union offering, not only to officials but also to other employees, subsidised loans by way of a mortgage at very low rates in order to enable them to buy their own homes. It seems that schemes of this kind were offered originally both by the National Union and by the Yorkshire Area (and no doubt other Areas). The National Union discontinued its scheme in the 1960s. In Yorkshire it was discontinued for staff in 1976 but continued for officials.

Mr Scargill's Yorkshire House

19. In 1967 Mr Scargill bought a house in Worsbrough Dale on the outskirts of Barnsley called 2B Yews Lane ("2BYL") with a building society mortgage.^[7] Following his appointment as Area Compensation Agent in 1972, the Yorkshire Area agreed to take over the mortgage. The amount of the loan was £3,000, with a 25-year term and a rate of 2.5% (incorporating both interest and repayment of capital). In late 1981, apparently before his election as National President, he applied for that loan to be increased to £25,000 in order to finance the building of an extension. That application was approved by the Trustees of the Yorkshire Area on 12 January 1982. The value of a subsidised mortgage of £25,000 was very substantial.^[8] Mr Scargill was also entitled to concessionary fuel in respect of 2BYL and to payment of the annual costs of a security system: I give more details below. To anticipate, in 1985 Mr Scargill sold 2BYL and bought another house nearby, Treelands Cottage, which he continues to own to the present day. Save where it is necessary to be specific, I will refer to the two without differentiation as "the Yorkshire house".

Arrangements for Mr Scargill's Accommodation following his Election

20. On 21 December 1981, following Mr Scargill's election as National President, which of course entailed his being based in London, there was discussion at the FGPC of how his accommodation would be provided for. Mr Gormley, the outgoing President, was in the chair. Mr Scargill was present as one of the members of the sub-committee. Minute 1 of the meeting reads as follows:

"PRESIDENT-ELECT

Consideration was given to the necessary arrangements required to be made during the period preceding the President-Elect (Mr A. Scargill) adoption of Office on Monday, 5^th April, 1982.

It was agreed:

(a) that permission be given for the purchase of a suitable House or Flat, within the Central Area of London, as soon as possible.

(b) that the normal rate of Subsistence be paid (for attendance at Head Office) until such time as Mr Scargill moves his Home to the London Area."

The minute does not state the terms on which Mr Scargill would occupy the "suitable house or flat". However, I should note in this context the next minute, which relates to the arrangements to apply to the accommodation of the outgoing President. It reads as follows:

"Reference was made to the coming retirement of the President (Mr J Gormley) and it was agreed:

That Mr Gormley continue to reside in the House provided by the Union, under the same terms and conditions as apply on his retirement, until his decease, and for his wife if she should outlive him.

Thereafter, the premises revert to the Union as Owners.

The Union also to be responsible, as Landlords, for Interior and Exterior Repairs and Decorations."

21. The minutes of that meeting were reported to the NEC on 19 January 1982, and it was agreed that "the report be accepted and approved".
22. It will be apparent that the FGPC intended that Mr Scargill's accommodation would be within "the central area of London", unlike that of the two national officials then in post, Mr Gormley and Mr Daly, both of whom lived in the outer suburbs. Mr Scargill says, however, that when he started to look for suitable property in central London he found that the prices were higher than he felt the Union would be willing to pay. He says that he took the problem to Mr Gormley who said that if he could find suitable accommodation for rent "there was no reason why the Union should not pay rent and associated costs for life as opposed to purchasing and paying the associated costs of a property"; that the FGPC and NEC would approve that course; and that the terms would be the same as those for his predecessors save that there would be no option to purchase the property (witness statement, paras. 57-58).
23. The matter next came before the FGPC, on 8 April 1982 - three days after Mr Scargill had taken office. Part of item 3 of the minutes – "National President" - reads:

"In furtherance of Minute 1 of the Finance and General Purposes Sub-Committee held on 21 December, 1981, it was agreed:

… that Mr Scargill be authorised to rent or to purchase suitable accommodation in Inner London, in consultation with the Vice-President, Secretary and Trustees of the National Union [my emphasis]."

Under the same agenda item it is also minuted that:

"Following a detailed discussion, it was agreed:

That all allowances and facilities accorded to the previous President should apply to the new President as and from 5^th April, 1982, and that the arrangements and allowances in respect of his own home in Yorkshire – currently borne by the Yorkshire Area – be paid in future by the National Union."

I do not think that the first half of that minute is directly concerned with the question of Mr Scargill's accommodation in London, which had already been addressed in the earlier minute: it presumably relates to other kinds of benefit. As to the second half, there is an issue whether the "arrangements and allowances in respect of his own home in Yorkshire" which the National Union was to take over from the Yorkshire Area included the subsidised mortgage enjoyed by Mr Scargill or referred only to concessionary fuel and the payment of security costs: I consider that question at para. 114 below.

24. The report of that meeting was "accepted and approved" by the NEC at a meeting later the same day.
25. In the course of the following month Mr Scargill found the flat in the Barbican. He reported the position to the meeting of the FGPC on 11 May 1982. The relevant minute reads:

"The President reported that he had been able to rent a flat owned by the local authority in Central London. The Officials and Trustees had approved the acquisition of this flat on a rental basis subject to an inspection. It was reported that there was no floor covering, etc., and it was agreed:

That the Union would provide basic furnishing."

The lease was available for a period of three years, renewable subject to agreement of a fresh rent (with provision for arbitration if necessary). There were provisions which prevented subletting or assignment at a profit. The initial rent was £6,525 p.a., payable quarterly in advance. Mr Scargill says that the original intention had been that any flat would be rented by the Union in its own name, but apparently the Corporation was only prepared to accept individuals as tenants, and accordingly the lease had to be in his name. That meant that the Union would not be paying the rent in its own right but would be doing so on behalf of Mr Scargill (or reimbursing him insofar as he made payments himself).

26. The report of the FGPC was "accepted and approved" by the NEC on 13 May 1982. The lease was in the event formally entered into on 24 June and Mr Scargill took up occupation at or around that time. At least for the next year, until the Union headquarters moved to Sheffield, he spent most of his time there, but his wife and daughter continued to live in Yorkshire.

The 1982 Contract

27. Mr Scargill was not, as he should have been, supplied promptly with a statutory statement of his contractual terms and conditions following his assumption of office as National President. There is in the papers an unsigned draft in standard form which He says was shown to him by Mr Loney, the Chief Executive Officer^[9] of the Union, in the interval between his election and his appointment. Clause 11 is headed "Accommodation" and reads as follows:

"(a) Accommodation will be provided at an Annual Rental (inclusive of rates) equal to 2% of the capital outlay of the Property.

(b) Heating and lighting costs of this accommodation will be met by the Union.

(c) Upon retirement you shall be given the option of –

(i) remaining in your present residence on the same terms and conditions as apply on retirement;

(ii) living in another property of comparable value (purchased by the Union in an area of your own choice) at the same terms and conditions as apply to your present residence;

(iii) purchasing your present residence from the Union at a cost price equal to a 5% depreciation per annum on a reducing balance method of the property during your period of office and on date of retirement

NOTE: in the case of options (i) and (ii), it is intended that whichever is chosen should apply to your Widow (during her Widowhood)."

The clause assumes that Mr Scargill would be occupying accommodation bought by the Union for his occupation, as in the case of his predecessors. Element (c), which deals with the position on retirement, broadly follows the resolution of the FGPC from 1967, though there are differences of detail. The draft contract was formally defective because it referred to the Contracts of Employment Act 1972 rather than the Employment Protection (Consolidation) Act 1978; and, whether for that reason or otherwise, Mr Scargill did not sign it.

28. It was not until 17 November 1982 that Mr Scargill was sent by Mr Daly a complete and purportedly correct contract for signature. The document is headed "Contract of Employment". The introduction reads:

"Your employment as National President commenced on 5^th April, 1982 and in accordance with the Employment Protection (Consolidation) Act 1978, you are hereby given notice of the Terms and Conditions of your employment …".

There follow a series of headings in conventional terms, largely but not wholly confined to the matters on which particulars were required under the 1978 Act. The document was signed by Mr Scargill, and also by Mr Daly. Mr Davidson put it to Mr Scargill that the probable trigger for his signing a contract at that stage was the fact that the FGPC was due shortly to consider a report commissioned from PMM which recommended a tightening up of procedures in a number of fields (see para. 34 below). He accepted that that might well have been the case. I will refer to this as "the 1982 contract".

29. Clause 11 of the 1982 contract is headed "Accommodation" and is identical to the previous unsigned draft as set out at para. 27 above. There is no reference to the arrangements about the Barbican flat approved by the FGPC some months previously, and the use of what appears to be standard drafting appropriate to the occupation of a Union-owned house is inapt to cover those arrangements. Mr Scargill says in his witness statement that he pointed this out to Mr Mansfield, the Finance Officer, and to Mr Daly, and that they both accepted that the draft was wrong and promised to supply a corrected version; but that this did not happen.^[10] He was asked by Mr Davidson why in that case he signed it, believing it to be wrong [T4/126-134]. He acknowledged that he should not have done so, but he said that he needed to have a signed contract as a protection in case there was a vote of Conference to dismiss him: the contract provided for a three-month notice period. I find that explanation implausible. It is a little surprising that Mr Scargill should have felt at real risk of being voted out at that time, so soon after his election; but if he did have a concern on this score an amended draft could have been produced within 24 hours – as indeed he accepted - or he could have signed with an endorsement requiring correction of the inaccurate clause. Mr Scargill is generally meticulous about formal documentation, and the obvious explanation for his signing the 1982 contract is that he thought it was accurate.

The 1983 Contract

30. There is also with the papers a "Contract of Employment" for Mr Scargill dated 5 July 1983: it is signed on behalf of the Union by Mr Daly, but it is not signed by Mr Scargill. I refer to this as "the 1983 contract". This is in substantially the same terms as the 1982 contract save for the insertion of a clause relating to trade union membership, as a result of which the clause relating to accommodation becomes clause 12 rather than clause 11. I should note, because it becomes important subsequently, that clauses 1-11 are printed and that clause 12 appears on a separate typed sheet headed "Endorsement to Contract of Employment regarding Accommodation". Fresh contracts were issued to all employees at about this time, and a standard-form covering letter from Mr Daly dated 28 July 1983 refers to "government legislation which affected all contracts of employment".
31. Although the only copy of the 1983 contract now available is not signed by Mr Scargill, other officials signed fresh contracts at this time, in response to Mr Daly's letter, and unless there were reason to suppose otherwise it would be natural to expect that Mr Scargill did so too, and that the signed version has simply been mislaid. That is reinforced by a statement in a letter to the Union's solicitors, Messrs Raleys, ostensibly signed by Mr Cave, the then Vice-President, dated 7 December 2001. I shall have to consider that letter in due course in a different context. It is sufficient to say now that its purpose was to ask Raleys to prepare an updated version of Mr Scargill's contract of employment and that it enclosed copies of both the 1982 and the 1983 contracts. It notes that the latter is unsigned but says that:

"… the original Contract of Employment, signed on behalf of the NUM by Peter Heathfield and signed by Mr Scargill, was used by the Union's lawyers in a successful Court action; for some reason, the original signed copy has never been returned or cannot be located."

There is an issue about whether the letter was in fact drafted by, or at least based on information from, Mr Scargill (as to this, see paras. 94-95 below); but, even if the information in it did not derive from Mr Scargill, so circumstantial an explanation must have come from somewhere, and it constitutes prima facie evidence that the 1983 contract was indeed signed by him. The statement gains some further support from the fact that someone – there is no evidence as to who – has written on the top of the unsigned version in manuscript "originals handed to YF 18.9.92": "YF" was Yvonne Fenn, Mr Scargill's then secretary.

32. Mr Scargill, however, denies that he signed the 1983 contract. He says that it was given to him to sign, but that he refused because it did not properly reflect the arrangements about his accommodation: see paras. 83-84 of his witness statement. That is not inherently implausible. But it is surprising that if it occurred the matter was not at once attended to: it would not have been difficult, as Mr Scargill acknowledged in relation to the 1982 contract (see para. 29 above). As for what Mr Cave says in his letter to Raleys, Mr Scargill accepts that the 1983 contract was indeed supplied to solicitors acting for the Union: he identified the litigation in question as being against a former official, Mr Windsor. I understood him also to accept that its provision to Ms Fenn, as noted on the file copy, was part of that process. But he points out that the detail recorded by Mr Cave is demonstrably wrong on at least one point, because the signature on behalf of the Union was that of Mr Daly, not Mr Heathfield (who did not take office till the following year); and he says that the statement that the contract was signed by him is equally unreliable. I also note that when, in 1990, a copy of the 1983 contract was provided to Mr Gavin Lightman QC (see para. 37 below) it is recorded by him as having been unsigned.
33. If Mr Scargill signed the 1983 contract it would reinforce the contention that he recognised it as an accurate statement of his rights, and it would undermine his assertion that he had signed the 1982 contract only subject to an express (oral) reservation. The evidence about whether he did so does not all go one way; but on balance, I believe that he did sign it. That seems inherently more probable, and it is supported by the explicit statement in Mr Cave's letter (which, to anticipate, I believe in fact to have been drafted by Mr Scargill – see para. 95 below). But even if he did not, it would be surprising for such a draft to be produced by Mr Daly if Mr Scargill had, only a few months previously, objected to the substantially identical terms of the 1982 contract. And it is also significant that Mr Scargill provided copies of it both to Mr Lightman and, later, to Raleys: that suggests that he regarded it as a valid contract so far as form was concerned, albeit that (in 2001) he thought it required amendment.

The PMM Report and the Code of Authorisation

34. As already noted, shortly after he took office as National President Mr Scargill asked PMM to review a number of matters relating to the Union's financial administration including "authorisation procedures for expenditure" and "procedures for control over Union assets". Their report was delivered on 30 September 1982. In the section headed "Control of the Union's Principal Assets and Expenditure" six houses "occupied by Union officials or persons associated with the Union" were listed. These included Lord Gormley's house in Sunbury and Mr Daly's house in Berkhamsted, together with four other properties; and the report set out the policy contained in the 1967 FGPC minute. It noted that in some cases the Union paid all "occupancy costs", and it was recommended that thenceforth occupancy costs for all properties should be independently reviewed and authorised. The Barbican flat is not referred to in the report, no doubt because it was held on a short-term lease and the Union was in any event not the tenant.
35. Following receipt of the report, the FGPC at its meeting on 24 April 1983 (chaired by Mr Scargill) recommended the adoption of a code for the authorisation of expenses, entitled "Delegation of Authority with Regard to the Expenditure of the Union". It begins:

"This code of authority supersedes all previous decisions and resolutions of the NEC with regard to the authority to approve Expenditure of the Union. Any subsequent changes in these matters shall be tabled as amendments to this code."

I need not set out most of the provisions of the code, which were evidently designed to address the laxities in the control of expenditure identified by PMM. It provided, essentially for three levels of authorisation – by national officials, by the FGPC, and by the NEC. The only specific provision which I should note is (k), which reads as follows:

"Continued Occupance of Union Houses

1. The National Executive Committee shall approve a procedure for establishing the terms and conditions of any continued occupancy of Union houses by Officials after retirement.

2. The National Executive Committee shall approve any individual decision to permit such continued occupancy."

36. The recommendation to adopt the code was approved by the NEC.

The 1984/5 Strike and the Dealings with 2BYL

37. For the purpose of this section I need to say something about a report prepared for the NEC by Mr Gavin Lightman QC in late 1990. In March of that year serious allegations were made in the media about the conduct of the finances of the Union during the 1984/5 strike, including allegations about the funding of Mr Scargill's Yorkshire house and Mr Heathfield's home. Mr Lightman was asked to investigate those allegations. He was given access to a wide range of documents and took evidence from many witnesses, including Mr Scargill. His report was put before me. Much of it is irrelevant to the matters with which I am concerned, and it contains some criticisms of Mr Scargill which he has always maintained are unfounded but which are irrelevant for the purpose of these proceedings. But it does touch in passing on the Barbican flat, though it was not something which Mr Lightman was called on to investigate, and there are some other areas of overlap.
38. On 5 March 1984 the Yorkshire Area decided to call its members out on strike; the strike itself started on 8 March. Most other Areas joined the strike very shortly afterwards. The strike was called off at the beginning of March the following year. As a result of a chain of events of which I need not give the details, the assets of the Union were sequestrated on 21 October 1984. A Receiver was appointed on 30 November: he was not discharged until 27 June 1986.
39. It was anticipated from the start that the calling of the strike might lead to sequestration, and at meetings held by the FGPC and the NEC "in camera" on 7 and 8 March 1984 steps were discussed to shield the Union's assets. Brief typed notes of the decisions taken were kept but the meetings were not formally minuted.
40. Apart from the discussions in camera, on 7 March the FGPC also transacted other business which was minuted in the ordinary way. Minute 6 reads:

"NATIONAL OFFICIALS

In accordance with the normal practice of the Union, it was AGREED:

That the Union purchase property to provide accommodation for the National officials."

That decision was approved by the NEC the following day, 8 March. It had already been decided at the meeting of the FGPC the previous month that the National Union would buy a property for Mr Heathfield (in fact, the property which he already occupied, which was owned by the North Derbyshire Area); and Mr Scargill acknowledged in evidence that there was no question of Mr McGahey (who was a lay official) being bought accommodation. The decision of 7/8 March was thus only in practice apposite to Mr Scargill, for whom no property had yet been purchased (albeit that by other means his occupation of both 2BYL and the Barbican flat was, in the one case substantially and in the other case wholly, funded by the Union).

41. Pursuant to that decision the Union's solicitors were apparently instructed to draft the relevant documentation for the purchase of 2BYL: I have not seen the documents in question, but they are referred to in the Lightman report. On 9 March Mr Heathfield on behalf of the National Union sent the Yorkshire Area a cheque for £22,255.45 "in accordance with minute 6 of the [FGPC] of the 7^th March 1984": that sum represented the outstanding mortgage on 2BYL. The National Union thus replaced the Area as mortgagee.^[11] The property was apparently valued by external valuers and a price agreed at £50,250. On 8 April Mr Scargill repaid the outstanding mortgage of £22,255.45; but he did so only, as was made clear in the letter from the Union of 9 April acknowledging receipt, on the basis that it would shortly be paying him the agreed price of £50,250.
42. In the event the purchase did not proceed. On 27 October, a few days after the appointment of the sequestrators, Mr Scargill referred to legal advice that completion would not be practical "at this stage". He enclosed a cheque for £6,860.58, representing sums which had apparently been spent by the Union on 2BYL in anticipation that it would be acquiring it, but which Mr Scargill thought that he ought now to pay pending completion. Mr Hudson, the Union's Chief Finance Officer, replied on 29 October confirming that the sum in question would be refunded "once conveyance has been completed and approved". But that never happened. The result was that Mr Scargill, having paid off the mortgage, was now the outright owner of 2BYL.
43. It was Mr Davidson's submission that what this episode showed was that both Mr Scargill and the other members of the FGPC and NEC recognised that the Union was obliged, as set out in the 1982 and 1983 contracts, to buy a property for Mr Scargill's occupation (as it had for his predecessors and, most recently, for Mr Heathfield); and that 2BYL was to be that property.
44. The essence of Mr Scargill's response was that the intended, or purportedly intended, purchase of 2BYL by the National Union had to be understood in the context of the fear of sequestration which was prevalent at the time. The detail of his evidence about this in cross-examination was confused and confusing. He said at first that, while the minute of 7 March 1984 was designed to give the impression that the National Union would purchase 2BYL, it was never in fact intended that that would happen [T5/5-8]. Put that way, the evidence makes no sense. It could have assisted no-one to minute a decision which was never going to be acted on. However, what I think Mr Scargill meant to say is that the intention was to convey 2BYL (and Mr Heathfield's house) not to the Union but to a charitable trust called the Mineworkers Trust, which it was hoped would be "sequestrator-proof". It is clear from the documents that such a scheme was being discussed very shortly afterwards, since on 22 March 1984 Mr Brian Langstaff QC provided an Opinion to the Union advising about it. Mr Langstaff understood the proposal to be that the properties would be conveyed straight to the Trust; but it may be that at an earlier stage it was thought that the Union would have to buy them first, which would account for the minute of 7 March and the payment of 9 March.
45. However, that explanation is still problematic. The clear advice given by Mr Langstaff, apparently confirming advice given by Mr Eldred Tabachnik QC, was (unsurprisingly) that the proposed transfer to the Trust was unlikely to give any better protection than leaving 2BYL in Mr and Mrs Scargill's name – and that it would in fact give less protection if, as was the case, either or both of them had a substantial beneficial interest in the property. Once that advice had been given, one would have expected the proposed sale simply to be aborted; but, as we have seen, matters proceeded until at least October on the basis that it was going ahead. Mr Scargill sought to explain that by saying that the Union was receiving advice from other counsel who took a different view [T5/16-17] and that it was necessary for the impression to be maintained that the sale was proceeding [T5/31/3-12]. But that answer appears to contradict his own witness statement, which says (see para. 110) that the plan to sell 2BYL to either the Union or the Trust was abandoned "on the advice of Mr Tabachnik and Mr Langstaff". It is also hard to see on what basis any counsel could have advised that it made sense for Mr Scargill to sell 2BYL, whether to the Union or to the Mineworkers Trust: transferring it out of his and wife's name, to whichever body, would increase the risk of sequestration rather than reducing it.
46. Quite apart from the difficulties inherent in Mr Scargill's evidence, it is flatly contrary to what was said, either by him or with his authority, in response to the media reports referred to at para. 37 above, which was much nearer the time. I should refer to two documents in particular.
47. First, on 5 March 1990 the Union issued a press release (which Mr Scargill must have authorised) which included the following passage:

"By the rules and long-standing practice of the Union houses occupied by the National Officials are owned by the National Union. These include former Officials like Lord Gormley and Lawrence Daly. Prior to the dispute, the NUM were in the process of purchasing the properties occupied by the President and General Secretary from, respectively, the President and the Derbyshire Area of the National Union of Mineworkers in accordance with the procedure of the Union. The union had also, perfectly properly, spent some money on the properties thereby enhancing their value to the Union prior to completion of the purchases."

48. Secondly, on 9 March 1990 Mr Scargill and Mr Heathfield made a report to the NEC responding to the same allegations. The report started by dealing with Mr Heathfield's house. The passage begins:

"The Secretary was, in 1984, a tenant of the NUM Derbyshire Area and his house was being sold by them to the National Union in accordance with NUM practice and the Secretary's Contract of Employment."

It then turns to "Mr Scargill's home", i.e. 2BYL. The passage begins:

"The President owned his own home and, for the same reasons [sc. as in Mr Heathfield's case], the NEC agreed on the 8^th March, 1984 that it should be conveyed to the National Union."

The report goes on to deal with the mortgage from the Yorkshire Area, saying that the Area "were quite properly requiring redemption of the mortgage following the President's election as a National official", and that that had only been delayed because of the move of the Union's headquarters from London to Sheffield (though it is not explained why that should have caused any delay).

49. Mr Lightman also appears to have been given to understand that the resolution of the NEC of 8^th March 1984 was "in accordance with the usual practice of the Union and in accordance with the national officials' term of employment" (see para. 182 of his report^[12]).
50. Thus Mr Scargill was in early 1990 stating quite explicitly that the National Union had planned to buy 2BYL simply in accordance with normal practice and its contractual obligations to himself. There is no suggestion that the intended purchase had anything whatever to do with the strike or the fear of sequestration. However, Mr Scargill said in cross-examination that his statements to the press and the NEC were untrue, though he preferred to use such terms as "error" and "not strictly accurate". He also said that it was untrue that the Yorkshire Area was pressing for repayment of the mortgage [T5/47/10/11]. He attributed these "errors" partly to haste and the pressure under which he was put by the allegations and partly (I think, though what he was saying was not entirely clear) to a reluctance to reveal in a public document the plans that had been made in secret at the time of the strike.
51. The confusions and the gaps in the evidence are such that it is impossible to establish with confidence the details about this episode: the steps taken to protect the Union's assets did indeed create a tangled web. However, I have concluded, on balance and not without hesitation, that the original FGPC and NEC decisions of 7 and 8 March 1984 were indeed, as Mr Scargill now says, made as a result of the fear of sequestration and the steps proposed to protect against it. The coincidence of timing, particularly in view of Mr Langstaff's Opinion discussing a transfer of 2BYL to the Trust (albeit not a sale to the Union), is compelling. There is no other apparent reason for the Union deciding suddenly at that point to embark on a transaction which no-one seems to have shown any specific interest in up to that date. And once that point is reached, then, despite the difficulties with the particular explanation advanced by Mr Scargill, the apparent continued intention to sell up to at least October is most likely to have been consequential on that original plan. I believe that in saying that the proposed sale was merely the implementation of normal policy and contractual obligations the 1990 press release and the statement to the NEC were, as Mr Scargill now says, misleading: in my judgment he thought that the true story was simply too sensitive and too complicated to be fit for public consumption.^[13]
52. However, this conclusion does not necessarily undermine Mr Davidson's point. He can still legitimately say that, whatever the immediate motivation, neither Mr Scargill nor the NEC would have proposed that the Union would buy 2BYL if such a transaction had not been understood to have been contemplated by the NEC in 1982 and to be in accordance with the terms of his contract of employment. The fact that the press release and the statement to the NEC were false as explanations does not mean that the statements as to the constitutional and contractual position on which they relied were factually wrong: indeed, it could be said, the plausibility of the false explanation depended on them being right. There is no reason to doubt that it was, as Mr Scargill asserted, in accordance with Union practice to buy the existing properties of officials in order to allow them to occupy them as Union accommodation.^[14] Nor does it follow from the fact that the transaction was precipitated by the fear of sequestration that Mr Scargill would not have gone ahead with it if sequestration had not supervened: he had had Mr Langstaff's advice but he clearly did not regard it as conclusive.

The Hiatus in the Union's Payment of the Rent: 1984-1991

53. The Union paid the rent on the Barbican flat due on the September 1984 quarter day. No further payment was made by it until the June quarter of 1991, by which time the lease had been renewed twice, in 1985 and 1988. Throughout that period of over six years Mr Scargill, who was of course the tenant, paid the rent and all other outgoings himself, save only that the Union continued to pay the telephone and fax bills.
54. In his witness statement Mr Scargill explained why he had paid the rent himself over this period as follows:

"120. This was my decision, which I took on my own, and I did so for two reasons. The first reason was the ongoing industrial dispute and the appointment of sequestrators in October 1984 and the ongoing legal action against the NUM and NEC concerning the NUM's decisions to locate its funds abroad. It therefore seemed wise that I should voluntarily pay the costs in the aftermath of sequestration and the ongoing litigation by the Receiver against the NUM, its NEC and National Officials.

121. The second reason was that in 1987, my daughter secured a place at St Bartholomew's Hospital in London to study medicine. She studied there from 1987 to 1989, and during this time, she lived in the Barbican flat as it is next door to St Bartholomew's. If I had not lived in the Barbican flat I would have had to pay for her accommodation somewhere else, and I thought it right that I should pay the rent and associated costs myself. As the rental agreements for the Barbican flat are for a fixed period of 3 years, I carried on paying the costs of the flat until June 1991 when renewal was due. By this time, the legal action against the NUM and NUM NEC on instruction by the Receiver and the High Court had been settled."

(Mr Scargill explained in cross-examination that the litigation referred to in the final sentence of para. 121 continued until 1989 [T5/51].)

55. Mr Davidson put it to Mr Scargill that if, as he claimed, he had a contractual right to have the rent on the Barbican flat paid by the Union, there was no reason why that arrangement should not have resumed following the end of the strike - or in any event once his remuneration began to be paid again, which he said was in November 1985. Mr Scargill's response was that that was not possible because of the ongoing litigation: I am not clear why that was an inhibition, but Mr Davidson did not pursue the point.
56. Mr Scargill in both his witness statement and his oral evidence was insistent that from the time that he first moved into the flat he regarded it as his home. It appears that he had some difficulty persuading the Corporation of London that it should be designated as his "primary residence" [T4/110/23-25 and 155/20-22; and T6/28/15/18] (though I am not clear what the significance of the designation is). I suggested to him [T6/29-30] that after the Union headquarters moved to Sheffield in mid-1983 he must have spent more of his time in Yorkshire than in London and must have spent most nights at 2BYL or Treelands: Barnsley is only some fifteen miles from Sheffield. He was reluctant to accept that, pointing out that until at least the end of the 1980s British Coal's headquarters were in London and that even after that ceased to be the case his work would take him to London a good deal. He pointed out that the trustees of the superannuation fund, which he chaired, were based in London, and he had to have meetings there with many other trade unions and other bodies, both national and international. He also told me that for a long time prior to his divorce in 1995 his marriage was in trouble, which affected the amount of time that he spent in his Yorkshire house. He preferred his London home. Even allowing for those factors, however, it is hard to see how he can have spent the majority of his nights in London, at least in the working week. Some broad indication of the extent to which his work required him to be in London can be obtained from the overnight subsistence claims which he made during this time and of which he gives details in his witness statement. These vary from year to year, but the largest number of nights claimed for seems to have been 52, in 1990/91 – though of course he may have stayed other nights for which he did not claim.
57. I should note that Mr Scargill told Mr Lightman "that he pays the rent for the flat, but that the rent is paid out of the expenses of £60 per night which he claims from the NUM when he stays in London" (see para. 249 of the report). The statement that he was paying the rent himself was of course true as at that date (though it was inaccurate if it suggests that the subsistence payments in any way covered the whole rent, which in 1990 was £8,400). But what may be of more significance is that Mr Scargill did not apparently tell Mr Lightman that the Union had a contractual obligation to pay the rent, albeit one that he was not at the time choosing to enforce.

The Resumption of Rental Payments

58. The lease on the Barbican flat fell due for renewal on the June quarter day in 1991. In, it seems, May that year Mr Scargill sought advice about whether the Union could properly be required to pay the rent, which would be £10,500 p.a., on a renewed lease. He received advice from Mr Druce, a partner in the Sheffield office of KPMG (into which PMM had become incorporated); from Mr Mark Stephens of Stephens Innocent, the Union's then solicitors; and from Mr John Hendy QC, who was the Union's standing counsel. Mr Stephens apparently advised orally, but the advice of Mr Druce and Mr Hendy was in writing. I take them in turn.
59. Mr Druce wrote to Mr Scargill on 6 June 1991 as follows:

"NUM Flat – 251 Shakespeare Tower, The Barbican, London EC2

Thank you for your letter of 31 May. I have read the enclosures carefully and would summarise the position as follows:

1 In April 1982 you were authorised, in your capacity as President of the National Union of Mineworkers, to rent suitable accommodation in Inner London.

2 The rental of the flat in the Barbican referred to above was approved in May 1982.

3 The NUM would be responsible for defraying all the expenses in connection with the upkeep and maintenance etc. of the flat.

4 The Union paid all bills in connection with the flat from 1982 to 1987.

5 Your daughter became resident in the flat in 1987 during her studies at St Bartholomews Medical School. She lived in the flat for two years. From the time she became resident, you personally took over the payment of the rent and other running costs, excluding the fax and telephone.

6 You continued to pay the upkeep and running costs of the flat after your daughter had ceased to be resident there and defrayed your personal expenditure only with any expenses paid to you in connection with overnight stays in London.

The facts listed above, in my opinion, indicate that the flat has been accounted for over the period of its rental in what might be termed a practical way. Strictly speaking I suppose the Union should have continued to bear all the costs and you should have made an appropriate contribution for your daughter's occupation. However, by assuming responsibility for the upkeep and running of the flat personally, you more than compensate the Union, in my opinion, for your daughter's occupation.

From my reading of the documents you have sent me I see absolutely no reason why the Union should not pay all costs in respect of the flat as and from June 1991, the date of the new rental agreement. Indeed, it is arguable that this situation should have obtained as soon as your daughter ceased to have occupation of the flat.

If there is any further information you require, please let me know."

60. I should make three points about that letter:

(1) We do not have the letter of 31 May 1991 to which Mr Druce was replying, or its enclosures. It is notable, however, that it appears to have been from Mr Scargill himself. Since there was a potential conflict between his interests and that of the Union instructions should have been sent by some other official – most obviously the National Secretary – with the authority of the NEC.

(2) Mr Druce seems only to have seen the FGPC minutes from 1982 and not the minutes of the meeting of 21 December 1981. Nor does he seem to have been given the 1982 or 1983 contracts.

(3) Mr Druce's understanding that the Union had paid the rent until 1987, and that the only reason why it had ceased to do so was the occupation of the flat by Mr Scargill's daughter, was wrong: payment had of course ceased in late 1984. The reasonable inference is that the position was mis-stated in his instructions.

61. Mr Hendy's Opinion is dated 12 June 1991. It starts by setting out the relevant minute of the FGPC decisions of 8 April and 11 May 1982, and the approval of the latter by the NEC on 13 May. It then continues:

"3. The Union paid all bills including rent in connection with this flat from 1982 onwards and Mr Scargill stayed there when he was in London and worked from the flat (one room being used as an office). In 1987 Mr Scargill's daughter went to London to study at St Bartholomew's Medical School for 2 years and lived in the flat which continued to be used by Mr Scargill when he needed to be in London on Union business. Nevertheless he felt that he should take over payment of the rent and other running expenses (apart from the telephone and fax machine) during this period. Since 1989 Mr Scargill has occupied the flat when required on Union business, his family have stayed with him on rare occasions as before 1987, and no one else has lived there. Since 1989 Mr Scargill has however continued to meet the costs of the accommodation which he has largely been able to do out of the overnight allowance paid to him when staying in London.

4. Whilst I understand the reasons why Mr Scargill thought it appropriate that he should assume the costs of the accommodation whilst his daughter was living in the flat, I see no reason why he should have been paying the costs from 1989 to date. He has occupied it on Union business as was intended in 1982. Accordingly in my view the situation should revert forthwith to that intended by the Finance and General Purposes Committee and National Executive Committee in 1982, and the Union should pay the rent and other associated expenses as they did between 1982 and 1987. It is not appropriate for Mr Scargill to continue paying the rent from his own pocket. The NEC's decision should be honoured until such time as it varies it."

62. I make four points about Mr Hendy's Opinion:

(1) We do not have whatever instructions were sent to Mr Hendy. Presumably they came from Stephens Innocent, and the client was identified as the Union, but it is not clear if Stephens Innocent had insisted on themselves being instructed by someone other than Mr Scargill.

(2) Mr Hendy was under the same misapprehension as Mr Druce about when the Union stopped paying for the flat, which reinforces my view that the error originated with Mr Scargill.

(3) Likewise Mr Hendy does not appear to have seen the 1981 FGPC minutes or the 1982 or 1983 contracts.

(4) It seems clear from the final sentence, which refers to the right of the NEC to vary – which must include revoke – its decision, that Mr Hendy did not understand Mr Scargill to have any contractual right to have the rent on the Barbican flat paid by the Union as a term of his employment: he was not, as I have said, shown any contractual documents. Rather, what he was advising about was whether payment of the rent constituted an authorised expense. That is why he focuses on the FGPC and NEC decisions and refers to the flat being "occupied … on Union business as was intended in 1982".

63. On 13 July 1991 Mr Scargill sent a memo to the Finance Department, marked "Private and Confidential", in the following terms:

"NUM Flat/Office^[15]

251 Shakespeare Tower, Barbican, London, EC2

The renewal lease on the above NUM flat/office is due in June 1991. In view of the Union's financial position and the fact that my daughter resided in the flat between 1987 and 1989, I paid all the expenses (apart from telephone and fax) in connection with the flat.

There is a decision in April 1982 authorising me as President of the NUM to rent suitable accommodation in London and the Union agreed to pay the rental and running costs of the above flat in May 1982. I have sought both legal and accountancy advice on the matter and attach, for your information, a copy of an Opinion from the NUM's Standing Counsel, John Hendy QC along with a letter from the Union's Accountant, Mr C Druce.

You will note that both are saying clearly that all costs in respect of the flat as and from June 1991 (the date of the new rental agreement) should be paid by the Union.

Could you please, therefore, arrange to pay all future bills in connection with this Union flat/office. In accordance with the previous arrangement I shall not, of course, be claiming any overnight subsistence payments when staying in London."

I note that the memo is couched in terms of the authorisation of expenditure rather than the recognition of a contractual benefit.

64. In accordance with that memo, the Finance Department arranged for the Union to resume payment of the rent, and other outgoings, with effect from the renewal date. Mr White, who was then an Assistant Finance Officer, gave evidence that he regarded Mr Scargill's memo as meaning that this was a properly authorised expense, and he treated it accordingly. The matter was not raised with either the FGPC or the NEC. The payments would not have been apparent from the Union's accounts as seen by either committee, since they were subsumed under the general (and in fact inaccurate) heading of "Rates": prior to 1985 they had appeared under the heading "Rent and Rates". The evidence did not establish whose decision it was to treat them in that way.

The 1992 Contract

65. On 1 July 1992 a further contract of employment for Mr Scargill was produced. It was signed, presumably on or about that date, by himself and by Mr Heathfield as Secretary. Both its format and its substantive provisions are identical to those of the 1983 contract save only for clause 12 (which, as in 1983, was printed as a separate sheet). This is headed "Endorsement to Contract of Employment regarding Accommodation" and reads:

"(a) Accommodation will be provided at 251 Shakespeare Tower, Barbican, London. The rent, rates and service charges of this accommodation will be met by the Union.

(b) Heating, lighting, maintenance, parking bay and other costs, etc. will be met by the Union.

(c) Concessionary Fuel/Cash in Lieu and security costs in respect of the property at Treelands Cottage, [address], will be met by the Union.

(d) Upon retirement, you will be allowed:

(i) to remain for the rest of your life in the accommodation at 251 Shakespeare Tower, Barbican, London on the same terms and conditions as in (a) and (b) above;

(ii) continue to receive for the rest of your life the costs relating to Treelands Cottage referred to in (c) above.

NOTE:

In the case of (a) and (b) above, it is intended that these terms should apply to your widow (during her widowhood)."

I refer to this as "the 1992 contract". This is the first occasion that the rights claimed by Mr Scargill in these proceedings are set out in a contractual document. It will be noted that it covers not only the costs of the Barbican flat but those in relation to his Yorkshire house.

66. It was Mr Scargill's evidence that the 1992 contract was produced as a result of advice given by Mr Hendy. Para. 129 of his witness statement reads as follows:

"The fact that I did not have a written Contract of Employment – as amended in April/May 1982 and in subsequent years – only emerged in the course of a court hearing in Sheffield in June 1991. Leading Counsel Mr J Hendy QC who was acting on behalf of the NUM advised the NUM orally that a written Contract must be prepared for me in accordance with the amendments adopted by the FGP and NEC in April/May 1982, and should incorporate amendments including an amendment in accordance with National Rule 4.N adopted in the new Rule Book in 1985 relating to Clause 12 of my Contract of Employment in respect of accommodation. Mr Hendy said there had been a series of decisions since 1982 by the FGP and NEC which should be reflected in my Contract of Employment. Leading Counsel in advising on preparation of the Contract dated 1 July 1992 had before him the decisions of the FGP on 8 April and 11 May 1982 and the NEC on 8 April and 13 May 1982, a copy of Mr P. Heathfield's Contract 2 March 1984 and Rule 4.N in the 1985 Rule Book."

Under cross-examination by Mr Davidson [T5/62-72] Mr Scargill gave some further details of that account, though precisely what he was saying remained in some respects obscure.

67. Before considering the reliability of Mr Scargill's account of the genesis of the 1992 contract, I should say something about the "rule 4N" to which he refers. In 1985 Conference introduced revised Rules. Rule 4, the objects clause, included at N the following object:

"To establish superannuation and pensions schemes for the benefit of the members, Officials and/or employees of the Union and/or some of them (including former members, Officials and employees) and/or their dependants, and/or to make grants and/or loans to and/or to establish trusts for the same and/or to provide housing for Officials and their families to continue in their retirement."

The equivalent object in the previous Rules – rule 3 (p) – had referred to superannuation and pension schemes but not to the provision of housing for officials and their families in retirement. This change seems to be of little significance for present purposes. It puts it beyond doubt (though in fact this seems to have been clearly understood under the old Rules) that it was a proper use of Union funds to provide housing in accordance with the practice which had prevailed for decades; but it does not authorise any particular arrangement. It would be interesting to know what prompted the change, but I heard no evidence about that.

68. I do not accept Mr Scargill's evidence that the 1992 contract was produced as a result of advice given by Mr Hendy or that Mr Hendy was involved in its drafting. My reasons are as follows:

(1) Over a year passed between the supposed giving of the advice by Mr Hendy and the production of the contract. There is no explanation for the delay. One would have thought that if Mr Hendy had advised in June 1991 that a new contract was required it would have been got on with.

(2) If Mr Hendy had given such advice I would have expected Mr Scargill's memo of 13 July 1991 to have referred to it: indeed, I would have expected Mr Scargill to have wanted the contract to be produced before giving the instructions in that memo.

(3) The account of what led Mr Hendy to advise that a new contract was required is implausible. The proceedings to which Mr Scargill refers had, on his own evidence, nothing to do with his contract of employment or, still less, with any right to be provided with accommodation. They were, he says, proceedings brought by the Certification Officer arising out of findings made in the Lightman report that the NEC and national officials had procured the making of misleading financial statements by the Union in order to avoid the effects of the sequestration. The claim was dependent on the contents of that report; and indeed it apparently collapsed when the report was held to be inadmissible in evidence. Although Mr Scargill says that the 1982 and/or 1983 contracts (and also Mr Heathfield's contract) were in the bundle for the hearing^[16], there was nothing in the subject-matter of the proceedings that would naturally have led Mr Hendy to advise about the contract, still less about its omission to refer to the arrangements about the Barbican flat: the allegations which led to the Lightman enquiry were nothing to do with the Barbican flat and the report made no criticism of the arrangements relating to it.^[17]

(4) The advice attributed to Mr Hendy is contrary to the terms of his Opinion dated 12 June 1991, which on Mr Scargill's account must have been written within at most a week or two of it (though it is not clear whether before or after). As noted above, that Opinion clearly regards the arrangements for the Barbican flat as revocable.

(5) There is no written record of either the initial advice or the advice said to have been given by Mr Hendy about the detailed drafting. We have seen that Mr Scargill was careful to ensure that Mr Hendy's Opinion of 12 June was in the file. If he had given the further advice now claimed, going significantly beyond his earlier advice, I would have expected to have seen a written record of it.^[18]

(6) When Mr Hendy was asked in 2002 to advise on a further version of Mr Scargill's contract (see paras. 97-98 below) he makes no reference in his Advice to having drafted this version.

(7) This is not the only occasion that Mr Scargill relies on advice about his contract said to have been given orally by leading counsel in the aftermath of court proceedings: see paras. 74-76 below. Once is not implausible (other things being equal); but twice is a little suspicious.

69. It is not possible now to reconstruct what triggered the production of the 1992 contract at that particular time. I am satisfied, however, that it was produced on the initiative of Mr Scargill, and probably drafted by him, in order to record by way of contractual entitlement the benefits that he was now receiving following the resumption of payment by the Union of the rent on the Barbican flat and to provide for their continuation into retirement. It is common ground that neither Mr Scargill nor Mr Heathfield sought the authority of the NEC for the Union to enter into a contract with these provisions.

The 1999 Contract

70. On 4 May 1999 a further contract was produced for Mr Scargill. It was signed by himself and Mr Cave, the then Vice-President.^[19] It is in identical terms to the 1992 contract except in two respects:

(1) The terms of clause 8, relating to car allowance, were changed.

(2) In the "note" to clause 12 the words "shall apply to your widow (during her widowhood)" have been replaced by "shall apply to your partner for as long as the partner remains on their own".

71. At paras. 153-154 of his witness statement Mr Scargill explains the change in the wording of clause 12 in 1999 as reflecting decisions taken in 1992 by the Trustees of the NUM Officials and Permanent Employees Superannuation Fund in 1992 to extend widows' benefits to "common law wives". (As I understand it, there was no actual rule change; but two decisions in that year established that the Trustees would routinely exercise a pre-existing discretion so that "common law widows" received the same benefit as legal widows.) I have no reason to doubt that there was indeed a clarification of the Trustees' practice at that time; but Mr Scargill accepted in cross-examination that if an equivalent change was to be made by the Union to post-retirement benefits other than pension rights that was a matter for the NEC, and that the NEC did not in fact take any such decision [T5/73-74]. He said that the NEC would have been well aware of the Trustees' decision; but that is of course not the same thing. Mr Scargill did not explain why the change to his contract was made at this particular time.
72. Neither Mr Scargill nor Mr Cave sought the authority of the NEC for the Union to enter into the 1999 contract.

The 2002 Contract

73. The final version of Mr Scargill's contract of employment bears the date 5 April 2002, some four months before his impending retirement (which had been known of for some time). It is signed by Mr Scargill and Mr Stanley: Mr Stanley had been authorised by the NEC to sign documents that would normally have been signed by the Vice-President following the death of Mr Cave on 7 January 2002. It is on this contract that Mr Scargill primarily relies in these proceedings. I will not set out its terms at this stage, because that is better done after considering the genesis of the document. It is the Union's case that the 2002 contract was produced entirely on Mr Scargill's initiative and that the relevant provisions were drafted by him. He denies that. He says in his witness statement, unequivocally, that "I was not involved in the drafting of my 2002 contract of employment" (see para. 233). He confirmed in cross-examination that that remained his position notwithstanding the contents of certain late-disclosed documents which I discuss below and which might be thought to undermine it [T3/167/9-22]. I accordingly need to review the history in some detail.
74. It was the evidence of Mr Scargill that the chain of events leading to the production of the 2002 contract started with a decision of Mr Recorder Kealy in proceedings brought against the Union in the Barnsley County Court by a dismissed employee, Mr Murdoch. The Union was represented at the hearing before the Recorder by Mr Jeremy McMullen QC, instructed by Mr Harry Eyre, who was a legal executive at Raleys. One of the issues related to Mr Murdoch's car allowance. On that issue the Union lost, apparently because the drafting of Mr Murdoch's individual contract did not properly reflect the terms of the car allowance scheme approved by the NEC. That led to a discussion between Mr Scargill, Mr McMullen and Mr Eyre about how the problem could be rectified for the future; and in that discussion, Mr Scargill said, reference was made to other benefits where a similar problem might arise. Mr McMullen is said to have advised orally that the contracts of employment of all the Union's staff needed to be amended. Although I initially understood from Mr Scargill that Mr McMullen had identified some point of principle with wider implications than simply the machinery of the car allowance scheme, when I tried to understand in the course of his re-examination what the nature of the problem was, he seemed to be saying that the only problem of which he was aware related to the car allowance scheme [T6/16-17].
75. Thus far it is unclear what the Murdoch case has to do with Mr Scargill's own contract of employment. But it was his evidence, only obscurely given in his witness statement but clarified in his oral testimony, that the "post-Murdoch discussion" had included reference to his own position. He said in chief that "in my case [Mr McMullen] pointed out that the attachment which was known as clause 12 should be brought into the contract body itself" [T3/126/23-25], and he added subsequently that Mr McMullen had said that that was the only change needed in his case [T3/169/24]: he said the same in re-examination [T6/16/7-11]. I asked Mr Scargill how that very specific point about the detailed drafting of his own contract had come up in the context of the Murdoch case: it did not seem to be related to the problem about the car allowance or to any of the potential wider issues which the Murdoch decision was said to have thrown up. His answer was that he had raised the point about his own contract with Mr McMullen himself: indeed Mr McMullen did not have a copy of his contract, "but I certainly made the point that that is how my contract was, and he made it clear that it should be in the body of the contract" [T4/29/7-10].
76. I find that explanation very odd. It is hard to see why the fact that clause 12 of Mr Scargill's contract was contained in an attachment would have been relevant to the problems apparently revealed by the Murdoch case. But in any event I find the advice attributed to Mr McMullen surprising, because there could be no significance in whether clause 12 appeared in the body of the contract or was described as an attachment. When I put that to him Mr Scargill said that he could not see the problem either and that he had been perfectly content with his contract as it stood [T4/30-32], a point which he repeated later on more than one occasion [T4/59/16-18; T4/73/1-8]. But he went on to say that he had not thought that there was anything wrong with Mr Murdoch's contract either – the implication being, as I understood it, that the law is full of surprises. That is as may be; but I still cannot see what the problem was. Mr Pitt-Payne returned to the subject with Mr Scargill in re-examination, but I was not further enlightened [T6/16-18]. Another oddity in Mr Scargill's account is that he said on two occasions that he did not himself have copies of the 1992 and 1999 contracts (see para. 78 below): that makes it surprising that he should have remembered them well enough to raise the point with Mr McMullen, as he says he did, that clause 12 was in an attachment.
77. According to Mr Scargill's witness statement, following that discussion Mr Eyre asked him to provide an amended version of his contract "as a prerequisite for amending all other officials' and staff contracts of employment, and in particular in my own case to cover the provision of the Barbican flat". On 24 September 2001 he wrote to Mr Eyre as follows:

"Contract of Employment

Following the decision in the Murdoch case and in light of discussions with both Jeremy McMullen and yourself, I have drafted an amended Contract of Employment relating to my own position.

I have attempted to cover the issue which was raised in relation to the provision of financial assistance towards the purchase of a motor car and also tried to cover the provision of the Barbican flat in London which I have occupied since 1982. I enclose a copy of National Rule 4 and in particular draw your attention to Rule 4.N which allows the Union to provide housing for officials and their families and that this provision continues in their retirement.

The provision referred to in Rule 4.N can only refer to the Barbican flat in London which I have occupied since 1982 – it is the only property provided by the NUM to me.

I enclose decisions taken by the Finance and General Purposes Sub-Committee on 8 April 1982 and endorsed by the NEC the same day (minute 23). These decisions were of course confirmed by Conference."

78. The letter enclosed a draft contract which was in identical terms to the 1999 contract except in two respects:

(1) Clause 8 – "Motor Car" – provided that Mr Scargill would be entitled to receive "assistance", to be determined by the NEC, towards the cost of a new car every two years, rather than, as in the 1999 contract, that he would be entitled to received an "amount" so determined. The distinction was presumably intended to have some significance, though I cannot see what it is.

(2) The previous clause 12 – "Accommodation" – is brought into the main text and becomes clause 9 (with consequential renumbering of the later clauses). But it is also substantially reworded, so that it reads as follows:

"(a) You are entitled as and from 5 April 1981 to receive all the allowances and expenses in respect of your own home – currently situated in Yorkshire – allowances and expenses which until 5 April 1982 were borne by the Yorkshire Area.

(b) The Union will provide you with a flat in the Barbican, London and be responsible for paying all rents, rates, heating, lighting, decorations, car parking and other costs associated with the use of this flat.

(c) Upon retirement you shall have the right to continue to occupy the flat or alternative accommodation by agreement on the same terms and conditions as apply at the time of your retirement. This right shall also apply to your widow/spouse (during her widowhood while the spouse continues to occupy the flat alone.)"

It will be seen that the provision is completely recast from the 1999 version, but the only differences of substance appear to be (a) that the reference to "concessionary fuel/cash in lieu" is replaced by a more general reference to "allowances and expenses" borne by the Yorkshire Area before 5 April 1982; and (b) that the possibility of a change of accommodation is provided for – see the phrases "currently in Yorkshire" and "alternative accommodation by agreement".^[20] Mr Scargill was asked by Mr Davidson why he did not simply use the language of clause 12 in the 1992 or 1999 contracts. He said that he had not at that time "located" them and that they were not in his personnel file [T4/46/20-25].

79. In my view the natural reading of the letter to Mr Eyre of 24 September 2001, and the enclosed draft, does not support Mr Scargill's account of how he came to put forward the terms in relation to the Barbican flat. The letter does not in fact say that Mr Eyre had asked for a draft; but, even if he had, there seems to me to be an implicit distinction between, on the one hand, "the issue which was raised [sc. in the discussions referred to in the first paragraph]" about car allowance, and, on the other, the question of the Barbican flat, which "I have … also tried to cover". In relation to the former, Mr Scargill gives no details, no doubt because it had indeed already been discussed. But in relation to the latter he gives further information, as if the point were a new one. The information is evidently aimed at justifying the substantive terms of the new clause 9 – yet the only problem supposedly identified by Mr McMullen had nothing to do with the content of the accommodation clause but only with where it appeared in the document.
80. On 1 October 2001 Mr Eyre sent instructions to Mr McMullen to advise on two matters – first, whether the Union should appeal against the Murdoch decision; and secondly on the terms of the draft contract sent by Mr Scargill with his letter of 24 September.^[21] In relation to the latter, the instructions say nothing about the accommodation provisions, notwithstanding that they represent much the more extensive changes; they refer simply to "the changes in relation to car allowance". It is impossible to know why the accommodation issue was ignored; but even if it was the result of carelessness by Mr Eyre his failure to raise the point supports the view that no issue about accommodation had been raised with or by Mr McMullen previously.
81. Mr McMullen advised on 10 October 2001. He advised against an appeal. In relation to the car allowance he advised that the change to the new clause 8 did not address the problem. He said nothing about the accommodation provisions – unsurprisingly, since he had not been asked to comment on them.
82. Mr Scargill returned to the issue of his contract in a conversation with Mr Eyre on 23 October 2001. Mr Eyre's file note of that conversation, obtained by the Union from Raleys, was only disclosed fairly shortly before the trial, at a time when witness statements had already been exchanged.^[22] It starts by dealing with certain matters relating to the aftermath of the Murdoch litigation, but it continues as follows:

"In the course of our conversation Mr Scargill raised the matter of his own contract of employment which had been the subject of additional comments by Jeremy McMullen Q.C.

Although the draft contract of employment included a term relating to car purchase/allowance, it seems that Mr Scargill is also concerned about the situation with regard to the Barbican flat.

Apparently other officials of the Union have acquired a life interest in property which reverts to the Union on death and this is incorporated in the individual official's contract of employment.

Mr Scargill did not take advantage of this benefit but instead has the use of a flat in the Barbican which is in his name. He needs to know whether or not this should be incorporated into his own contract of employment so as to preserve his interest in the flat after he retires and for the rest of his life.

Mr Scargill said that he will be writing to me about this and I have undertaken to consider the situation and if necessary obtain Counsel's advice on the position."

83. Although Mr Scargill said that he had no recollection of the conversation recorded in that note and said that he did not believe that the note was at all points accurate, he did not deny that such a conversation had occurred. I should make two points at this stage:

(1) The note suggests that the point was being raised by Mr Scargill because of concerns felt by him.^[23] Despite the general introductory reference to "additional comments from Mr McMullen", the problems about the flat are expressed as raised by Mr Scargill himself and what is reported is wholly inconsistent with Mr Scargill's position in evidence that he had been perfectly content with his contract and that the whole problem was lawyer-driven (cf. para. 75 above).

(2) It is puzzling that Mr Scargill should have been understood to be enquiring whether his rights in relation to the flat "should be incorporated into his … contract of employment", since that had already occurred, in 1992 (with a revision in 1999). But, whatever the explanation (see para. 107 below), the fact is inescapable that he was raising some issue at least about these rights.

84. A note made by Mr Eyre on 29 October 2001 records a further conversation with Mr Scargill. It reads:

"In addition Mr Scargill is concerned that his contract of employment should properly reflect his entitlement to retain use of the Barbican flat after his retirement and until he dies.

Mr Scargill makes the point that officials have previously had a contractual entitlement to the use of a house purchased by the Union on their behalf but he wishes to know if this provision would also cover the rental of the Barbican flat.

Mr Scargill has referred me to his own contract of employment and has said that he will send further details relating to this.

I have said that I will look into this for him."

Mr Scargill said in evidence that he had no recollection of saying what is recorded in that note and that he could not see why he would have done so in view of the terms of his letter of 24 September. But it is clear that the matter must have been discussed between them, because three days later, on 1 November, Mr Scargill sent Mr Eyre a copy of the 1982 contract, evidently pursuant to the promise recorded by Mr Eyre to "send further details". The covering letter reads as follows:

"Please find enclosed a copy of my original Contract of Employment which is in the same form as the Contract of Employment that applied to Joe Gormley and other full-time NUM officials."

He did not include the 1992 or 1999 contracts.

85. On 5 November 2001 Mr Eyre sent instructions to Mr McMullen to advise on the contractual position as regards the Barbican flat. After being reminded of his previous advice about the car allowance scheme and whether the Union should appeal against the decision in Mr Murdoch's case, counsel is asked for his "opinion upon further amendments to the President's contract of employment". A copy of the 1982 contract is enclosed, together with the minutes of the FGPC and NEC meetings of 8 April 1982, Rules 4B and 4N, and the draft contract sent to Raleys on 24 September 2001. After referring to the NEC minutes, the instructions continue:

"We understand that in accordance with these provisions our client rented a property in The Barbican, London and presently retains the use of that property.

However, Mr Scargill's presidency is due to expire on retirement within the next year or so and he is concerned that he should retain personal use of The Barbican property after that date and for the rest of his life. Our client is concerned that his Contract of Employment dated 17 November 1982 does not adequately reflect the factual situation or the various provisions of the NEC. Accordingly Mr Scargill has drafted an amended Contract of Employment, a copy of which is enclosed, incorporating at paragraph 9 provisions relating to accommodation and in particular his continued rights of occupation in The Barbican flat.

Counsel is instructed to consider the documents and the amendments made by Mr Scargill and advise as to its effectiveness in preserving his right in this regard."

(That is not very well expressed, not least because it does not make clear that the real question is not whether Mr Scargill can continue to occupy the flat but whether the Union should pay for it; but that will have been clear from Mr Scargill's draft clause 9.) Mr Eyre wrote the same day to Mr Scargill saying that Mr McMullen's advice was being sought, but it does not appear that a copy of the instructions was enclosed.

86. In his oral evidence Mr Scargill sought to dissociate himself from the contents of the instructions sent to Mr McMullen, saying that if he had seen them at the time he would have corrected them [T3/133 and T4/71-75]. He said that so far as he was concerned the only problem was that raised by Mr McMullen in the post-Murdoch discussions, namely that the accommodation provision should be brought into the text of the contract: otherwise the 1992 and 1999 contracts were perfectly satisfactory [T4/73]. I cannot accept that. In my view it is entirely clear from Mr Scargill's letters of 24 September and 1 November and from Mr Eyre's two file notes that Mr Scargill himself was concerned that the rights which he claimed in relation to the Barbican flat were not properly incorporated in his contract. It is indeed remarkable, as I have already noted, that he was not content with the 1992 and/or 1999 contracts – to which he nowhere refers and of which he gives no copies to Raleys – but, whatever the explanation for that, the documentation is quite clear about what was worrying him at this point.
87. When Mr McMullen received the instructions he got in touch with Raleys to explain – plainly correctly, though the point seems to have surprised them – that it was necessary to be clear whether he was advising Mr Scargill or the Union, since their interests were not the same. A file note by Mr Eyre dated 28 November 2001 reads as follows:

"Further to my discussion with Counsel on 9 November I contacted Mr Scargill and conveyed Counsel's reservations to him.

Mr Scargill clearly understands the difficulty and has suggested that we might resolve the situation by amending the instructions so that Counsel is instructed by the General Secretary of the Union rather than Mr Scargill himself.

The problem with this is that I do not have any instructions directly from the General Secretary of the Union and I am unlikely to get any because Mr Cave is currently extremely ill and is probably unable to give instructions.

In view of the difficulty this places me in I discussed the situation with Ian Firth and he has suggested that what we should do is contact Jeremy McMullen Q.C. and ask him to advise us as his client on possible conflict. In other words we should ask Jeremy McMullen to reiterate his discussion with me in the form of an opinion and he should be specifically asked to say whether or not in his view it would be appropriate for us to act for Mr Scargill or for the Union in these circumstances."

(Mr Firth was the senior partner in Raleys.) The note does not say when the conversation with Mr Scargill occurred: it is not clear that it was the same day that the note was written and it may well have been some days previously.

88. Mr Scargill denied in his oral evidence that Mr Eyre had raised with him the problem about a conflict of interest or, therefore, that he had suggested that instructions could be given by Mr Cave: the first he heard of the problem was when he received a letter from Mr Firth dated 30 November 2001 [T3/133-136; T4/25-27]. He pointed out that he would not have suggested that instructions come from "the General Secretary" because there was no such position in the Union: Mr Cave was Vice-President. I have no difficulty in accepting that Mr Eyre's note is inaccurate as to details – there are other instances – but I cannot accept that no such conversation occurred as he records. There is no conceivable reason why Mr Eyre should have fabricated his note.
89. On the same day Mr Firth wrote a file note on the same issue, recording what Mr Eyre had told him and his view that Mr McMullen should be asked to advise formally on the conflict. The note is lengthy and I need not set it out in full. However, his summary of the issue about the Barbican flat, as relayed to him by Mr Eyre, is of interest. It reads:

"Arising from that decision, Mr Scargill has instructed Harry to get Counsel's opinion upon one particular aspect of his own contract of employment with the NUM, namely that which entitles him to provision by the Union of his home accommodation.

He has never taken advantage of this provision and his home is owned by him personally, and Mrs Scargill (subject to any alteration in that arrangement as a result of their divorce).

Instead of being provided with his home accommodation at the Union's expense, he has a flat in the Barbican, London which the Union rents for his exclusive use.

He has instructed Harry to get Counsel's advice as to how this position can be rectified, as the provision by the Union of the flat in London has never been incorporated in his contract of employment."

Mr Firth then records Mr McMullen's view that Raleys should be clear who they were acting for and that if they were advising the Union they should obtain instructions from the NEC. He continues:

"In response to this suggestion Mr Scargill has said we should treat the instructions as coming from the General Secretary of NUM, Frank Cave. Unfortunately, Frank Cave was admitted to hospital in mid-October and according to recent reports from his friend John Church is very seriously ill with cancer and is not likely to survive the end of the year. In those circumstances it is plainly impossible for us to treat the instructions as coming from him."

He adds, pre-echoing a point which I have made above:

"It isn't easy to see how the Murdoch situation has given rise to this problem which appears entirely unrelated."

90. In accordance with Mr Firth's advice, Mr Eyre wrote to Mr McMullen on 29 November 2001 asking him to advise Raleys whether they could act for either Mr Scargill or the Union in the circumstances which had arisen. Unfortunately it transpired that the previous day Mr McMullen had been appointed to the bench and could no longer advise. On 30 November Mr Firth wrote to Mr Scargill explaining the problem. He referred to Mr Scargill's suggestion, recorded by Mr Eyre, that instructions could come from Mr Cave but said:

"As I understand Frank has again been in hospital, I do not feel your suggestion that we should treat the instructions as coming from him is realistic."

91. A file note from Mr Firth records a conversation between himself and Mr Scargill on 7 December, in which Mr Scargill was chasing progress. Mr Firth records that he explained the difficulty about Raleys acting for both parties. Mr Scargill is said to have said that he had spoken to Mr McMullen, who had suggested that instructions could come from Mr Cave. When Mr Firth said that he understood Mr Cave to be too ill, Mr Scargill said, according to the note, "that Frank is in fact now out of hospital, undergoing chemotherapy, and although he isn't attending at work he is capable of providing a letter of instructions". Mr Firth noted that he told Mr Scargill that he would be content to receive instructions by letter from Mr Cave "and Mr Scargill promised this would be forthcoming shortly". Mr Scargill said that he did not require to be separately advised.
92. Mr Scargill said in his oral evidence that he had no recollection of that conversation and that he could not see why he would have called Mr Firth [T3/140-141]. I am sure that the conversation occurred: again, there is no conceivable reason why Mr Firth should have recorded it if it did not. Separately, Mr Scargill denied that Mr McMullen had said that the problem could be solved by a letter coming from Mr Cave [T3/141/14-18] or, by necessary implication, that he had said so to Mr Firth. It is possible that Mr Firth may have misunderstood or misrecorded what Mr Scargill said about that, since it seems unlikely that Mr McMullen would have had any further involvement following his elevation - though Mr Scargill's alleged conversation with him may have occurred, if it did, prior to 28 November. But I am sure, for the reasons already given, that the suggestion of involving Mr Cave came to Raleys from Mr Scargill, as recorded by Mr Eyre on 28 November.
93. On 7 December 2001 a letter was sent to Mr Firth on Union paper and bearing the stamped signature of Mr Cave. It bears the reference FWC/NM. FWC is Mr Cave. NM is Ms Nell Myers: she was then the Union's Press Officer, but she also worked for Mr Scargill. The letter reads:

"CONTRACTS OF EMPLOYMENT

Following the decision in the D. Murdoch-v-NUM case, it is necessary for the Union to update the Contracts of Employment of each employee, so that they incorporate all the changes in an individual's terms and conditions as determined by the Union and agreed by the employee(s).

It would be sensible to start by updating the Contract of Employment for the Union's President, Arthur Scargill, and once this is done the contracts of other employees can be updated on the same basis.

I enclose the following:

1. Arthur Scargill's Contract of Employment dated 17 November, 1982, signed on behalf of the NUM by Lawrence Daly and also signed by Mr. Scargill (APPENDIX 1);

2. an unsigned copy of Arthur Scargill's Contract of Employment dated 25 July, 1983 (APPENDIX 2) – the original Contract of Employment, signed on behalf of the NUM by Peter Heathfield and signed by Mr. Scargill, was used by the Union's lawyers in a successful Court action; for some reason, the original signed copy has never been returned or cannot be located;

3. a draft Contract of Employment incorporating amendments to Mr. Scargill's contract of employment which have been introduced by the Union from time to time and accepted by Mr. Scargill (APPENDIX 3).

EXPLANATORY NOTES

It may help if I explain briefly the reasons for the draft amendments in the draft Contract of Employment I have enclosed for Mr. Scargill:

(a) Accommodation, Point 9

When Mr. Scargill was elected NUM President in 1982 he was not provided with accommodation purchased by the Union in accordance with Point 11 of his contract of employment. Instead, the Union provided him with rented accommodation – i.e., a flat in the Barbican, on the understanding that all the costs of this flat would be met by the Union and that he would continue to have the use of the flat following retirement or the use of another property rented by the Union in an area of his choice on the same terms and conditions. The terms and conditions would apply to his widow (during her widowhood) [my emphasis].

I enclose decisions taken by the Union's Finance and General Purposes Sub-Committee on 8 April, 1982 and endorsed by the NEC the same day (Minute 23) (APPENDIX 4). These decisions were of course confirmed by Conference. I also enclose a copy of National Rule 4 (APPENDIX 5) and would draw your attention to 4.N which allows the Union to provide housing for officials and their families, a provision which continues in their retirement.

(b) Period of Notice of Termination of Contract

[I need not set this section out, which raises a distinct issue about the relationship of the notice provision in the contract with the Union's Rules.]

PROPOSAL

John Hendy QC drafted the Rules of the Union and also advised the Union in relation to Mr. Scargill's Contract of Employment. You may recall that Mr. Hendy was unavailable to deal with the D. Murdoch-v-NUM case, and as a result the Union was advised to use Damien Brown and Jeremy McMullen QC – this was how Mr. McMullen came to be involved in an issue relating to the Contract of Employment of Mr. Scargill and other NUM employees.

I note that Mr. McMullen is now unavailable to act – following his elevation to the Bench – and would therefore ask if Mr. Hendy, who knows the background to the issue, could deal with this as a matter of urgency."

Appendix 3 was Mr Scargill's draft as sent with the letter of 24 September. I should note, for reasons which will become apparent, that there is in the bundle an unsigned draft of the letter in which the word "if" in the final paragraph does not appear in the typescript but is inserted in Mr Scargill's handwriting.

94. Mr Davidson put it to Mr Scargill that he was the author of that letter; alternatively that, even if he was not, he read (and, by implication, approved) the whole letter before it was sent – Mr Cave was simply his "mouthpiece" [T4/39-40]. Mr Scargill denied both suggestions. It was his case that the letter was written entirely by Mr Cave. He said in his witness statement (paras. 175 and 177) that in view of Mr Firth's advice about a conflict of interest he had asked Mr Cave

"… if he would deal with my Contract of Employment whilst I together with the Claimant's CEO would deal with all other Contracts of Employment [sc. because of the "Murdoch" problem] in accordance with Rule [sic]. Mr Cave readily agreed."

He accepted that Mr Cave was seriously ill at the time and was not in the office; but he said that he was out of hospital, in full possession of his faculties, and keen to stay involved with the work of the Union; although he had died only a month later, that was unexpected. He said that he had passed Mr Cave a bundle of documents "in the first week of December, immediately after I got this letter from Mr Firth [sc. the letter of 30 November]" [T4/41/15-16]; that Mr Cave would have had that bundle with him at home; and that he would then have dictated the letter over the phone to Ms Myers. Mr Scargill accepted that he did see the final page in draft, because Ms Myers had been concerned whether it was appropriate for Mr Hendy to be asked to advise (since the issue arose out of the Murdoch case, in which Mr Hendy had not acted because he had a conflict of interest) and she had brought that page to him for that reason; he had said that the problem could be solved by inserting the word "if" in the final paragraph, which he inserted in the draft in his own hand [T3/141-142; T4/38]. But he had not been shown the rest of the letter [T3/141/20-21], and he had had no other involvement, having stepped back in accordance with Mr Firth's advice. The letter was "entirely Mr Cave's work" [T4/40/7]. He said (as already noted in another context – see para. 32 above) that if he had drafted the letter, or seen it in full before it was sent, it would not have referred to Mr Heathfield as having been National Secretary in 1983.

95. I cannot accept that account. In my judgment the letter of 7 December 2001 was indeed drafted by Mr Scargill. My reasons are as follows:

(1) I find Mr Scargill's explanation for his insertion of the word "if" very hard to believe. If there really was a problem such as Ms Myers is said to have raised, it would not have been met by that single change. It seems clear to me that the word was added simply because it had been accidentally omitted in the typing: without it the sentence does not make sense. But, if that is so, the natural explanation is that the letter was brought to him for correction as a whole, in the usual way; and that can only have been because he was the draftsman.^[24] It would in any event have been very odd for Ms Myers to have brought Mr Scargill only a single page of the letter; but that is what Mr Scargill has to say in order to avoid any responsibility for the rest of the letter.

(2) The letter contains information that it is very unlikely that Mr Cave would have known. The matters set out under the heading "Explanatory Notes" are not likely to have been apparent from the "bundle" which Mr Scargill says he passed to Mr Cave: it can only have come from Mr Scargill himself. Likewise, the detail about what had happened to the signed version of the 1983 contract: when Mr Davidson asked Mr Scargill in cross-examination where Mr Cave could have got that information he said he had no idea [T4/42/1]. It is not impossible that Mr Scargill could have given Mr Cave a detailed briefing, covering points of this kind; but that is not his evidence, and in any event the picture of Mr Cave carefully noting the information in question and then reproducing it seems much less likely than that Mr Scargill drafted it in the first place. Of course even if that is what did occur it would concede the substance of Mr Davidson's case that Mr Cave was merely Mr Scargill's mouthpiece.

(3) Mr Scargill's explanation is inconsistent with Mr Firth's note of 7 December. According to that note the idea of Mr Cave providing a letter of instruction was only agreed on that day; but that is the date of the letter itself. It is perfectly conceivable that Mr Scargill could have sat down there and then and produced a draft: it would have been quick work, but the matter was at the forefront of his mind and he was on top of the materials. But I do not see how Mr Cave could have done so. It is true that Mr Scargill says that he had approached Mr Cave already, following Mr Firth's letter of 30 November; but I find that unlikely, since the letter had been, to put it no higher, discouraging about involving Mr Cave – and in any event Mr Scargill did not apparently say to Mr Firth anything along the lines of "don't worry, I've arranged it already".

(4) It was the Union's case that Mr Cave was too ill to have agreed to write, or to have written, the letter of 7 December 2001. I was taken to various near-contemporary statements from Mr Scargill himself referring to Mr Cave as extremely ill; and we have seen that Mr Eyre, apparently getting his information from a Mr Church, regarded Mr Cave as too ill to give instructions at the end of November. Mr Kelly, one of the Union's witnesses, who was a close friend of Mr Cave, gave evidence that, although he did indeed leave hospital in early December 2001, "he went home to die" [T3/113/23-24], and that he was not in a state to be thinking about work. He says at para. 13 of his witness statement that he is sure that Mr Cave was "not materially involved in writing [the letter of 7 December 2001] given the state of his health". Mr Scargill put in a copy of Mr Cave's diary for the period, supplied by his widow, which, although it is confined to brief notes, arguably shows that he was in December taking some interest in Union affairs, but it also shows that he visited Doncaster Royal Infirmary as an out-patient on both 6 and 7 December, on the latter occasion for a blood transfusion. I do not say that it is impossible that Mr Cave was in a fit state to have written the letter of 7 December 2001, essentially unaided; but the preponderance of the evidence suggests that it is very unlikely. The picture of a man who was on any view seriously ill dictating a letter of this character over the telephone from home, and on a day when he had been in hospital for a blood transfusion is in my view unconvincing.

(5) The letter was not typed by Mr Cave's own secretary, Diane Cutts, but, as I have said, by Ms Myers, who worked for Mr Scargill.^[25]

96. Taking those points as a whole, I must reject Mr Scargill's evidence. I acknowledge that it is rather surprising that if it was he who drafted the letter of 7 December 2001 he made the undoubted mistake about Mr Heathfield having signed the 1983 contract. But it is not incredible. It was twenty years previously, and even though Mr Scargill has a good memory there is no reason to suppose that it is infallible.
97. Mr Firth replied to Mr Cave acknowledging his instructions and confirming that Raleys would be acting only for the Union. Instructions were sent to Mr Hendy on 12 December. They consisted of a brief covering letter enclosing Mr Cave's letter of 7 December 2001, with its enclosures, together with Mr Scargill's draft revised contract of employment as originally sent with his letter of 24 September.
98. On 22 January 2002 Mr Hendy sent his Advice, which was duly forwarded by Raleys to the Union. The letter was addressed to Paul Hardman, a member of the Union's staff whose job title was Executive Officer: it appears that it had been arranged that he would deal with the ongoing issue of Mr Scargill's contract following Mr Cave's death. On 5 February a letter was sent from the Union to Raleys, signed "pp Mr Hardman" by his secretary, Ms Race, asking for "clarification" on two points arising out of Mr Hendy's Advice. The first concerned the implications of his advice about notice periods for the cases of officials other than Mr Scargill. The second concerned a statement by Mr Hendy to the effect that the Union had since 1982 "paid the expenses of [Mr Scargill's] Yorkshire home": this was said to be wrong, since the Union had only provided concessionary fuel or cash in lieu. A "suggested draft amendment to counsel's Advice" was enclosed. Raleys replied saying that they had forwarded the letter to Mr Hendy. Mr Hendy telephoned the Union head office on 6 February and spoke to Mrs Fellows^[26], saying that he would correct the Advice and asking for the original version to be returned. The next day, 7 February, a letter was sent to Raleys, again signed by Ms Race pp Mr Hardman, referring to the conversation with Mrs Fellows and returning the Advice.
99. Mr Hardman was in fact on holiday from 31 January to 16 February 2002. It was his evidence in his witness statement that he had not written either the letter of 5 February or the letter of 7 February and had had nothing to do with them. He confirmed in cross-examination that Ms Race could not have drafted the former herself and would not in any event have written either on her own initiative. Mr Davidson put it to Mr Scargill that both letters were in fact written by him [T4/1-24]. Mr Scargill denied that. He initially said that he could not have done so because he was in Egypt; but when he was pressed he accepted that he had returned from Egypt on 4 February. He maintained, however, that the letter of 5 February must have been drafted by Mr Hardman before he went away, and sent in his absence.
100. I cannot accept Mr Scargill's evidence on this point either. I believe Mr Hardman when he says that he did not either draft or write the letter of 5 February. If he had, there is no reason why it would not have been sent before he left – or, at latest, the following day. Nor are the points made in the letter of a character with which I would have expected Mr Hardman to be familiar. As to that, Mr Scargill said that Mr Hardman had contacted him between 23 and 26 January (when he left for Egypt) because he was concerned that Mr Hendy had got it wrong about the Yorkshire expenses; but I prefer the simpler explanation that it was Mr Scargill who raised the queries and who drafted both letters – using, however, Mr Hardman's name because he was not supposed to be involved in dealing with advice about his own contract. Mr Hardman said that he would neither have minded nor been surprised if that had happened [T3/61].
101. Mr Hendy on 22 February 2002 produced a revised version of his Advice, correcting the error about the expenses of the Yorkshire house. He set out the terms of clause 11 of the 1982 contract (noting that it had been repeated in the 1983 contract) and the decision of the FGPC and NEC of 8 April 1982. He then said:

"4. The report of this Committee was adopted by the National Executive Committee later on 8^th April 1982 and in due course the minutes of the National Executive Committee were ratified by the Conference of Delegates. In accordance with the decision of the F&GP Committee, the National Union provided to Mr Scargill a rented flat in the Barbican, London and continued to provide concessionary fuel/cash-in-lieu in respect of his home in Yorkshire. I am instructed that an understanding was reached that he would have the use of the flat in London on his retirement (with subsequent use by his widow) [my emphasis]. This appears to me to be consistent with the clause in the Particulars set out above which was inappropriate to apply to the Yorkshire property which was owned personally by Mr Scargill and so not apt to attract the provisions of that clause.

5. Consequently, unless the National Union has changed its intentions since 1982, any revision and update of the Particulars of Employment should reflect the post-retirement provisions in relation to the London flat rented by the Union and the allowances in relation to Mr Scargill's Yorkshire home."

He set out clause 9 from Mr Scargill's draft^[27] and concluded:

"This appears to me to faithfully reproduce the National Union's intentions in 1983 and I can suggest no improvement."

It will be noted that the essential element in that advice, which I have italicised, depended entirely on what Mr Hendy was told in his instructions (see point (a) in the Explanatory Notes in Mr Cave's letter of 7 December 2001 – para. 93 above).

102. The Advice was sent to Raleys, who in turn sent it to Mr Hardman, asking him to "perfect the contract of employment as originally drafted with the amendments suggested by Mr Hardman and arrange for it to be signed by Mr Scargill and an appropriate representative of the Union".
103. On 5 April, Mr Scargill wrote a letter, addressed to himself, in the following terms:

"Please find attached a Contract of Employment which incorporates all the terms and conditions of employment by you on 5^th April, 2002.

Following the case of D. Murdoch-v-National Union of Mineworkers, the Union took advice from Leading Counsel. On the basis of that advice it was agreed that a Contract of Employment incorporating all your terms and conditions together with an undertaking that both you and the employer regard the Contract of Employment as legally binding should be sent to you.

Please keep this Contract safely in your possession."

104. The attached contract is signed by Mr Stanley (see para. 73 above) and is the definitive version of the contract originally proposed by Mr Scargill in September 2001. Clause 9 is not, however, in identical terms to his original draft. It reads as follows:

"Accommodation

(a) You are entitled as and from 5 April 1982 to receive all the allowances and expenses in respect of your own home – currently situated in Yorkshire – allowances and expenses including payment of your annual concessionary solid fuel bills or cash in lieu payment to the same value. These allowances and expenses shall also apply to your widow/spouse (during her widowhood while the spouse continues to occupy the house alone).

(b) The Union will provide you with a flat in the Barbican, London and be responsible for paying all rents, rates, heating, lighting, decorations, car parking and other costs associated with the use of this flat.

(c) Upon retirement you shall have the right to continue to occupy the flat or alternative accommodation in an area of your choice by agreement on the same terms and conditions as apply at the time of your retirement. This right shall also apply to your widow/spouse (during her widowhood while the spouse continues to occupy the flat alone.)"

The differences between the versions of clause 9 as originally proposed and as finally adopted are:

(1) In (a) the typo referring to 1981 is corrected. The word "own" before "home" is omitted.^[28] More significantly, after the words "allowances and expenses" a reference is added to concessionary fuel/cash in lieu; and a sentence is added making it clear that the benefit applies to any widow.

(2) In (c), the phrase "in an area of your choice" is added after "alternative accommodation".

105. Mr Davidson put it to Mr Scargill that the final version of the 2002 contract, incorporating those changes, was produced by him. He denied that. He said that the changes must have been made by Mr Hardman, on his initiative, as part of his responsibility to "perfect" the contract in the light of Mr Hendy's advice [T4/86-94]. Mr Hardman denied that. He said the formal responsibility was Mrs Fellows', but he did not know who actually produced the final draft [T3/53-54; T31/61-62]. I accept his evidence. I am satisfied that the final draft was produced by Mr Scargill. In truth, he initiated the whole process, produced the original draft and was responsible for the subsequent changes. His evidence – see para. 73 above – that he was "not involved" in the drafting of his 2002 contract is untrue.
106. Neither Mr Scargill nor anyone else involved sought the approval of the NEC for the terms of the 2002 contract.
107. It is impossible now to know, Mr Scargill not having given a true account, why he thought it necessary to generate the 2002 contract, given that the rights purportedly accorded by it were in substance the same as those already accorded by the 1999 contract. (Indeed they were arguably rather less good, in that they do not refer expressly to the security costs on the Yorkshire house and they revert to the language of "widow" rather than "partner".) It does not seem likely that he had simply forgotten about the 1992 and 1999 contracts. One possibility that occurred to me is that if, as he says, they had gone missing from the file he needed to have them replaced; but if that were the case that is surely all that he need have said to Raleys (and anyway the first thing to have done would have been to have a thorough search, which ought to have produced them since we know that they were in fact somewhere in the Union's possession). It may be that the key is in the fact that neither the 1992 nor 1999 contracts had been drafted, or approved, by lawyers. Mr Scargill may have wanted a legal imprimatur, particularly in view of his impending retirement, just as he did when he resumed charging the rent to the Union in 1991: the 2002 draft first emerges under cover of the letter of 24 September 2001 to Raleys asking for their advice about it. I do not rule out the possibility that his concern was triggered by some aspect of the Murdoch case, even though I do not accept that Mr McMullen gave any advice on the subject. Ultimately, however, this is not a puzzle that I am required to solve.

Analysis and Conclusion as at Mr Scargill's Retirement

108. It is the Union's case that Mr Scargill would only enjoy the rights purportedly accorded to him by clause 9 of the 2002 contract (or by clause 12 of the 1992 and 1999 contracts) if and to the extent that the NEC had authorised the making of a contract in those terms, and that no such authority was ever given. It is Mr Scargill's primary case that the NEC did give such authority, by its decisions of 8 April and 13 May 1982, in each case approving recommendations of the FGPC, as set out at paras. 24 and 26 above: all that the Union was doing in making the 1992, 1999 and 2002 contracts was giving belated effect to what had been intended all along. That has been Mr Scargill's consistent theme since 1991. Mr Pitt-Payne does, however, contend by way of alternative that NEC authority for the making of the 1992, 1999 and 2002 contracts could if necessary be found elsewhere. I take the two cases in turn.

(1) Mr Scargill's Primary Case: the Decisions of 8 April and 11/13 May 1982

109. The decisions of the FGPC on 8 April and 11 May 1982, each duly approved by the NEC, are not very precisely worded, but it is nevertheless plain from their express terms that they were intended to authorise the payment by the Union (directly or by way of reimbursement) of the rent paid on the Barbican flat of which Mr Scargill was to have the use (together, no doubt, with at least some outgoings). The question is whether they were intended to authorise the conferring on him of a contractual right to such payment throughout his employment, and continuing into retirement for himself and his widow. As to that, the minutes are silent: they say nothing about the duration of the arrangements contemplated. Mr Scargill's case has to be based on an implication. The task for me is to infer the intention of the FGPC and the NEC having regard to the factual matrix as known to the parties.^[29] This is inevitably a somewhat artificial task because not all, if indeed any, members of either committee^[30] may actually have considered the question of the contractual status of the arrangement which they were authorising, or its duration; and even if they did their intentions may not have been the same. But courts sometimes have to perform this sort of exercise.
110. Approaching the question in that way, the essence of Mr Pitt-Payne's case on behalf of Mr Scargill is that the arrangements made as regards the Barbican flat were evidently a surrogate for an arrangement of the kind made with his predecessors (and with the National Secretary). That is clear from the sequence of events. The original decision of 21 December 1981 had been for "the purchase of a suitable house or flat", which would evidently have been occupied on the same terms as Lord Gormley's house. The FGPC will have had these very much in mind since they were the subject of a decision at the same meeting: see para. 20 above. The decision of 8 April 1982, expressed as being "in furtherance of" that earlier decision, was simply for an alternative way of according Mr Scargill substantially the same benefit – "rent … or … purchase". Since the rights under the "purchase" option would have conferred a contractual right continuing into retirement (and for any widow) the same must have been intended for this surrogate right. The further minute under the same heading, resolving to accord Mr Scargill "all allowances and facilities" accorded to Mr Gormley reinforces the point: even if it was not expressly directed to the question of accommodation it confirms the intention that Mr Scargill should be in no worse position than his predecessors.
111. That is a powerful point, persuasively argued by Mr Pitt-Payne. But in the end I am not persuaded. The fact is that the purchase of a property by the Union and the undertaking of an obligation to pay rent are very different things. If a property had been purchased the Union would have incurred the full cost, which the FGPC would necessarily have judged to be affordable, in that year. (It is true that there would also have been a commitment to meeting some running costs on an ongoing basis; but the figures would have been of marginal significance.) The Union would have lost the benefit of the income generated by the capital for the term of Mr Scargill's life (and that of any widow); but it would have had a capital asset with, probably, an appreciating value. It would also have received some rent, albeit below market level. The position is complicated by the risk that Mr Scargill might reach retirement age and elect "option (iii)" – that is, to purchase the property at book value – in which case the value of the asset would be much reduced; but there would have been no certainty that that would occur. By contrast, to rent a property for Mr Scargill for life (and his widow's life) meant committing the Union, for a period potentially of fifty years or more, to very substantial annual expenditure, the future affordability of which would be impossible to assess, and which would leave it at the end with no capital asset at all. No doubt an economist might argue that the cost of the rent over fifty years might be no less than the opportunity cost associated with the capital tied up in a house over a similar period (though so many assumptions would have to be made that the exercise would be largely meaningless); but what matters is that the nature of the deal is quite different, and that at least with the purchase of a house the Union would take the cash hit up front. These considerations may not have passed through the minds of all or any members of the committee. But the point is that they demonstrate that the rights which Mr Scargill claims are significantly different from the rights conferred on his predecessors; and I cannot therefore properly infer that the committee must have intended them to confer them. To use the time-honoured test, if an officious observer of the sub-committee's discussions had said "don't you need to minute that Mr Scargill should be given a contractual right to have the rent and other outgoings paid on the Barbican flat for life (and his widow's life) ?", I do not believe that he would have been suppressed with a testy "of course". On the contrary, I think the likely reaction would have been a good deal of head-scratching.^[31] That being so, in my judgment the understanding to be inferred – or perhaps, more realistically, to be imputed – is that the arrangement was terminable on reasonable notice.
112. That is the fundamental point. But it does not stand alone. In my view the surrounding circumstances and the subsequent history both support the view that the arrangements about the Barbican flat were understood not as constituting the provision of a home for Mr Scargill, equivalent to Lord Gormley's home in Sunbury or Mr Daly's in Berkhamsted, but as a facility to enable him to do his job in London. The matters on which I rely are as follows.
113. The starting-point is that Mr Scargill, unlike his predecessors or Mr Daly, was to retain his home in Yorkshire. This was clearly understood by the FGPC and NEC; the minutes of 8 April 1982 refer to it as "his own home in Yorkshire". His wife and daughter were not going to move with him to London. That by itself gives some reason to believe that the committee members, including Mr Scargill himself, are likely to have regarded his case as different in character from Lord Gormley's. There are also other indications in the minutes more suggestive of a "London base" (indeed an "NUM flat/office", in Mr Scargill's own phrase) than of a home. It was always envisaged that the property was to be in "central/inner London", which suggests that proximity to Euston Road was thought important. And the FGPC on 11 May agreed to pay for "basic furnishing": an employer does not normally agree to pay for the furnishing of an employee's home, whereas it is entirely reasonable to pay to furnish accommodation which he is required to occupy for the purpose of his work. Mr Scargill says in his witness statement that Lord Gormley calculated at the time that the savings in the subsistence payments that the Union would otherwise have to pay when Mr Scargill was working in London would meet most of the cost of the rent: that seems to me another significant indicator of how the Barbican flat was viewed. And the flat was free: under the standard "Union-provided accommodation" arrangement, a rent was payable, albeit a low one.
114. Mr Scargill's case that the FGPC and NEC saw the Barbican flat as equivalent to the accommodation bought for other national officials would be further undermined if and to the extent that they intended the Union to pay for the cost of Mr Scargill's Yorkshire home: it would have been both unprecedented and very hard to justify for the Union to pay, in whole or substantial part, for two homes.^[32] It is thus important to know whether the "arrangements and allowances" in respect of 2BYL which the minutes of 8 April say that the National Union would take over from the Yorkshire Area included the subsidised mortgage. It was Mr Scargill's evidence that they did not, and that the only payments referred to were concessionary coal and security costs (see his witness statement para. 60 and his oral evidence at T4/115-116); as regards the mortgage, he understood that he would either have to go over to a commercial rate or re-pay it and re-mortgage with a building society. I am inclined to accept his evidence as regards the arrangements and allowances that the National Union decided to take over from the Yorkshire Area: I think that more specific language would probably have been used if the FGPC had understood that it was entering into a subsidised mortgage arrangement, and the National Union did not in fact take any steps to take over the mortgage from the Yorkshire Area.^[33] I am not, however, inclined to accept Mr Scargill's evidence that he was intending that the subsidised mortgage from the Yorkshire Area should be discontinued. He went on receiving it without demur for the next two years, and, he says, without any pressure from the Area to repay the mortgage (see para. 50 above); and when he did come to give it up, in April 1984, it was only in the very peculiar circumstances described in para. 41. He gave no real explanation for why, if his understanding was as he says, he did not take any steps to repay the mortgage, or move to a commercial rate, within a reasonable period of his election. It also seems to me significant that he had applied to have the mortgage raised – from £3,000 to £25,000 – only very shortly before he was elected, with the actual decision being made after his election; it would be curious if that arrangement had been finalised on the basis that it would have to be undone within a few months.
115. If the "arrangements and allowances" in relation to 2BYL did not include the subsidised mortgage, then the National Union's decision to pay them is not fatal to Mr Scargill's case, but it still has some significance: the allowances that were paid were clearly paid on the basis that 2BYL was Mr Scargill's home. And if, as I think, Mr Scargill was expecting to retain his subsidised mortgage from the Yorkshire Area, I find that hard to reconcile with his regarding the Barbican flat as the home with which the Union was obliged to provide him in accordance with the arrangements made for his predecessors: as his own case tacitly acknowledges, he would not have regarded himself as entitled to both.
116. Of course, if my analysis thus far is correct it means that Mr Scargill was not, immediately following his assumption of the Presidency, in the same position as his predecessors. His right to use the Barbican flat was revocable; and a subsidised mortgage on 2BYL, though valuable, was not equivalent to the rights granted to previous national officials. But that need not have remained the position. If he had the right to be provided with accommodation on the same basis as his predecessors, it did not have to be exercised straightaway. There were in fact particular reasons why it would make sense in early 1982 not to rush into any long-term arrangements about accommodation. It was on the cards, to put it no higher, that the Union head office would be moving out of London, and where to acquire any Union accommodation on a long-term basis would depend on whether that happened and if so where it moved to. If it moved to somewhere reasonably near Barnsley, he could ask the Union to buy 2BYL and allow him to occupy it on the usual terms. But it would be necessary to wait and see. In the meantime, the Barbican arrangement and the subsidised mortgage on 2BYL meant that he was still receiving a substantial accommodation benefit.
117. If this, as I believe, represents the common understanding in 1982, it would explain why Mr Scargill made, as I have found, no objection to signing the 1982 contract and (if he did) the 1983 contract: clause 11 accurately stated rights which he expected to be accorded in due course. It would also mean that the apparent plan for the Union to purchase 2BYL in 1984, even if it was put forward when it was only by way of a feint, was credible because it was in conformity with what Mr Scargill and the NEC understood to be his contractual rights. Likewise the defence advanced in 1990 to the media attacks which led to the Lightman enquiry. No-one at that time suggested that Mr Scargill had "used up" his right to Union accommodation because the Barbican had already been made available to him for life.
118. Although Mr Davidson relied also on the prolonged hiatus in the Union's payment of the rent on the Barbican flat between 1985 and 1991, I am less sure that this advances the argument. The complicated aftermath of the strike and the receivership may be a sufficient explanation. Perhaps if Mr Scargill had regarded the obligation to pay the rent at the Barbican as representing the Union's contractual obligation to provide him with a home he would have had the payments resumed sooner; but I do not attach much weight to this.
119. I have thus far in the analysis ignored Mr Scargill's evidence that Mr Gormley told him explicitly that if a property were rented it would be available to him on, so far as possible, the same terms as a house owned by the Union: see para. 22 above. I am bound to say that I doubt whether that was said: I have made clear already that I cannot treat Mr Scargill as a reliable witness, and this has a strong flavour of retrospective "improvement", whether conscious or unconscious. But, even if it was said, Mr Gormley could not speak for the NEC; nor, his term having ended, did he attend any of the meetings of April and May 1982.
120. Strictly speaking, I need go no further (on this aspect of the case). In particular, although I heard a good deal of evidence about them, it is unnecessary for me to consider why Mr Scargill procured the making of the 1992, 1999 and 2002 contracts. If NEC authority was needed for a contract giving Mr Scargill the rights which he claims, it is common ground (subject to the alternative case considered below) that it has to be found in the FGPC and NEC decisions of April and May 1982; and if, as I have held, they did not in fact authorise the creation of such rights that is the end of the matter. Nevertheless, I think I should make what findings I can about why these later contracts came to be made.
121. The starting-point must be to acknowledge that from the mid-1980s onwards Mr Scargill was in a substantially worse position as regards accommodation than both he and the FGPC and NEC had intended when he took up his appointment. The Union had not yet bought him a house, as it had for his predecessors (and indeed for his colleague Mr Heathfield); the plan, feigned or real, to buy 2BYL had not been proceeded with. And the two benefits which in practice made up for that, at least in the short term – the subsidised mortgage on 2BYL and the payment of the rent at the Barbican – had been given up. In the immediate aftermath of the strike, that no doubt had to be put up with: the affairs of the Union were in disarray. But it is understandable that by the end of the 1980s Mr Scargill should have felt that he was entitled to be put in the position that had originally been intended.
122. The obvious thing in those circumstances would have been to revive the plan for the Union to buy 2BYL – or, rather, Treelands as it would now have been – for his occupation in accordance with the terms of clause 11 of the 1982 contract. That was appropriate accommodation now that the Union was based in Sheffield, and it would have been equivalent treatment to that received by Mr Heathfield. He would have received a substantial capital sum and would have been entitled to live there at a low rent for the rest of his life or to exercise the option to re-purchase at an advantageous price on retirement. He might or might not also have been able to persuade the NEC to resume payments of the rent on the Barbican flat – though it would have been more difficult to show a business case for it doing so once the Union was no longer based in London.
123. However, it appears that by 1990 or thereabouts that course no longer appealed to Mr Scargill and that he wanted to secure the Barbican flat as the permanent home which the Union was to provide. I need not make a finding about his reasons. One obvious possibility is the state of his marriage, but there may have been other factors. On my findings above, the NEC had not in 1982 authorised the making of any arrangement under which it would pay the rent on the Barbican flat for the rest of his (and any widow's) life; and the straightforward course for him was to go back to it and seek that authority. But he did not do so. Instead, he procured first, in 1991, the resumption of payments on the flat, and then, in 1992, the making of a contract purporting to accord him the rights in question, in both cases without any reference to the NEC. He sought to legitimise his position by obtaining accountancy and legal opinions as to the effect of the NEC decisions of April and May 1982. But those opinions could not be a substitute for actual NEC authority; and in any event neither Mr Druce nor, more pertinently, Mr Hendy ever addressed the crucial question of whether Mr Scargill had a contractual right to payment of the rent on the flat continuing into retirement – in fact Mr Hendy's opinion, at least implicitly suggested otherwise. And, even on the question on which they did advise, it is doubtful whether they received sufficiently full instructions.
124. It is impossible to be sure why Mr Scargill went down that route rather than simply going back to the NEC. It may be that he had convinced himself that the 1982 decisions of the NEC provided the necessary authority and that nothing else was required; but if he thought that the matter was beyond question it is hard to see why he went to the trouble, and put the Union to the expense, of obtaining accountancy and legal advice. A more likely explanation is that he was not confident that the NEC would indeed approve the new arrangements. The aftermath of the strike and the sequestration, and more particularly the allegations that led to the Lightman enquiry, had inevitably caused tensions between officials and the NEC. At the special delegate conference held in October 1990 to discuss the Lightman report, Mr Scargill and the other national officials were reproached with not "trusting" the NEC about the financial arrangements made during the sequestration, which included those about his and Mr Heathfield's homes. Mr Rees, who made a speech in those terms, confirmed in his evidence before me how heated the atmosphere had become [T5/164-6]. It would be understandable if Mr Scargill had preferred not to re-open with the NEC issues which had aroused such controversy. Although Mr Lightman had not dealt directly with the Barbican flat, he had touched on it and had recorded that it was paid for by Mr Scargill personally: it might have been awkward to seek a change in that position so soon afterwards. There would also of course have been questions about whether payment for the flat was now justified in circumstances where the need for Mr Scargill to be in London on business had diminished so drastically as compared with ten years previously. In any event, whatever Mr Scargill's reasons, what ultimately matters is that he did not seek NEC authority for either the resumption of rental payments in 1991 or the making of the 1992 contract.
125. The 1992 contract was signed by Mr Heathfield. There was no evidence of any kind of substantive discussion or negotiation between him and Mr Scargill – though even if there had been it would not have made up for the absence of NEC authority. I heard no evidence about Mr Heathfield's understanding of the position, and I make no findings about it. He may have believed, as a result of what he was told by Mr Scargill or otherwise, that there was NEC authority for the Union entering into the commitments in question: he had not of course been in office in 1982. It was no part of the Union's case to question his good faith or his authority, in the sense of his appropriateness as a signatory; but those are immaterial to the more fundamental question of whether the Union had authorised the creation of the rights now asserted. The same applies to Mr Cave and Mr Stanley in relation to the 1999 and 2002 contracts.
126. The 1999 and 2002 contracts raise no other questions of significance. They are simply further steps down the path embarked on in 1991/1992. The elaborate findings that I have had to make about the genesis of the 2002 contract are important primarily because they demonstrate with particular clarity why I cannot regard Mr Scargill as a reliable witness; and because they illustrate his determination to keep all matters relating to his contractual rights closely under his personal control while seeking to maintain a frankly spurious cover of constitutional propriety.
127. In short, I find that the rights purportedly conferred on Mr Scargill under clause 9 of the 2002 contract (and clause 12 of the 1992 and 1999 contracts) were not authorised by the decisions of the NEC in April and May 1982.
128. I return by way of coda to how Mr Firth of Raleys summarised Mr Scargill's own description of the situation when seeking advice about the 2002 contract: see para. 89 above. In his note of 30 November 2001 he recorded:

"Mr Scargill has instructed Harry to get Counsel's opinion upon one particular aspect of his own contract of employment with the NUM, namely that which entitles him to provision by the Union of his home accommodation.

He has never taken advantage of this provision and his home is owned by him personally, and Mrs Scargill (subject to any alteration in that arrangement as a result of their divorce).

Instead of being provided with his home accommodation at the Union's expense, he has a flat in the Barbican, London which the Union rents for his exclusive use.

He has instructed Harry to get Counsel's advice as to how this position can be rectified, as the provision by the Union of the flat in London has never been incorporated in his contract of employment."

No doubt that note must be treated with some caution, since Mr Firth is recording what he has been told by Mr Eyre, and although it closely corresponds to Mr Eyre's own notes (see paras. 82 and 84), he may not have been the most accurate of note-takers. I do not therefore put it at the centre of my reasoning. Nevertheless in my view it gives a frank and essentially accurate picture of what has happened in this case. Mr Scargill was accorded a particular set of contractual rights in 1982, but he "has never taken advantage of [them]". Instead, he sought, long after the event, to "rectify" that omission by substituting a different set of rights that suited him better. But, for the reasons which I have given, that attempt has not been effective because he chose not to go back to the NEC but instead to deal with it in the hole-and-corner way that he did.

(2) Mr Scargill's Secondary Case: Alternative Source of Authority

129. In his written closing submissions Mr Pitt-Payne submitted that even if authority for the 1992, 1999 and 2002 contracts could not be found in the decisions of the NEC in April and May 1982

"… nevertheless there was authority for those contracts, in the light of five matters.

(i) The signatories were proper and appropriate individuals to sign documents on behalf of the Union.

(ii) They were acting in accordance with the Union's past practice, a practice that had been repeatedly endorsed by the NEC.

(iii) They were doing something for which there was an express power in the NUM's Rules, following an amendment in 1985.

(iv) In 1992 and 2002 they acted on external legal advice.

(v) They were continuing a payment that the NUM was already discharging."

I cannot accept that submission. I take the five elements in turn.

130. As to (i), this is true but not sufficient.
131. As to (ii), I do not accept that the contents of clause 12 of the 1992 and 1999 contracts and clause 9 of the 2002 contract were in accordance with past practice. There was no precedent for undertaking an obligation to pay the rent on a property to be occupied by a former Union official in retirement. But in any event it was clearly the practice that any arrangements for the provision of life-long accommodation would be authorised in each individual case by the FGPC and NEC. That was what happened in relation to Mr Scargill in 1981/2 (and also in Mr Heathfield's case); and his own consistent argument that the NEC had in fact in 1982 authorised the arrangements which he claims implicitly recognises that. It is further confirmed, if confirmation were necessary, by item (k) (2) in the authorisation code adopted in 1982 (see para. 35 above). Mr Scargill said that item (k) only applied to property owned by the Union and not to rental property. That may be right as far as it goes, though the argument sits awkwardly with his case that the Barbican flat was intended, so far as possible, to be equivalent to a Union house of the kind occupied by his predecessors. But the real importance of this provision of the code is that it confirms – what one would in any event expect – that a benefit of this kind, imposing substantial obligations on the Union, would require NEC authorisation.^[34]
132. As to (iii), this is a reference to rule 4N – see para. 67 above. But, as there noted, while this confirms that it was within the Union's objects to make such arrangements, it says nothing about the authority to make them in any particular case.
133. As to (iv), I have found that no legal advice was obtained in relation to the making of the 1992 contract (see para. 68 above). Advice was obtained from Mr Hendy in 2002, but that was of limited value, since his advice was on the basis of facts set out in his instructions (drafted by Mr Scargill) which effectively decided the crucial issue: see para. 101.
134. As to (v), it is wholly unclear whether any member of the NEC in 1992, 1999 or 2002 knew that the Union was paying the rent on the Barbican flat. It had not done so for six years between 1985 and 1991, and the NEC was not informed – still less was its authority sought – when payments resumed in 1991; nor were the payments detectable from the accounts (see para. 64 above). The only official communication to the NEC about the Barbican flat was in the form of the Lightman report, which said – perfectly correctly as at that time – that Mr Scargill paid the rent himself.

Conclusion on the Position as at Mr Scargill's Retirement

135. Clause 9 of the 2002 contract (and clause 12 of the 1992 and 1999 contracts) did not bind the Union to pay the rent and other outgoings on the Barbican flat for the rest of Mr Scargill's life (and that of any widow) because the NEC had never authorised the making of a contract conferring those rights.

(2) POST-RETIREMENT: RATIFICATION

Consideration of the Barbican Flat by the NEC

136. It is Mr Scargill's case that even if, contrary to his belief, the rights purportedly conferred by the 2002 contract (and the 1992 and 1999 contracts) were not authorised by the NEC during the course of his employment, the grant of those rights was ratified as a result of events taking place between 2008 and 2011, including in particular meetings of the NEC on 11 November 2008 and 10 February 2009: see paras. 63-64, 69 and 86 of the Amended Defence and Counterclaim.
137. The story starts in 2006. Mr Wayne Thomas, the General Secretary of the South Wales Area of the Union, who was a member of both the NEC and the FGPC, began to press the Secretary for information about the "administrative costs" of the National Union, and, in that connection, about "the details of any home or properties that we hold throughout the UK that is deemed to be a national asset". One of the properties which he wanted to know about was the Barbican flat. He had for some time heard what he described as "rumours" that Mr Scargill enjoyed the use of a flat in London at Union expense, but members in his Area were increasingly asking questions about it. The then Secretary, Mr Kemp, was not very forthcoming, if not positively obstructive; but he resumed his enquiries with Mr Kemp's successor, Mr Kitchen, who took up office in October 2007.
138. Mr Scargill's role as "Honorary President" was ill-defined but far from merely nominal, and he remained actively involved in Union affairs. Mr Thomas's enquiries came to his attention. It is evident that he appreciated that they were liable to lead to a challenge to the continued payment by the Union of the rent on the Barbican flat. He enlisted the support of Mr Lavery, his successor as President. He prepared for his benefit two substantial notes setting out his case as to why he was entitled, both legally and morally, to have the rent on the Barbican flat paid for the rest of his life.
139. Mr Lavery said that he was fully persuaded of Mr Scargill's case, and he was anxious if possible to avoid the flat becoming a bone of contention. In an e-mail dated 29 January 2008 to Hazel Riley, the Union's Finance Officer, (copied to Mr Kitchen) he noted that Mr Thomas's most recent letter did not specifically "seek information relative to AS" and asked how a reply could be prepared "which does not accentuate the payments made for the flat in the Barbican". He said:

"I must say that the minutes provided show that the payments are well in order and I would not wish to challenge them."

140. Mr Kitchen seems to have ignored that suggestion, since on 31 January 2008 he wrote to Mr Thomas giving details of a number of items of Union expenditure in the previous year, including the rent, water rates and council tax on the Barbican flat (which together came to a total of about £25,000). Apparently unaware that that letter had already been sent, Mr Scargill on 4 February sent Mr Kitchen two memos, the first endorsing Mr Lavery's comments in his e-mail of 29 January and suggesting that any reply to Mr Thomas omit all mention of the flat; and the second suggesting a (somewhat tendentious) form of words to be used "in the event that you do not accept the advice of Ian and myself that details of [the Barbican flat] should not be included in the reply to Wayne". Mr Kitchen described those letters in his evidence as causing him concern because it seemed that "there was an intention to keep things quiet, to play things down" [T2/109]. That seems to me a fair comment. It was clear that Mr Thomas wanted information about the Barbican flat, and as an NEC member he was entitled to have it. In my judgment it was wrong of Mr Scargill to try to have this information withheld.
141. On 29 February 2008 Mr Lavery and Mr Scargill had a meeting, which Mr Lavery asked should be held in secret, away from the Union office, to discuss various sensitive issues, including the Barbican flat. A full note was made by Mr Scargill following the meeting. It appears that Mr Lavery assured Mr Scargill that he was satisfied of his entitlement to have the rent on the flat paid until his death (and that of any widow). It is evident from the note that Mr Scargill regarded Mr Thomas and another member of the NEC, Mr Wilson, the General Secretary/President of the Scotland Area, as being hostile to him personally; and that he believed that Mr Kitchen was on their side and – in words which he attributed to Mr Lavery – "not to be trusted".
142. It appears, though I have no details, that the issue of properties occupied by Union officials, past or present, was raised in connection with the 2008 Conference, and a commitment was made that it would be discussed in the NEC. The first such discussion was on 11 November 2008. Prior to that meeting the national officials – that is, Mr Lavery, Mr Stanley and Mr Kitchen met for a discussion. Three schedules had been prepared by the Finance Department, headed respectively "National Union Properties", "National Union Rental Property" and "Yorkshire Area Property". The Barbican flat was the only item in the second schedule, which gave a break-down of the relevant expenditure (which now included not only the rent, rates and council tax but also electricity, insurance and TV licence). The schedules are headed "NEC member only/strictly private and confidential", and a manuscript note suggests that they "went to NEC". However, it was Mr Kitchen's evidence, which I accept, that Mr Lavery decided that the documents would not in fact be circulated at the NEC meeting but that he would use them as the basis of an oral report [T2/117-8, 120-1].
143. The minutes of the NEC meeting itself record, under the heading "National Union Properties":

"The President gave a detailed report on the properties owned and rented by the National Union. The Committee examined detailed information and minutes in relation to the background of purchase or rental of the properties and continuing costs and obligations."

There is then a discussion of four properties of which the Union owned the freehold, followed by a reference to the Barbican flat in the following terms:

"The Barbican Flat is occupied by the Honorary President, Arthur Scargill in accordance with his contract and NEC minutes. In 1982 the NEC approved the acquisition of the Flat on a rental basis from the City of London Authority."

That is no doubt a summary, and it is unclear what detail was given; but evidently Mr Lavery gave an account of the justification for the continued payment of the rent on the Barbican flat based on the materials with which he had been supplied by Mr Scargill. The minute continues:

"Following discussion, IT WAS UNANIMOUSLY AGREED:

(a) that the Report be accepted;

(b)-(c) … [items related to other properties];

(d) a further Report would be discussed at the next NEC meeting."

144. In addition to the formal minute, we have a typed-up version of the contemporary notes taken by Ms Tasker, who was the official note-taker. In those notes Mr Lavery is recorded as introducing his report by saying:

"We gave an undertaking at the NEC before Conference to have a review of all the properties owned by the National Union and rented properties. This isn't a final report. These are facts and figures that Hazel has put together. From the NEC, if we need more information, tell us what you want to collate a report with everybody's questions and we will compile a report with that information. We want all the information to do what you want for the report that I promised to get on the table for the next NEC meeting."

In relation to the Barbican, Mr Lavery is recorded as saying:

"The next one is the Barbican. The National Union rents the property at the Barbican and costs for the Barbican. Again, there will be arguments for and against. We won't have them at the meeting. Does anybody want more information ?"

Mr Thomas is then recorded asking for "the history of how it came about we are renting a building in this property", to which Mr Lavery replied:

"The history of the Barbican will be done in the report. There is not much more than promised."

Mr Wilson then said that he hoped that the report would show "why we have maintained a property which should not have been here for the last 20-odd years". Mr Lavery said that he would "… not move back on that commitment. It will form part of the report for the next NEC." Other parts of the note make it clear that the intended further report would be in writing.

145. It is clearer from Ms Tasker's note than it is from the formal minute that the NEC's approval of Mr Lavery's report did not represent a decision to approve the state of affairs that he reported. His report was essentially preliminary, and the definitive discussion was intended to be at the next NEC meeting, after a further report which would (among other things) set out "the history of the Barbican". That was also confirmed by Mr Thomas in his oral evidence [T2/57].
146. The next NEC meeting was on 10 February 2009. In the part of the minutes dealing with Finance and General Purposes, the following is minuted:

"Barbican, London

At the last meeting of the NEC it was agreed that a further report would be prepared to enable discussions in relation to the decisions taken in 1981 and 1982 to provide rental accommodation in inner London for the then President, following his election in 1981. The report outlined the decisions approved by the NEC for the acquisition of the Barbican flat on a rental basis and the continued obligations of the Union.

Following a lengthy discussion, IT WAS UNANIMOUSLY AGREED:

that the Reports be accepted and further questions relating to the Barbican Flat should be sent in writing to the National Secretary."

Despite his indication at the previous meeting that it would be in writing, the "report" given by Mr Lavery was again oral. I heard no evidence giving more detail about what was contained in that report or about the "lengthy discussion" referred to, though Mr Thomas and Mr Kitchen did give some evidence about the nature of the eventual decision which I discuss below. The reference in the minute of the actual decision to "Reports" is presumably intended to cover Mr Lavery's report to the November meeting.

147. There were apparently no written questions sent to the Secretary pursuant to the decision of the NEC on 10 February 2009, though Mr Thomas told me that that was because there was now more transparency about the arrangement.
148. I heard no evidence of any further activity in relation to the Barbican flat over the rest of 2009; but in spring 2010 the Scotland Area put down the following motion for the Conference to be held in July:

"Conference agrees to an immediate investigation to establish the facts of why we are still financing a "home" for our former President in London 27 years after the National Union moved its office to Sheffield.

The investigation must also clarify the evidence given to the Lightman report which refers to the former President's "home" in Yorkshire.

If it is found that the Union or Areas of the Union have been funding more than one "home" this must be stopped and action taken to recover any wrongful payments made."

149. Shortly after the publication of the motion from the Scotland Area, on 31 March 2010, there was a meeting between Mr Kitchen and Mr Scargill. Both made a contemporary note. The notes differ as to the purpose of the meeting. Mr Kitchen's note records that the meeting had been to discuss Mr Scargill's concessionary fuel entitlement, although Mr Scargill then raised the question of the Scotland Area motion; but Mr Scargill's note records that Mr Kitchen asked for the meeting to discuss a whole range of subjects, including the Barbican flat. Mr Scargill explained his case as to his entitlement and produced a copy of the 2002 contract, though Mr Kitchen was not actually given it. According to Mr Kitchen's note, Mr Scargill complained of a witch-hunt; and although Mr Scargill's own note does not use that phrase it is consistent with the tone of it, which includes some very disobliging language about Mr Kitchen. Mr Kitchen said that there was no witch-hunt on his part and that he only wanted "to make sure everything is being done right with documents to back things up".
150. Mr Pitt-Payne put it to Mr Kitchen that the resolution from the Scotland Area had to be understood in the light of a serious deterioration in the relationship between Mr Scargill and the Union, and in particular Mr Kitchen, as a result of his having made a complaint to the Certification Officer about elections conducted by the Yorkshire Area to choose a representative for the NEC: Mr Kitchen was one of the candidates whose election was challenged. He suggested that the question of the Barbican flat would never have been pursued but for that deterioration. Mr Kitchen denied that suggestion, saying that the issue of the Barbican flat was already being pursued prior to the complaint to the Certification Officer [T2/141/6-7]. I do not think I need make a finding on this, since ultimately I am concerned with how the parties acted (or failed to act) rather than with their motivations.
151. Although I was not told whether the Scotland Area motion was passed, it was evidently following the 2010 Conference that a decision was made to take legal advice on the question of the Barbican flat. Eventually, on 15 February 2011, Bird & Bird, the Union's solicitors, wrote to Mr Scargill to say that the Union would not pay the rent beyond the June quarter-day.

Analysis: Did the NEC Ratify the Post-Retirement Payments ?

152. Article 17 in Bowstead and Reynolds on Agency reads (so far as material) as follows:

"(1) Ratification may be express or by conduct.

(2) An express ratification is a manifestation by one on whose behalf an unauthorised act has been done that he treats the act as authorised and becomes a party to the transaction in question. It need not be communicated to the third party or the agent.

(3) Ratification will be implied whether the conduct of the person in whose name or on whose behalf the act or transaction is done or entered into is such as to amount to clear evidence that he adopts or recognises such act or transaction: and may be implied from the mere acquiescence or inactivity of the principal."

Article 16 reads (again, so far as material):

"In order that a person may be held to have ratified an act done without his authority, it is necessary that, at the time of the ratification, he should have full knowledge of all the material circumstances in which the act was done, unless he intended to ratify the act and take the risk whatever the circumstances may have been."

153. Mr Pitt-Payne submitted that the decision of the NEC on 10 February 2009 constituted an express ratification of the acts of Mr Heathfield and/or Mr Cave and/or Mr Stanley in conferring the disputed rights on Mr Scargill: the minuted decision could only be understood as a decision to treat those acts as authorised, after receiving a full report from Mr Lavery. In the alternative, he submitted that the continued payment of the rent and other expenses for a further two years following that date was a clear recognition of Mr Scargill's contractual right to such payment and accordingly constituted implied ratification.
154. The starting-point is to establish exactly what was the meaning and effect of the decision of the NEC of 10 February 2009. It is described in the minute as being to "accept" Mr Lavery's report, which, as Mr Pitt-Payne pointed out, appears to have said that the Union had "continued obligations" to Mr Scargill. If the minute stopped there, it might well be conclusive. But the problem is with the reference which immediately follows to "further questions", which looks as if the issue was not, after all, regarded as definitively concluded. That was indeed the evidence of both Mr Thomas and Mr Kitchen. I take them in turn.
155. As for Mr Thomas, when Mr Pitt-Payne put it to him in cross-examination that by accepting Mr Lavery's report the NEC had accepted the view expressed in it that the Union had an ongoing obligation to pay the rent on the Barbican flat, he demurred. His particular answers [T2/62-63] are slightly opaque, but the gist was that he did not believe that the NEC had been given the full material from which they could satisfy themselves that that was the case, and that was why provision was made for further questions. I asked him further about this at the end of his evidence. My particular question was whether he knew why, when it was clear that the original intention had been that there would be a written report, Mr Lavery had again only reported orally. Mr Thomas replied [T2/79-80]:

"A. Without criticising Mr Lavery, my Lord, this is part of -- we believed we were in the situation where we were getting clarity, more evidence and specific reasons for continuing paying, et cetera, et cetera. By the time we got into this meeting, sir, my understanding of it, once again, even though a verbal report had been given by the president, it still didn't satisfy our requirements. It didn't satisfy why the ongoing need was there, and hence the president, in my opinion, we should accept that, and "Anything you want over and above that you should write in specifically, because I have had enough", basically. So that is the gist of the meeting."

156. Mr Kitchen initially accepted with fewer qualifications than Mr Thomas Mr Pitt-Payne's proposition that the NEC had accepted Mr Lavery's report; but when Mr Pitt-Payne put it to him that "the NEC was accepting the position as reported by the President that there was a continued obligation in relation to the flat" he replied [T2/130/6-8]:

"It was hoped by Mr Lavery at that point that that would draw a line under it and no further questions would come about it, yes."

That does not sound like a final conclusion. At the conclusion of his evidence I took him again to the reference in the minute to "further questions", and asked him as follows [T3/35-37]:

"Q: Now, you were present at this meeting and participated in the discussion, or at any rate heard the discussion.

A. Yes.

Q: What was your understanding about what the purpose of asking further questions was? What further questions was it anticipated were or might be necessary? Do you see what I mean? If the report has been accepted, why is anyone anticipating further questions?

A. Because the report was a verbal report given by Mr Lavery, in an attempt to try and draw a line underneath it, although when we were approving the minutes of the meeting it was felt that that would not be the case and that NEC members were not fully satisfied to leave it at that, and it was said in the meeting that if – the report given by Mr Lavery was accepted in the fact that he had given the report and said what it said, and if that didn't draw a line under it then questions were invited to be put in writing, as opposed to try and prevent somebody at the next NEC meeting trying to re-open it under matters arising. Because that gives the president, you know, you have been told to put it in writing to the secretary, so you can't keep revisiting it under matters arising of the previous minutes. It is my recollection that is why it was worded that way."

157. Although the detail of what Mr Thomas and Mr Kitchen are saying in those passages is not always clear, what matters is that their evidence reinforces the inference to be drawn from the minute itself, namely that there was unfinished business. Mr Lavery "hoped" that the possibility of further questions would not be taken up, but that remained to be seen. In fact, this reads to me like a classic chairman's fudge. It was clear that there were strongly opposed views on the committee, and the ultimate way forward was to adopt a motion in equivocal terms and hope for the best.
158. That conclusion is perhaps reinforced by a more formal point. The minute refers to Mr Lavery's report being "accepted". I pointed out in the course of the evidence that the earlier NEC minutes which I had seen used the formula "accepted and approved" in relation to some reports coming before it, others being merely "noted" or "received": the "reports" of the FGPC meetings of 21 December 1981 and 8 April 1982, for example, were both "accepted and approved" – see paras. 21 and 24 above. Mr Scargill said in re-examination that the Union used as its "guiding principle" Lord Citrine's ABC of Chairmanship [T6/13/9]. Ch. 10 of that work deals with the question of how committees should deal with reports, and a copy was helpfully produced in closing submissions. Para. 262 lays down that:

"… the first motion, when the report of a delegate comes before the meeting, should be 'that the Report be accepted as having been read … [or, in the case of a verbal report] … given'."

Lord Citrine goes on to say that "after passing this formal motion" the committee is at liberty to deal with the items arising from the report "as in paragraph 259 and 260". These paragraphs discuss the various possible decisions open to a committee, prescribing that if the report's contents are agreed the motion should be "that the Report be approved". Although the Union clearly had a tradition of paying attention to formalities, I would not regard this point by itself as carrying great weight; but it nevertheless shows that the distinction between accepting the report and approving its content, advanced expressly by Mr Kitchen and implicitly by Mr Thomas, need not be merely the quibble of a barrack-room lawyer. It is worth noting too that the minute of the November meeting had also "accepted" Mr Lavery's report, although it was there even clearer that the question remained live and was to be the subject of further discussion.

159. I accordingly do not accept that the NEC on 10 February 2009 can be taken as having ratified the accommodation clauses in the 1992, 1999 and 2002 contracts. But even if the position were less clear than I believe, there would be real difficulties about whether the NEC was in possession of all the information necessary to make an informed decision. It seems that Mr Lavery referred to the FGPC and NEC decisions of 1981 and 1982; but it is wholly unclear how much detail he gave about them. Since there was no written report it must be presumed that he did not provide copies, and I do not know whether he read them out or merely purported to summarise their effect. There is no reference in any of the minutes to any of the relevant contracts, and they too were certainly not produced. That being so, while the NEC must have understood that the "continued obligation" which Mr Lavery was saying existed was an obligation to pay the rent on the Barbican flat following Mr Scargill's retirement as President, it is far from clear whether all the substantial terms were explained – most obviously, the right for any widow to continue to occupy the flat, but also which particular outgoings were being paid. The schedule produced to the officials before the November 2008 meeting was never circulated, even if, as seems likely, Mr Lavery communicated some or all of its contents orally. The provision of a second oral report, contrary to the expectations raised in November 2008, is unsatisfactory and unexplained, and it is not at all surprising that Mr Thomas and others should have felt that they were still not being given the full picture. In the light of the matters set out at paras. 139 and 141 above, it seems likely that Mr Lavery's continued economicalness with the information which he provided was deliberate. It has not in my view been proved that the NEC had "full knowledge of all the material circumstances".
160. I do not believe that the position is altered by the Union's continued payment of the rent until February 2011. Up to November 2008 there could be no question of the payments evidencing acceptance by the NEC of Mr Scargill's claimed rights: it was not until then that it even knew that the payments were being made. Although that changed, the continuation of the payments thereafter did not connote that the NEC had accepted that they were due. As I have found, even after the February 2009 meeting members – or in any event some members – did not feel that they had sufficient information to decide what the position was. In those circumstances the fact that steps were not taken at once to bring the payments to an end (they would continue administratively unless and until countermanded by the NEC) does not amount, in the language of Bowstead, to "clear evidence that [it] adopted or recognised" the agreement which is relied on. No doubt a time would have come when such an inference would have been justified; but within a year or so the issue had been raised again by the Scotland Area, and it was discussed between Mr Scargill and Mr Kitchen in March 2010 in terms which made it clear that the Union was still undecided.
161. I accordingly do not find that the Union ever ratified the accommodation provisions in the 1992, 1999 and 2002 contracts.

(3) ESTOPPEL

162. At paras. 63, 69 and 86 of the Amended Defence and Counterclaim it is pleaded that the Union is estopped from denying the validity of each of the 1992, 1999 and 2002 contracts. Mr Pitt-Payne said in opening that what was relied on was estoppel by convention; he referred to Amalgamated Investment and Property Co. Ltd. v Texas Commerce International Bank Plc [1982] QB 84. The matters relied on as giving rise to the relevant "common assumption" are substantially the same as are relied on in support of the ratification case. That means that my conclusions as regards that case are fatal to the estoppel case also: I do not believe that Mr Scargill and the NEC ever shared, or proceeded on, a common assumption that he enjoyed the rights claimed.
163. A rather different estoppel case made a fleeting appearance in Mr Pitt-Payne's opening, based on a passage in Mr Scargill's witness statement, and the factual basis was explored in cross-examination. In short, what Mr Scargill says is that at the time of his retirement in 2002 he declined to take advantage of severance benefits totalling £264,500 in reliance on the fact that the Union would be continuing to pay the rent and other costs of the Barbican flat for the rest of his life.
164. In his closing submissions Mr Pitt-Payne said that he accepted that there were decisions of the Court of Appeal that made it difficult for him to rely on estoppel "as a basis for a continuing contractual right to payments as from today that would not otherwise exist" and that he would accordingly be relying on it only as a defence to the Union's claim for equitable compensation; but it will be convenient if I make the necessary factual findings at this point.
165. The severance benefits which Mr Scargill claims that he gave up consist of (a) a payment of some £118,000 from a "special reserve fund" established by the Union to make lump sum payments to retiring employees who had been employed before the introduction of its contributory pension scheme, and (b) a payment of £145,615 under the Union's severance scheme.^[35] Mr Pitt-Payne accepts that neither payment was strictly a contractual entitlement, but he says that Mr Scargill had a legitimate expectation that both would be paid. Mr Davidson sought to establish in cross-examination that there was in fact no legitimate expectation of either payment. As regards (a), his point was that it was difficult to justify a payment out of the fund in question when in fact – as was accepted – Mr Scargill would be in receipt of a full pension. Mr Scargill acknowledged that these payments were indeed controversial, which was one of the reasons why he decided to forego it; but the expectation of receipt was nevertheless there. As regards (b), Mr Davidson pointed out that the termination of Mr Scargill's employment was not a case of severance in the usual sense: he had simply retired. Mr Scargill said that if reference was made to the relevant decisions of the NEC and/or Conference it would be seen that he fell squarely within the scheme; but the decisions in question were never produced.
166. I do not think it is necessary for me to make a finding about Mr Scargill's "entitlement" to either of these benefits, and I prefer not to do so in circumstances where I have not seen the full relevant documentation. I am prepared to proceed on the basis, even though it has not been satisfactorily proved, that he did have a legitimate expectation of receiving them and that he made, and communicated to the Union, a conscious decision to forego them. I am also prepared to proceed on the basis that part of his reason for doing so was that he felt that his retirement was already adequately provided, and that part of that provision was the Union's payment of the rent on the Barbican flat. But none of that could get him home on any kind of estoppel, whether by convention or by representation, unless the NEC was aware that he was making his decision on that basis and did nothing to disabuse him of the true position. As I have already found, the NEC as a body did not even know as at the date of his retirement that the Union had been paying for the Barbican flat, let alone that a contract had been signed committing it to continue payment after his retirement. Mr Scargill says that he shared his thinking, albeit in fairly general terms, with Mr Cave and with the then Finance Officer [T6/59/13-20]; but that could not be enough.

CONCLUSION IN RELATION TO THE BARBICAN FLAT ISSUE

167. The Union is entitled to the declaration sought at para. 48 (2) of the Particulars of Claim, which is in the following terms:

"The Claimant has and has since 1 August 2002 had no obligation to make any payment whatsoever in relation to the rent, rates, service charges, heating, lighting, maintenance, parking bay, lighting, decorations and other costs associated with the use of the flat situated at 251 Shakespeare Tower, Barbican, London."

168. I have had to reach that conclusion by a very elaborate route. I am conscious that this judgment may be read by Union members (and others) who will not wish to follow every twist and turn of the story. For their benefit I will attempt a simplified summary; but I must emphasise that this will involve ignoring many details and subtleties, and my definitive reasoning is that which I have set out above. The summary is as follows:

(1) Mr Scargill's predecessors all had houses bought for them by the Union in or near London which they were entitled to occupy not only during their office but after retirement (with the right extending to any widow), either at a very low rent or (on retirement) by buying the property at a very reduced price. That may seem to today's eyes a very generous benefit; but it was of long standing and was within the Union's Rules, and if that was what this claim was about it seems likely that the Union would be obliged to continue the benefit.

(2) That benefit appeared in Mr Scargill's first written contract in 1982, but it was not at that stage taken up. However, the NEC did agree to pay the rent (and other outgoings) on a flat of which he became the tenant, on the Barbican estate, which is fairly near the then Union headquarters in London.

(3) Mr Scargill says that having the Union pay the rent on the Barbican flat was understood to be a replacement for the benefit given to his predecessors as described at (1), and therefore was also a lifetime benefit. I have rejected this argument for a variety of reasons, including: that the original minutes of the NEC from 1982 do not say that; that it is not what original contract which he signed says; that the Yorkshire Area went on subsidising the mortgage on his home in Yorkshire, which he retained; and that it was known at the time of his election that the Union might well shortly be moving its headquarters outside London, in which case a flat in London would not be necessary. I have found that it is more likely that the understanding at that time was that the payment of the rent of the Barbican flat was in the nature of a facility to enable Mr Scargill to do his job properly and that he retained the right in due course to have a house bought for him by the Union.

(4) My conclusion about that is supported by the fact that in 1984 the Union agreed to buy Mr Scargill's house in Yorkshire, on the basis that it would remain his home – though the deal in the end did not go ahead, for reasons to do with the 1984/5 strike and the sequestration of the Union's assets.

(5) The Union did not in fact pay the rent on the Barbican flat between 1985 and 1991. But I have found that in 1991 Mr Scargill decided that he did not want to take up the benefit to which he had been entitled since 1982 – that is, of having a house bought for him – but instead wanted the Union to resume paying the rent on the flat and to continue to do so into his retirement.

(6) What he should then have done was to go back to the NEC and seek their authority for that arrangement, since it was not what had been agreed so far. But he chose not to do so. Instead, he obtained, on his own initiative and without involving the NEC, legal advice which supported his right to have the Union pay for the Barbican flat (though it did not deal with whether the right would continue into retirement) and told the Finance Department to resume the payments on that basis. He also in 1992 signed a contract, which was renewed in 1999 and 2002, which said that the Union would pay the costs of the flat until his death (and that of any widow). He obtained legal advice in support of the most recent of those contracts.

(7) Although Mr Scargill claims otherwise, the process of drafting the contracts and obtaining the legal advice, which should have been on an arm's-length basis, was done entirely on his initiative and under his control. None of this was disclosed to the NEC. The legal advice was based on information provided by him which did not give the full picture; and anyway it could not make up for the absence of NEC authorisation.

(8) Therefore, when Mr Scargill retired in 2002, the contract which appeared to give him the right to have the Union continue to pay the rent on the Barbican flat was not effective because the NEC had never approved his having any such right.

(9) Without the knowledge or agreement of the NEC the Union continued to pay the rent on the Barbican flat following Mr Scargill's retirement. When the question was first raised in the NEC in 2008/2009, no decision was reached to approve the contract retrospectively.

169. I have in the course of reaching those conclusions had to make some findings which reflect badly on Mr Scargill: he has not always been straightforward in his dealings with the Union and I have had to reject his evidence at several points. But in fairness to him it should be recognised that the result reached in this case means that he is in a worse position than his predecessors and that he has missed out on a benefit which when he was first elected President he could reasonably have expected to enjoy. The basic idea of the Union providing him (and any widow) with accommodation for life was in accordance with Union practice, and if, for example, the Union had bought his house in Yorkshire in 1984, as it nearly did, he (and any widow) would, it seems, have been able to live there on a very low rent for the rest of his (or her) life. But he only has himself to blame. If he had told the NEC in 1991 that he now preferred a different arrangement, they would either have agreed or not; and if they had not agreed he could have taken advantage of the rights in his original contract. He has paid a real price for the lack of transparency in his dealings.

B. FUEL

170. The issue is a limited one, and concerns only whether Mr Scargill's admitted right to be reimbursed the cost of gas supplied to his Yorkshire house is capped at the price of ten tonnes of coal.
171. The first place to look is at the terms of the written contracts. The 1982 contract says nothing about concessionary coal at all. As we have seen, the 1992, 1999 and 2002 contracts do all refer to "concessionary fuel/cash in lieu"/"annual concessionary solid fuel bills or cash in lieu": see paras. 65, 70 and 104 above. But those are clearly shorthand references to an existing entitlement which was understood by the parties and do not help much on the point in issue. (Since the existence of the basic right is undisputed, I need not consider the issues of NEC authority in relation to these particular provisions.)
172. Mr Kitchen in his witness statement says that the scheme for providing concessionary coal to employees of the Union varied from Area to Area, but in every Area was subject to a cap. His explanation of the position about employees of the National Union is not entirely clear; but I understand the effect to be that, although there was a scheme for them too, with its own cap, since all of them enjoyed a superior entitlement under an Area scheme, which they were entitled to retain, the national entitlement was theoretical only. That explanation appears to be consistent with a memo from Mr Scargill to the Union's Finance Department dated 16 November 1987 stating:

"With reference to my annual fuel allowance I would inform you that full-time officials in Yorkshire have 10 tonnes of allowance and I was granted the same when I became President."

173. It is the Union's case that that memo shows Mr Scargill communicating to Mr Daly, or confirming, his Yorkshire entitlement so that it could be replicated by the National Union. Mr Scargill said that the reference to his becoming President was to the Presidency of the Yorkshire Area [T3/152-3]. That may well be right, but since the decision of the NEC on 8 April 1982 was that the National Union would take over the "arrangements and allowances" in respect of his Yorkshire home currently borne by the Yorkshire Area (see para. 23 above) that is a distinction without a difference: what the National Union would be taking over was an allowance capped at ten tonnes. There is in the bundle a handwritten schedule by the Union's Finance Officer, Ms Riley, headed "Staff Concessionary Fuel Allowance 1987". That shows Mr Scargill with an entitlement of ten tonnes: the figure originally written was five, but it has been changed to ten. This appears to show that it was the understanding of the Finance Department at least that Mr Scargill's entitlement was capped.
174. It is, as I have said, common ground that a staff member enjoying a concessionary coal allowance could in certain circumstances be paid instead for the cost of gas heating. It is Mr Kitchen's evidence, and it makes sense, that any such cash-in-lieu entitlement would be subject to a cap equivalent to the value of the concessionary coal entitlement. This appears to be confirmed by the way in which Mr Scargill handled a request for cash in lieu made by Mr Cave in February 1998. In his memo confirming the arrangement he said that Mr Cave was entitled to receive:

"… the monetary value up to the value of the 7 tonnes of coal currently paid for by the NUM (Yorkshire Area). I should add that if your fuel bills exceed this amount you will be responsible for any additional payments."

175. Mr Scargill's case that he is entitled to have his gas bills paid without any cap is based on a decision of the FGPC, dated 12 November 1975, subsequently confirmed by the NEC, that "heating costs of the National Officials be met by the Union". That entitlement is on its face unlimited, and he says that it represents a distinct right, separate from the concessionary coal entitlements of other employees: the decision was made because, anomalously, "… whilst Area officials were getting tonnage of coal or alternative fuels, the national officials had not had that facility up to that point" [T3/147/3-8]. When he wrote the memo to the Finance Department quoted at para. 172 above, he was not intending to set out his own entitlement, as President of the National Union, but merely responding to an enquiry about the position of Area officials in Yorkshire, by reference to his own entitlement when he was still receiving the benefit from the Yorkshire Area [T3/146/6-20 and 152-3]. As for Ms Riley's schedule, that was a "mishmash"; but if it was really intended to show that his entitlement was capped it was wrong [T3/148-9 and 155]. He was not in fact asked about the letter to Mr Cave, but he did point out that, when he wrote to Mr Cave in November 2000 about himself making the same change from coal to gas (Mr Cave as Vice-President had to authorise the change since Mr Scargill could not do so for himself), he had stipulated that:

"… in accordance with my Contract of Employment I shall be entitled to claim the full cost of running a gas fired system both now and after I retire [my emphasis]."

Mr Cave did not demur, saying only that he would arrange for payment of the gas bills "in accordance with your Contract of Employment".

176. I do not accept Mr Scargill's case on this point. I accept that the 1975 decision of the NEC is in very general terms; but, as he himself explained, it was intended to put national officials in the same position as Area officials as regards concessionary coal. I see no other sign that it was intended as a distinct kind of right (which would need much further definition). If that is so, there is no reason why national officials' entitlements should not have been capped like everyone else's (even if possibly at a higher figure). I find his explanation of his memo of 16 November 1987 unconvincing. I think it unlikely that the Finance Department would have applied to him for information about the entitlements of officials other than himself. The natural explanation is that they were asking him, and he was answering, about his own position – NB the explicit statement "I was granted the same". The request was plainly connected with the exercise which produced Ms Riley's schedule, and it seems likely that the change from five tonnes to ten in his case is in response to the memo. Nor do I see why, if there were a separate deal for national officials, Mr Cave's entitlement was specified, when he converted to gas, as remaining capped. All that is left is Mr Scargill's own assertion when he converted to gas that he would be entitled to the full cost; but that cannot by itself create a right that did not otherwise exist.
177. The form of declaration sought in the Particulars of Claim in relation to this issue is unsatisfactorily general. I will ask counsel to supply a draft which makes clear the nature of the cap on Mr Scargill's continuing entitlement.

C. SECURITY SYSTEM

178. At a meeting of the Trustees of the Yorkshire Area on 3 March 1978 it was noted that the Trustees had "verbally agreed" to the installation of a security system at 2BYL. The minute does not say in terms, but Mr Scargill says and it is not disputed, that the Area agreed to pay the ongoing costs of the system. Mr Scargill says that the Area thought it reasonable to pay these costs because there had been threats against Mr Scargill on account of his activities as Area President. I have no difficulty in accepting that. Even before the 1984/5 strike, and still more following it, Mr Scargill had many enemies; and it is entirely appropriate that the Union should bear the reasonable costs of taking precautions to avert risks incurred because of his work on its behalf.
179. Mr Scargill says that these costs were part of the arrangements and allowances about his Yorkshire home which the NEC on 8 April 1985 agreed that the National Union should take over: see para. 23. That is not disputed. Nor is it disputed that it was understood that the same arrangements should apply at Treelands.
180. The only point of dispute between the parties is whether the obligation in question was to continue after Mr Scargill's retirement. Mr Scargill relies on the express statement to that effect in the 1992 and 1999 contracts and the admittedly more general reference to "allowances and expenses" in the 2002 contract. However, there are in principle similar problems about these provisions as there are about those in relation to the Barbican flat, and it is necessary to go back to the original decision of the Yorkshire Area Trustees which they reflect. There is, unsurprisingly, no contemporary evidence about how long the Trustees intended the arrangement to last for; and it is necessary for me to find what they must have intended by reference to the surrounding circumstances and the object of the payment. Taking that approach, I do not think that the agreement can be understood as being limited to the period of Mr Scargill's employment. It is unrealistic to suppose that individuals who have sufficient malice towards Mr Scargill to wish to intrude on his home and perhaps cause damage or injure himself or his family would immediately cease to be a risk at the moment of his retirement. In my view the Trustees must have contemplated – or would have done so if the point had been raised – that the special risks against which Mr Scargill needed protection would continue after his retirement: no doubt they would diminish with time but it would be impossible to fix a point at which it was no longer reasonable to pay the upkeep on the system. I would therefore regard the obligation as continuing so long as Mr Scargill is the owner of Treelands.
181. With rather more hesitation, I would hold that the right must have been intended also to extend to any widow, legal or "common law", occupying Treelands. It is not so much that the risks would continue following Mr Scargill's death as that union practice appears to have been to continue for the benefit of widows rights which were enjoyed by their spouses during retirement. It was Mr Scargill's evidence that a similar arrangement made for Lord Gormley continued not only into his retirement but during the time that his widow occupied the Union house in question.
182. Again, I would ask counsel – in this case Mr Pitt-Payne – to draft a form of declaration that can be made under the counterclaim.

(D) ACCOUNTANCY COSTS

183. It was the practice throughout Mr Scargill's time as President that either the Union itself or the Trustees of the Yorkshire Area would pay the cost of the Union's auditors – who were PMM and then KPMG – preparing his personal tax bills. There is no reference to this entitlement in any of his contracts of employment or, expressly, in any decision of the NEC. But he says that he was told by the Area officials when he was first employed by the Yorkshire Area in 1972 that the Area would pay that cost and would do so for life; and he says that that was one of the allowances which the NEC agreed to take over when he became National President, albeit that it was not strictly covered by the decision of 8 April 1982 since it did not relate to "his Yorkshire home". It seems that for a substantial period the costs were in fact still borne by the Yorkshire Area; but Mr Scargill says that that was an oversight.
184. I am prepared to assume for present purposes that it was during Mr Scargill's employment by the National Union a term of his contract that the Union would pay these accountancy costs, although in the absence of any clear authorisation by the NEC that must be debatable. But I can see no basis on which any such obligation could continue following his retirement. Insofar as this made sense as a contractual "perk" it could only have been on the basis that PMM/KPMG were dealing with the Union's accounts in any event, and it would make sense and avoid duplication of effort, and correspondence with other accountants, if they handled the tax returns of senior employees also. But I can see no such justification following Mr Scargill's retirement, when he would be receiving no payments from the Union.^[36]
185. I ask counsel for the Union to draft an appropriate declaration.

THE UNION'S CLAIM FOR EQUITABLE COMPENSATION

186. The Union claims the amount of (a) the rent and other outgoings paid in relation to the Barbican flat and (b) payments of cash in lieu of concessionary coal for Treelands. The claim goes back to 10 May 2005, i.e. six years before the issue of proceedings.^[37] It is important to understand how the case is put in law. Para. 49 of the Particulars of Claim plead as follows:

"Further, since the purported execution of the 1992, 1999 and 2002 Agreements the Defendant has knowingly received a clear financial benefit by way of payments made by the Claimant in relation to Treelands Cottage and the Barbican Flat, as a result of breaches of the fiduciary duties owed to the Claimant by Mr Heathfield, Mr Cave and Mr Stanley due to their respective roles as agent for the Claimant in each of the purported transactions. The Claimant seeks equitable compensation from the Defendant for recovery of sums that have been paid by it in respect of meeting various costs of the Barbican Flat and Treelands Cottage (as more specifically defined in sub-paras 48(1) and 48(2) above) which were unauthorised under the provisions of the Rules in force at the relevant time AND the Claimant claims: …"

187. Mr Pitt-Payne analysed that claim in his written closing submissions, identifying the essential elements as follows:

"(i) Mr. Heathfield, Mr. Cave and Mr. Stanley acted as agent for the NUM in "each of the purported transactions". The transactions referred to here must mean the execution of the 1992, 1999 and 2002 contracts.

(ii) As agents for the NUM, each of these individuals owed fiduciary duties to the NUM.

(iii) These individuals acted in breach of those fiduciary duties.

(iv) As a result of those breaches, Mr Scargill knowingly received a financial benefit by way of payments made in respect of the Barbican Flat and Treelands Cottage."

That analysis seems to me to be accurate.

188. Mr Pitt-Payne submitted that the claim as so formulated was fatally flawed because there was no evidence that any of the three signatories acted in breach of any fiduciary duty. As he put it:

"The allegation by the NUM against Mr. Heathfield, Mr. Cave and Mr. Stanley is that each of them purported to enter into a contract on behalf of the NUM without authority – i.e. that they acted outside the scope of their authority. But exceeding one's authority, and acting in breach of fiduciary duty, are two different things. The first does not entail the second – everything depends on the circumstances of the transaction. For instance, an agent who honestly believed that he was acting within the scope of his authority, but who turned out to be wrong, would not thereby act in breach of fiduciary duty. On the other hand, an agent who deliberately exceeded the scope of his authority in order to benefit himself or a third party would act in breach of fiduciary duty."

Although he goes on to amplify the point made in the final sentence, I need not do so. He is correct to say that the Union made no attempt to adduce evidence about the state of mind or state of knowledge of Mr Heathfield or Mr Cave or Mr Stanley; and there is no evidence on the basis of which I could properly draw any adverse inferences.

189. That is sufficient to dispose of the pleaded claim. I have not considered whether a claim advanced on a different basis, say as a common law restitutionary claim, might have succeeded; the fact is that no such claim was advanced, even when I raised the difficulties with Mr Davidson in his closing submissions.
190. Strictly speaking, I need not on this basis make any findings about whether or to what extent Mr Scargill genuinely believed that the Union had properly authorised the benefits which he caused to be included in the 1992, 1999 and 2002 contracts and to be paid to him following his retirement. Mr Davidson did not in fact at any stage in his cross-examination put squarely to Mr Scargill that he was acting in bad faith, and in those circumstances I am not prepared to make any such finding. Even if I were to consider doing so, the position is not straightforward. It is possible that Mr Scargill had by 1991 convinced himself, albeit wrongly, that the NEC had in 1982 authorised a lifetime arrangement in relation to the Barbican flat, and that bringing the paperwork into conformity with what he believed the true position to be, without going back to the NEC, was justifiable. He cannot, after all, have expected to keep under wraps indefinitely the fact that the Union was paying for the flat. However, I do not believe that he thought that the position was beyond doubt, otherwise he would not have taken such pains to obtain cover in the form of counsel's advice in 1991 and, more pertinently, 2002. The way in which he sought to obtain a helpful opinion without the involvement of the NEC, or anyone truly independent, is unattractive, to put it no higher; as are his efforts in 2008 to prevent full answers being given to Mr Thomas. But concealment and manipulation in support of a genuinely held belief are alas far from unknown.
191. I dismiss the claim for equitable compensation.

Note 1    I use the term “National Union” to distinguish the Union at national level from its constituent Areas: as to the distinction, see para. 6 below.     [Back]

Note 2    It is disputed whether during his time as an Area official he was employed by the Area or by the National Union, but nothing turns on that.     [Back]

Note 3    The niceties about the constitutions both of the Areas and of the National Union are far from straightforward. To the extent that this summary over-simplifies them it does not matter for present purposes.     [Back]

Note 4    The documents in question are in fact framed as statutory statements of particulars. Such statements are not, strictly speaking, contracts as such but only evidence of the terms of the contract. But very often, as here, they are described as “contracts of employment”; and the formal distinction is, to put it at its lowest, blurred. Nothing turns on the distinction in this case, and I will for convenience refer to the documents in question as contracts.    [Back]

Note 5    There is an FGPC minute in the papers adopting – or, it may be, affirming – that depreciation policy; it is undated, but it appears to date from late 1968.     [Back]

Note 6    It seems that this figure was not calculated in accordance with the practice endorsed in 1967, which would have produced a figure (still very low) of about £700; I was offered no explanation of why the prescribed formula was not followed.    [Back]

Note 7    In fact the property seems to have been in the names of Mr and Mrs Scargill; but for present purposes that it is an immaterial complication, and I will refer to it simply as his.     [Back]

Note 8    In order to assess it with any precision one would need to know the level of interest rates at the time. I heard no evidence about this; but Mr Davidson said in closing submissions, without demur from Mr Pitt-Payne, that mortgage rates in 1982 were over 14%, yielding a saving of over £3,000 p.a.    [Back]

Note 9    This was a senior administrative post within the Union. It does not correspond to the post of “CEO” in modern usage.     [Back]

Note 10    I should mention for completeness that it has always been Mr Scargill’s position that clause 11 of the 1982 contract was not entirely wrong: it accurately stated the position for the three days between 5 and 8 April 1982. His insistence on this is characteristic of his interest in formalities.    [Back]

Note 11    In fact no formal steps were taken to implement this change; but Mr Davidson submitted, no doubt correctly, that the National Union would have been subrogated to the Area’s rights.     [Back]

Note 12    He had of course seen the 1982 and 1983 contracts: see para. 32 above.     [Back]

Note 13    Mr Scargill said that in fact most of the members of the NEC in 1990 would not have been misled, since they had been members in 1984 and knew the real reasons. That may or may not be right; but it does not matter for present purposes. What may be more significant is that Mr Scargill is prepared to be economical with the truth when he judges it necessary.    [Back]

Note 14    This will not have previously occurred for national officials, since they would not already have had homes in or near London. But, as noted above, Areas also provided officials with accommodation, and it was apparently not unusual for them to do so by buying the home which the official already occupied.    [Back]

Note 15    The reference to “NUM flat/office” has a whiff of advocacy about it: the flat was only an office in the sense that Mr Scargill used one of the bedrooms as an office [T5/59]. But it is of interest that that is how Mr Scargill chose to describe it for a Union audience.    [Back]

Note 16    It would be natural to suppose that these were the proceedings referred to in Mr Cave’s letter of 7 December 2001, for which copies of these contracts are said to have been taken off the file; but that was not in fact Mr Scargill’s evidence – see para. 32 above and T5/68.     [Back]

Note 17    At the dates covered by the Lightman report the Union was of course not paying the rent or other outgoings (save telephone and fax bills). Although the report did refer to the Barbican flat (see para. 37 above), it did so only very briefly and “for completeness” because it had been mentioned in the press.     [Back]

Note 18    Mr Scargill said in cross-examination that Mr Hendy gave his advice to Mr Heathfield and to the then Chief Executive Officer of the Union, Mrs Fellows. But it is inconceivable that Mr Scargill would not have been involved.     [Back]

Note 19    The office of Secretary was at this date in abeyance: see para. 8 above.     [Back]

Note 20    I should record that although these latter changes were potentially significant, Mr Pitt-Payne said in his closing submissions that they were no longer of practical effect since the option to elect alternative accommodation would have had to be exercised at the point of retirement. I am not sure that that is clear from the words themselves, but since Mr Scargill drafted them he no doubt knows what he intended.     [Back]

Note 21    This is described by Mr Eyre as “the defendant’s new contract”. The Defendant in the Murdoch case was of course the Union. The failure to distinguish between Mr Scargill and the Union appears characteristic of Raleys’ relationship with them: see below.     [Back]

Note 22    The same applies to the other Raleys’ internal documents referred to below.     [Back]

Note 23    It is odd that the note reads as if Mr Scargill was raising the issue for the first time, whereas he had already done so in his letter of 24 September. Maybe that is simply clumsy drafting. But it may be that Mr Eyre had overlooked the parts of the letter and the draft contract about accommodation: he did not, as I have noted above, refer to it in his instructions to Mr McMullen.     [Back]

Note 24    It might conceivably have been the case that Mr Scargill was asked to correct the letter because Mr Cave was away from the office. But that is not his evidence.     [Back]

Note 25    This point was made by Mr Kelly in his witness statement but was not explored further. I did, nevertheless, consider whether Ms Cutts might have been on leave because of Mr Cave’s illness; but entries from her diary, which was in evidence, suggest that she was at work until the following week. I should add that Ms Myers is now Mr Scargill’s partner; but it was not suggested that that is material to any of the questions I have to decide.     [Back]

Note 26    The evidence about Mrs Fellows’ formal job title at this time is confusing, but it is clear that she worked closely with Mr Scargill.    [Back]

Note 27    He omitted the word “own” before “home” in (a); but this is plainly a slip.    [Back]

Note 28    This is a point of no significance and no doubt derives from its omission by Mr Hendy when he set it out in his Advice: see n. 27 above.     [Back]

Note 29    The minute is not, strictly speaking, a contractual document, though since it is a decision of a committee about conferring rights on an employee who would look to the decision as the substantive source of those rights (and indeed was also the chairman of the committee) the distinction is a fine one. But in any event it makes no difference. The relevant rules about construction are not confined to contractual documents.     [Back]

Note 30    It may at the theoretical level be a nice question whether I am concerned with the intention of both committees or only the NEC; but it makes no difference in the circumstances of this case.    [Back]

Note 31    I should say that I did have evidence from one member who attended the FGPC and NEC meetings of 8 April (besides Mr Scargill), namely Mr Rees. But his evidence was essentially an interpretation of the effect of the decisions rather than an account of any explicit discussions at the time, which it would indeed be remarkable if he could now recall.    [Back]

Note 32    The evidence was that when the Union moved its headquarters in 1983 a flat was rented in Sheffield for Mr Daly’s use, since it was clearly too far to travel from Berkhamsted. But that was a reaction to a particular situation (and one which was likely to be of short duration: Mr Daly retired in 1984) and affords no relevant parallel, or certainly none that assists Mr Scargill.     [Back]

Note 33    It did, it is true, do so two years later (see para. 41 above); but that was only as a step towards an intended purchase of 2BYL (whether genuine or sham), which is not what is contemplated by the minute.    [Back]

Note 34    It appears that no such procedure as was required by (k) (1) was ever put in place; but that does not affect the point which I make above. In any event the more pertinent provision for present purposes is (k) (2).    [Back]

Note 35    Although the latter payment was foregone in the sense that Mr Scargill did not receive it, an equivalent payment was in fact made to the International Miners Organisation, an organisation with which Mr Scargill has long been closely associated and of which he was President.     [Back]

Note 36    Mr Scargill is apparently, or was until recently, receiving (in addition to his pension) a salary from the Trustees of the Lancashire and Yorkshire Area Trusts; but that is a separate matter.     [Back]

Note 37    The claim was originally unlimited in point of time; but I gave permission to Mr Scargill to amend the Defence to rely on the Limitation Act 1980, and Mr Davidson acknowledged that the claim was indeed time-limited.    [Back]