WHEN THE JUDGE IS ENTITLED NOT TO DECIDE ON THE EVIDENCE: PLUS THE IMPORTANT ISSUE OF CONDUCT AND COSTS

The Court of Appeal decision today in Constandas v Lysandrou & Ors [2018] EWCA Civ 613 illustrates two distinct issues:

1. The position when a judge is unable to make a finding on the evidence.

2. What conduct can lead to a successful party being disallowed costs.

THE CASE

The claimant brought an action claiming he had a half share in a house on the grounds that he had contributed to the purchase price when it was first purchased. At trial the judge found she could not, on the available evidence, make any findings as to who had paid sums when the house was purchased.  The claimant had the burden of proof and this meant he failed to discharge it. However she disapproved of the defendant’s conduct and did not make any order for costs in the defendant’s favour.

THE APPEAL

The claimant appealed against the findings on liability. The defendant appealed against the refusal to award costs.

WHEN CAN A JUDGE TURN TO THE BURDEN OF PROOF?

There is a detailed consideration of the guidance given on this issue.

1. 1. The circumstances in which a court is entitled to determine a disputed issue of fact by resort to the burden of proof were discussed in Stephens v Cannon [2005] EWCA Civ 222, [2005] CP Rep 31. That case concerned a dispute over the sale of a piece of land. One issue in the case was the rival evidence as to the price for which the property would have been sold at a particular time. The Master had adopted the valuation put forward by the buyer’s expert Mr Harvey, a chartered surveyor. The sellers submitted that the Master was wrong to adopt Mr Harvey’s figure as the likely sale price. The Master said that he was confronted with the expert evidence of two professional surveyors who had presented valuation ranges which were some way apart. He was unable to decide that he preferred one view over the other and the case therefore fell to be decided on the basis of the burden of proof. As the sellers bore the burden of proof to satisfy him on the balance of probabilities that their view was correct and they had failed to do this he adopted the view put forward by the buyers. The sellers complained that the Master had abdicated his judicial responsibility by failing to reach a conclusion in the light of the evidence of the two experts as to the price which would have been achieved upon sale.

   2. After referring to the relevant authorities, Wilson J, with whom Arden and Auld LJJ agreed, set out the following propositions ([46]):

“(a) The situation in which the court finds itself before it can despatch a disputed issue by resort to the burden of proof has to be exceptional.

(b) Nevertheless the issue does not have to be of any particular type. A legitimate state of agnosticism can logically arise following enquiry into any type of disputed issue. It may be more likely to arise following an enquiry into, for example, the identity of the aggressor in an unwitnessed fight; but it can arise even after an enquiry, aided by good experts, into, for example, the cause of the sinking of a ship.

(c) The exceptional situation which entitles the court to resort to the burden of proof is that, notwithstanding that it has striven to do so, it cannot reasonably make a finding in relation to a disputed issue.

(d) A court which resorts to the burden of proof must ensure that others can discern that it has striven to make a finding in relation to a disputed issue and can understand the reasons why it has concluded that it cannot do so. The parties must be able to discern the court’s endeavour and to understand its reasons in order to be able to perceive why they have won and lost. An appellate court must also be able to do so because otherwise it will not be able to accept that the court below was in the exceptional situation of being entitled to resort to the burden of proof.

(e) In a few cases the fact of the endeavour and the reasons for the conclusion will readily be inferred from the circumstances and so there will be no need for the court to demonstrate the endeavour and to explain the reasons in any detail in its judgment. In most cases, however, a more detailed demonstration and explanation in [a] judgment will be necessary.”

1. 1. The Court of Appeal held that the Master’s decision could not stand, despite having considerable sympathy for him confronting the task of valuation. The Master had not sufficiently striven to come to a decision or explained why he could not reasonably do so. An allied concern was that he seemed to regard himself as required to adopt one or other of the experts’ figures whereas it had been open to him to adopt an intermediate figure in a principled way. He had not therefore been entitled to resort to the burden of proof in the manner in which he did.

   2. The principles set out in Stephens v Cannon were refined in Verlander v Devon Waste Management & Anr [2007] EWCA Civ 835 (unreported). The factual dispute in that case was how an employee came by an injury to his back when loading an industrial freezer onto the trailer of a lorry. He claimed that he had been required to lift the freezer to a height of about four to five feet to stack it onto refrigerators already loaded onto the lorry. The defendants claimed that he had only been required to lift the freezer a few inches so that although he had suffered the back injury claimed, there was no unsafe system of work. The Recorder at trial found the claimant to be an unimpressive witness who had been evasive and some of whose evidence had been contradictory. On the other hand he detected some closing of ranks and obfuscation on the part of the defence witnesses. The Recorder said he was unable to find that the claimant had proved his case and dismissed the claim. The Court of Appeal unanimously dismissed the appeal. Having cited the passage from Stephens v Cannon that I have set out earlier, Auld LJ reduced the analysis to two main propositions:

“19. …First, a judge should only resort to the burden of proof where he is unable to resolve an issue of fact or facts after he has unsuccessfully attempted to do so by examination and evaluation of the evidence. Secondly, the Court of Appeal should only intervene where the nature of the case and/or the judge’s reasoning are such that he could reasonably have been able to make a finding one way or the other on the evidence without such resort.

…

24. When this court in Stephens v Cannon used the word “exceptional” as a seeming qualification for resort by a tribunal to the burden of proof, it meant no more than that such resort is only necessary where on the available evidence, conflicting and/or uncertain and/or falling short of proof, there is nothing left but to conclude that the claimant has not proved his case. The burden of proof remains part of our law and practice — and a respectable and useful part at that — where a tribunal cannot on the state of the evidence before it rationally decide one way or the other. In this case the Recorder has shown, in my view, in his general observations on the unsatisfactory nature of the important parts of the evidence on each side going to the central issue, particularly that of Mr Verlander, that he had considered carefully whether there was evidence on which he could rationally decide one way or the other.”

1. 1. More recently the issue of reliance on the burden of proof to resolve a conflict of evidence was discussed in Barnett v Medway NHS Foundation Trust [2017] EWCA Civ 235 (‘Barnett‘) at [55]. That case also concerned the trial judge’s difficulty in deciding between the evidence of two expert witnesses. Not only was the medical evidence there particularly difficult, but the evidence of the two microbiology experts was expressed in difficult and shifting terms. The Court of Appeal accepted that the claimant’s expert’s evidence fell short of establishing probability. Irwin LJ with whom Hallett and Hamblen LJJ agreed held that there was some force in the appellant’s criticism of a lack of reasoning in the judgment under appeal. Only the briefest explanation had been given by the judge for his conclusion and although brevity was generally to be commended, in that case it had gone too far. However, Irwin LJ had then conducted for himself the exercise of examining and evaluating the evidence before the judge and arrived at the same conclusion. It was one of those rare cases where the judge was justified in his inability to resolve an issue of fact consistent with the approach laid down in Stephens v Cannon and Verlander v Devon Waste Management.

   2. Ms Steinhardt also referred to the comments of the Court of Appeal in Cooper v Floor Cleaning Machines Ltd [2002] EWCA Civ 1649, [2004] R.T.R 17 (‘Cooper‘) where Scott Baker LJ and Thomas LJ said that before resorting to the burden of proof the court should raise this possibility with counsel. Thomas LJ said at [23] that in an exceptional case where a judge has in his mind that he might have to decide the case on the burden of proof, such a possibility, if not already canvassed in the course of final submissions, should be raised by the judge with the advocates before him. This might help focus the judge’s views and asset the appellate court in upholding his decision. Scott Baker LJ also said at [3] that it would have been prudent to have done so since the judge might have been dissuaded from that course by one or both sides. Ms Steinhardt submitted that it was particularly unfortunate that HHJ Faber did not raise the possibility that she would be unable to make a finding of fact because the parties might not have agreed to forego the extra day’s hearing for additional witnesses and because of the long period between the closing submissions and the handing down of the judgment.

APPLYING THIS TO THE CURRENT CASE

Discussion

1. It is clear from the judgment that HHJ Faber did grapple fully and conscientiously with the evidence presented to her in order to decide whether she was able to make a finding that Mr Constandas had paid £600 towards the purchase of the house in June 1959. She did strive to arrive at a conclusion and she explained clearly why she was not able to do so. However, just as paucity of reasoning was not enough to justify overturning the judge’s conclusion in Barnett, so the full description of the efforts that HHJ Faber made before resorting to the burden of proof is not of itself enough to enable us to conclude that she was justified in disposing of the case on that basis. The test is not whether the reasoning given adequately explains what the Judge has done, but whether what the Judge has done is in fact justified or whether she could reasonably have been able to make a finding of fact one way or the other.

2. In my judgment the Judge could not, given her assessment of the evidence before her, have reached a conclusion on whether Mr Constandas used the money for the down payment. The dilemma facing the Judge in this case was different from the dilemma facing the judges in many of the earlier cases. In Stephens v Cannon and in Cooper the problem was not a lacuna in the evidence needed to establish a particular fact but the presentation of two conflicting versions of the evidence and the difficulty of choosing between them. Choosing between conflicting factual and expert evidence is a primary judicial function and, however well matched and convincing the parties’ witnesses may appear to be, the judge’s task is generally to decide the case by choosing one over the other and to describe as fully as possible the factors that led to that choice: see the discussion of this judicial duty in Morris v London Iron and Steel Co Ltd [1988] 1 QB 493, 504. Here the problem facing HHJ Faber was a more fundamental problem and one which can properly be described as exceptional. Many years had elapsed since this disputed payment was made, the documentary evidence as to the provenance of the money was understandably sparse, the Respondents’ direct evidence as to what had happened was not available at all because of their infirmity and Mr Constandas’ direct evidence was rejected because of his lack of credibility

The Court considered the criticisms of the trial judge.

Those criticisms, however, mischaracterise the task before the Judge. She was right to approach the case on the basis that it was not for the Respondents to prove that they had had the money or that they had made the payment. The burden was on Mr Constandas to show that he had made the payment. In the absence of any positive reliable evidence to show that he had done so, he was in effect inviting the court to draw an inference in his favour from the absence of any other plausible source for the funds. That would be a bold inference for the court to draw, particularly in circumstances where Mr and Mrs Lysandrou were unable to give direct evidence themselves because of their dementia. The Judge concluded that she could not rule out an alternative source for the money and so could not infer that it must have come from the £643 held in Mr Constandas’ account. Given that there was no positive evidence of Mr Constandas’ payment and given that she could not rule out any other source, it was inevitable that she concluded that Mr Constandas had not proved his case.

NO ISLAND HOPPING

1. For this court to arrive at a different conclusion would require the kind of “island-hopping” from one piece of evidence to another in the way which Lewison LJ cautioned against in FAGE UK Limited & anor v Chobani UK Ltd & anor [2014] EWCA Civ 5 at [114].

CONDUCT AND COSTS

The trial judge had disallowed the defendants’ costs on the grounds of their conduct.  The Court of Appeal rejecting the Defendants’ appeal on this issue.

1. 1. “The Respondents have appealed against the Judge’s decision to make no order as to costs. Following the delivery of the main judgment, there was a discussion between counsel and the Judge on consequential matters including costs and permission to appeal. The Judge then gave a short further ruling on costs (‘the costs ruling’). She referred to certain findings of fact that she had made as set out in the main judgment. The first finding was the use made by the Respondents in the proceedings of documents belonging to Mr Constandas. The Judge referred at [19] of the main judgment to Mr Constandas’ complaint that when he was evicted from the house, his possessions including his financial documents were put out onto the street in bin bags. Some of these documents were produced by the Respondents at the trial in an attempt to show that Mr Constandas had more financial resources available to him than he claimed when he approached the local housing authority asking for emergency accommodation to avoid being street homeless. The Judge disapproved of the fact someone had been prepared to use confidential documents against Mr Constandas and thought that that cast the conduct of the defence in a poor light.

   2. The second incident of misconduct was the allegation that had been made by the Respondents that Mr Constandas had seriously assaulted Mrs Lysandrou by pushing her violently in the chest. Michael Lysandrou had described this supposed assault in detail and put it forward as the reason why Mr Constandas had been summarily evicted from the house in June 2015. The Judge found that the assault had never happened and had been fabricated by the Respondents as the reason for the eviction; the real reason for the eviction was, the Judge found, that Mr Constandas had started to assert his entitlement to an interest in the house.

   3. The Judge also referred in the costs ruling to the manner in which Mr Constandas had been evicted from the house. She recognised that the eviction had been lawful, given her conclusion that Mr Constandas had failed to establish a claim to half the beneficial interest in the house. The manner of the eviction was described by Mr Constandas in his written evidence in support of an injunction to allow him back into the house. He describes how he went shopping on the morning of Saturday 20 July 2015. When he returned at lunchtime the locks to the house had been changed and all his belongings were outside in black bags. In his later witness statement Mr Constandas listed the belongings that had gone missing and concluded:

“It is extremely upsetting for me that this has happened. I am a co-owner of this house and a member of the family, yet I am being sorely used and treated like an unwelcome guest and told to go naked into the world as an 85 year old man. In bringing this claim I am trying to protect the cause of truth and my own dignity, as well as keeping myself from becoming homeless. I have nowhere else I could go and no-one I could turn to for help. I do not have any friends or relatives I could go to be with. I would be all alone and the idea is extremely upsetting to me. For the reasons I have given above, it is not true that I am a very wealthy man, as the Defendants allege. If I were made to leave the property now, my home for 43 years, I would be utterly lost.”

1. 1. The Judge may have rejected Mr Constandas’ claim to part ownership of the house but she took a very dim view of the way that Michael Lysandrou had behaved towards his elderly uncle. She formed the view that he had manipulated his parents in pursuing this distressing and unnecessary litigation. She described Michael Lysandrou’s conduct as manipulative, highly exceptional and reprehensible. She said in the costs ruling:

“… this is a family; Mr Constandas has lived there for 40 years. We have these elderly siblings and had Mr Michael Lysandrou been properly motivated towards his family, he could have got round the table with Mr Constandas and arranged an agreed time for leaving the premises, instead of which he did what he was legally entitled to do, but because of his approach his action resulted … in a very emotionally charged response which is hardly surprising.”

1. The Judge also dealt with the submission that had been made to her that it was unfair to penalise Mr and Mrs Lysandrou for Michael Lysandrou’s misconduct. She held that this was a matter for the Respondents to sort out amongst themselves and that it would not be right to distinguish between the costs incurred by Mr and Mrs Lysandrou and the costs incurred by Michael Lysandrou.

2. Mr Jacobs reminded us that CPR r 44.2 lays down the general rule that the unsuccessful party will be ordered to pay the costs of the successful party. The rule goes on to provide that the court may make a different order having regard to all the circumstances including the conduct of the parties before, as well as during the proceedings; whether it was reasonable for a party to raise and pursue a particular allegation; and the manner in which a party has defended the case. Mr Jacobs also drew our attention to the well-known dictum of Jackson LJ in Fox v Foundation Piling Ltd [2011] EWCA Civ 790, [2011] CP Rep 41, at [62] referring to the “growing and unwelcome tendency” of first instance courts to depart from the general rule that costs should follow the event too far and too often, generating huge additional costs for litigants.

3. Mr Jacobs did not assert that the Judge had erred in law in declining to make a costs order but argued rather that she had placed too much weight on the instances of Michael Lysandrou’s conduct and that her refusal to order any costs recovery was disproportionate. The incidents which the Judge criticised were, Mr Jacobs argued, peripheral to the main dispute between the parties. He compared the present case with that of Sulaman v Axa Insurance plc [2009] EWCA Civ 1331, [2010] CP Rep 19 (‘Sulaman‘) where the successful defendant was awarded only a third of her costs because the judge was satisfied that she had lied to him in two respects in her evidence at the trial. Longmore LJ with whom Aikens LJ agreed upheld the judge’s decision, rejecting as misconceived the defendant’s complaint that the judge had failed to calculate the time and expense taken up by the lies. Sedley LJ dissented in part as he would have allowed the defendant to recover two thirds rather than one third of her costs. Mr Jacobs argued that the approach of the Court in Sulaman shows that Judge Faber’s decision to deprive the Respondents of all their costs must be disproportionate.

4. I do not see any basis for interfering with the Judge’s exercise of discretion here. I do not accept that the matters of misconduct raised were peripheral. The allegation of assault was made, the Judge found, to provide a false reason for the eviction, given that the Respondents’ case was that Mr Constandas had only asserted an interest in the property after he had been served with the notice to quit. Her decision to make no order as to costs was well within the range of reasonable responses to the unfortunate litigation before her. The Sulaman case is one of many where this court has stressed that the trial judge is in a much better position to assess what is the fair order as to costs than the appellate court which only dips its toe into the case for one day. The Judge was entitled to take the view that the whole litigation could have been avoided if Michael Lysandrou had behaved in a civilised manner towards the other parties. Her order was a reasonable response to that conclusion. I would therefore dismiss the cross-appeal from the costs order.”