Howell & Ors v Lees Millais & Ors

On the afternoon of Monday 2 July we heard an appeal from a decision of Peter Smith J made on Friday 29 June refusing to recuse himself from hearing what I understand is known as a Beddoe application in which trustees seek directions from the court with regard to the operation of a trust (“the application”). We gave permission to appeal and allowed the appeal and said that we would give our reasons today, Wednesday, 4 July.

This is a most unusual case. The three claimants in the application are trustees of two settlements. The first claimant is a Mr Paul Howell, who is a partner in the solicitors firm of Addleshaw Goddard (“AG”). They are a large and well-known firm with some 178 partners and 400 fee earners. The recusal application that led to this appeal arises out of exchanges between some members of AG and Peter Smith J in his personal capacity in the recent past. They culminated in two emails which he sent to Simon Twigden of AG on 26 and 31 May, which was of course not much more than a month ago. The Beddoe application was assigned to Smith J (“the judge”) some time last week. AG learned on Wednesday that he was to hear the application which was due to begin on Friday 29 June. On Thursday 28 June leading counsel for the claimants, Mr Peter Crampin QC, wrote to the judge asking him to recuse himself. The judge refused by letter dated the same day. He said in the letter that if Mr Crampin wanted to renew the application he should make it on Friday supported by evidence.

The application was heard on Friday and the judge refused to recuse himself. He handed down a judgment containing reasons for his decision on Monday. We heard submissions in support of the claimants’ appeal from that decision on Monday afternoon. Mr Le Poidevin and Mr Steinfeld QC indicated, on behalf of the first and second defendants, respectively, that their clients were neutral. I will consider the questions raised by the appeal under these heads: the principles, communications between the judge and AG, the application, the recusal hearing and the judgment.

The claimants’ submission is that this is a case of apparent bias. The relevant test is now well established. In Porter v Magill[2002] 2 AC 357, especially per Lord Hope at paragraphs 102 to 103, the House of Lords endorsed the approach set out by Lord Phillips MR giving the judgment of this court in Re Medicaments and Related Class of Goods (No 2)[2001] 1 WLR 700 at [85] as follows:

This court, comprising Mummery, Latham and Carnwath LJJ recently summarised the principles in AWG Group v Morrison[2006] EWCA Civ 6, [2006] 1 WLR 1163, as follows:

A judge is automatically disqualified from hearing a case on the ground of apparent bias if, on an assessment of all the relevant circumstances, the conclusion was that the principle of judicial impartiality would be breached [AWG at 6].”

This disqualification is not a discretionary case management decision reached by weighing various relevant factors (such as inconvenience, costs and delay) since there was either a real possibility of bias or there was not [AWG at 6].”

The test is, having ascertained all the circumstances bearing on the suggestion that the Judge was (or could be) biased, the court must itself decide ‘whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the tribunal was biased’ [AWG at 7].”

An appellate court is well able to assume the vantage point of a fair-minded and informed observer with knowledge of the relevant circumstances. It must itself make an assessment of all the relevant circumstances and then decide whether there is a real possibility of bias [AWG at 20].”

An example of a real danger of bias is where ‘there was… animosity between the Judge and any member of the public involved in the case Locabail UK Limited v Bayfield Properties Limited[2000] QB 451 (CA) at 25; the categories of such danger are not closed, “if for any other reason there were real grounds for doubting the ability of the judge to ignore extraneous considerations, prejudices and predilections” then recusal would be necessary.”

In most cases, the answer, one way or the other will be obvious. But if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal (Locabail at [25]).”

Where the hearing has not yet begun, there is scope for the sensible application of the precautionary principle. Prudence normally leans on the side of being safe rather than sorry [AWG at 9].”

The material circumstances to be considered by the fair-minded and informed observer will include any explanation given by the judge under review as to his knowledge or appreciation of those circumstances. Where such an explanation is proffered, the reviewing court does not have to rule whether or not the explanation should be accepted or rejected; rather, it has to rule whether or not the observer would consider that there was a real danger of bias notwithstanding the explanation advanced (see in Re Medicaments at [86], [92] and [93]. I would add that as in that case the reviewing court here is this court. The correct approach to the views of the judge can be seen from this passage in Locabail at [19]:

The Guide to Judicial Conduct issued by the Judge’s Council, First Supplement, June 2006, indicates at paragraph 7.2.3 that:

The mere fact that a judge has decided a case adversely to a party or criticised the conduct of a party or his lawyers will rarely if ever be a ground for recusal. However, a real danger of bias might be thought to arise if there were personal friendship or animosity between the judge and a member of the public (see eg Locabail at [25]. The same would, I think, be true if there were personal animosity against a firm of solicitors or his partners.

Between November 2006 and May 2007 there were quite lengthy discussions between AG and the judge about the possibility of the judge joining AG. It is not, I think, necessary in order to determine this appeal to set out the nature of those discussions in any detail. It is sufficient to refer to exchanges between Mr Simon Twigden, who is a partner and head of the contentious group at AG, and the judge which show how their discussions came to an end and which demonstrate the judge’s reaction to their termination by AG.

On 21 May 2007 the judge emailed Mr Twigden as follows:

The judge replied on the next day 26 May. His reply shows considerable disappointment. He said that he did not think that the senior management of AG had given “a fair appraisal to my proposal”. He complained that AG had treated his proposal as one of partnership, whereas it was not. He then stressed the considerable advantages of being associated with him as a judge who had recently given judgment in “a landmark decision on corruption” which “also has an impact on Banking and Corporate”. He thus stressed the value of the contribution he could make to the firm but concluded by saying that, if it was too late, please would Mr Twigden let him know and he would go elsewhere. On 31 May Mr Twigden replied setting out the financial position as AG saw it and concluded:

Some four hours later the judge replied:

Mr Flint submits that these exchanges show that the judge was plainly upset with AG, to put it no higher. I agree. To my mind they show disappointment and some animosity towards Mr Twigden and AG. I can understand the real concern subsequently demonstrated by AG when they learned that the judge was to hear the Beddoe application. I will return to this in a moment after considering so far as necessary the role of AG and their partners in the application.

In the ordinary Beddoe application the trustees will not be ordered to pay the costs personally even if the application fail. The costs will be directed to come out of the fund. However, in this case the defendants to the application, who I think included former trustees and a beneficiary of the trusts, have made it clear through their solicitors that they will be seeking an order that the trustees personally pay both their own costs and the costs of the other parties to the application and indeed the costs of proposed substantive litigation. The correspondence shows that this will be a hard-fought application and that efforts will be made to impose costs liabilities on the trustees personally. As I have already indicated, one of those trustees is Mr Howell, who is a partner of AG. Although I should make it clear, as is accepted by Mr Flint, that this is not a case in which the honesty of Mr Howell is impugned it is a case in which his conduct is impugned. It is not just a run of the mill case in which the trustees can necessarily look to the trust for the payment of costs.

As I said earlier, on 28 June Mr Crampin QC wrote to the judge to ask him to recuse himself. He referred to the fact that the application was hotly contested and to the discussions between the judge and AG, including the contents of the emails referred to above. He said that he had advised his clients that, in view of the short time since the discussions ended on 31 May and the tone of the judge’s comments in the emails, the judge was under a duty to recuse himself. He referred to paragraphs 5, 6 and 20 in AWG and quoted this passage from a recent decision of this court in Drury v the BBC [2007] All ER (D) 205, 14 May 2007;

The judge replied as follows on the same day:

I would accept Mr Flint’s submission that the penultimate paragraph of that letter was a clear indication that the discussions including the emails were confidential and that they should not be shown to the other parties, at any rate without the consent of the judge. It was for that reason that Mr Twigden prepared a short witness statement in which he said that the relevant matters were contained in “a schedule of confidential facts”. That seems to me to have been an entirely sensible approach. The schedule contains ten paragraphs in which Mr Twigden describes meetings and discussions with the judge and exhibits the emails. The matter then came on for hearing before the judge.

We have a transcript of the hearing, which does not make entirely happy reading. The judge began by saying that the hearing was confidential. Mr Twigden gave evidence. In examination-in-chief he confirmed the truth of his statement and of the confidential schedule. Counsel for the defendants did not ask him any questions. He was then asked a number of questions by the judge, which read very much like a cross-examination. Mr Twigden agreed that disclosure of information would be a contempt of court. He accepted that his schedule was not a full record of everything which took place. He was asked a number of questions about the discussions. They included the judge asking him about the figures which had been discussed by way of remuneration. It is again not necessary for me to refer to the figures in this judgment.

The judge then put to Mr Twigden two previous occasions in which he, the judge, had made strong criticisms of AG; one when he was a QC and one when he was a judge. Mr Twigden agreed that the judge had asked whether those criticisms would have any adverse impact on his joining the firm and said that they would not. The judge put to Mr Twigden that his criticisms of AG on those two previous occasions were much more serious than those contained in the emails. Mr Twigden said that the emails were sent only a month ago. The judge then turned to a different topic, namely Mr Twigden’s familiarity with the details of the Beddoe application. He said that he had scant knowledge of the case.

I am bound to say that to my mind it was not appropriate for the judge to cross-examine Mr Twigden rather as if he, the judge, was fighting his own case. The authorities to which I have referred lead to the conclusion that at most a judge should make a short statement of the position on the record. It was in my judgment wholly inappropriate for the judge to cross-examine Mr Twigden.

There followed submissions by Mr Crampin. He put the application thus:

There then followed these exchanges:

Pausing there, I am bound to say that those exchanges seem to me to be somewhat extraordinary. In my judgment, Mr Crampin was entirely justified in saying that the judge was in the process of giving evidence. The judge’s approach was quite wrong. It is one thing to test counsel’s submissions as a judge. It is quite another for a judge to give evidence of fact.

There then followed another exchange which in my judgment demonstrated an animosity toward AG. Immediately after the last exchange, the transcript continues:

Finally, I should I think refer to this part of the transcript, if only in fairness to Mr Crampin. Immediately after the last extract the transcript continues:

The judge’s contribution to these exchanges seems to me to be intemperate. In short, the cross-examination of Mr Twigden and the approach adopted by the judge in the course of Mr Crampin’s submissions provides strong support for Mr Flint’s submissions that the fair-minded and informed observer having considered the facts would conclude that there was a real possibility that the judge was biased against AG and its partners, one of whom is the first claimant in the application. When this evidence is put together with the content and tone of the emails sent by the judge that I quoted earlier, I am quite satisfied that this is a case in which the judge should have recused himself. This is not to my mind a case which is close to the borderline but a case in which there is no doubt that the test laid down in the authorities is satisfied. I should add by way of postscript that to my mind Mr Crampin behaved entirely appropriately throughout.

Mr Flint relies upon a number of elements in the judge’s judgment. First, he submits that the judge erred in paragraph 9 in saying that the shortness of time since the email exchanges is irrelevant. He notes Mr Crampin’s acceptance that he was not saying that the judge should never hear an AG case, and the judge said this in paragraph 9:

Secondly, Mr Flint submits that the judge was wrong to reject, as he did in paragraph 24, the concern that Mr Howell’s conduct was being impugned. Again I would accept that submission. As I indicated earlier, while it is true that Mr Howell’s honesty was not being impugned, his conduct was, and the judge was wrong to hold that the potential costs order was, as he put it, nothing more than a costs order that might be made against any party to litigation if an application is unsuccessful. The usual order in an application of this kind is not that trustees pay the costs personally, yet that is the order sought here.

Thirdly, I would accept Mr Flint’s submissions that in the judgment the judge again impugned the good faith of Mr Twigden. He said at paragraph 25:

Finally, and less importantly, the judge said that he would recuse himself if the defendants raised any objection. It is difficult to see how that approach can be justified given the nature of the test.

It may well be that the judge became somewhat carried away in the heat of the argument. But for the reasons I have given, I would hold that his attitude throughout, from the emails at the end of May, during the hearing on Friday and in his judgment show that the test for apparent bias is satisfied. As the reviewing court, this court is in a position to form its own view. I have concluded that in all the circumstances, a fair-minded and informed observer would conclude that the judge was biased against AG and its partners, including Mr Howell. It was for that reason that I concluded on Monday that the appeal should be allowed.

The Master of the Rolls has summarised the essential facts and the relevant principles. Without repeating them, I shall add a short judgment of my own simply to add emphasis to my entire agreement with his judgment.

There is no disguising the regrettable features of this case. The application to Peter Smith J to recuse himself was entirely justified and, notwithstanding the inevitable delicacy of the position in which he found himself, leading counsel responsibly handled the case throughout in accordance with his professional obligations both to his client and to the court. The exchange of still very recent emails demonstrates that the judge was extremely displeased that the negotiations about his possible future with the firm of solicitors Addleshaw Goddard had broken down. His irritation is obvious. It did not arise from previous professional encounters with the solicitors or their conduct of earlier or indeed the current litigation when different considerations would apply. It arose exclusively and directly from the judge’s personal affairs and his private but recently unsuccessful dealings with Addleshaw Goddard. The solicitors were not simply solicitors on the record. Mr Howell, a partner in the firm of Addleshaw Goddard, was a party to what I may loosely describe trustee proceedings, and this contentious litigation carried with it at least the potential for serious adverse personal consequences for him.

It is the conduct of the hearing which underlines that the judge had become too personally involved in the decision he was being asked to make to guarantee the necessary judicial objectivity which would be required in the trustee proceedings. I identify three particular features. First, the witness who supported the application was in effect cross-examined by the judge in something of the style of an advocate instructed to oppose the application. Second, the submission by counsel for the applicant that the judge had given evidence was in the circumstances unsurprising, and the concerns he expressed on this topic were validly made. Finally, the judge impugned the good faith of the application, a conclusion repeated in the strongest terms of his judgment when there is no shred of evidence to suggest some ulterior or improper motive behind the application.

In these circumstances it is unfortunate to have to record that, in my judgment, the conduct of the hearing itself demonstrated not only that the application to the judge to recuse himself was rightly made, but that it should have been granted.

I agree with both judgments and there is nothing I need to add.