Royal Courts of Justice
Strand
London WC2A 2LL
BEFORE:
MR JUSTICE MANN
BETWEEN:
FOSBERRY
Claimant
-v-
HM REVENUE & CUSTOMS
Defendant
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Miss S Ayling (instructed by HMRC) appeared on behalf of the Claimant.
The Defendant appeared in person.
J U D G M E N T
MR JUSTICE MANN: This is an appeal from the judgment of Master Wright delivered on 6th October 2006. He was sitting on a costs assessment arising out of a costs order made in the VAT Tribunal shortly after 1st November 2004 when Her Majesty’s Customs & Excise abandoned opposition to an appeal made by Mr and Mrs Fosberry from a refusal to register them for VAT. HMC submitted to an order for costs. In this appeal I sat with assessors, Master O’Hare and Miss Elisabeth King.
The Fosberrys, who had appealed to the VAT Tribunal, had entered into a conditional fee agreement (a “CFA”) with BJ Rice & Associates (“BJR”). At the hearing before the Master the question arose as to the extent of compliance with formal requirements applying to the CFA. The Master ruled against compliance in two respects and held the agreement to be unenforceable. Accordingly, on the indemnity principle, HMRC, the successors to HMCE, was not liable for any of the Fosberrys’ costs payable to BJR, BJR having acted for them in the appeal up until the date when it was effectively successful by agreement.
The Fosberrys appealed to this court from the decision of the costs judge. Before me they sought to be represented by Mr Rice of BJR. Mr Rice is a tax adviser. He has no advocacy rights in this court and in the circumstances it did not seem right to me to allow him to appear to represent them as advocate. He was, of course, free to help Mr Fosberry, who also appeared in front of me, as a McKenzie friend. That however would not have enabled Mr Fosberry to advance his argument to best effect. It seemed to me that the real purpose behind this appeal was to enable BJR to recover their fees if the appeal were successful, and that they were the persons or body primarily interested in a successful appeal, BJR being a limited partnership under the 1907 Act. They obviously have a strong interest in this appeal, if not the only interest in this appeal.
In those circumstances it seems to me to be right that they should formally be allowed to make representations to me as an interested party. The way in which I achieved that, with Mr Rice’s agreement and with no opposition from Mr Fosberry or Miss Ayling, who appeared for HMRC, was to join the partnership BJ Rice & Associates as parties to these proceedings. Once that was done Mr Rice had a right to represent to me, which he exercised because he was effectively one of the parties to the appeal, being a partner in the partnership. Thus Mr Rice was able to address me. He advanced all the points that it would be necessary to run on this appeal both on his own behalf and in effect, although not technically, on behalf of Mr Fosberry. Mr Fosberry formally adopted all Mr Rice’s submissions. Thus the matter was heard.
The regulatory regime for CFAs applicable at the time of the agreement in question, which is 14th June 2002, was the Conditional Fee Agreements Regulations 2000. The relevant statutory provisions were contained in inter alia Section 58 of the Courts and Legal Services Act. I shall start by setting out the relevant provisions of the Act.
Section 58(1) provides as follows:
“A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but (subject to subsection (5)) any other conditional fee agreement shall be unenforceable.”
Section 58(3) lays down certain requirements applicable to all CFAs. They are as follows:
“(a) [the conditional fee agreement] must be in writing;
(b) it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement; and
(c) it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor.”
The requirements for the purposes of the proceedings before me were those laid down in the regulations to which I have referred and all the issues that arise in this case arise under those regulations. The effect of non-compliance with the regulations would be that the CFA will be unenforceable, and it was because of non-compliance that the Master held that this CFA was indeed unenforceable.
BJR are, of course, not solicitors or in any sense qualified advocates. However, it was common ground before me that the legislation referring to CFAs applies, for present purposes, to BJR even though they were not solicitors. In the light of that common ground it is unnecessary for me to set out how one arrives at that conclusion.
In his decision the Master held that the CFA in this case infringed two of the requirements of the regulations. The first regulation said to be infringed is Regulation 3(2)(c):
“(c) if –
(i) sub-paragraph (b) does not apply, and
(ii) the legal representative agrees with any person liable as a result of the proceedings to pay fees subject to the percentage increase that a lower amount than the amount payable in accordance with the conditional fee agreement is to be paid instead,
the amount payable under the conditional fee agreement in respect of those fees shall be reduced accordingly, unless the court is satisfied that the full amount should continue to be payable under it.”
In relation to that the Master held the following in his judgment:
“69. The agreement provides (see the last paragraph on page (1) of the agreement):
"The success fee applies no matter how long the proceedings take, and is subject only to the parties agreeing a smaller percentage at the conclusion or if a "costs assessment" reduces the percentage. The hourly charge is not reduced".
The agreement does not provide for the matters set out in Regulation 3(2)(c). It ought to have done so because the VAT Tribunal is (as already stated) a Court so that the agreement "relates to Court proceedings". Accordingly there has, in my judgment, been a breach of Regulation 3.”
The finding of the Master is challenged on this appeal. I consider it further below.
The Master then went on to consider that there was a contravention of Rule 4. He dealt with this in paragraphs 70 and 71 of his judgment, setting out in paragraph 70 the provisions of Rule 4. He said as follows:
“Paragraphs 70 and71 of Matter’s judgments.”
That finding too is challenged. He reached his conclusion in paragraph 72:
“72. A breach of the CFA Regulations in this case renders the conditional fee agreement unenforceable resulting in a breach of the indemnity principle so that no costs are recoverable.”
In paragraph 73 he set out some further principles applicable to this conclusion and, in particular, citing from Hollins v Russell [2003] 1 WLR 2487, which I will set out myself in due course.
In paragraph 74 he concluded that the shortcomings had a “materially adverse effect on the protection afforded to the client” and he came to the same conclusion in paragraph 75 in relation to failure to comply with Regulation 4(2)(c). In paragraph 76 he referred to Garrett v Halton Borough Council [2006] EWCA Civ 1017 and reached a conclusion that appropriate steps were not taken. In paragraph 77 he repeated his conclusion that, as a result, the CFA was unenforceable.
Paragraph 78 is the last paragraph of his judgment. At first sight it looks as though he was indicating that the percentage uplift in the CFA in this case was irrecoverable because a notice was not served. However, it is common ground that he made no finding to that effect in this case and I therefore need say no more about that. The Master’s judgment is therefore to be taken as turning on the two points which I have set out above.
The second of the Master’s points is one which I will deal with at this stage in the judgment.
In my view the right course in relation to his second pint is that, so far as that arises as a separate point, I would overturn it but not fully reverse it. The second of the points is essentially a question of fact, namely whether there was a discussion about insurance. The point arose late in the day in terms of the costs assessment. The CFA itself was not produced before the hearing in front of the Master; it was produced at the hearing. I confess to surprise at the fact that it had not been tendered before then and had not been sought before then, but anyway that was the position. The representative of HMRC had only a short time to deal with the point. I understand that there was an adjournment of half an hour while he considered the document. The insurance point was then taken by him. There was no request for an adjournment from either party to deal with that point or indeed any of the others. However, I am not satisfied that the Master had before him evidence from which he could deal with the point if it mattered. It was in my view unfair to the Fosberrys, or in reality to BJR, to deal with the matter in those circumstances without evidence. Whether there was a reference to insurance is something in relation to which the starting point could be expected to be positive evidence one way or the other from the two parties to the CFA. If it were to become relevant it will be necessary to reconsider this point, but, for reasons which will become apparent from what I say below, it is unnecessary to dwell further on that point.
The hearing before me was not confined to a consideration of the points before the Master. HMRC put in a respondent’s notice taking several additional points. The respondent’s notice was served late, but an extension of time for service was applied for. One point in the respondent’s notice, namely a point about non-signature of the CFA, was abandoned at the hearing before me when it appeared (at least on the face of the document) that the CFA had been signed. The possibility of a challenge to the respondent’s notice was left open by a recent decision of Blackburne J, but the points were fully argued before me and I am satisfied that there is no prejudice to the Fosberrys or to BJR in allowing the points that were eventually run in relation to the respondent’s notice to be taken. I set out the relevant points arising out of the respondent’s notice later in this judgment.
The CFA itself is, as I have said, dated 14th June 2002. It is a two-page document with a schedule occupying two-thirds of a third page. It is not a document in traditional numbered paragraph form. It consists of a number of paragraphs which, to some extent, look a little more like a narrative and which, if I can respectfully say so, have apparently not been drafted by a lawyer. Nevertheless, it does cover a lot of important points. It is unnecessary for me to set out the whole of that agreement. I will set out the relevant parts of the agreement later in this judgment in the context of the disputes which arise in relation to the CFA. I can summarise its effect as follows.
On its face it provides for a charging rate of £200 per hour as a basic charging rate. It provides that if the appeal is unsuccessful then the costs will be capped at £6,000 plus VAT. It therefore builds in something like 30 hours of costs and anything else would not be charged for or recoverable in the event of the appeal to the VAT Tribunal being unsuccessful. However, in the event of an appeal being successful, then there was to be an uplift in the form of a success fee of 55% plus appropriate VAT and there would be no cap on the amount recoverable.
That is the basic structure of the CFA and I do not think I need say anything more about it. In summary it contains a lot of provisions giving effect to that and some ancillary matters.
Before turning to the detailed points which arise on this appeal I should set out certain points of principle which arise in relation to the approach which I should take.
The first is matters arising out of the decision in Hollins v Russell to which I have already referred in the context of my description of the Master’s decision. The principal effect of this case for present purposes is to establish that not every literal departure from the Regulations will result in an agreement being held to be non-compliant and therefore unenforceable. What is required if there is to be a relevant departure is a material breach, a material non-compliance. At paragraph 106 of that judgment Brooke LJ said as follows:
The question whether something is "satisfied" inevitably raises questions of degree. What is enough to satisfy? There can be different degrees of satisfaction. A court may be satisfied beyond reasonable doubt or on the balance of probabilities but it is still satisfied. Different things can be satisfied in different ways… Conditions are satisfied when they have been sufficiently met. How sufficiently must depend upon the purpose of the conditions. It is not impossible to imagine conditions which would only be sufficiently met if they were observed in every minute particular: the specifications for precision machinery might be an example. But in general conditions are sufficiently met when there has been substantial compliance with, or in other words no material departure from, what is required.
The key question, therefore, is whether the conditions applicable to the CFA by virtue of section 58 of the 1990 Act have been sufficiently complied with in the light of their purposes. Costs judges should accordingly ask themselves the following question:
‘Has the particular departure from a regulation pursuant to section 58(3)(c) of the 1990 Act or a requirement in section 58, either on its own or in conjunction with any other such departure in this case, had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice?’
If the answer is ‘yes’ the conditions have not been satisfied. If the answer is ‘no’ then the departure is immaterial and (assuming that there is no other reason to conclude otherwise) the conditions have been satisfied.”
I need not read paragraph 108. Paragraph 109 of the judgment refers to the importance of looking at the circumstances of the case and indicates that paying parties are not to be encouraged to trawl through the facts of every case in order to discover whether there has been a material breach.
On the basis of that case I shall therefore have to consider whether any breaches which I find to be established are immaterial or whether they have had some material effect on either consumer protection, which is obviously one of the purposes of the legislation, or upon what is described as the proper administration of justice. Minor and trivial breaches are not going to be significant.
The other case referred to by the Master in the passages I have cited is Garrett v Halton. That case establishes that there can be a material breach of the statute or of the regulations so as to render the agreement unenforceable even in the absence of detriment to the client. I do not think I need say anything more about it than that. I do not need to set out any part of the judgment.
With those principles in mind I turn to the basis of this appeal.
I have already set out the Master’s first criticism of and finding against this agreement. Mr Rice says the Master’s decision is wrong. He says the agreement complies with the relevant regulation, i.e. 3(2)(c). He says the object of the requirement is to make sure that the agreement provides that if his firm agrees with his client that a lower amount than originally provided for should be payable, then the amount payable under the CFA is to be reduced accordingly. That, he says, is what the Act requires goes into an agreement and he says that this CFA complies. He relies on the last paragraph of the first page of the agreement. The paragraph reads as follows:
“The reason for the success fee being fixed at 55% is that it reflects the risk that a prolonged but eventually unsuccessful appeal could involve the firm suffering a loss and the fact that there is no way of knowing when matters will be concluded. The success fee applies no matter how long the proceeding [sic] take and is subject only to the parties agreeing a smaller percentage at the conclusion or if a ‘costs assessment’ reduces the percentage. The hourly charge is not to be reduced.”
One only has to put the matter in the way in which Mr Rice has put it in order to appreciate that there must be something wrong with his analysis. He seems to be saying that the agreement must record that if he agrees a lower sum with his client then a lower sum will be payable. That seems rather a pointless provision. In fact I consider that Mr Rice misunderstands the meaning and effect of the provision. It must be read in its context. Paragraph (b) deals with what happens when there is an assessment and when, in that assessment, it is determined that the uplift percentage is, to an extent, unreasonable. A determination of unreasonableness as to part of the percentage would be reached in proceedings between the parties to the litigation and not between the client and the solicitor. Without the particular provision in the regulations the effect of the determination would be to protect the paying party from having to pay the excess part of the percentage but in theory leaving it open to the solicitor to collect the unreasonable excess from the client. The effect of the provision in the regulations is to make the excess irrecoverable from the client as well unless the court orders otherwise. Paragraph (c) operates in different circumstances but with the same objective. It operates where there has not been an assessment, i.e. (b) does not apply, but where the representative agrees with the counter party to the litigation that a lower percentage or a lower amount is to be payable. In that event the client is again protected by this paragraph from having to pick up the difference between the CFA percentage as expressed in the CFA and the lower amount agreed between the representative and the counter party in the litigation unless the court orders otherwise. Together, therefore, they provide for what happens when the percentage gets reduced; the one where the reduction is by the court and the other where it is by agreement between the litigation parties.
It is inherent in that analysis that the expression “person liable as a result of the proceedings to pay fees subject to the percentage increase” is a reference to the litigation counter-party. Mr Rice says it is not; he says it is a reference to the client or to someone who has agreed at the outset to pay the fees. That person, he says, has become liable as a result of success in the proceedings to pay the fees and the key expression (which I have quoted above) matches a part of the definition or description of “client” in paragraph 1 of the Regulations. He points to the fact that “client” is defined in Regulation 1(3) to include: “(b) [one who] is liable to pay the legal representative’s fees in respect of those [legal] services.” I do not consider Mr Rice’s interpretation to be correct. For the reasons I have already given it would seem to me to render it rather a pointless provision and indeed surprising in its effect. The interpretation that I find to be correct is not surprising, gives a meaningful effect and fits into the context of the regulation in question. What the agreement therefore has to “provide” is that, in the event that there is an agreement with HMRC that the percentage will be reduced, the amount of the reduction would not be claimable against the client unless the court otherwise ordered. The paragraph referred to and relied on by Mr Rice does not have that effect and there is no other provision in the agreement which does. Accordingly, the Master was therefore right to find that the CFA was non-compliant in that respect. I shall consider the materiality of that finding below.
I have already dealt with the Master’s second ground. I do not consider that the Master should have reached the conclusion that he did on that ground and so far as necessary would set aside that part of the decision. I need say no more about that.
I now need to turn to the points appearing in the respondent’s notice served by HMRC so far as they survived to the end of the hearing because at least one of them was abandoned. The most significant point is that arising out of Regulation 3(1)(b) of the Regulations. That provides as follows:
“1) A conditional fee agreement which provides for a success fee -
(a) must briefly specify the reasons for setting the percentage increase at the level stated in the agreement, and
(b) must specify how much of the percentage increase, if any, relates to the cost to the legal representative of the postponement of the payment of his fees and expenses.”
(b) contains an important point. If a percentage uplift contains an element which is for compensation for delay in receiving money then to identify that element will enable the court on an assessment to filter out the two risk elements which are said to be reflected in the uplift fee, i.e. the timing risk and the litigation risk. To be able to do that is obviously a significant factor in determining reasonableness. Does this agreement comply? The only part of the agreement which is a candidate for compliance with this provision is the last paragraph at the foot of the first page (which I have already set out above). Mr Rice submitted that it demonstrated that no element of the 55% was attributable to the delay that would be sustained by his firm in receiving payment. He relies on the overall wording and the reference to the fee applying no matter how long the matter takes. I am afraid I do not agree with him in his construction of that part of the document. The paragraph appears to me positively to reflect an element of compensation for delay. In this respect I have particular regard to the first sentence. I will quote it again, this time breaking it down into two constituent parts by reference to an (a) and a (b) which do not appear in the original:
“The reason for the success fee being fixed at 55% is (a) that it reflects the risk that a prolonged but eventually unsuccessful appeal could involve the firm suffering a loss and (b) the fact that there is no way of knowing when matters will be concluded.”
The second limb, i.e. the limb which I have described as (b), seems to me to be a reference to the delay in receipt of fees that Mr Rice’s firm will suffer because one does not know how long the proceedings will take. I do not think there is any other way in which that can be read.
That seems to me, therefore, on its face to be a positive indication that part of the 55% is to reflect timing risk. The second and third sentences of the paragraph do not gainsay that analysis. Accordingly, that paragraph seems positively to suggest that part of the 55% reflects a timing risk. However, neither that paragraph nor any other part of the CFA seeks to identify what the size of that particular element is. That being the case, it seems to me that in this important respect the agreement is non-compliant.
Mr Rice sought to rely on other material in the bundle before me, namely statements in a prior letter and a prior attendance note which he said indicated that in fact no part of the 55% uplift was intended or calculated to reflect the timing risks or the delay risks in respect of his fees. The expressions that he identified in those two documents are probably equivocal, but I think I would agree with him that they tend, perhaps marginally, to point more to the fact that, at least as expressed in those documents, there was no delay element in the fee, contrary to the submissions of Miss Ayling for HMRC. However, the problem for Mr Rice is that they are not relevant documents. What is important in this context is the content of the agreement itself, i.e. the CFA. It says what I have found it to say. It is therefore non-compliant. It is not rescued from non-compliance by documents other than the CFA which are not incorporated into the CFA.
Next is an alleged breach of Regulation 2(1)(c) (iii) of the Regulations which reads as follows:
“(1) A conditional fee agreement must specify…
(c) what payment, if any, is due…
(iii) on the termination of the agreement for any reason.”
The purpose of this regulation, when read as a whole, is obviously to enable the client to understand clearly what happens in various events. I have only read out (iii), but (i) and (ii) deal with the requirements as to what is to happen if the success events occur only partly or what is to happen irrespective of whether the success events occur. What is envisaged is clearly a regime spelt out in the CFA which makes the matter clear to the client so that the client knows in particular whether, in the event of the matter not going as far as the determination of the dispute in question, the client is going to have to pay any and, if so, what money.
The relevant parts of the CFA in the case before me which are relied on by Mr Rice as containing these relevant matters which have to be “specified” are as follows. The agreement starts with a statement of its date and its parties and states that it “concerns the Fosberrys’ registration for VAT purposes”. I will read on from the first paragraph:
“An application to register for Value Added Tax purposes has been rejected but the reason given is, in the opinion of the firm, unsound and this being so the firm was confident that registration could be effected. The reasons given by the firm were accepted by Mr and Mrs Fosberry and they are satisfied that all of the issues appertaining to the matter of VAT registration and appeals have been explained. Registration for VAT purposes is beneficial. Both the firm and Mr and Mrs Fosberry are aware that challenging a decision of HM Customs & Excise is a daunting prospect, but moreover can be expensive.”
The next paragraph deals with certain charging matters and records that there is no practical alternative to engaging the firm to act.
Then comes the paragraph which (if any paragraph does) comes closest to complying with the provision of the regulations currently under consideration. I will set it out:
“Given that there is no guarantee of success Mr and Mrs Fosberry require a limit to be placed on the liability that they are to face if the decision is challenged in the VAT Tribunal but is unsuccessfully [sic]. Given the length of time appeals to the Value Added Tax and Duties Tribunals can take, it was agreed that the maximum fee to be charged if the appeal if [sic] unsuccessful will be £6,000 plus VAT, calculated at an hourly rate of £200 per hour for all hours reasonable [sic] spent in prosecuting the appeal. If less than 30 hours or so spent the amount payable will be the amount calculated by reference to the hours reasonable [sic] spent. Mr and Mrs Fosberry can cancel this agreement at any time but not after the hearing of the substantive appeal before the Tribunal because subject [sic] consequential matters the agreement would have run it’s [sic] course.”
That paragraph refers to two events. It refers to the appeal being unsuccessful and it refers to a cancellation by Mr and Mrs Fosberry. Other parts of the agreement (which I do not need to set out) indicate the third way in which the matter might be ended, which is a successful appeal. I need not dwell on that. What the agreement does not spell out is the consequences of the agreement terminating, whether by cancellation by the Fosberrys or otherwise, prematurely, before a decision in the Tribunal. It does not spell out what is to happen in that event. One asks the question: supposing that the Fosberrys cancel? Do they pay nothing? Do they pay for the hours worked subject to the cap, or do they pay for the hours worked without a cap? It has to be said, in my view, that that position is not clear from the wording which I have set out.
Mr Rice contended for the second of those alternatives and it is certainly arguable as a matter of construction. In fact as a matter of construction I tend to think that it is probably right, although the process of construction gets pretty close to a process of implication rather than mere construction. Be that as it may, that does not seem to me to comply with the regulation. The agreement says that the agreement must “specify” certain things, including the effect of termination. The word to be stressed is the word “specified”. That, to my mind, imports a certain degree of clarity of expression. One might be able to get to a given result, and in particular Mr Rice’s proposed result, as a matter of construction, albeit, as I have indicated, one close to a process of implication., but in my view, at least on the facts of this case and bearing in mind the wording of the agreement, that does not amount to a specification within the provisions of the regulation. A degree of clarity is obviously required and, in my view, it is lacking in this case. Accordingly, I consider that this agreement does not specify what payment is due on the termination of the agreement in the event of a cancellation or indeed for any other agreement. It therefore fails to comply for this reason too.
The last point arising out of the respondent’s notice is a point said to arise out of Regulation 4(3). That provides as follows:
“(3) Before a conditional fee agreement is made the legal representative must explain its effect to the client.”
The legal representative for these purposes is BJR. Miss Ayling sought to establish by reference to various documents, some of them after the event, that there was not or cannot have been such an explanation proffered by the firm to the Fosberrys. I can deal with this point shortly.
This point is not one going to the content of the agreement. It is a factual matter. To be dealt with fairly it needs evidence from the proponents and it requires that the proponents, i.e. the Fosberrys and Mr Rice, have an opportunity to provide such evidence. It is impossible for the court to deal with this matter fairly on the footing of inferences, some of them, in my view, somewhat stretched, from non-contemporaneous documents and some contemporaneous documents. The position is indeed not apparent from those documents and in the context of these proceedings the point was never raised at a time when it could be dealt with on the basis of primary evidence. It would be unfair to determine this point against the Fosberrys and indeed against the Revenue on the evidential state of play in this case bearing in mind the late point in time at which this point has arisen. It has not been established that no explanation was given and the Fosberrys and Mr Rice have not been given a proper opportunity to show that it has, assuming that the point can be made to arise in issue anyway. Accordingly, I reject this point as an attack on the validity of the CFA.
Accordingly, there are three respects in which this CFA is non-compliant. The mere existence of literal non-compliance is not necessarily fatal – see the cases referred to above. In my view, I should view these matters globally and consider whether these literal shortcomings prevent substantial compliance with the regulations in accordance with the approach set out in Hollins v Russell. Looking at them globally, I consider that they do have the effect of preventing substantial compliance. They all have significant effects in terms of consumer protection and the delay compensation point also has significant administration of justice implications. This last point is important not only from the point of view of the client but also from the point of view of the paying party, and it is therefore particularly important that that particular provision be complied with. The shortfalls cannot fairly be characterised as de minimis matters, or slight matters, or by reference to any other adjective which would enable one to say that substantial compliance within the meaning of the test has been achieved. The matters that they are individually intended to safeguard are significantly important matters: reduction of sums owing, proper assessment of risks and the liability of the parties to pay for those risks and the financial position on premature termination, and the degree of failure on each is, by itself, significant. But whatever view one might take of them individually, taken in aggregate they represent an overall significant and important shortfall. If it matters I would certainly have considered the delay percentage point as sufficient by itself to have brought this agreement down and would probably have considered the failure to provide for reduction of fees on agreement with the litigation counter parties sufficient as well. I am not quite so sure about the third point, but that does not matter. What matters is that at the end of the day the combined effect of these shortcomings is such that it makes this agreement non-compliant and in the circumstances makes it unenforceable.
I do not confess to taking any great joy in this conclusion. I am sure that Mr Rice has done his best to represent his clients helpfully and conscientiously and indeed he was no doubt an important ingredient in the Commissioner’s decision not to resist the appeal any further. However, the agreement is deficient in the respects that I have indicated and I shall therefore reject this appeal.