Seeking more information – Part 18

One of my frequently-used tools for “fleshing out” a defendant’s case in a possession claim concerning allegations of sub-letting, false representation, no longer living at the demised premises, only or principal home, ‘false succession’ etc is by use of the CPR Part 18 procedure:

The Practice Direction to Part 18 effectively requires, first, an attempt at pre-litigation information request:

The litigation use of the Part 18 process was considered in the recent High Court case of (1) HRH Prince Khaled Bin Sultan Bin Abdulaziz Al Saud (2) HRH Princess Deema Bint Sultan Bin Abdulaziz Al Saud v (1) Ronald William Gibbs (2) Sunnydale Services Ltd [2022] EWHC 706 (Comm) where Mr Richard Salter QC, sitting as a Deputy Judge of the High Court, said (Emphasis in underlining):

“27. In support of his submission that the court should take a liberal approach to the scope of CPR Pt 18, Mr Atrill relied upon Harcourt v Griffin[2007] EWHC 1500 (QB), [2008] Lloyd’s Rep IR 386. In that case, Irwin J granted an application by a personal injury claimant for an order under CPR Pt 18 for further information to establish the full nature and extent of the insurance cover enjoyed by the respondents who were liable for his injuries. Mr Atrill particularly drew my attention to Irwin J’s observation (at [10]) that:

The nature and extent of the Defendants’ insurance cover is not in itself a ‘matter .. in dispute in the proceedings’ between the Parties, in the sense that the proper quantum of damages payable to the Claimant could be determined without determining whether the Defendants can actually pay those damages. However, it appears to me that the wording of CPR. r. 18 requires to be interpreted reasonably liberally. The purpose of the jurisdiction must be taken to be to ensure that the Parties have all the information they need to deal efficiently and justly with the matters which are in dispute between them. Moreover, the wording need not be taken to imply that there must be a live disagreement about the relevant issue, since on very many occasions parties are properly required to furnish information pursuant to CPR r. 18 precisely to discover whether there is or is not a live disagreement between the parties on a given point. The whole thrust of the new approach to civil litigation enshrined in the Civil Procedure Rules is to avoid waste of time and cost and to ensure swift and, as far as possible, proportionate and economical litigation. Therefore, I have no hesitation in finding that if there is no rule of law or significant rule of practice to the contrary, then the wording of CPR r. 18 is broad enough to cover information of this kind…”

32. With great respect to Irwin J, it seems to me that his more liberal and pragmatic approach to CPR Pt 18 risks stretching the scope of the rule beyond that which can reasonably be thought to be contemplated by its terms. The rule expressly says that the matter about which clarification or further information can be sought must be one “which is in dispute in the proceedings”. That wording, in my judgment, makes it clear that there are two cumulative aspects to this restriction: the matter must be “in dispute”, and that dispute must be “in the proceedings”.

33. That means (for example) that requests under Pt 18 cannot be used for the purpose of obtaining material for cross-examination as to credit (Thorpe v Chief Constable of Greater Manchester [1989] 1 WLR 665), or to obtain material to support different claims between the same parties or claims against different parties (Trader Publishing Ltd v Inc [2010] EWHC 142 (Ch)). As Morgan J observed in Barness v Formation Group Plc [2018] EWHC 1228 (Ch) at [10]:

34. The terms of the Practice Direction also make it clear that requests and orders under CPR Pt 18 must be strictly confined to matters which are reasonably necessary and proportionate for the stated purposes. In Hall v Sevalco Ltd [1996] PIQR 344 at 349 (a case about interrogatories under the RSC) Lord Woolf MR observed that “necessity is a stringent test”: and in King v Telegraph Group Ltd [2004] EWCA Civ 613, [2005] 1 WLR 2282  at [63], Brooke LJ laid particular stress on the strictness required by the terms of the Practice Direction:

35. In my judgment, the requirement of the rule that the information sought must relate to a “matter which is in dispute in the proceedings”, and the requirement of the practice direction that any request must be strictly confined to matters which are reasonably necessary and proportionate for one or other of the stated purposes, are threshold conditions. If those conditions are not satisfied, then the court simply has no jurisdiction to make any order under CPR Pt 18 (though, as Thirlwall J has pointed out, there may be other powers available to the court to assist in avoiding the waste of time and costs and in achieving the “swift and .. proportionate and economical litigation” referred to by Irwin J).

36. If, however, those threshold conditions are satisfied, then the question becomes a matter for the court’s discretion. The power under CPR Pt 18 is one of the court’s case management powers, and its exercise should be considered in the context of the overall case management of the action: see Toussaint v Mattis [2001] CP Rep 61, CA, at [16], per Schiemann LJ.”

The Judge importantly concluded:

“46. One of the complaints made by the claimants about Mr Gibbs’ responses to the RFI is that they show that he has failed to exercise reasonable diligence in examining relevant documents and undertaking reasonable enquiries. Mr Atrill invited my attention to the following passage in paragraphs [20.96], [20.98] and [20.101] of Matthews and Malek, Disclosure (5th edn, Sweet & Maxwell 2017):

.. It is incumbent upon a party responding to a Request to a Pt 18 order to exercise reasonable diligence in formulating a response ..
.. [T]he court is likely to regard a party [as] being under a duty to undertake reasonable enquiries, but what constitutes reasonable enquiries will depend on the circumstances .. [A] party is not bound to make enquiries to the extent that such enquiries place an unfair or oppressive burden on him ..
.. If it is necessary for the purposes of responding to a Request, the party must examine the documents in his control .. or that of his servants or agents held in that capacity. If a such search would be unduly burdensome, then that may be a ground for objecting to the Request ..

47. In my judgment, those passages accurately state the law in this area. I would, however, add this rider. Where, as in the present case, a request under Pt 18 has already been answered, and the objection is that the answer given is inadequate because reasonable diligence has not been exercised, the proper way forward will not usually be to ask the court (as the claimants in the present case have done) simply to order that the original generally worded request should be answered again. Such a course will often just postpone until an application for sanctions for non-compliance or for relief from such sanctions is made the inevitable issue of what reasonable diligence in formulating a response to that request – and thus compliance with the order – actually requires. By that time it is likely to be too late to consider the appropriateness of the scope of the original order: see eg Griffith v Gourgey [2015] EWHC 1080 (Ch) at [40] and [54(1)]. 

48. The better course will usually be, wherever possible, to ask the court to specify in its order precisely what further enquiries the party responding to the Pt 18 request should carry out, so that the issue of what proper compliance requires is plainly defined from the outset. 

49. A related issue (which similarly arises on the facts of the present application) is how the court should approach assertions by the party responding to a Pt 18 that that party is not able to recall and/or to provide the requested information, either at all or in the detail requested. 

50. On an application under Pt 18, the court is not required to take at face value and without analysis everything that a party says in its response or its witness statements. In some cases it may be clear that there is no real substance in the assertions made: see eg (in the context of CPR Pt 24) ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [10], per Potter LJ. However, it is also clear that the court should not, on such an interim application, conduct a “mini-trial”. In most cases, it will neither be possible nor appropriate (having regard to the overriding objective) to go behind what is said in answers to Pt 18 requests: cf the guidance given by Beatson J in West London Pipeline and Storage Ltd v Total UK Ltd [2008] EWHC 1729 (Comm) at [80], in relation to challenges to claims to privilege. To reject a statement contained in a document verified by a statement of truth will, in many cases, involve the implicit conclusion that the person making the statement has lied. That is a conclusion which a court will understandably be reluctant to reach on an interim application where the statement has not been tested in cross-examination.”

Court reject challenge to fraud conviction

A. Introduction

Mr Zeroual (the applicant), a (now former) secure tenant of the London Borough of Hammersmith & Fulham, was convicted on 18 December 2018 of two counts of fraud, contrary to section 1 of the Fraud Act 2006:

  1. Count one – dishonestly failing to disclose information that he was under a legal duty to disclose “namely that he had sub-let part of the premises” of the flat in breach of the tenancy conditions.
  2. Count three – dishonestly failing to disclose that his wife was living with him between 2010 and 2013 (before their later separation), which meant that he was no longer eligible for the single person’s discount in respect of council tax payable for the flat.

He was acquitted on count two which alleged that he had dishonestly failed to disclose a change in circumstances (i.e. that he no longer lived at his flat as his only or principal home) in relation to his application to purchase the flat under the Right to Buy.

The sentence passed down on 23 January 2019 was:

  • 18 months imprisonment suspended for 18 months,
  • with a 30 day Rehabilitation Activity requirement;
  • in July 2020 he was ordered to pay £89,074 (of which £17,500 was to be paid as compensation to the council) pursuant to the Proceeds of Crime Act 2002.

B. The Appeal

The ground of appeal on count one focused on the directions given in relation to sub-letting and whether they were sufficient to deal with the issue of exclusive possession and whether any persons staying in the flat were rather and ’merely’ lodgers.

With respect to count three, which wasn’t originally appealed, it was argued both that the Judge failed to properly direct the jury as to the elements required to convict him and that it should not have been left to the jury because the failure to disclose information charged under this count was not a failure to disclose information which he was under a legal duty to disclose for the purposes of the Fraud Act 2006.

C. The decision

In R v Zeroual [2022] EWCA Crim 288 the Court of Appeal (Criminal Division):

(a) refused an application for an extension of time to appeal in light of the merits of the substantive appeal;

(b) refused permission to appeal on count 1;

(c) refused the application to vary the grounds of appeal to challenge the conviction on count 3 because the judge’s directions were sufficient and the evidence showed that there was a case to answer;

(d) refused the new applications for permission to appeal against sentence, the confiscation order and the costs order because there were no arguable grounds of appeal.

D. Reasons

The applicant’s case at trial on count one had been that he had always lived at the relevant flat but from time to time had lodgers. However, the jury clearly rejected his evidence that he was living at the flat, which had been a central blank of the prosecution’s case. It therefore followed that if he had been found to have moved out of the flat the occupants remaining had exclusive possession and there had been a clear sub-letting of part.

Complaint as to the failure of the judge to explain the terms dishonesty and gain was not made out given that it had been common ground that if sub-letting was made out then the applicant was intending to make a gain and was acting dishonestly.

As for count three, it was the applicant’s case that he had made an application to the local authority for a 2-bedroom property (rather than his 1-bedroom demised premises) because his wife was pregnant and that should have been sufficient notification that she was living with him. He hadn’t realised, he said, that he needed specifically to inform the Council Tax department and he was not acting dishonestly.

However, it was common ground that there was a legal duty to inform the local authority of any relevant change of circumstances, as confirmed by regulation 16 of the Council Tax (Administration and Enforcement) Regulations 1992, and there was therefore no basis for allowing a late variation to the grounds of appeal to allow this issue to be raised.

Interestingly the applicant had been acquitted on count two (see above) following the trial judge’s direction to the jury that they had to be sure he no longer had the intention to use the flat as his only or principal home against the backdrop of his intention to exercise the right to buy (remembering that the allegation was of sub-letting of part not all of the flat).

E. Conclusion

You often hear the comment that fraud is not a victimless crime but it would seem in this case that this would extend to the applicant himself, albeit the consequences follow on from his actions. As Lord Justice Dingemans explained at paragraph 9 of the judgment:

“He has been evicted from the flat, which he had intended to purchase under the right to buy scheme. He has lost his job with the civil service. His family circumstances have deteriorated. His savings have been confiscated. The applicant has suffered mental health problems being severe reactive depression, requiring treatment.”

Housing fraud in the criminal courts – an introduction

A. Introduction
For many housing practitioners – whether that be those working for a social landlord, investigators or lawyers – their primary experience of seeking to ‘apply’ the results of their work in the fraud field is in the civil courts. In particular, it is in the context of (residential) possession proceedings in the county court.

However, the “crossover” into the criminal courts is not unusual and a quick review of the Cornerstone on Social Housing Fraud twitter account (@CSHousingFraud) for 2021 will show, by way of example, references to 13 convictions:

B. Housing fraud (criminal) charges
The usual offences charged in this field (primarily allocation fraud/unlawful sub-letting) are:

(1) Fraud Act 2006

Section 2 (fraud by false representation)

Section 3 (fraud by failing to disclose information)

Section 4 (fraud by abuse of position)

Section 7 (making or supplying articles for use in frauds)

Conviction (section 1(6))
– Summary conviction, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum (or to both);

– Conviction on indictment, to imprisonment for a term not exceeding 10 years or to a fine (or to both).

Sentencing guidelines (Magistrates’ Court) can be seen here.

Sentencing guidelines (Crown Court) can be seen here.

(2) Prevention of Social Housing Fraud Act 2013

Section 1 (unlawful sub-letting: secure tenancies)

Section 2 (unlawful sub-letting: assured tenancies)

Conviction (sections 1(5)(6), 2(6)(7))

– A person convicted of an offence under sections 1(1), 2(1) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

– A person convicted of an offence under sections 1(2), 2(2) is liable—

(a) on summary conviction, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both);

(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both).

(3) Housing Act 1996

Section 171 (false statements and withholding information)

Section 214 (false statements, withholding information and failure to disclose change of circumstances)

Conviction (sections 171(2), 214(4))

A person guilty of an offence under these sections is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

*Note that section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 replaced the previous statutory maximum of £5,000 in the magistrates’ court with an unlimited fine. This applies only to offences committed on or after 12 March 2015.

C. Sentencing guidelines
The Sentencing Council website says:

“On 1 December 2020 the Sentencing Code came into effect in England and Wales, consolidating existing sentencing procedure law into a single Sentencing Act.

The Code covers sentencing for adults and under 18s and applies to all convictions made on or after 1 December 2020, irrespective of the date on which the offence was committed. From this date, judges and magistrates need to refer to the Code, rather than to previous legislation, although there will be some transitional cases where an offender is convicted before 1 December but is sentenced later.

The Code includes general provisions relating to sentencing procedure, the different types of sentences available to the courts, and certain behaviour orders that can be imposed in addition to a sentence. It is a consolidation only so has made no substantive changes to the law.”

And so, for example, section 59 of the Sentencing Act 2020 provides:

“(1) Every court—

(a) must, in sentencing an offender, follow any sentencing guidelines which are relevant to the offender’s case, and

(b) must, in exercising any other function relating to the sentencing of offenders, follow any sentencing guidelines which are relevant to the exercise of the function,

unless the court is satisfied that it would be contrary to the interests of justice to do so.

(2) The duty imposed by subsection (1) is subject to—

(a) section 125(1) (fine must reflect seriousness of offence);

(b) section 179(2) (restriction on youth rehabilitation order);

(c) section 186(3) and (6) (restrictions on choice of requirements of youth rehabilitation order);

(d) section 204(2) (restriction on community order);

(e) section 208(3) and (6) (restrictions on choice of requirements of community order);

(f) section 230 (threshold for imposing discretionary custodial sentence);

(g) section 231 (custodial sentence must be for shortest term commensurate with seriousness of offence);

(h) sections 273 and 283 (life sentence for second listed offence for certain dangerous offenders);

(i)section 321 and Schedule 21 (determination of minimum term in relation to mandatory life sentence);

(j) the provisions mentioned in section 399(c) (mandatory minimum sentences).”

Section 60 then goes on to say:

“(1) This section applies where—

(a) a court is deciding what sentence to impose on an offender for an offence, and

(b) offence-specific guidelines have been issued in relation to the offence.

(2) The principal guidelines duty includes a duty to impose on the offender, in accordance with the offence-specific guidelines, a sentence which is within the offence range.”

Section 73 deals with guilty pleas and the reduction of sentence that thereupon applies (depending on when the plea is made, minimum sentences that apply to some sentences, etc). See the Sentencing Council reference here.

By way of example, if a person has been convicted of a section 1 Fraud Act offence in the Magistrates’ Court and the court is retaining the case for sentencing then the court will:

  1. Determine the offence category – high, medium or lesser culpability – and as part of that consideration determine the harm by reference, in the latter instance, to value and impact.
  2. Use that to reference the case in the tables provided – that covers custodial sentences, fines and community orders, and allows for aggravating factors.
  3. Consider any factors which indicate a reduction, such as assistance to the prosecution – see section 74.
  4. Reduction for guilty pleas – see section 73.
  5. Totality principle – If sentencing an offender for more than one offence, or where the offender is already serving a sentence, consider whether the total sentence is just and proportionate to the overall offending behaviour. See guidance here.
  6. Confiscation, compensation and ancillary orders – see re magistrates’ court here and re Crown Court here.
  7. Reasons for sentence – see section 52.
  8. Consideration for time spent on bail (tagged curfew) – see section 240A of the Criminal Justice Act 2003 and section 325.

The Crown Court “version” can be seen here.

D. Conclusion

This blog is by way of an introduction to the criminal prosecution of housing fraud, and future articles will aim to build on its operation and the practical considerations that may need to be borne in mind in considering whether to go down this route instead of or, more likely, in addition to the civil litigation process. In the meantime there are earlier articles available on this site covering confiscation orders and compensation orders.

International Fraud Awareness Week 2021

Sunday (14th) saw the start of the International Fraud Awareness Week 2021.

This week has been run by the Association of Certified Fraud Examiners since 2000 as a dedicated time to raise awareness about fraud. To cite from the bespoke website:

“The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education. Organizations and individuals are encouraged to register as Official Supporters prior to International Fraud Awareness Week, and to host training opportunities, distribute anti-fraud information or otherwise promote anti-fraud activities during the week.”

One of the supporters of this week is the London Borough of Hillingdon, as is evident from their tweet on the first day of the week:

Annual Fraud Conference 2021 – Oxford Town Hall

On 24 November 2021 I will be “going home” to speak at the Annual Fraud Conference 2021 – The Power of Partnerships – being held at Oxford Town Hall. This is in its 6th year now and is organised by Oxford City Council’s Oxford Investigation Service (OIS).

From 1987 to 1997 I worked in Oxford for the Oxfordshire Money Advice Project, a debt training, support and advocacy agency funded by Oxfordshire County Council and run by the National Association of Citizens Advice Bureaux. During that time I also spent 4 years as a city councillor, including almost 2 years as chair of the Housing Committee.

Oxford, and the Town Hall in particular, has always therefore held precious memories for me and I have always enjoyed my returns since coming to the Bar in 1999, primarily to the County Court, and the nostalgia-bug invariably grips me whenever I am there.

This time I am privileged to be surrounded by such an impressive line-up covering fraud from its detection and investigation stage through to its prosecution and appropriate response.

I am especially lucky to be talking in a workshop with Raj Vine, the fantastic Counter Fraud Specialist at Riverside. I worked with Raj, and indeed the OIS, in a sub-letting possession trial I wrote about earlier this year.

The title of this year’s conference is especially important for two main reasons. Firstly, when you look at any housing fraud case which has produced a successful outcome for the landlord then it will always have only done so because of the input of various agencies, individuals and professions. I am fortunate that by the time I get involved much of the hard work has already been done!

Secondly, it illustrates for me as a lawyer where I could do more, listen more and learn more – whether that be investigation work, officer input, etc. Teamwork is not, and should never be, an empty mantra and partnerships are essential to identify the true factual scenario, maximise prospects of success and hone the case to the extent it warrants.

Section 168 determinations, waiver and shared ownership

The case
On 12 October 2021 the Upper Tribunal (Lands Chamber), in Bedford v Paragon ASRA Housing Limited [2021] UKUT 266 (LC), rejected an appeal against the refusal of the First-tier Tribunal to strike out as an abuse of process the Housing Association’s application for a section 168 determination that the tenant of a shared ownership lease had breached a covenant therein prohibiting sub-letting.

Remember that by section 168(1), Commonhold and Leasehold Reform Act 2002,

“(1)A landlord under a long lease of a dwelling may not serve a notice under section 146(1) of the Law of Property Act 1925 (c. 20) (restriction on forfeiture) in respect of a breach by a tenant of a covenant or condition in the lease unless subsection (2) is satisfied.

(2)This subsection is satisfied if—

(a)it has been finally determined on an application under subsection (4) that the breach has occurred,

(b)the tenant has admitted the breach, or

(c)a court in any proceedings, or an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, has finally determined that the breach has occurred.”

Appellant’s case
The tenant’s argument was that Paragon had waived the breach such that the application was obsolete:

14. Despite being aware of the breach of covenant by subletting Paragon appear not to have taken a decision to forfeit Mr Bedford’s until May 2020 and it continued to collect rent by monthly direct debit between December 2018 and May 2020.

17. The basis of the application to strike out the proceedings was said to be that they served no purpose because the right to forfeit the lease had been waived by Paragon’s acceptance of rent with full knowledge that Mr Bedford was subletting the property.  The sole purpose of an application under section 168, 2002 Act was to secure a determination that a breach had occurred as a prelude to the service of notice under section 146, 1925 Act and the commencement of forfeiture proceedings.  In circumstances where Mr Bedford had a defence that the breach of covenant had been waived, the pursuit of the application by Paragon was, he contended, an abuse of process.

First instance decision
The First-tier Tribunal did not accept it would be a “futile exercise” to make a determination of breach because forfeiture was not the only remedy available to Paragon (e.g. they may seek damages and/or an injunction). In any event the tribunal said it did not have the jurisdiction to determine the question of waiver of the forfeiture in this case. 

Upper Tribunal decision
Martin Rodger QC, Deputy Chamber President, dismissed the appeal:

(a) Alternative remedies46. I do not accept that the availability of alternative remedies for the breach of covenant was an irrelevant consideration in the FTT’s assessment of whether the application was an abuse of process.  On the contrary, it was highly relevant.  The most obvious alternative remedy that a landlord might seek in the face of a persistent breach of covenant by its tenant would be an injunction compelling the tenant to comply, either by requiring that he terminate the current sub-tenancy or by prohibiting any future sub-letting.  Mr Gallivan also referred to the possibility of a claim for compensatory damages on a negotiating basis, as had been directed, for example, by Lightman J in Crestfort v Tesco [2005] L & TR 20 where commercial premises had been sublet in breach of covenant.

[see also paragraph 47 of the judgment]

(b) Determination of waiver – “48. As for the second ground of appeal, Miss Cattermole is obviously correct in her submission that, in principle, the FTT could have determined whether the right to forfeit had been waived as part of its consideration of the application to strike out.  It was neither necessary nor strictly correct to approach the question as raising a matter of jurisdiction.  But that does not take the appeal very far. Even if I was to take the view that the FTT had erred by suggesting that it did not have jurisdiction to consider the issue of waiver, its decision not to strike out was obviously correct because the proceedings were plainly not an abuse of process.   Neither the detailed facts nor the application of the law to those facts was clear.  Although Mr Bedford made a lengthy witness statement in relation to the allegation of breaches of covenant and in support of his application to strike the proceedings out, he did not include any detail of the subletting itself.  Nor did the submissions prepared by counsel say any more than that “the property is sub-let” and only the 2018 tenancy agreement (which had expired in 2019) was exhibited.  Until the facts about the breaches themselves are established it cannot be ascertained whether the Paragon had sufficient knowledge of those facts to amount to waiver, and until it can clearly be seen that there has been a waiver it cannot be suggested that the proceedings were an abuse of process.

[see paragraphs 28-32 of the judgment re jurisdiction]

Modern shared ownership leases are assured tenancies:

(a) until the purchased share has been staircased to 100%, and until then

(b) for so long as the tenant/one of joint tenants live there as their only or principal home.

The permanent loss of security of tenure brought in by the Prevention of Social Housing Fraud Act 2013 by reason of sub-letting/parting with possession of the whole of the demised premises does not apply to shared ownership leases and so security of tenure can be ambulatory (section 15A, Housing Act 1988).

It follows that if security of tenure has been lost then forfeiture, and not the notice seeking possession approach, is the landlord’s route to recovering possession in a sub-letting case.

That is the context in which this appeal has to be seen.

Non admissions and (civil) defences

There is a widespread misconception that in civil claims a defendant can, by non-admissions, simply put the claimant to proof of the matters pleaded in the particulars of claim – whether that be with regard to the service of notices, allegations of anti-social conduct, etc.

In housing fraud cases, these failures to positively plead can be seen, by way of example, in respect of:

  • Details of visits to the demised premises;
  • Names of sub-tenants/occupiers;
  • Representations made leading to allocation of the premises;
  • Connections with other accommodation;
  • Monies received for use of premises.

How does such an approach sit with the CPR, especially rule 16.5 (emphasis added)?

“(1) In his defence, the defendant must state –

(a) which of the allegations in the particulars of claim he denies;

(b) which allegations he is unable to admit or deny, but which he requires the claimant to prove; and

(c) which allegations he admits.”

The short answer is “not well”, a longer answer being “not well at all”. To understand why, aside from reading CPR r. 16.5 (1)(b) and paragraph 10.2 of Part 16’s practice direction (“a defendant should deal with every allegation in accordance with rule 16.5(1) and (2)”), it is instructive to also read the judgment of Lord Justice Henderson in SPI North Ltd v Swiss Post International (UK) Ltd & Anor [2019] 1 W.L.R. 2865. Early in his judgment he explained:

“2…Under the Civil Procedure Rules , unlike the previous Rules of the Supreme Court (“RSC”), a non-admission may only properly be pleaded by a defendant where he is, in fact, unable to admit or deny the allegation in question, and therefore requires the claimant to prove it. 

3. Plainly, a defendant is able to admit or deny facts which are within his own actual knowledge, or which he is able to verify without undue delay, difficulty or inconvenience, by reference to records and other sources of information which are under his control or otherwise at his ready disposal.”

A breach of 16.5 may well lead to a strike out application. It may also be the case that the claimant seeks to “fill in the gaps” by means of a Part 18 Request for Further Information, bearing in mind the latter’s purpose:

1.2  A Request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet.” [Practice Direction to CPR Part 18]

One note of caution is that Henderson LJ went on in his judgment, at paragraphs 49 & 54, to state that defendants were not obliged to make enquiries of third parties before pleading non-admissions.

“49. In my judgment, a number of factors point towards the conclusion that a defendant is “unable to admit or deny” an allegation within the meaning of rule 16.5(1)(b) where the truth or falsity of the allegation is neither within his actual knowledge (including attributed knowledge in the case of a corporate defendant) nor capable of rapid ascertainment from documents or other sources of information at his ready disposal. In particular, there is no general obligation to make reasonable enquiries of third parties at this very early stage of the litigation. Instead, the purpose of the defence is to define and narrow the issues between the parties in general terms, on the basis of knowledge and information which the defendant has readily available to him during the short period afforded by the rules for filing his defence.

54…I have little hesitation in concluding that the wording of rule 16.5(1)(b) does not import any duty to make reasonable enquiries of third parties before putting the claimant to proof of an allegation which the defendant is “unable to admit or deny”. But that is not the end of the matter, because Mr Drake advanced a further argument against the claimant’s approach which I find equally compelling. The argument was, in short, that rule 16.5(1) does not import a “process” requirement, of which the defendants were arguably in breach and which could for that reason alone have arguably justified striking out the defence (or parts of it) if the offending non- admissions were not remedied. In order to justify such a draconian remedy, submits Mr Drake, it would have been necessary for the claimant to establish, to the civil standard of proof, that the defendants actually could have had available to them knowledge (whether or not derived from third parties) which meant that they were in fact able to admit or deny specific allegations which they had chosen not to admit. In other words, it would not be enough merely to show that the defendants failed to make reasonable enquiries of third parties which they ought to have made. It would be necessary to go further, and to establish that the impugned non-admissions were in fact improper because the relevant allegations should have been either admitted or denied.”

Finally, it is worth noting that CPR r. 16.5 also provides:

“(3) A defendant who –

(a) fails to deal with an allegation; but

(b) has set out in his defence the nature of his case in relation to the issue to which that allegation is relevant,

shall be taken to require that allegation to be proved.

(5) Subject to paragraphs (3) and (4), a defendant who fails to deal with an allegation shall be taken to admit that allegation.

Judicial assessment of the facts

Judgment was handed down today in a multi-track possession trial in which I represented the local authority. The “simple” issue was whether the defendant had resided with the (mother) tenant at the time of her death and for at least the previous 12 months leading up to that time such that he was entitled to succeed to her (pre-1 April 2012) secure tenancy.

There was no documentary evidence supporting the defendant’s case and he relied on his own witness statement, that of a long-standing friend and some hearsay evidence (e.g. a letter from a former neighbour).

In her ex tempore judgment allowing the claim for possession, the Judge cited R (Dutta) v General Medical Council [2020] EWHC 1974 (Admin) and the judgment of Warby J at paragraph 39 and I thought it was a helpful reminder to place on this blog as to the proper judicial approach to the determination of facts:

“There is now a considerable body of authority setting out the lessons of experience and of science in relation to the judicial determination of facts. Recent first instance authorities include Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3650 (Comm) (Leggatt J, as he then was) and two decisions of Mostyn J: Lachaux v Lachaux [2017] EWHC 385 (Fam) [2017] 4 WLR 57 and Carmarthenshire County Council v Y [2017] EWFC 36 [2017] 4 WLR 136. Key aspects of this learning were distilled by Stewart J in Kimathi v Foreign and Commonwealth Office [2018] EWHC 2066 (QB) [96]: 

i) Gestmin:
We believe memories to be more faithful than they are. Two common errors are to suppose (1) that the stronger and more vivid the recollection, the more likely it is to be accurate; (2) the more confident another person is in their recollection, the more likely it is to be accurate.

Memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is even true of “flash bulb” memories (a misleading term), i.e. memories of experiencing or learning of a particularly shocking or traumatic event. 

Events can come to be recalled as memories which did not happen at all or which happened to somebody else. 

The process of civil litigation itself subjects the memories of witnesses to powerful biases. 

Considerable interference with memory is introduced in civil litigation by the procedure of preparing for trial. Statements are often taken a long time after relevant events and drafted by a lawyer who is conscious of the significance for the issues in the case of what the witness does or does not say. 

The best approach from a judge is to base factual findings on inferences drawn from documentary evidence and known or probable facts. “This does not mean that oral testimony serves no useful purpose… But its value lies largely… in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth”. 

ii) Lachaux:
Mostyn J cited extensively from Gestmin and referred to two passages in earlier authorities. I extract from those citations, and from Mostyn J’s judgment, the following: 

“Witnesses, especially those who are emotional, who think they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason, a witness, however honest, rarely persuades a judge that his present recollection is preferable to that which was taken down in writing immediately after the incident occurred. Therefore, contemporary documents are always of the utmost importance…” 

“…I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective fact proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities…”

Mostyn J said of the latter quotation, “these wise words are surely of general application and are not confined to fraud cases… it is certainly often difficult to tell whether a witness is telling the truth and I agree with the view of Bingham J that the demeanour of a witness is not a reliable pointer to his or her honesty.”

iii) Carmarthenshire County Council:
The general rule is that oral evidence given under cross-examination is the gold standard because it reflects the long-established common law consensus that the best way of assessing the reliability of evidence is by confronting the witness.

However, oral evidence under cross-examination is far from the be all and end all of forensic proof. Referring to paragraph 22 of Gestmin, Mostyn J said: “…this approach applies equally to all fact-finding exercises, especially where the facts in issue are in the distant past. This approach does not dilute the importance that the law places on cross-examination as a vital component of due process, but it does place it in its correct context…”

The Dutta case is worth reading in its entirety and emphasises that assessment as to the credibility/probative value of evidence is not a binary choice.

Where are you? The “missing” witnesses and drawing an adverse inference

The issue – adverse inferences

In June I wrote an article on a sub-letting trial which I had recently concluded, and one of the points raised was the importance to a party of their putting forward the best, and at times most obvious, evidence. I said:

Lastly, often one of the most compelling features of a case is what is not there more than what is. Why was there nothing (email, letter, statement, etc) from those persons found at the premises? Why was there nothing from the defendant’s adult children who apparently sometimes stayed there? Why was there nothing from the husband (not least to refute the notion that his wife lived with him)? Why was there nothing from the neighbours who surely after 26 years of the defendant apparently living at the premises could have confirmed as much? Don’t forget to consider and use authorities such as Wisniewski v Central Manchester Health Authority [1998] PIQR P324 where Brooke LJ considered the court’s ability to draw adverse inferences from the absence or silence of a witness (that can of course go both ways).

Last month I was in trial dealing with an “only or principal home” possession claim and my skeleton argument highlighted this same issue, and indeed the same authority, in a case where the defendant called no other witnesses than themselves:

Conversely, the Defendant’s evidence in support of her case is limited in the extreme.  She has further not called her husband, Mr……. or any person from the neighbouring flats and houses to the Property to give evidence.  Such absence is telling.  In Wisniewski v Central Manchester Health Authority [1998] PIQR P324 at [340] Brooke LJ considered the issue of “missing” witnesses and summarised the relevant principles:

“(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

(2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

(4) If the reason for the witness’s absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”


Against that background it is important to note that Sir Ernest Ryder SPT cautioned in Manzi v King’s College Hospital NHS Foundation Trust [2018] EWCA Civ 1882 at [30]:

Wisniewski is not authority for the proposition that there is an obligation to draw an adverse inference where the four principles are engaged. As the first principle adequately makes plain, there is a discretion i.e. “the court is entitled [emphasis added] to draw adverse inferences”.”

Current jurisprudence

The brilliant blog – Civil Litigation Brief – recently reported on a High Court judgment by DHCJ Hodge QC in Ahuja Investments Ltd v Victorygame Ltd & Anor [2021] EWHC 2382 (Ch) in which the opening paragraph gave a flavour of what was to come:

In his farewell speech from the Delhi High Court, Justice J.R. Midha is reputed to have said that: “In the Court of Justice, both the parties know the truth; it is the judge who is on trial.” Never has that perceptive observation resonated more fully with me than in the present case, where both parties have signally failed to assist the court by calling evidence from three highly relevant potential witnesses, in breach of their duty under CPR 1.3 to help the court to further the overriding objective to deal with the case justly and at proportionate cost. As a result, this is not so much a case of “Hamlet without the Prince” as one of Hamlet without any of Polonius, Gertrude or Laertes (or Rosencrantz and Guildenstern without Hamlet, Claudius or the Player).

The facts of the case are unimportant for current purposes but rather the Judge’s consideration of Wisniewski and a Court of Appeal “warning” not to over-use the principles raised therein – in Magdeev v Tsvetkov [2020] EWHC 887 (Comm) at [150]-[154] – is of some interest and instruction:

65. In my judgment, before the discretion to draw an adverse inference or inferences can arise at all, the party inviting the court to exercise that discretion must first:

1.establish (a) that the counter-party might have called a particular person as a witness and (b) that that person had material evidence to give on that issue;

2.identify the particular inference which the court is invited to draw; and

3.explain why such inference is justified on the basis of other evidence that is before the court.

Where those pre-conditions are satisfied, a party who has failed to call a witness whom it might reasonably have called, and who clearly has material evidence to give, may have no good reason to complain if the court decides to exercise its discretion to draw appropriate adverse inferences from such failure. A good illustration of this, in the context of the present case, may be afforded by what passed between Mr Singh and Mr Jandu over the phone in the few minutes before exchange of contracts for the sale of the property at 15.11 (GMT) on 1 March 2016.

To add to the Manzi, Magdeev and Ahuja line of authorities we also have Lord Leggatt’s lead judgment in the recent Supreme Court case of Royal Mail Group Ltd v Efobi [2021] UKSC 33 – referred to in Ahuja at [31] – at [41]:

The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in Wisniewski v Central Manchester Health Authority [1998] PIQR P324 is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.

Impact beyond adverse inferences

Finally, it is worth noting what DHCJ Hodge QC said in Ahuja at [32]-[33] (the “third aspect” concerned rectification):

“32.The omission to call a material witness or witnesses without reasonable explanation may have a significance that goes beyond the drawing of appropriate adverse inferences. Three particular aspects are of particular relevance to the present case. First, in a case where there are contemporary documents which appear on their face to provide cogent evidence on an issue which is contrary to the evidence of one of the parties to the litigation, the court may decide to take the documents at their face value, and decline to accept that party’s evidence to the contrary, where this is unsupported by the evidence of a non-party witness who clearly could have given evidence material to that issue and who might have, but has not, been called by that party as a witness. The same may apply where the evidence of one of the parties to the litigation is contrary to the known or probable facts.

33.Second, the failure to call a witness who might have been able to give evidence on a material issue may mean that the court is left with no direct evidence at all on that issue. In that situation, the party who might be expected to have called that witness cannot complain if the court rejects that party’s case on that issue and either makes a finding based on the inherent probabilities presented by the limited evidence that is before the court, or simply concludes that it is unable to make any finding of fact at all on that issue. This is an alternative way of analysing my conclusion as to what was said during the telephone conversation between Mr Jandu and Mr Singh between 15.02 and 15.06 GMT on 1 March 2016 (if Ahuja can be taken to have been advancing a positive case on that issue notwithstanding the paucity of Mr Singh’s evidence on the point).


It is clear that simply not calling a witness without apparent reason is not, in itself, necessarily sufficient to enable a court to draw adverse inferences (or indeed reach other negative determinations). However the “Wisniewski principle” remains sound and requires consideration as to its possible application in housing fraud/misuse cases.

Cornerstone on Social Housing Fraud – 2nd Edition now published