Reliance on other party’s statements

We recently reported on the authority of UK Insurance Ltd v Stuart John Gentry [2018] EWHC 37 (QB)  dealing with the issue of what adverse inferences could be drawn from the absence of (what might be seen as) material witnesses.

The Court of Appeal had cause to consider an adjunct to this question earlier this month when they handed down judgment in Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] EWCA Civ 355.  The facts of the case are not important to this article but the comments towards the end of the Court of Appeal’s judgment on whether a party can rely on a statement served by the other side where that witness has not been called to give evidence are.

Before addressing that it is fair to note that the Court of Appeal did, albeit briefly, comment on the absence of material witnesses when it said:

  1. No litigant is obliged to call witnesses to satisfy the curiosity or enthusiasm of his opponent. It was always open to PAG to subpoena any witness it thought would be helpful to the Court. The fact that a party who might be expected to produce witnesses does not do so may sometimes speak volumes but it is a matter for the Judge to decide whether it does so in a particular case. The critical question in the present case was whether manipulation of GBP LIBOR had taken place. The critical witness for that purpose was Mr Thomasson. If he was believed, there was nothing relevant for senior management to know; if he was not, RBS’s case collapsed anyway. The Judge did say (paragraph 461) that RBS’s decision not to call Mr Cummins (and a Mr Nielsen) in connection with the allegations of lowballing did not reflect well on RBS and repeated this in her decision on whether RBS had been fraudulent (paragraph 485). She was well aware of Mr Lord’s case (paragraph 479) but in the end was not prepared to draw an adverse inference. We do not think the Judge can be criticised.

Turning back to the potential reliance on the witness statements of those not called to give evidence, the Civil Procedure Rules seemingly makes the position clear at 32.5(5):

“(1) If –

(a) a party has served a witness statement; and

(b) he wishes to rely at trial on the evidence of the witness who made the statement,

he must call the witness to give oral evidence unless the court orders otherwise or he puts the statement in as hearsay evidence.

(5) If a party who has served a witness statement does not–

(a) call the witness to give evidence at trial; or

(b) put the witness statement in as hearsay evidence, any other party may put the witness statement in as hearsay evidence.”

The Court considered previous authority on this point, in particular McPhilemy v Times Newspapers Ltd (No. 2) [2000] 1 WLR 1732, and in an admirably clear pronouncement concluded:

  1. In our view, CPR 32.5 is not applicable where a party wishes to put in only part of a witness statement. The rule itself refers to “the witness statement” being admitted, not merely some of it. Further, it makes sense that a party wanting to rely on something said in a statement should have to place all of the statement before the Court. A Court asked to attach significance to a passage from a statement should have before it the totality of what the witness said. There would otherwise, as the Judge noted in paragraph 296 of her judgment, be “real concern that cherry picking out of context would arise”. It would, moreover, be odd if a party were free to contend for the reliability of what the witness said in a particular passage while withholding the balance of the statement because he disputed it. That, in fact, would seem to have been the position in the present case had the Judge acceded to PAG’s application. PAG, we gather, was unwilling to put in Mr Sefton’s witness statement in its entirety because most of what he said was adverse to its case. It follows that, in our view, the Judge was correct to refuse PAG’s application.

It may be that in housing fraud trials less attention is paid to the content of trial bundles in the context of those witnesses not being called, and certainly proper legal analysis of the status of such evidence is rarely entered into, but this case highlights both the basic rules applicable and their proper application and may prove significant in the “right” case.

Allocation conviction under section 171 of the Housing Act 1996

On 12 February 2018 South Oxfordshire District Council reported on a successful prosecution of a tenant under section 171 of the Housing Act 1996:

171.— False statements and withholding information.

(1) A person commits an offence if, in connection with the exercise by a local housing authority of their functions under this Part—

(a) he knowingly or recklessly makes a statement which is false in a material particular, or

(b) he knowingly withholds information which the authority have reasonably required him to give in connection with the exercise of those functions.

(2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

The tenant had failed to disclose, when applying to go on the Council’s housing register, that she in fact owned a property (which she was letting out).  She had been living in the allocated property for a number of years by the time of the conviction, and the authority had been alerted to the situation by means of an anonymous tip-off.

This was the first conviction for housing fraud by the Council and appears to have relied on the effective follow-on investigative work of not only themselves and the landlord (SOHA Housing), but also Oxford City Council’s Investigation Team.

As well as the £1530 financial orders handed out to the tenant by the Magistrates’ Court in Oxford the tenant apparently, and perhaps unsurprisingly, now faces possession proceedings, presumably under Ground 17 of Schedule 2 to the Housing Act 1988:

Ground 17

The tenant is the person, or one of the persons, to whom the tenancy was granted and the landlord was induced to grant the tenancy by a false statement made knowingly or recklessly by—

(a) the tenant, or

(b) a person acting at the tenant’s instigation.

 

where the real issue will no doubt be not, following the conviction, be whether Ground 5 is satisfied but rather whether it is reasonable in all the circumstances to make a possession order.
The usual authorities of Shrewsbury & Atcham BC v Evans (1997) 30 HLR 123, CA and Lewisham LBC v Akinsola and Adeyemi (2000) 32 HLR 414, CA will no doubt be considered by the court, and though a possession order is by nature of the ground being discretionary no means guaranteed – see for example Southwark LBC v Erekin [2003] EWHC 1765 – it is also worth noting the recent remarks of Mr Justice Turner in Poplar Housing & Regeneration Community Association Ltd v Begum [2017] EWHC 2040 (QB); [2017] HLR 42 (a sub-letting of part/only or principal home/drug activity possession case):
“40…I would stress that it is not compassionate to allow profiteering fraudsters indefinitely to continue to occupy premises and thereby exclude from such accommodation more needy and deserving families.”

Unlawful Profit Orders in action

Absence of material witnesses

In December 2017 the High Court had cause to consider a claim by an insurance company for damages based on the assertion that the Defendant had fraudulently represented to them that his car had been in collision with another vehicle driven by  someone who they insured. Mr Justice Teare handed down judgment in UK Insurance Ltd v Stuart John Gentry [2018] EWHC 37 (QB)  on 18 January 2018 and awarded the Claimant damages of £19,179 in addition to interest and costs.

One of the most interesting aspects of the judgment was a reminder of the court’s approach to “missing” witnesses, and at paragraph 68 the Judge noted:

“Mr. Grant on behalf of the Claimant invited the Court to draw adverse inferences from the failure of Mr. Gentry to give evidence (or to call evidence from Mr. Miller, Mr. Ebbs, and Mr. Toms). The circumstances in which inferences may be drawn have been summarised by the Court of Appeal in Wisnewski v Central Manchester Health Authority [1998] PIQR P324 at p.14 in these terms:
“(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.””

To give one example of how this might operate in a housing context, consider a possession claim where the landlord seeks to show that the tenant did not live at the demised premises as their only or principal home at the expiry of a notice to quit.  They have credit reference evidence linking the tenant to an alternative address which proves to be their partner’s.  The tenant does not call this person to give evidence, or they do not attend trial.

The two-stage approach will then be:

(a) why has the partner not been called or not attended trial?

(b) if there is no good reason, should the court draw an adverse inference such as to diminish the defendant’s evidence or bolster that of the claimant?

Finally, as part of the evidential overview, the importance of the Court of Appeal decisions in Lambeth LBC v Vandra [2005] 1801 (see paragraph 8 concerning the absence of direct evidence) and Islington LBC v Boyle [2012] PTSR 1093 (see paragraphs 55 & 65 with respect to the need for the tenant to rebut an inference in two homes cases) should not be overlooked.

 

Cornerstone Barristers launch blog

On 15 February 2018 Cornerstone Barristers formally launched this social housing fraud blog…we are looking forward to hearing from contributions and ideas from across the sector.

Official Book Launch held

On Monday, 5 February 2018 Cornerstone Barristers hosted the official book launch for “Cornerstone on Social Housing Fraud”. Katrina Robinson MBE, Chair of the Tenancy Fraud Forum, opened the event and spoke of the need for greater understanding of the impact of social housing fraud, and the need to take effective action against it.

She was followed by the author of the book, Andy Lane, who had a lot of people to thank!

The event was well attended by barristers, solicitors, housing officers and Andy’s family.

The book is available from Bloomsbury Professional:

https://www.bloomsburyprofessional.com/uk/cornerstone-on-social-housing-fraud-9781526502032/

Social housing fraud and ‘dishonesty’

An e-flash was produced by Cornerstone Barristers on 26 October 2017 on the question of how ‘dishonesty’ is defined by the courts. It is set down below but can be seen in its original form at:

https://cornerstonebarristers.com/news/social-housing-fraud-lsquodishonestyrsquo/

 

Richard Hanstock produced an excellent e-flash on Wednesday of this week concerning the high profile judgment of the Supreme Court, Ivey v Genting Casinos t/a Crockfords [2017] UKSC 67. The legal significance of that case was not the somewhat prurient insight into the world of high-stakes gambling, but rather the Court’s approach to the question of ‘dishonesty’. For over 30 years even the most errant law student would have been able to answer that the ‘correct’ approach to this concept was the two-stage ‘Ghosh test’, following on from the Court of Appeal’s Judgment in R v Ghosh [1982] QB 1053:

(1) Would the defendant’s behaviour be regarded as dishonest by the ordinary standards of reasonable and honest people? If yes,

(2) Was the defendant aware that his conduct was dishonest and would be regarded as dishonest by reasonable and honest people?

Whilst the Supreme Court was concerned in Ivey with the Gambling Act 2005, it will be immediately apparent that this is an issue that resonates in the social housing fraud arena. For example, the Fraud Act 2006, under which one may see prosecutions for right to buy or shared ownership fraud, has the concept of dishonesty at the heart of the offences created therein:

“(1) A person is in breach of this section if he– (a) dishonestly makes a false representation…”

[Section 2 – fraud by false representation]

“A person is in breach of this section if he– (a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose…”

[Section 3 – fraud by failing to disclose information]

“(1) A person is in breach of this section if he– (a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person, (b) dishonestly abuses that position…”

[Section 4 – Fraud by abuse of position]

Of more common usage amongst the social housing sector perhaps, the more serious offence created by sections 1 and 2 of the Prevention of Social Housing Fraud Act 2013 provides that this offence may be committed if:

(a) dishonestly and in breach of an express or implied term of the tenancy, the tenant sub-lets or parts with possession of—

(i) the whole of the dwelling-house, or

(ii) part of the dwelling-house without the landlord’s written consent, and

(b) the tenant ceases to occupy the dwelling-house as the tenant’s only or principal home.

(this is the section 1(2) wording concerning secure tenancies – for assured tenancies section 2(2) makes no mention of a sub-letting or parting with possession of part of the dwelling-house being “without the landlord’s consent”).

In most instances the ‘Ghosh test’ has not presented an insurmountable hurdle providing that evidence of, say, the sub-letting complained of is sufficiently compelling. But there could be times when prosecution is discouraged where, say, the tenant genuinely feels that they have done nothing wrong, nothing dishonest.

For example, they move out of their one-bedroom housing association flat but allow someone to live in the premises, though do not demand any money for the same (and perhaps have no further dealings with the premises). Or, as happened in one civil possession claim, the tenant ‘temporarily’ left her home in order to look after, she said, her sick mother and sub-let her flat at a market rent (with a deposit) to someone answering an advert.

It is therefore significant that Lord Hughes, in giving the judgment of the Court, rejected the need for or sense of the second part of the ‘Ghosh test’ but rather re-affirmed the proper approach at [62; 74] by reference to Lord Hoffman’s analysis in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 WLR 1476:

“Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.”

It would be wrong to portray this judgment as a ‘game-changer’ in the social housing fraud field, significant though it undoubtedly is, but it does enable both those charged with prosecution responsibilities and those wishing to make representations on the degree of culpability for, say, a submission on reasonableness in a civil false statement ground 5/17 case to proceed with greater confidence as to either the essential elements of the offence in issue or content of submissions.

_______________________

Andy Lane is the editor of the Cornerstone Housing Newsletter and specialises in the fields of social housing and public law.

 

Route of challenge to judgment procured by fraud

 

The Court of Appeal handed down judgment on 15 December 2017 in the case of (1) Shahan Salekipour (2) Amir Saleem v Jashan Kaur Parmar (In her own right & as executrix of Mohinder Singh Parmar, Deceased) sub nom Re Parmar (Deceased) [2017] EWCA Civ 2141.

The original claim was for sums owing from the defendant landlord, and at trial the judge preferred the landlord’s evidence.  A fresh claim was brought by the claimants seeking a rescinding of the earlier judgment on the basis that one of the landlord’s witnesses had, they said, been pressured to give perjured evidence.

This second claim was struck out as an abuse of process and the application to set aside this order was dismissed on the basis that the county court had no jurisdiction to rescind one of its previous judgments. The High Court, on appeal, upheld this decision and Garnham J held that the more common and appropriate route to challenge a decision procured by fraud was by appeal.

The claimants appealed, and the defendant sought to uphold the High Court decision on the additional ground that, even if she had been aware of the fresh evidence, the trial judge would still have dismissed the claim.

In delivering the main judgment of the Court of Appeal, which allowed the claimants’ appeal, Sir Terence Etherton M.R. rejected the notion that the County Court, as a creature of statute, had no jurisdiction to rescind one of its own judgments.  The relevant provisions of the County Courts Act 1984 were sections 23, 38 and 70:

“23. Equity jurisdiction.

The county court shall have all the jurisdiction of the High Court to hear and determine-

(g) proceedings for relief against fraud or mistake, where the damage sustained or the estate or fund in respect of which relief is sought does not exceed in amount or value the county court limit.

…”

“38. Remedies available in county courts.

(1) Subject to what follows, in any proceedings in the county court the court may make any order which could be made by the High Court if the proceedings were in the High Court.

…”

“70. Finality of judgments and orders

Every judgment and order of the county court shall, except as provided by this or any other Act or as may be prescribed, be final and conclusive between the parties.”

Previously, the County Court Rules had a provision, Order 37 r. 1(1), which would have allowed the County Court to have jurisdiction:

“In any proceedings tried without a jury the judge shall have power on application to order a rehearing where no error of the court at the hearing is alleged.”

The Master of the Rolls said at paragraph 73 of his judgment:

“If however, the respondent is correct about the County Court’s lack of jurisdiction, the only remedy for a litigant in the County Court who wishes to have a prior final County Court order set aside for perjury or fraud is to appeal, even though that will often not be the most appropriate course consistent with the overriding objective in CPR r.1.1. It was common ground before us that the High Court has no jurisdiction to hear independent proceedings to set aside an earlier final order of the County Court obtained by perjury or fraud. If that deprivation of a previous County Court jurisdiction was the effect of the repeal of CCR Ord. 37 r.1(1), then it appears that it would have been the result of oversight rather than intention, and, contrary to objective of the CPR, would have produced a significant difference between the High Court and the County Court and would have seriously disadvantaged County Court litigants, for no sound policy reason.”

This led to his conclusion at paragraph 74:

“I agree with the appellants that such an anomaly does not exist because, leaving to one side the CPR, including the management powers under CPR 3.1, sections 23 and 38 of the 1984 Act confer jurisdiction on a County Court judge to determine proceedings to set aside a final County Court order obtained by perjury or fraud. Such proceedings appear to me to fall precisely within the wording of section 23. The right of a party to have a judgment set aside on the ground of fraud is a principle of equity: Flower v Lloyd (1877) 6 Ch D 297; Noble at [42] (Elias LJ). The present proceedings are, consistently with the terms of section 23, “proceedings for relief against fraud … where the damage sustained … does not exceed in amount or value the county court limit”. “

This is a useful confirmation therefore of the route of challenge to a judgment procured by fraud.  The example given in “Cornerstone on Social Housing Fraud” – in Chapter 4 at pages 65-69 – is a claim for possession against a would-be successor to a tenancy being dismissed upon a finding that the defendant has in fact succeeded to the subject tenancy.

Cornerstone on Social Housing Fraud

This is the post excerpt.

Hello…I am Andy Lane and this is my first clumsy attempt at a blog to accompany ‘Cornerstone on Social Housing Fraud’, a book that I have written as part of the Cornerstone Barristers’ series.

I am keen to hear of successful initiatives in the field of social housing fraud, identify good practice and update readers on the relevant law – civil or criminal. As I get more confident (and time) I will seek to develop this site and its resources so that it becomes a (hopefully) interesting and useful source of information for those involved in its subject area – whether that be lawyers, local authority or housing association officers, or anyone with an interest in this field.

I am incredibly fortunate that my friend and colleague, Richard Hanstock, has agreed to join me in this enterprise and will ensure the references to Manchester United are kept to a minimum and the quality of the posts is high.