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BATES and others v POST OFFICE LIMITED
OBSERVATIONS ON RECUSAL APPLICATION
1. These observations are based on the draft Judgment referred to in paragraph 3
below, a “Note on background to possible recusal application” dated 13 March
2019 (“the Note”) and a discussion with David Cavender QC. I do not propose
to set out the background facts in any detail because they are helpfully and clearly
explained in the Note.
2. The hearing before Fraser J (“the Judge”) in November/December 2018 (‘the
Common Issues trial”) concerned 23 issues (several of which had a number of
sub-issues) of interpretation of two forms of contract (SPMC and NTC) under
which Post Office Ltd (“PO”) engaged sub-postmasters. The issues arose in
proceedings brought by around 600 claimants, each of whom was responsible
for running a branch post office, and PO. The proceedings are the subject of a
Group Litigation Order. The Judge, who was appointed to deal with the
proceedings by the President of the Queen’s Bench Division, has ordered that
they to be dealt with in a series of trials, of which the first concerned these issues
of interpretation of the SPMC and the NTC (“the contracts”) entered into by the
claimants.
3. The Judge has made available a draft judgment (“the Judgment”) which I
understand he is amending, and which he intends to hand down in final form
shortly. (These observations are prepared on the assumption that the final
judgment will be in substantially the same terms as the draft). Meanwhile, as I
understand it, the Judge is proceeding with the next stage of the proceedings
(“the current hearing”), which will involve him making findings of fact in
relation to various disputes (known as the Horizon Issues) concerning the
characteristics and reliability of the PO’s computer system, and involves a mix
of factual and expert evidence.
4. The PO has three concerns about the Judgment, which are to an extent connected
with each other. The first (“the interpretation issue”) is that the Judge went
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wrong, in some respects badly wrong, in his reasoning and conclusions on the
many of the issues of interpretation. The second concern (“the unfairness issue”)
is that the Judge made findings of fact in relation to matters that were not before
him in the Common Issues trial and in relation to which there had been no
disclosure and the PO had not adduced evidence. The unfairness issue inter-
relates with the interpretation issue, as it appears likely that the Judge has or may
have used facts that he should not have found to interpret the contract and, in
particular, justify the implication of terms as “necessary”. The third concern
(“the recusal issue”) is that the Judge made findings of fact (which are also the
subject of the unfairness issue) in such a way as to betray a prejudice against the
PO which justify the PO objecting to his continuing to hear these proceedings.
. These observations are principally directed to the recusal issue, and how it might
be best addressed. I have looked at the Judge’s reasoning and conclusions on the
interpretation issue only very cursorily, and it seems to me that at least some of
them raise quite significant points on which the PO has a reasonable case, and,
at least on the face of it, some points on which the PO has a pretty strong case.
The “relational contract”/good faith justification for the implication of terms,
which plays a prominent part in the Judge’s reasoning is controversial in itself,
but, quite apart from that, the Judge appears to have extended its application in
a fairly radical way. It also seems to me that there is often very little or no
reasoning offered to justify the implication of terms on the alternative, and
conventional, basis of necessity.
. At any rate this stage, I am left with the uneasy feeling that the real justification
in the Judge’s mind for the implication for at least many of the terms which the
Judge implied was the raft of adverse factual findings that he has made. If this
can be shown, that is impermissible, as the question of the implication of terms
must be considered as at the date of contracting. Interpretation of contracts must
be carried out by reference to the factual and commercial circumstances in which
the contract was made, and that cannot include facts which occurred after the
contract was made. In the present case, there may be room for some argument
that some post-contractual factual evidence could have ben relevant to some or
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all of Common Issues 10-13, but I am dubious whether that could be maintained,
and anyway the relevant facts would presumably be very limited.
7. The construction issue ties in with the unfairness issue, in the sense that, if the
point made in paragraph 6 above is right, the Judge should not have made most
of the findings about the factual evidence and the witnesses that he did,
especially in the light of what had been said to and by him as discussed in
paragraphs 13, 16 and 18 below, and that it represented a serious procedural
unfairness that he did so. There seems to me to be real force in that argument.
8. However, the urgent issue is the recusal issue. Reading the Judgment, one is
struck by the fact that the issues which the Judge had to decide, which he lists in
paragraph 45 of the Judgment, all involve questions of interpretation or implied
terms. Yet many of the paragraphs in the Judgment are given over to descriptions
of evidence, and findings of fact, in relation to what happened after the contracts
had been entered into, often in trenchant, even highly critical, terms. And,
importantly, as I understand it, those descriptions and findings relate to witnesses
who will be called at later trials and evidence which will have to be considered
at later trials.
9. Assuming that the PO decides to appeal on the recusal issue, it will need
permission to appeal (as it will on the interpretation and unfairness issues) which
should be sought first from the Judge, and, if he refuses it, from the Court of
Appeal. That, of itself, presents no particular problems. At least on the basis of
what I have read, I would be very surprised if the Court of Appeal refused
permission to appeal on at least some of the interpretation issues, and I would be
surprised if they refused permission to appeal on the unfairness and recusal
issues,
10. Turning now to the recusal issue, it proceeds on the basis that the Judge was
wrong in principle and unfair in practice to make in the Judgment adverse
findings of fact about the character and evidence of certain parties and witnesses,
such that he cannot now fairly proceed to conduct the remaining trials in these
proceedings.
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11. In that connection, the facts are set out in the Note. The PO’s case is that the
Judge made findings which related to events after the contracts had been entered
into, which were irrelevant to the issues before him, in circumstances where there
had not been disclosure in relation to those issues and where the PO had not
prepared for the hearing to determine factual issues, or proffered or prepared
witnesses for a factual investigation.
12.On reading the judgment, three possible problems to the PO succeeding on the
recusal issue occurred to me. First, the evidence had been called, and, even
though it was not relevant, the Judge was, in effect, entitled to do his best with
it. Secondly, the findings the Judge made did not really impinge on the
subsequent trials. Thirdly, in various passages, the Judge went out of his way to
make it clear that he was not making conclusive findings (see eg paragraphs 21,
60, 124 of the Judgment).
13.So far as the first point is concerned, it seems to me that the PO has a strong
counter-argument based on what they said and indeed the Judge said, prior to the
first trial (para 5a-m of the Note), what they said at the opening of the first trial
(second paras I and 2 of the Note) and what they said in their closing speech
(second paras 3 and 4 of the Note). Mr Cavender QC summarised the PO’s
position admirably in these terms when closing his case:
“So in summary on important points of this introduction in terms of scope,
the court should not have regard to post-contractual evidence, evidence
of breach, for two distinct reasons: firstly, to do so would involve a basic
error of law, and, secondly, would involve a serious procedural
irregularity. It would do the second because the orders of the court setting
out the issues for trial and the issues on which evidence were to be
admitted is set out in the Common Issues. The Statements of Case have
been ordered to be limited to those issues ... and the witness statements
were limited to those issues.” (Day 14, page 64)
14.1 very much doubt that it can be said that, for instance by not appealing the
Judge’s refusal to shut out irrelevant evidence, or by cross-examining on some
of the irrelevant evidence, the PO waived any right to object, but I have not had
the opportunity of considering all the transcripts.
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15.The mere fact that a judge makes adverse findings against a party whose
evidence he will have to consider will not of course justify a recusal application:
see Locobail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 and Otkritie
International Investment Management Limited v Urumov [2014] EWCA Civ
1315, para 16. The fact that a Judge, who has made adverse findings about a
party or his case, may then go on to determine other issues of fact, law or
discretion in relation to that party is, in effect, part of the normal give-and-take
of litigation. However, very different considerations apply when the findings (or
even observations — see for instance El-Farargy v El Farargy [2007] EWCA Civ
1149) should not have been made.
16.As to the second concern I mention in para 12 above, the relevant findings are
set out in paragraphs 7-15 of the Note, and disparaging remarks about the PO’s
conduct are set out in paragraphs 16-23 of the Note. I am not sufficiently
acquainted with the issues in the present and future trials to know whether, and
to what extent, the findings in paragraphs 7-15 are relevant to the further trials,
but, to put it at its lowest, it does not seem unlikely that they are. On that basis,
I think that my second concern is largely put to rest. As to the disparaging
remarks, much depends how much they were based on findings or evidence that
he ought not have made or heard respectively.
17.Turning to the third concern mentioned in para 12 above, it is, I suppose,
conceivable that an appellate court could conclude that statements such as those
made in paragraphs 21, 60 and 124 of the judgment can be invoked to expunge
the adverse findings rather like the inclusion of a “subject to contract” proviso
can be invoked to establish that what is otherwise plainly a contractual document
is not. However, I would not expect the Court of Appeal to accept such an
argument. We are not here concerned with hallowed expressions in the context
of technical law: we are concerned with bias, and the test is very well established:
“The question is whether the fair-minded and informed observer, having
considered the facts, would conclude that there was a real possibility that the
tribunal was biased” - Porter v Magill [2002] 2 AC 357, para 103.
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18. In my view, the Judge’s attempts to distance himself from, or to water down, his
illegitimate findings, in some ways render them worse rather than better. What
was he doing making findings (sometimes in trenchant, even damning terms
about the PO’s witnesses, and exculpatory or better about several of the
Claimants), if he knew that the findings were, at best, unnecessary, indeed
inappropriate? Having said that, if an appellate court was for some reason
desperate to rescue the Judge, I suppose that it is conceivable that they would
refuse a recusal order on this ground. But it does not appear to me to be at all
likely: I do not think the notional “fair-minded and informed observer, having
considered the facts, would conclude that there was [no] real possibility” of the
Judge having made findings unfairly about a witness and/or his/her evidence,
which renders it unfair for the judge to proceed further with these proceedings.
19. For all the reasons set out above I consider that there are reasonable grounds for
PO to bring an application to recuse the Judge in these proceedings.
Furthermore, if it is PO’s intention to bring an appeal on the basis of the
“unfairness issue” (as I understand to be the case) — and on that appeal will ask
the Court of Appeal to return the case to a different Judge, then the PO has little
option but to seek to get the Judge to recuse himself at this stage.
20.1 turn to the question what to do about the current hearing, bearing in mind that
the PO does not want to alienate or be seen to threaten the Judge. In my view, if
the recusal argument is to be pursued in the Court of Appeal, it would be right to
apply to the Judge to recuse himself from the present trial. It could be seen to be
an aggressive step to take, and it would have to be handled carefully, but if the
PO’s case is that, having seen the final version of the Judgment, the Judge should
not be conducting further trials in the proceedings, I think the PO could risk being
held to have waived its rights, or at least to have weakened its position on the
recusal issue, if it sits on its hands and lets the present trial proceed without
making its objection clear. The fact that this course would be taken without
notice and after the present trial has begun cannot be blamed on the PO: until
they have the Judgment, they are not in a position to take a view on the recusal
issue.
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21.1 had wondered whether there might be a middle course of telling the Claimants
about the proposed recusal application and asking them whether they would like
the PO to raise the point with the Judge now or not (on the basis that it would
not be said to waive or weaken the PO’s rights). However, I think that there is
also the point that the Judge may decide to adjourn the current hearing if he knew
of the recusal issue. From what I have heard, this is unlikely, but the PO ought
to give him the chance, bearing in mind a party’s duties under the Overriding
Objective.
22.It would be worth considering whether to have the application to the Judge for
permission to appeal on the recusal and interpretation issues heard at the same
time as the application to consider recusing himself or, if he does not, adjourning
the current trial. That said, the recusal application is urgent and it might be better
to give further time to properly draft and present the permission to appeal
application to the Judge. So it may well be they will need to be separate
applications.
23.On the issue of presentation of the argument to the Judge, I make the following
suggestions with some diffidence, as it is very much for the advocate presenting
the case to decide how to play it. But I can see some benefit in a different leading
counsel from Mr Cavender QC presented the argument; that is not implying any
criticism of Mr Cavender: it simply would indicate that this is a not a
disappointed advocate venting his spleen (which, given what I have read and
been told) is the sort of reaction one might expect from the Judge. I also think
that it should be said that the point is being brought before the Court because of
the very unusual circumstances, namely the Judgment in the first trial just being
handed down, and the second trial being just under way. It should also be pointed
out that the PO considers that it is under a duty to raise the point now, as
otherwise it may be held to have waived it, and anyway the Judge’s attention
should be drawn to the point so that he can decide whether to adjourn or proceed
with the second trial. If he suggests that this is being raised as a threat, then the
PO can say that it is being/would have been raised anyway as a ground on which
they would seek permission to appeal.
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24.The PO could also consider delicately suggest that he might like to refer the
recusal application to another Judge as suggested by Ward LJ in El-Farargy,
para 32. But that is a point which has classically to be played by ear, and may
well be best omitted.
25. Assuming (which seems very likely from what I have heard) the Judge refuses
to recuse himself or to adjourn the current trial, consideration should perhaps be
given to appealing that decision urgently (a) to ensure that it cannot be said that
the PO has waived its right, (b) to bring this matter to the attention of the Court
of Appeal in the hope that they might expedite the application for permission to
appeal. Peter Smith J’s refusal on a Friday to recuse himself was reversed by the
Court of Appeal the following Monday in Howell v Lees Millais [2007] EWCA
GRO
‘David Neuberger
One Essex Court
14 March 2019
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