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EG V RS, JS & BEN PCT [2010] Court of Protection Case No: 1110237109

Solicitor’s application for permission to appeal in a Court of Protection case against a costs order made against her in respect of an unsuccessful application to be appointed Health & Welfare Deputy. Permission to appeal not granted.

This appeal by a professional deputy against the order for costs made against her highlights the need for careful consideration of when a deputy may have a conflict of interest when too closely associated with one party in a dispute.  Permission to appeal not granted.

The appeal was brought by a solicitor, EG from the order of District Judge Owen sitting in the Court of Protection.  The order directed that EG meet the costs of her failed application for permission to apply to be appointed the Health & Welfare Deputy of RS and the costs to be paid by her were, the legal costs of JS, (sister of the protected party, RS), BEN PCT (the primary case trust) and of the Official Solicitor representing RS.

However, no appeal was made against the District Judge's order that EG not be permitted to make the application to be appointed and none against the direction that EG be a party to the proceedings to determine the application.  Only the costs order was challenged.

The factual background to the case is complex and acrimonious between the parties and arose regarding the welfare and finances of RS who had been severely injured in a road traffic accident and brain damaged as a result.  The court had applications before it as to the role of CH (the brother in law of RS and estranged husband of JS) as property and affairs deputy of RS and as to welfare matters generally.

In the course of the litigation, EG had been acting for CH and had written to JS in respect of contact issues between JS and RS and, inter alia, stating that if contact matters could not be agreed then JS would be prevented from having access to RS.  The appeal court held that this was plainly an impartial attempt to deal with contact and an example of the way in which EG could not possibly be appointed the deputy without risk that she would be seen as impartial. In addition, it was held, she had a clear history of acting for one of the warring parties.

During the permission hearing, it was asserted on behalf of EG that she had flagged up the potential conflict problem by simply asking the court to decide the matter.  The appeal court held that it is not for a solicitor (the proposed deputy) to ask a court the question do I have a conflict of interest (especially when the conflict was clear and obvious) and that a party cannot litigate on the basis of asking do I have a claim [?] and then asking for no order for costs to be made.

The appeal had no real prospect of success and therefore permission to appeal was refused and the court going on to rule that even if it had granted such permission, it would have refused the appeal in its entirety (save with regard to who pays the costs –EG or her firm – agreed by all it should be the firm) in that the District Judge plainly applied the costs rules, considered the matter carefully and came to the conclusion that EG should meet the costs of an application she ought to have known would fail.

Summary by Richard Tambling,  barrister, 1 Garden Court
___________________________

Case No: 10237109
IN THE COURT OF PROTECTION

Sitting at Birmingham Civil Justice Centre

Date: 03/08/2010

Before :
HIS HONOUR JUDGE CARDINAL
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Between :

EG Appellant

- and - 

RS, JS and BEN PCT Respondents

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Mr Mallalieu (instructed by DWF LLP) for the Appellant
Mr Joseph O'Brien (instructed by Irwin Mitchell) for the Respondent RS
There was no appearance by JS save by letter from her solicitors Anthony Collins
BEN PCT did not oppose the appeal and did not attend
Hearing date: 29th June 2010
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JUDGMENT

His Honour Judge Cardinal:
Introduction
1. The appeal before me is a cautionary tale for all those who put themselves forward as professional deputies when too closely associated with one party in a dispute before the Court of Protection.

2. I have before me the appeal of EG [a solicitor at the relevant time with the firm of solicitors DWF LLP and then a member of that firm] from the order of District Judge Owen in this court and dated 25th August 2009. By his order of that date the District Judge directed that EG meet the costs of her failed application for permission to apply to be appointed the Health & Welfare Deputy of RS, the costs to be assessed by detailed assessment in default of agreement. The costs to be paid by her were the legal costs of JS, [sister of the protected party [RS]], of BEN PCT, the primary case trust involved, and of the Official Solicitor representing RS as litigation friend.

3. There is no appeal against the District Judge's order that EG be not permitted to make the application to be appointed and none against the direction that EG be a party to the proceedings to determine the application. Only the costs order is challenged.

4. I have to deal with the issue of permission to appeal and if granted the appeal itself. EG argues that she has real prospect of success and that the permission should therefore be granted and the appeal allowed.

5. The background to this case is a complex and acrimonious dispute regarding the welfare and finances of RS, a man severely injured in a road traffic accident and brain damaged as a result. There are currently before me applications as to the role of CH [the brother in law of RS and estranged husband of JS] as receiver then property and affairs deputy of RS and as to welfare matters generally, due for trial in the late summer over a number of days, though that matter is a separate issue. I have already made interim decisions in a separate application by the OPG to remove CH as financial deputy [I refer in more detail to this below].

6. CH's solicitor at the relevant time was EG although she no longer is a member of the firm of solicitors DWF LLP and that firm has parted company with CH.

7. It is of some concern to me that by late September there will have been four separate contested court hearings involving the affairs of RS to the detriment of his estate. I have urged mediation on the family though that is not of relevance to the case I have now to decide.

8. EG appeals the decision of District Judge Owen in three respects: the principle of the order which she says ought not to have been made; the width of the order [if the Court is against her she says that the costs ordered should only relate to the hearing before District Judge Owen when the application for permission was refused]; and the fact that the costs order was against her rather than against her firm. I shall come to the opposition to the appeal in a moment.

9. Plainly the principle of the order is the main point and I shall return to that. Likewise I shall come to a decision as to any period for which costs ought rightly to be paid if I so decide; but it is agreed that any costs order can and should be against the firm rather than EG personally and that order can be made pursuant to s50 (3) of the Supreme Court Act 1981. Mr Mallalieu for the Appellant had instructions from the firm of solicitors to accept liability without challenging the absence of any notice to be given separately to them and accepted that such an order would not amount to an exercise of the wasted costs jurisdiction.

10. The Official Solicitor seeks that I should uphold the judgment as to costs in its entirety. On behalf of JS I have a letter from her solicitors Anthony Collins, who seek to have the principle upheld but who do not contest the period for which costs are payable i.e. they would accept costs limited to the date of hearing of the application for permission only. No point is taken by anyone about their non attendance before me in order to save further costs. The PCT concedes the appeal and an order will be made accordingly not least because it did not make the application for costs with vigour before the District Judge and its costs are perhaps not so considerable as to justify contesting the appeal. Accordingly the appeal will be recorded as unopposed by the PCT.

11. I return to the history: on 15th January 2009 JS applied to the Court for a number of orders including, should the Court feel it appropriate, a Health and Welfare Deputy to be appointed and that application has yet to be determined by me. The difference between JS' application and that of EG is that EG sought to have herself appointed [subject to what I say below] whereas JS has inter alia applied simply for a Deputy to be appointed. For what it is worth the Official Solicitor still does not necessarily conclude that this step is necessary.

12. To complicate matters further the OPG has made allegations about the conduct of the affairs of RS by CH and for his removal as Financial Deputy and that too is before me in the late summer for trial. When OPG made allegations EG still acted for CH and responded on his behalf. I have yet then to resolve the application by the OPG to remove him as property and affairs deputy.

13. EG says that CH and Sam Harris the case manager for RS approached her and suggested she apply to be Health and Welfare Deputy. EG felt she would be suitable if the Court did not feel to the contrary.

14. By her application dated 23rd February 2009 EG sought permission to apply to be Deputy and raised potential conflict in that application in form COP2. On 3rd March 2009 the Court indicated by letter that matters could only be considered if a full application were made. But as it happens, EG had made a full application on the previous day, by completing and forwarding form COP4 to the Court. In Section 5 of the form EG set out her role and explained if the Court thought she were not a suitable Deputy then she invited it to consider an alterative professional.  EG told JS's solicitors and Official Solicitor of her application.

15. The application was adjourned to 29th May 2009 and Official Solicitor invited to be appointed for RS. In addition the Court joined BEN PCT. At the directions hearing on 29th May the Official Solicitor queried the need for Health & Welfare Deputy at all [for which he has been criticised but I note that this was in fact the first occasion when the Official Solicitor had been involved]. The hearing was adjourned for EG to set out why an appointment was appropriate and why she considered she was the suitable applicant. [Speaking for myself I would have thought that it was by now clear her application was opposed and that she could and should have then considered withdrawing her application; but she did not]. Her witness statement as to that is at Tab 4 and dated 17th August 2009.

16. The response of Anthony Collins for JS was that she was open though undecided as to the suggestion that a Deputy should be appointed but that EG was not suitable because of a conflict of interest. Their skeleton argument invited the court to dismiss EG's application.

17. On 21st August 2009 BEN PCT indicated it did not take position as to whether or not a Deputy should be appointed or whether it should be JS or EG [or another]. The OPG filed a position statement as to its application only and was not concerned with welfare matters.

18. So at the hearing on 25th August 2009 District Judge Owen refused the application for permission of EG to be appointed and ordered her to pay costs of JS, Official Solicitor and BEN PCT.

The Law
19. Before I proceed further I should remind myself of the law relating to appeals to me in the Court of Protection from a District Judge.

20. EG requires the permission of the court to appeal District Judge Owen's decision, and the relevant rule is 173 of the Court of Protection Rules 2007. 

Rule 173 says this, at sub-rule 1:

"Permission to appeal shall be granted only where: 

(a)    The court considers the appeal would have a real prospect of success; or
(b)    There is some other compelling reason why the appeal should be heard."

Were I to give permission to pursue the appeal then Rule 179 applies, and I note rule 179(1) says this: 

"An appeal be limited to a review of the decision of the first instance judge unless:

(a)    A practice direction makes different provision for a particular category of appeal [not so here]; or
(b)     The appeal judge considers that in the circumstances of the appeal it would be in the interests of justice to hold a re-hearing."

Sub-rule 3 says: 

"The appeal judge will allow an appeal where the decision of the first instance judge was: 

(a)     Wrong; or
(b)     Unjust because of a serious procedural or other irregularity in the proceedings before the first instance judge."

21. Clearly, here there is no allegation of procedural or other irregularity, so I am confined, if I give permission to hear the appeal, to looking simply at the decision of District Judge Owen and asking myself whether that decision was wrong.

22. Moreover in deciding the case in the way he did District Judge Owen was exercising his discretion. So were I to allow the appeal I would have to decide that either he was wrong in principle or else that his decision was outside the bounds of a reasonable exercise of his discretion. It is comparatively seldom that this court, even if it would itself have preferred a different answer, can say that the District Judge's decision is wrong.  Unless it can say so it will leave the decision undisturbed. It is not for me to subject it, I consider, to close textual analysis and I must throughout resist the temptation to substitute my views and judgment for that of the District Judge at first instance. Even if I might decide matters a different way had I heard the case at first instance, it does not mean I should automatically allow the appeal.  That would be an entirely wrong approach. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible and is in fact plainly wrong that the appellate body is entitled to interfere.

23. So what is the law as to costs in the Court of Protection? That is contained in the Court of Protection Rules 157 and 159.  157 is the general rule:

"Where proceedings concern P's personal welfare the general rule is that there will be no order as to the costs of the proceedings, or of that part of the proceedings, that concerns P's personal welfare."

24. There is then the basic presumption that each party meets his or her own costs.  Can that be varied?  That is dealt with at rule 159 which sets out the exceptions, the departure from the general rule.  Sub-rule 1 says this:

"The court may depart from rules 156 to 158 [we are only concerned with 157] if the circumstances so justify and in deciding whether departure is justified the court will have regard to all the circumstances, including. 

(a)     The conduct of the parties;
(b)     Whether a party has succeeded on part of his case, even if he has not been wholly unsuccessful; and
(c)     The role of any public body involved in the proceedings."

Sub-rule 2 says: 

"The conduct of the parties includes: 

(a)     Conduct before as well as during the proceedings;
(b)     Whether it was reasonable for a party to raise, pursue or contest a particular issue;
(c)     The manner in which a party has made or responded to an application or a particular issue; and
(d)      Whether a party who has succeeded in his application or response to an application, in whole or in part, exaggerated any matter contained in his application or response."

Sub-rule 3 does not need to concern me.

25. It is worthy of note therefore that it is for the court to discern if a departure from the general rule is appropriate; the court may examine all of the circumstances, not simply the items contained in sub-rule 1(a) to (c) of rule 159, and that such a departure must be justified and the court satisfied of that in the circumstances.

The Appellant's case
26. So what of the arguments advanced by the Appellant? I deal first with the decision in principle:

27. On behalf of the Appellant EG Mr Mallalieu referred to the permission form completed by her. In it she pointed out that CH does not have a good relationship with the rest of the family- the appointment of a Deputy for health and welfare would mean one person could consider the care provision offered/the suggestions made and determine what is in RS' best interests without being driven by any external motivators. She added that she had advised CH and I should like the court to determine whether in its opinion this causes any conflict of interest for me due to the current application. I believe my duties in advising CH and in acting as health and welfare deputy would not conflict but would ask the court to give specific consideration to this issue. That statement causes me [as it doubtless did the District Judge] the gravest concern. It is just not possible to act as honest broker on one hand and firmly on the side of one party alone on the other. It should have been clear even then to EG that she simply could not realistically pursue the application. Later on in his submissions to me Mr O'Brien posed the question what would an ordinary member of the public think? The obvious answer is that the appointee has a prejudice, a bias, in favour of his/her client. I am disappointed that EG did not see this at the outset.

28. By form COP4 EG had of course signed appropriate undertakings as to conflict, argued Mr Mallalieu. They included for instance the statement I will ensure that my personal interests do not conflict with my duties as a Deputy…The personal statement by her [page 229 of the Bundle] says that she had acted for CH in connection with an application for a statutory will and advised CH in connection with correspondence with the OPG [with whom he remains in dispute]. Those were I consider important concessions confirming again her unsuitability to act as honest broker especially when she concluded thus: I feel very strongly that a Health and Welfare Deputy should be someone removed from the family situation. If the Court feels I would not be suitable to act then I must accept that decision but would ask the court in that case to give serious consideration to the appointment of an alternative professional. Given the history EG could scarcely argue she was wholly aloof from family disputes and that anyone could see her other than as one sided no matter how well meaning and well intentioned she was in making the application. Moreover it was I consider naïve of her so to apply- for it was not for the Court to give her advice that could or should have been obvious – that she simply could not be seen by the family of RS as an impartial Deputy in the light of past events and of the current litigation.

29. It was only before District Judge Owen at the May hearing that the opposition to the application by the Official Solicitor became clear said Mr Mallalieu and that for the first time the question as to whether or not a Deputy was required in principle was raised. Certainly District Judge Owen directed a full statement from EG but it seems to me that the extent of the opposition was clear even though the position statement of the Official Solicitor at the August 2009 hearing was only available that day. For in the course of the hearing before District Judge Owen in the May Mr Yogi Amin for the Official Solicitor said this: …in relation to the individual who has made the application there is a potential or perceived conflict of interest which I fear is heightened into the realms of actual conflict given the letter we have seen today [I shall come to that letter- dated July 2007- below]. So it seems to me that EG can should and ought to have known the risks she was running by persisting with an application which even then seemed very likely to founder.

30. Mr Mallalieu criticises the District Judge for treating the application as if it were ordinary civil litigation. For the Judge said that having made an application in proceedings that may be contested (and surely she would have had some good idea that might be the position in this case given what had happened in the past) there are risks in making such an application and there may be costs consequences. Later he added … the opposition has been strong to this application, but that is a risk of litigating and it is a risk that matters may not be successful. With respect to Mr Mallalieu I do not read into these statement an intention or inclination of the District Judge to go behind the costs rules in the Court of Protection as I have set them out above. In certain circumstances by continuing to litigate one takes a risk that a failed application may lead to an adverse costs consequence. The learned District Judge is saying no more than that. He is not at all imposing a presumption that ordinarily and as if subject to the Civil Procedure Rules the costs follow the event.

31. EG's statement of 17th August was shown to me. That deals in part with the letter to which I have referred of 17th July 2007 sent by EG as CH's solicitor to JS. She explained that the letter was to set out an agreed programme of contact [between JS  and RS] and that it was never intended to prevent access by JS or other member of the family to RS but rather to set out a sensible basis for these events to happen on. She added that she thought she could in effect as Deputy hold her client back in welfare matters and further that she would cease to act for CH to demonstrate her impartiality.

32.  Mr O'Brien has shown me the letter; I have to say that it does not begin to seem impartial for it is plainly one-sided:

• It takes her client's side in assuming that his account of contact issues is correct
• It reads somewhat patronisingly -...we feel that we must put some safeguards in place surrounding your contact with RS
• It invites JS to agree what is suggested – if not then you will be refused access to RS's property
• It concludes by referring to allegations made about CH to the NHS and adds could you please let me have details of these allegations in order that I can prepare and submit a defence to them in conjunction with CH.

33. Having set out those very significant matters I cannot see how EG could begin to consider herself being seen as an impartial Deputy no matter what her good intent may have been. She had a plain history of acting for one of the warring parties. I am afraid I agree with Mr O'Brien's submission that to say the letter of July 2007 was never intended to prevent access by JS etc is somewhat disingenuous. For that is precisely what it seems to have set out to do.

34. Mr Mallalieu reminded me that in her statement JS took the position that she was open to the appointment of a Health and Welfare Deputy but that she opposed the appointment of EG. I need trouble myself no further as to the position of the PCT and OPG. The Official Solicitor had raised opposition to the application on the hoof, but it seems to me not unreasonably; and EG knew full well of his opposition on behalf of RS.

35. Mr Mallalieu took me further through the judgment on the permission application by District Judge Owen. The Judge referred to the unusual nature of the dispute; the need for independence in this case; the fact that CH believes he has acted properly throughout- though he did not comment on that; that most of the work done previously for CH by EG had related to financial matters but with some health and welfare overlap. I indicated my concern that the appearance of bias should be avoided at all costs and cited to Mr Mallalieu [though plainly in a different context] the Re Medicaments case and he took the point that there might be a concern such as that referred to in Locabail. But he did not accept that EG had strayed in support of her client so as to disqualify her form acting impartially. There was not he asserted a risk of bias or the appearance of bias. I am afraid I beg to differ- I cannot think of a case where the involvement of the solicitor has hitherto been more clearly on one side only. I am fortified in that conclusion not simply by the letter of 2007 that I have set out in part above but by the knowledge that in 2008 EG wrote in a letter of 4th March I am a solicitor who provides legal advice to CH. The letter continued to complain of JS entering CH's private quarters at the home he shares with RS. Moreover the assertion that EG would act independently of CH as a Health and welfare Deputy is contradicted by his statement of 13th April 2009 asking that his solicitor be appointed Deputy- scarcely denoting a parting of the ways.

36. Mr Mallalieu asserted that EG had flagged up the potential conflict problem. I accept that but it will not do – it is not for a solicitor to ask a Court the question do I have a conflict of interest, the more so where in my judgment [and clearly in that of the District Judge] the conflict was clear and obvious. A party cannot litigate on the basis of asking do I have a claim [?] and then asking for no order for costs to be made.

37. Mr Mallalieu criticised the comments of Mr Mahmood of counsel at the hearing before District Judge Owen – Mr Mahmood represented JS at the 25th August hearing. He had perhaps implied that the application of EG lacked bona fides- I make it clear that I accept that there is no question of bad faith on EG's part- the true criticism of her is that she has been naïve and pressed on with an application which she ought to have known was doomed to fail.

38. Mr Mallalieu returned to his skeleton and raised the following matters:

i. He repeated the District Judge effectively was falling into the trap of applying Part 44.3 of the Civil Procedure Rules in coming to his conclusions as to costs. I do not accept that for the reasons I have given. The words risk of litigation refer to risks in the context of a Court of Protection application.

ii. It is wrong to have a 'loser pays' principle. I agree- but that is not what the District Judge applied here. He awarded costs against EG because he described her application as ill-judged and misconceived.

iii. One should look with care at the judgment in Re Cathcart [1893] 1 Chan 466. In that case Lord Halsbury said this at page 472: It seems to me that if the demand for inquiry is really prompted by a desire to protect the person and property of the alleged lunatic, and is presented on reasonable grounds and in a reasonable manner, the expense of such a proceeding ought not to fall upon the person so invoking the aid of the law to protect those in need of protection. His Lordship added of course that there were circumstances where the situation might be different: It is quite true that either party may by his conduct render an inquiry much more expensive than it might otherwise have been, and undoubtedly had therein this case  been a cross-appeal, that consideration might have been a very serious one indeed. I entirely accept that this case underlines the general principle that costs ought not to be awarded against a party acting for the best in a health and welfare case. For my part the decision seems to me however to go no further than then 2007 Costs Rules now do- the general principle is that costs should not be awarded in a health and welfare case but there are exceptions, and I have already set those out. Just as in the Rules conduct is a matter that can be considered so in the case of Re Cathcart. I remind myself that District Judge Owen said this in his costs judgment: It does seem to me given my findings that the application does fall into the conduct area…it is an application that has been unsuccessful and in my view merits a costs order within 159(1) due to its conduct in that it was unreasonable, in my finding, for it to be pursued to a contest today, with costs being incurred by those opposing it. I cannot for my part see that the District Judge has strayed outside the terms of the Rules or indeed outside the dicta in Re Cathcart.

iv. Mr Mallalieu argued that as a matter of public policy the Courts should support professionals seeking appointment as Deputies who should not be deterred from so acting. A person in EG's position was merely trying to be a neutral arbitrator and should not be penalised. Now I endorse the view that professionals should not be discouraged from making applications; but there must be a limit to such applications where there is clear opposition and acrimony given the role of the would-be Deputy hitherto. It seems to be that such an applicant ought to ask him or herself am I in any way compromised by my intervention to date? Is there any evidence of my taking sides too strongly? Can I be sure that all parties will indeed regard me as a neutral arbitrator? Am I really suitable given the history of conflict with my client and my support of him? Would my appointment mean more conflict? Had EG asked herself those questions then it is clear she would never have applied in the light of the correspondence to which I have alluded- that is why the learned District Judge said of the application – I find that this is a very unfortunate application. It does seem to be that it is misconceived; that it is an ill-judged application and I have heard mention today about 'over-stepping the mark.' There was always in my view a serious issue whether EG could be or be seen to be independent. It seems to me that in pursuing this application today the mark has been overstepped. The applicant was given some fairly good indications at the last hearing as to the likely opposition to this application. She has continued to pursue it, as she is entitled to do, but as I say I think there is a lack of judgment in doing so, rather than withdrawing it before today's hearing. I regard those firm conclusions as above criticism. Moreover they are not of course challenged before me.

39. There is another matter of concern not raised by Mr Mallalieu but properly raised by Mr O'Brien for RS. In bringing this application EG knew full well that were the application to fail and no order as to costs be made then the costs of the Official Solicitor by operation of Rule 163 would fall on the estate of RS. He would be meeting costs he did not and could not invite to be incurred. In other words EG knew someone would meet the costs of this application; it does not seem to me to be at all right that they should fall at the door of RS.

40. For the reasons I have set out then there is no conclusion I can draw other than that the decision of District Judge Owen is right and proper.

41. The second basis of the appeal lies in the width of the order- should the District Judge have ordered EG to meet not just the costs of the hearing of 25th August 2009 but also of the application generally? Now it is argued that the opposition of the Official Solicitor only became clear on the morning of the hearing in August. I find to the contrary- I have already cited the words of Mr Amin for the Official Solicitor at the May hearing; it is clear that the application was opposed from the beginning. It was well within the discretion of the District Judge to make the order he did- and was within the bounds of a reasonable exercise of that discretion. I do not propose to interfere with that order which I find to be considered and reasonable.

42. What then of the third ground- that the costs should be payable by EG's firm and not EG? All parties now agree this- they did not previously argue this point but I shall allow that by consent.

Conclusion
43. It is clear from what I have said that the appeal against the order regarding BEN PCT will succeed- permission is granted and the appeal allowed by consent. As to the appeal regarding the costs of JS permission to appeal is granted and the appeal allowed so far as the costs other than those of 25th August are involved.

44. But the situation is different with regard to the costs of the Official Solicitor and the costs of JS on 25th August- I have reviewed the decision of the District Judge and come to the conclusion that his decision was an entirely proper one. He applied the Costs Rules as he should have done and I find no reason to criticise him. The appeal has no real prospect of success. I am minded therefore to refuse permission to appeal. Even had a granted such permission I would have refused the appeal in its entirety [save with regard to who pays the costs –EG or her firm - as I have set out already] in that the District Judge plainly applied the costs rules, considered the matter carefully and came to the reluctant conclusion that EG should meet the costs of an application she ought to have known would fail. I cannot say the judgment was wrong in principle and do not do so. The District Judge exercised his discretion correctly and properly- moreover had I had to make the initial decision I would have made the same one that he did.

45. For the avoidance of doubt I give leave for this judgment to be reported in a suitable anonymised form