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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Ul-Haq & Ors v Shah [2008] EWHC 1896 (QB) (31 July 2008) URL: http://www.bailii.org/ew/cases/EWHC/QB/2008/1896.html Cite as: [2008] RTR 31, [2008] EWHC 1896 (QB) |
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QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
ON APPEAL FROM THE BIRMINGHAM COUNTY COURT
Case No. 7BM00846 (Mr Recorder Parkes QC)
Strand, London, WC2A 2LL |
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B e f o r e :
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(1) Mr Wasim UL-HAQ (2) Mrs Samara KHATOON (3) Mrs Zahida PARVEEN |
Claimants and Respondents to the Appeal |
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- and - |
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Ms Anita SHAH |
Defendant and Appellant |
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The respondents were neither represented nor present at the hearing of the appeal.
Hearing date: 16 June 2008
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Crown Copyright ©
Mr Justice Walker :
Introduction
The Discretion Submission
It was submitted on behalf of the Appellant that, by reason of their collusion in the Second Respondent's fraudulent claim, the otherwise (genuine) claims of the First and Third Respondents should be struck out
The Judge erred in law in that :
(1) he should have struck out two Claimants' claims ; and
(2) he should not have distinguished the case from the precedent referred to in the Skeleton Argument
3.4-(1) in this rule reference to a statement of case includes reference to part of a statement of case.
(2) The court may strike out a statement of case if it appears to the court
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim:
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order.
(3) When the court strikes out a statement of case it may make any consequential order it considers appropriate.
(4)
(5) Paragraph (2) does not limit any other power of the court to strike out a statement of case.
The facts and outcome in the Khan Case
Unhappily such fraudulent claims are now legion. They occupy the court time of District Judges and Circuit Judges in West Yorkshire literally week in and week out. My own judicial experience reflects, I have no doubt, that of many of my brethren throughout the country. Just about every variant of a fraudulent claim comes before the curt, including deliberately staged collisions, damage caused to vehicles which have never been in collision at all, claims deriving from the most trivial touching of vehicles, and claims in which a driver will assert that his car was carrying other members of his family including his children, when in fact none were present but all of whom have reported to a hospital or their General Practitioner that they have been injured, and who are then able to produce an apparently independent expert's report confirming the fact of such injury. (Such was the case in respect of Mr Mayat). The cost to the insurance industry and to other honest policy holders must be very substantial. In addition, and of more relevance to these proceedings, the cost in court time in trying such cases is very high, with the added knock-on effect of casting suspicion onto many genuine claims so that claimants are put to proof of their legitimate and genuine claims for compensation when in other circumstances they might not have been called upon to do so.
Earlier cases
54. It would be open to this court to allow the appeal against the judge's refusal to strike out the petition on that ground alone. But, for my part, I would allow that appeal on a second, and additional, ground. I adopt, as a general principle, the observations of Millett J in Logicrose Ltd v Southend United Football Club Ltd (The Times, 5 March 1988) that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules even if such disobedience amounts to contempt for or defiance of the court if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled indeed, I would hold bound to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.
55. Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. That, as it seems to me, is what happened in the present case. The trial was 'hijacked' by the need to investigate what documents were false and what documents had been destroyed. The need to do that arose from the facts (i) that the petitioners had sought to rely on documents which Nigel Tobias had forged with the object of frustrating a fair trial and (ii) that, as the judge found, Nigel Tobias was unwilling to make a frank disclosure of the extent of his fraudulent conduct, but persisted in his attempts to deceive. The result was that the petitioners' case occupied far more of the court's time than was necessary for the purpose of deciding the real points in issue on the petition. That was unfair to the Blackledge respondents; and it was unfair to other litigants who needed to have their disputes tried by the court.
56. In my view, having heard and disbelieved the evidence of Nigel Tobias as to the extent of his fraudulent conduct, and having reached the conclusion (as he did) that Nigel Tobias was persisting in his object of frustrating a fair trial, the judge ought to have considered whether it was fair to the respondents and in the interests of the administration of justice generally to allow the trial to continue. If he had considered that question, then as it seems to me he should have come to the conclusion that it must be answered in the negative. A decision to stop the trial in those circumstances is not based on the court's desire (or any perceived need) to punish the party concerned; rather, it is a proper and necessary response where a party has shown that his object is not to have the fair trial which it is the court's function to conduct, but to have a trial the fairness of which he has attempted (and continues to attempt) to compromise.
72 When exercising any power under the rules, the court must, by virtue of r 1.2, seek to give effect to the overriding objective. The overriding objective in its rightful place at the forefront of the rules is in these terms:
(1) These Rules are a new procedural code with the overriding objective of enabling the courts to deal with cases justly.
(2) Dealing with a case justly includes, so far as is practicable
(a) ensuring that the parties are on an equal footing;(b) saving expense;(c) dealing with the case in ways which are proportionate(i) to the amount of money involved;(ii) to the importance of the case;(iii) to the complexity of the issue;(iv) to the financial position of each party;(d) ensuring that it is dealt with expeditiously and fairly; and(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases.'
It is not at all clear to me to what extent, if at all, the judge had the overriding objective in mind as setting out the parameters for the exercise of his discretion. He correctly saw at the beginning of his judgment that the source of his power to strike out lay in r 3.4 but he did not trace back through the case management rules to r 1.1. Even though this was a reserved judgment it may still be unfair to the judge to engage in too close a textual analysis of his judgment and infer from the omission of express reference to the overriding objective that he did not direct himself to it. Consequently I prefer to assume he had it in mind. Nevertheless, there is still every indication that he regarded the risk of a fair trial not being possible as the factor of crucial, even overriding, weight. It undoubtedly is a factor of very considerable weight. It may often be determinative. If the court is satisfied that the failure to disclose a document or the effect of a tampered document can no longer corrupt the course of the trial, then it would be a factor of much less and perhaps even little weight in considering a strike out. Where, in my judgment, Evans-Lombe J erred, was to treat the question of a fair trial as the only material factor. It was not: other matters have now to be put in the scales and weighed.
73 The attempted perversion of justice is the very antithesis of parties coming before the court on an equal footing. The matter has become hugely more expensive (to an extent we did not appreciate until we were told when application was made for a freezing order that the amount of the appellant's costs overall and on a solicitor and own client basis may be in the region of £1.5m). The judge commented at the beginning of his judgment (para. 2) that 'the hearing has run for 29 days greatly exceeding the parties' estimate.' The original estimate was three weeks and we were told another week to ten days would be required to conclude the matter even on the limited basis that the judge would still permit. The judge did not, however, treat cost and time as elements of the overriding objective. He did not appear to allot to the case an appropriate share of the court's resources while taking into account the need to allot resources to other cases. In this day and age they are elements of case management which must not only be seen to have been placed in the scales but also given due and proper weight when assessing how justice is to be done to the parties and to other litigants. The balance must be struck so that the case is dealt with in a way which is proportionate to the amount of money involved in the case, its importance and complexity and the financial position of the parties. Mr Tobias stood to gain much had his fraud gone undetected. He was seeking on behalf of the minority shareholders to wrest control of the company from the majority and he persisted in that claim even to the point of his cross-appeal. He bolstered his claim by what the judge found to be a 'campaign of forgery' and, more importantly, the judge was not satisfied with the explanation given for it. He found (para. 51):
'In his evidence Nigel sought to give the impression that his forgeries came about as a result of an impulsive moment of madness flowing from his disappointment that his case was not adequately supported by the documents. In my judgment, so far from that being the case, it is apparent that the process of forgery, which Nigel admitted to, was sophisticated and must have taken some time to complete including the special *647 manufacture of headed note paper of the defunct Tobias family company. But for the slip up with relation to the telephone number shown on the headings it would, in all probability, not have been discovered.'
Any notion that this was a petitioner coming to the Court of Equity with clean hands is utterly dispelled by the devastating conclusion in para. 44:
'I am not satisfied that I have received from Nigel a truthful picture of the circumstances of the forgeries which he admits.'
74. This was, therefore, a flagrant and continuing affront to the court. Striking out is not a disproportionate remedy for such an abuse, even when the petitioners lose so much of the fruits of their labour.
75. Even if the judge were correct in his analysis that all effect of the 1994 agreement could be excised from the petition and a prima facie case could be made out of what remained, I am quite clear that, if the CPR are to receive a correct start, then this court must make the clear statement that deception of this scale and magnitude will result in a party's forfeiting his right to continue to be heard.
77. I have had the opportunity to read in draft the copy of the judgment of Chadwick LJ and I agree with it. I have added these words of my own simply to underline that the principles to apply are those in the new procedural code. They are encapsulated by the need to do justice, case by case. In this case it is no more than justice in that broad sense that the petitioners should be denied the relief which they sought to obtain by persistent cheating.
13 Mr Skeate [counsel for Churchill], in the course of the adjournment before this hearing, helpfully set himself the task of seeking any authority which would support the application of a rule, similar to that relating to insurance claims, to partly fraudulent claims in negligence. His research led him to the judgment of the Court of Appeal in Molloy v Shell UK Limited [2001] EWCA Civ 1272. The Court was there considering a fraudulent loss of earnings claim by the respondent/claimant (Molloy) in the context of what would have been the appropriate costs order by the court below. It was not concerned with the point as to entitlement or otherwise to damages which arises in the present case. However, in the course of his leading judgment at paragraph 18 Laws LJ said (obiter): "For my part I entertain considerable qualms as to whether, faced with manipulation of the civil justice system on so grand a scale, the court should once it knows the facts entertain the case at all save to make the dishonest claimant pay the defendant's costs."
14 I can, with respect to Laws LJ, see the attraction of the suggested approach. It would act as a deterrent to dishonest claims and demonstrate the court's disapproval of the gross abuse of its process. At the same time, it is easily apparent that the approach, if widely adopted, would also give rise to the very difficult questions. For example, there would be the problem about where to draw the line. It is not uncommon for a claimant to be believed on one issue, but disbelieved on another. Mr Skeate invites me, if I accept this approach in principle, to define its scope and give guidance about it. He suggests that perhaps only gross or substantial abuse should lead to the Draconian measure of disallowing the claim altogether. He refers in this context to the Overriding Objective of the CPR "of enabling the court to deal with cases justly", and submits that disallowing the claim altogether may be necessary in order to achieve that objective.
15 Having considered Mr Skeate's submissions with care, I am not persuaded that I should depart from the basic principle of the law of negligence, and disallow compensation for proven or admitted loss caused by a tortfeasor. The fact that a claimant dishonestly puts forward unjustified heads of loss should not disentitle him in law from recovering such head or heads of loss as are indisputably made out. The special rule relating to avoidance of insurance claims is, as it seems to me, confined to the special considerations governing that area of the law. I can find no support for an equivalent or similar rule relating to claims in tort.
16 In the present case, I think that the application of well-established principles can ensure that justice is done. I can vary or set aside as appropriate the relevant aspects of the Recorder's findings on each head of damage, and penalise the respondent in costs, so as to place the appellant in no worse position (subject to enforcement) than it would have been if it had simply paid the respondent the amount it conceded it owed him. I can do so by having regard to the fresh evidence, and by assessing the effect that such evidence would probably have had on the Recorder's findings.
17 First I set aside the damages for loss of earnings, which is fraudulent. I then have to consider the damages for pain suffering and loss of amenity and for inconvenience. The evidence in support of the former consisted simply of doctor's notes, based, I am satisfied, solely on the respondent's own reporting of his symptoms. The inconvenience suffered by the respondent was similarly based solely on what he himself said. It is possible that the respondent suffered some degree of pain suffering and/or inconvenience; but knowing the extent to which he has perjured himself in the course of these proceedings, I cannot be satisfied that what he said would have been sufficient to establish any ascertainable loss under these heads. The justice of the case is not served by referring these issues back for re-hearing. Accordingly I set aside the awards under these heads. The remaining head of loss for which damages were awarded was the cost of repair. This is admitted, and will accordingly stand.
18 As regards interest, the court has a discretion whether or not to award interest. I am satisfied that discretion should be exercised to disallow interest, and that had he known the true position the Recorder would inevitably have reached the same view.
19 As regards costs, by CPR 44.3 (2)(a) the general rule is that the unsuccessful party should pay the successful party's costs but (b) the court may make a different order; by (4)(a) the court must have regard to the conduct of the parties. In the present case, I have no doubt that the seriousness of the respondent's conduct should be reflected by an order setting aside the order as to costs made by the Recorder, and by ordering the respondent to pay the costs of the original claim and of this appeal, both on an indemnity basis.
The analysis in Khan
If the failure to comply with a rule, practice direction or court order has not rendered a fair trial impossible, an order striking out a case, even for contumacious breach, is likely to be a breach of ECHR Article 6 as being a breach of the respondent's right to determination of his civil rights and obligations at a fair and public hearing within a reasonable time by an independent tribunal.
In this case however the Claimants have had a hearing and in my judgment a fair trial has taken place. The Second Defendants have been able to rely upon material emanating principally from the police which has shown that the claim of Mr Mayat was fraudulent. While the argument in relation to Article 6 was fully developed by Mr Wilson on this appeal, it seems to me that the use of the CPR and in particular the provisions of the overriding objective are not inimical to the principles of proportionality. The balance of interests that has to be struck between the individual Claimant and the wider public interest is always a difficult one. However a restriction upon the right of a Claimant to pursue his own genuine claim where he is also supporting the fraudulent claim of a fellow litigant is not in my judgment disproportionate.
My conclusion is however that the Deputy District Judge was wrong to reject the Second Defendant's submission that he had the power to strike out the three claims under CPR 3.4. Accordingly it is open to me as an appellate court to exercise my discretion afresh. The three claims were all modest in value; £1,500 in the case of Mr Khan, £1,520 in the case of Mr Shah and £2,000 in the case of Mr Ashraf. Those claims I have little doubt would in all probability have been settled without the need for a trial on the issue of liability or quantum had they not allied themselves to the fraudulent claim of Mr Mayat. For all the reasons that Mr Turner QC has advanced on behalf of the Second Defendant I do not consider that I should regard their dishonesty as something purely collateral and therefore immune from the court's exercise of its sanction to strike out under the CPR. Their own witness statements were an attempt to obstruct the just disposal of these proceedings; they failed to help the court to further the overriding objective; their cases should be struck out. Accordingly the appeal is allowed.
The Judge below
26. It follows from my primary conclusion that the First and Third Claimants have colluded in advancing a false claim by the Second Claimant, but it does not follow that their own claims are false or that they themselves did not suffer injury. They were undoubtedly in the car when it was struck at a speed which, taking the evidence as a whole, I find was somewhere between 4 and 10 mph. In the circumstances it would not be surprising if the First and Third Claimants [suffered] some mild whiplash injury. But should I prevent them from recovering because of what I have found was their collusion and in my view particularly the First Claimant's collusion, he plainly being the dominant figure in a fraudulent claim by another person? That is what Mr Brough urges on me, in reliance on the decision of Judge Hawkesworth QC in the case of Khan and others v Hussein & others, where a claim was struck out under CPR 3.4(2) after a trial involving very similar facts to the trial of the present action.
27. I have looked at the authorities referred to by Judge Hawkesworth QC, and in my judgment none quite supports the submission for which Mr Brough contends.
I do not think that the First or Third Claimant fall into that category either, nor that a judgment in their favour would be unsafe. There is no reason to suppose that their own individual claims have been dishonestly advanced, although in the circumstances I must naturally examine their evidence as to injury and loss with particular care.
"Fourthly, there are dicta of Laws LJ in a short ex tempore judgment in Molloy v- Shell UK [2001] EWCA Civ 1272 which suggest that the right course may be dismissal of a claim when the court is faced with 'manipulation of the civil justice system on so grand a scale' (that was a case where an injured claimant put forward a false claim for loss of earnings when in reality he had found further employment) but Laws LJ's remarks were obiter and are, it seems to me, of uncertain application. In particular, I do not think that it would be right to regard them as extending to a case where two claimants, although involved in supporting a false claim by another person, themselves advance apparently sustainable claims
Judge Hawkesworth QC decided his case on a different basis, foreshadowed by the judgment of Ward LJ in Arrow Nominees, and not apparently canvassed before Gibbs J in Churchill Car Insurance v- Kelly. Ward LJ considered the impact of the Civil Procedure Rules, holding that the question of whether a fair trial could be held was only one factor to be put in the scales. Bearing in mind the overriding objective of the CPR as set out at CPR 1.1 he found the attempted perversion of justice in that case to be the very antithesis of parties coming before the court on an equal footing, and to have taken a wholly inappropriate share of the court's resources, and regarded the striking out of the claim as a proportionate remedy for the petitioners' abuse. Even if the judge was right to conclude that a prima facie case could be made out for what remained of the claim once the tainted material was cut away, Ward LJ was clear that the court 'must make the clear statement that deception of this scale and magnitude will result in a party's forfeiting his right to continue to be heard' ([75]). Following that guidance, Judge Hawkesworth QC decided that he could not regard the dishonesty of the other claimants as purely collateral to the dishonesty of the one claimant whose whole claim was fraudulent: their own witness statements were an attempt to obstruct the just disposal of the proceedings, they failed to help the court to achieve the overriding objective, and in consequence their claims were struck out under CPR 3.4.
In the present case, the First and Third Claimants have put their names to Particulars of Claim which confirm the truth of what I have found to be the false claim of the Second Claimant. They did not sign the statement of truth themselves, but they must have authorised their solicitor to do so. They have put in and signed false witness statements placing the Second Claimant in the car with them, and they have given false evidence to the same effect. If they had not done so, there would have been no trial of liability and it is highly unlikely that there would have been any dispute about damages. The claim has in effect been 'hijacked' by the need to deal with a fraudulent claim by one of the three claimants, colluded in by the others. The Claimants' behaviour has been the antithesis of assisting the court to achieve the overriding objective. It has placed the defendant and her insurer on a footing which has been far from equal, it has incurred a great deal of unnecessary expense, and it has wasted the court's time. All this is true, and extremely serious. I am prepared to accept (given Mr Pitchers' concession) that there is a jurisdiction under CPR 3.4(2)(c) to strike out a claim after trial, even though but for failure to comply with the rules the claim is perfectly sustainable in itself. Nonetheless, it seems to me that the jurisdiction to strike out even during a trial is likely to be exercised very rarely (see eg per Colman J in National Westminster Bank plc v- Rabobank Nederland [2006] EWCH 2959), and it will be rarer still at the conclusion of a trial. The main function of CPR 3.4(2), it seems to me, is the case management function of enabling the court to dispose of issues and claims in advance of trial (see in particular CPR 1.4(2)(c)), whether because they are hopeless, or abusive, and thereby to save time and costs, or because a fair trial would not be possible, not to penalise a claimant who though in some respects dishonest has put forward an otherwise sustainable claim which has been fairly tried and properly determined. Arrow Nominees, by contrast, was a case which was stopped before trial, where its continuation would have given rise to a substantial risk of injustice. I therefore respectfully decline to follow the course taken by Judge Hawkesworth QC, and will not strike out the First or Third Claimant's claims. That is not to rule out the possibility of costs consequences of the kind envisaged by Gibbs J in Churchill Car Insurance, which will be a matter for argument.
The submissions on appeal
i) The judge had rightly held that the fraudulent plot must have been hatched in the short period of perhaps an hour or so between returning from the scene of the collision and setting off for the hospital. Mr Lewis submitted that it must have been initiated by Mr Ul-Haq and/or Mrs Parveen, for Mrs Khatoon was Mr Ul-Haq's mother and could not speak English. He submitted that the judge had failed to factor in that Mr Ul-Haq and Mrs Parveen were initiators and prime movers behind the fraud.ii) The judge had relied on the decision of Gibbs J in Kelly v Churchill. However there was a significant distinction between the case of dishonestly over-egging the claim on the one hand and otherwise legitimate litigation which had been cynically engineered to encompass and conceal a spurious claim by an additional "party". The first involved simple mendacity while the second involved abuse of process.
iii) The judge's comments in paragraph 30 of his judgment showed a reluctance to employ CPR 3.4 after hearing the evidence at trial. However in the present case cross-examination during trial had been the earliest opportunity for Ms Shah to demonstrate that Mr Ul-Haq and Mrs Parveen had abused the process of the court in the way that they did. Further, the court's powers of case management remained available until the end of the litigation.
iv) The judge had failed to have regard to public policy, which required that the court address the growing problem of motor insurance claim fraud, and "phantom passenger" claims in particular. The phenomenon of "phantom passenger" claims had rightly been of concern to HHJ Hawkesworth QC in Khan, and had become sufficiently widespread to have given rise to the decisions in Ghalib, Patel and Bashir. Mr Lewis submitted that other court users and honest holders of motor insurance policies had a legitimate expectation that courts would utilise all the case management powers available to them in appropriate cases to discourage misuse of the courts resources and attempts to obtain insurance monies by fraud in this way.
Analysis
i) In paragraph 27 of his judgment the judge said expressly that in the circumstances he must examine their evidence as to injury and loss with particular care. Mr Lewis has asked me to examine some of the documentary material. I decline to perform a partial exercise of this kind. The judge saw and heard the evidence, and he had the whole of the documentary material before him. The mere fact that Mr Ul-Haq and Mrs Parveen had lied in support of Mrs Khatoon's claim did not prevent the judge from concluding they had themselves suffered injury.
ii) Mr Lewis drew attention to passages in paragraphs 26 and 27 of the judgment. In paragraph 26 the judge said "it follows from my primary conclusion that [Mr Ul-Haq and Mrs Parveen] have colluded in advancing a false claim by [Mrs Khatoon], but it does not follow that their own claims are false or that they themselves did not suffer injury." In paragraph 27 of the judgment the judge said that there was "no reason to suppose" that Mr Ul-Haq and Mrs Parveen's individual claims had been dishonestly advanced. In my view the reason the reason the judge expressed himself in this way was that there was no express assertion by Ms Shah that Mr Ul-Haq and Mrs Parveen's individual claims were fraudulent. This can be seen in the stance of Ms Shah in the re-amended defence and counterclaim. In paragraph 1 care was taken to state that Ms Shah alleged that the claim made by Mrs Khatoon was constructed for the purposes of financial gain and was fraudulent. No such allegation was made in relation to Mr Ul-Haq and Mrs Parveen. Similarly, the Appellant's Initial Skeleton Argument made reference (as quoted above) to the "genuine" claims of Mr Ul-Haq and Mrs Parveen. If there had been any argument that the alleged injuries of Mr Ul-Haq and Mrs Parveen had been concocted then I have no doubt that the judge would, in this painstaking reserved judgment, have examined the argument and analysed it with care.
Conclusion