APPEALING ON THE JUDGE’S FINDINGS OF FACTS: A TRIAL IS NOT A DRESS REHEARSAL BUT “THE FIRST AND LAST NIGHT OF THE SHOW”

In the decision in Watson Farley and Williams -v- Ostrovizky today [2015] EWCA Civ 457 the Court of Appeal emphasised the difficulties of a party appealing findings of facts by the trial judge.

The aptness of the metaphor relating to island hopping in this case arises not just because the planned solar parks were for the most part in the Greek Isles, rather than on the mainland, but more so because the parties engaged in an exercise of trading gobbets from the transcripts, emails and other documents to sustain submissions on the facts. At times, Mr Pooles’ submissions resembled a closing speech on the facts to a trial judge.”

THE CASE

At the end of a 10 day trial the judge dismissed the appellant’s counterclaim for professional negligence against his solicitors. The appellant appealed arguing that the judge’s findings on the facts were not sustainable.

KEY POINTS

  • A court on appeal will rarely attempt to interfere with findings of fact from trial judges.
  • Duplication of the judge’s role is a disproportionate use of the resources of an appeal court.
  • The trial judge looks at all the evidence, the appeal court cannot replace by by “island hopping”.

THE APPEAL AGAINST FINDINGS OF FACT

This is another case that gave rise to a formidable number of bundles.  However it was clear that the appeal was against the findings of fact made. The judgment of the Court of Appeal was given by Lord Justice Burnett.

  1. Mr Pooles opened the appeal by confirming that it did not raise any points of law but rather that the appellant sought to attack factual findings made by the judge in respect of every aspect of the evidence put before him and also the conclusions he drew from those findings. Mr Hubble QC submits that all of the findings made by the judge were open to him on the evidence he heard and read. In that latter regard, I should note that we were provided with 12 lever arch files of material (in addition to the core bundle) which included a transcript of the oral evidence. The judge had the benefit of 55 lever arch files. Mr Hubble submits that there is no single alleged error in the judge’s conclusions which would deliver success to Mr Ostrovizky. Rather, he would need to succeed in overturning a lengthy series of factual findings and invite this court to rewrite the judgment completely. That accurately summarises the exercise in which the appellant is engaged.

THE APPROACH OF THE APPEAL COURT TO FINDINGS OF FACT

“The Approach to Factual Challenge

8. The correct approach of an appellate court when invited to interfere with the factual findings of a trial judge was restated, not for the first time, by the Supreme Court in McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477 and accurately summarised in the head note:

“It was a long settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial judge’s conclusions on primary facts unless satisfied that he was plainly wrong.”

Lewison L.J. returned to the topic in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] ETMR 26. In a vivid passage at para [114] he said:

“Appellate courts have been repeatedly warned, by recent cases at the highest level, not to interfere with findings of fact by trial judges, unless compelled to do so. This applied not only to findings of primary fact, but also the evaluation of those facts and to inferences to be drawn from them. … The reasons for this approach are many. They include

i. The expertise of the trial judge in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed.

ii. The trial is not a dress rehearsal. It is the first and last night of the show.

iii. Duplication of the trial judge’s role on appeal is a disproportionate use the limited resources of an appellant court, and will seldom lead to a different outcome in an individual case.

iv. In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping.

v. The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence).

vi. Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done.”

  1. The aptness of the metaphor relating to island hopping in this case arises not just because the planned solar parks were for the most part in the Greek Isles, rather than on the mainland, but more so because the parties engaged in an exercise of trading gobbets from the transcripts, emails and other documents to sustain submissions on the facts. At times, Mr Pooles’ submissions resembled a closing speech on the facts to a trial judge.”

THE FINDINGS IN THIS CASE

The Court of Appeal found that the trial judge was entitled to come to the findings of fact he did (which included findings about the credibility of witnesses)

  1. The judge’s conclusions relating to these central issues in this appeal present a complete block to its success. That said, I am satisfied that each of the additional findings made by the judge, about which Mr Ostrovizky complains, were open to him. He was right to conclude that the argument relating to the pledge as it evolved in the course of the trial was not pleaded. Whilst that was sufficient to dispose of it, I agree entirely with the judge that, in the light of the events which developed, it was not a point of any substance. The same may be said of his conclusion that the omission from the second and third agreements of the protection provided by clause 2.2 of the first agreement carried Mr Ostrovizky nowhere. The evidence supported his finding that the relevant partnerships had been established and were to be used for the projects envisaged by the second and third agreements before those agreements were drafted. Its inclusion was unnecessary. In the light of the judge’s findings that Mr Weinerman and Mr Ostrovizky had chosen not to take advantage of the provision in the first agreement it was also natural for him to conclude that its later inclusion would anyway have made no difference.
  2. The judge recognised that the clause relating to statutory documents became redundant when Mr Weinerman decided that the corporate entities would not be SAs. He accepted the evidence of Ms Faitakis that the agreements provided proper protection (in the round) for Mr Weinerman and Mr Ostrovizky, given that the trust arrangement was not available. For that reason the inclusion of the redundant clause did not render the drafting of the agreement negligent. That conclusion was open to him. As with other aspects of the arguments advanced by Mr Ostrovizky he also concluded that its inclusion made no difference whatsoever to the train of events that followed.
  3. This is an example of his approach to the “but for” causation question. Although Mr Pooles criticised the judge for dealing with questions of breach of duty and at the same time whether the alleged breach would have led Mr Ostrovizky or Mr Weinerman to behave differently, there was no legal error in doing so. It was an appropriate course to take. It was also necessary for the judge to consider in detail the events which followed and the various explanations for what occurred over the next four or five years. Nonetheless, the immediate consequences (or lack of them) of the alleged negligence merited attention. Mr Ostrovizky and Mr Rinis began ignoring the terms of the agreements very soon after they were executed.”

THE JUDGMENT AT FIRST INSTANCE

The decision of Mr Justice Silber at first instance makes interesting reading. The judge did not shirk from making findings in relation to the credibility of witnesses.

  • There are a number of factual issues which have to be resolved  in this case and they relate to events and matters which occurred  between four and six years ago. As one might expect, there have been many emails passing between the parties as well as many other relevant documents. Leggatt J stressed the obvious importance of documentary evidence in Gestmin SGPS S.A v Credit Suisse (UK) Limited  and Credit Suisse Securities  (Europe) Limited   [2013] EWHC 3560 ( Comm) when he observed that:-

” 22…the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

  • At the time when the events which led to the present action occurred, those involved with them would have had no reason to believe, or even to suspect, that they would be or even might be questioned about them between four and six years later in a Court in November 2013. In those circumstances, the documentary evidence is especially important and therefore disclosure has been and is of great importance. Indeed not only does contemporaneous correspondence enable a Court to evaluate the evidence of witnesses especially those who produced the documents, but also it helps the witnesses to recall events.
  • The comments of Leggatt J are particularly relevant in a case such as the present one in which, as I will explain, the Defendant’s side have not given full disclosure as they contend belatedly that documents can no longer be produced. Indeed, when further documents were brought to Court by Mr Simos, who was not a party to the action, it undermined aspects of the Defendant’s case. I will explain my views on the reliability of the evidence of the witnesses starting with those involved in the decision of the Defendant to invest in the PVs.

On the credibility of the defendant (the appellant at the Court of Appeal stage);

  • Mr Pooles contends that the Defendant was a credible witness and that the answers given by him were consistent with his written testimony, while the answers provided on the last day when he was recalled do not in any way diminish the reliability or the credibility of his evidence. I readily appreciate and do take into account the facts that it must have been difficult and a great strain for the Defendant to return to this country to give evidence and then to be recalled a few days later to give further evidence.
  • Nevertheless I have concluded that on numerous occasions, the Defendant  gave answers that show that he was prepared to say whatever he considered most likely to advance his case without considering whether his answers were correct, and in particular  in relation to the email of 27 July 2007 and his statement that “everything was destroyed by Ms Murray”. He also admitted that in 2007, he was preoccupied with other business ventures as he explained that he “had two large deals going on in Berlin… a medical centre in the Czech Republic and a building to convert into a hotel in Germany”. Further, he was not involved in the discussions with Ms Murray and Mr. Rinis in the period leading up to and immediately after the 2007 agreements. I was left in no doubt that these matters whether considered individually or cumulatively led me to the conclusion that he was a witness whose evidence I should, approach with extreme caution.

RELATED POSTS

Posts that discuss this case (at first instance)

Posts on witness evidence and credibility generally:

1. Litigators must know about credibility.

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