Davey v Williams & Anor

An appellate court should rarely interfere with factual findings based on oral evidence. It may do so where the trial judge failed properly to use the advantage of hearing the witnesses, gave unsatisfactory or incomplete reasons, or drew inferences unsupported by the evidence. The court must distinguish findings of primary fact from inferences drawn from those facts. It may form its own view on the latter, while giving due weight to the trial judge’s conclusions. In a disputed credibility case, the court should assess the witnesses’ evidence against the objective documents, their motives, the surrounding conduct and the overall probabilities. Where the trial judge’s reasoning is materially flawed but the appellate court cannot fairly determine credibility from the record, the proper course is ordinarily to order a retrial rather than substitute its own conclusion.

The claimant alleged that he had paid £25,000 to the respondents towards the purchase of shares in their company and had thereafter been excluded from the business. The Cardiff County Court dismissed his claim after a three-day trial. The Assistant Recorder resolved the dispute principally by analysing subsidiary matters, including the cash withdrawals, the absence of a receipt, the claimant’s financial decisions and the respondents’ explanations, but made no express finding as to which side was telling the truth.

The claimant appealed. The central issue was whether the trial judge’s approach justified appellate interference and, if so, whether the Court of Appeal should determine the factual dispute itself or order a retrial.

1. Appeal allowed. The judgment for the respondents was set aside and the proceedings were ordered to be retried before a different judge. Appeal costs were awarded, with trial costs reserved.

2. Lord Justice Mance held that the Assistant Recorder’s reasoning was unsatisfactory and incomplete. He had not directly assessed the credibility of the principal witnesses and had attached undue or misplaced significance to matters such as the two cash withdrawals, the absence of a receipt and the alleged lack of an obvious reason for the claimant’s financial choices. The court was required to consider the evidence as a whole, including objective documents, the parties’ conduct, their motives and the overall probabilities.

3. The guidance in The “Ocean Frost” [1985] 1 Ll.R. 1 was relevant beyond fraud cases. A witness’s confusion or inconsistency does not necessarily establish dishonesty. The court must test testimony against independent evidence and the surrounding probabilities.

4. Under Benmax v Austin [1955] 1 AER 326 and Watt v Thomas [1947] AC 484, an appellate court should generally respect findings dependent upon credibility. It may nevertheless examine the reasoning where the judge did not properly take advantage of seeing and hearing the witnesses, where the reasons are unsatisfactory, or where the conclusion is an inference from primary facts. In that situation the appellate court may form an independent view, subject to the proper weight accorded to the trial judge.

5. Lord Justice Peter Gibson concurred. He emphasised that the central issue was whether one side or the other was telling the truth. The Assistant Recorder had not determined that issue expressly and had failed to address several materially probative matters, including the coincidence between the mortgage proceeds, the proposed investment and the claimant’s commencement of work, and an unexplained payment into the respondents’ account.

6. Although the Court of Appeal had serious doubts about the dismissal, it could not fairly substitute its own assessment of credibility for a trial conducted on a proper basis. A determination by a judge who heard the oral evidence was therefore required.

• Court of Appeal (Civil Division): The appeal from the Cardiff County Court was allowed. The judgment of the Assistant Recorder was set aside and the proceedings were ordered to be retried before a different judge.