Simetra Global Assets Ltd & Anor v Ikon Finance Ltd & Ors

An appellate court may allow an appeal and order a retrial where the trial judgment does not demonstrate that the critical issues and evidence were properly considered. Reasons may be concise, but they must identify the issues vital to the result and explain their resolution. The judge need not address every argument, but must confront apparently compelling evidence inconsistent with the conclusion reached.

In commercial fraud cases, contemporary documents are generally more reliable than recollection or demeanour. A judge should test oral evidence against those documents, the witnesses’ motives and the overall probabilities. An appellate court considering the adequacy of reasons need not substitute factual findings of its own. It may remit the entire case where the deficiencies prevent the factual assessment from standing.

The appellants claimed that they had been deceived by confirmations which appeared to verify that approximately US $292 million was held in foreign-exchange trading accounts. They alleged dishonest assistance in breaches of fiduciary duty, deceit and conspiracy against companies and individuals associated with the trading platform. The respondents maintained that the confirmations concerned demonstration accounts containing only notional funds.

After a 13-day Commercial Court trial, Robin Knowles J dismissed the claims in [2018] EWHC 2624 (Comm). He found no dishonesty and no reliance. The appellants did not seek judgment in their favour on appeal. They sought a retrial before another judge, contending that the judgment failed to address critical issues and contemporary documents and did not adequately explain its findings.

The central question was whether those deficiencies were sufficiently serious to prevent the findings from standing and to require a retrial.

1. The appeal was allowed and the action remitted for retrial before a different Commercial Court judge. Although a retrial after a lengthy trial was a last resort, the trial judgment plainly failed to take account of evidence which required consideration. Allowing serious and inadequately reasoned findings against the appellants’ witnesses to stand would cause the greater unfairness.

2. Failure to give adequate reasons may constitute a self-standing ground of appeal. The extent of the duty depends upon the case. A judgment need not address every argument or identify every factor affecting the evaluation of evidence. It must, however, identify the issues vital to the result and explain how they were resolved. The principles in Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 and English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605 were applied.

3. A careful judgment should ordinarily employ the building blocks of reasoned decision-making. It should identify the issues, marshal the principally relevant evidence and explain why that evidence is accepted or rejected. Fairness particularly requires engagement with apparently compelling evidence which points against the proposed conclusion. A failure to follow that approach does not invariably make a judgment inadequate, but cogent alternative reasoning will then be required.

4. Contemporary documents are especially important when assessing honesty, motivation and state of mind in commercial fraud litigation. This is not an inflexible rule of law. Such documents are nevertheless generally more reliable than oral evidence or demeanour, particularly where internal communications reveal unguarded thoughts. A judge should test witness evidence against the documents, motives, independently established facts and overall probabilities.

5. The trial judgment did not determine whether the primary alleged fiduciaries had owed and breached fiduciary duties, although secondary liability for dishonest assistance depended upon that question. Its findings concerning their honesty were also unclear. It did not analyse the objective meaning of the account confirmations, which plainly appeared to concern actual trading accounts rather than demonstration accounts.

6. The judgment further failed to engage with a large body of contemporary communications, the material effect of the expert evidence, and significant evidence bearing upon the credibility and state of mind of the principal participants. It also misunderstood aspects of a witness’s evidence and did not explain its rejection of documentary material relevant to reliance.

7. The Court of Appeal did not replace the trial judge’s findings with findings of its own or predetermine the retrial. The usual restraint governing appellate reversal of factual findings remained relevant background, but the immediate issue was the adequacy of the reasons and the failure to consider evidence. The fresh-evidence application therefore required no determination.

1. Court of Appeal (Civil Division): In Simetra Global Assets Ltd & Anor v Ikon Finance Ltd & Ors [2019] EWCA Civ 1413, the court unanimously allowed the appeal and remitted the action for retrial before a different Commercial Court judge.

2. High Court, Queen’s Bench Division, Commercial Court: Robin Knowles J dismissed the appellants’ claims in [2018] EWHC 2624 (Comm), finding no dishonesty, deceit, conspiracy or reliance.