The Financial Conduct Authority v Avacade Limited (in liquidation) (trading as Avacade Investment Options) & Ors.

Apparent bias is assessed objectively by asking whether a fair-minded and informed observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias. A judge’s direct financial interest in the outcome ordinarily requires automatic recusal, but that principle is narrow. Where a judge becomes aware that the claimant is a client of the judge’s firm, the court must assess the circumstances realistically and may give the benefit of reasonable doubt to the party seeking recusal. Practical case-management considerations are relevant, particularly where the trial is complete and the remaining applications require fresh exercises of discretion. A judge may therefore withdraw from consequential applications while retaining matters that flow organically from the completed judgment.

The Financial Conduct Authority brought civil proceedings against five defendants alleging contraventions of the Financial Services and Markets Act. Following the trial and circulation of a draft judgment, the judge learned that the FCA had instructed the firm of which he was a partner in separate business-interruption litigation. The defendants accepted that no issue arose regarding the trial or the judgment already handed down, but applied for recusal from further applications involving costs, injunctions, interim restitution and case management.

The central issue was whether the firm’s relationship with the FCA created apparent bias, and, if so, what further matters should remain with the trial judge.

1. Test for apparent bias. Applying Porter v Magill [2001] UKHL 67, the question was whether a fair-minded and informed observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias. The assessment was objective and included the possibility of subconscious influence.
2. Financial interest. Automatic disqualification for a judge with a financial interest in the outcome is a narrow principle. The judge had no sufficiently tangible financial interest in the present action to require automatic recusal.
3. Client relationship and practical considerations. Although the apparent-bias case was doubtful, the judge considered that a fair-minded person might feel discomfort about a judge deciding substantial financial and regulatory orders while being a partner in a firm acting for the claimant. Under the guidance in Locabail (UK) Limited v Bayfield Properties Limited [2000] QB 451 and Jones v DAS Legal Expenses Insurance Company Limited [2003] EWCA Civ 1071, practical factors and the parties’ wishes were relevant, and reasonable doubt should be resolved in favour of recusal.
4. The trial and judgment were complete. Declarations, the incidence of costs and permission to appeal flowed organically from the judgment and remained with the judge. Costs assessment, final injunctions, interim restitution orders and any further trial involved fresh and self-contained exercises of judgment or discretion and could properly be determined by another judge.
5. The conference attended by representatives of the judge’s firm and an FCA representative did not create reasonable doubt about impartiality. The judge therefore acceded to the recusal application, withdrawing from further conduct save for the specified matters.