Margaret Anne Ryan & Anor v HSBC UK Bank Plc & Anor

Apparent bias is assessed in two stages. The court must first ascertain all circumstances bearing on the allegation and then ask whether the fair-minded and informed observer would conclude that there was a real possibility of bias.

The assessment is holistic and may include the judge’s associations, the adequacy of disclosure, the conduct of the recusal process and the fairness of the substantive hearing. A causal link between apparent bias and the result is unnecessary. Where the test is satisfied, recusal is mandatory and the affected judgment must be set aside.

The claimants sought permission under Companies Act 2006 s 261 to continue a derivative claim on behalf of Mar City Plc against HSBC UK Bank Plc. The permission application had been dismissed by HHJ Gerald in [2022] EWHC 1874 (Ch).

After judgment, the claimants discovered that the judge and his wife jointly owned a company which had received lending from HSBC, including recovery finance secured over the company’s assets. They applied for the judge’s recusal on grounds of apparent and subconscious bias and sought to set aside the permission judgment. The central issue was whether, considering all the circumstances and the conduct of the proceedings, the fair-minded informed observer would conclude that there was a real possibility of bias.

1. Applicable test. The court must identify all circumstances bearing on apparent bias and then determine whether the fair-minded informed observer would conclude that there was a real possibility of bias. The observer is objective, informed, neither complacent nor unduly suspicious, and assesses the proceedings as a whole. The enquiry is directed to perception, not proof of actual bias, and does not require a causal connection between the apparent bias and the outcome.
2. Business association. A routine banker–customer relationship will not ordinarily justify recusal. The position may differ where the customer is insolvent or in financial difficulty, the judge’s financial affairs may be interconnected with it, recovery finance is involved, and the business is of considerable personal importance to the judge. In that context, incomplete information may itself remain material to the observer’s assessment.
3. Disclosure and recusal process. Non-disclosure of a potentially material association, the judge’s failure to have consciously considered it before hearing the case, inaccuracies in an order made when the issue was raised, and the judge’s defensive or hostile reactions were relevant to the overall assessment. The court was not confined to leaving those matters for an appeal.
4. Substantive hearing. The judge’s treatment of the evidence, pleadings and merits of the derivative claim displayed a number of indicators of an unfair process. These included misdescribing the claim, overlooking material evidence, taking points against the claimants which had not been advanced by HSBC, treating disputed matters as unchallenged, and rejecting evidence as incredible without cross-examination.
5. Disposition. The cumulative effect of the business association, the stage-one enquiry and the unfair process ground led the fair-minded informed observer to conclude that there was a real possibility of bias against the claimants and in favour of HSBC. HHJ Gerald was disqualified from continuing with the permission application, and his judgment was set aside. Consequential orders were reserved for further submissions.

The judgment describes the earlier permission decision of HHJ Gerald, which dismissed the application under Companies Act 2006: [2022] EWHC 1874 (Ch). The present court set that judgment aside on grounds of apparent bias and directed that HHJ Gerald should not continue to hear the permission application.