Noted with Interest: England Court of Appeal Highlights Danger of Long Delay in Delivery of Judgment | Quinn Emanuel Urquhart & Sullivan, LLP
When appealing a judgment in England, the default position is that an appellate court will not interfere with the factual findings of a lower court unless it is satisfied that no reasonable court could not have reached that conclusion on the basis of the evidence before it. It is a very high bar. In practice, this means that it is rare for the factual findings of a lower court to be overturned on appeal where those findings are based on a trial judge’s assessment of the evidence of witnesses (where it is recognized that the trial judge has an inherent advantage over an appellate tribunal in assessing the primary facts). This is often the case, for example, in disputes involving complex and protracted frauds, where contemporary documentary evidence is often scarce and the judge’s assessment of the reliability (or not) of key witnesses is crucial to the result.
In the recent case of Natwest Markets PLC v Bilta (UK) Ltd  EWCA Civ 680, the Court of Appeal recalled that this general rule does not apply in a particular case, namely when there was a significant gap between the conclusion of the trial and the delivery of the judgment. In such cases a much lower standard will apply, focusing not on whether the trial judge’s findings were in error, but on whether the Court of Appeal can be positively convinced. that these conclusions were correct. As this case shows, it can make a crucial difference in the outcome of an appeal.
Context and first instance decision
The claim in Natwest concerned a form of VAT fraud relating to the trading of carbon credits (“USA“) issued under the EU Emissions Trading System. EUA trade within an EU Member State was subject to VAT, but import or export from one Member State to another was exempt from VAT. The fraud was carried out by a trading company importing the USA from State A to State B (not paying VAT) and then reselling them in State B (with added VAT) The latter transaction would result in a VAT liability for which the company would normally report to the tax authorities of State B (in this case UK HMRC). the manager of the trading company would siphon off the VAT and disappear, leaving an unpaid VAT debt that the company could not meet.
Applicants in Natwest were the companies (now in liquidation) whose directors had committed VAT fraud (in violation of their duties towards these companies). The defendants were the employers of traders who bought a significant amount of EUA (indirectly) from the plaintiffs in June and July 2009, and allegedly turned a blind eye to the fact that the EUA they exchanged was clearly part of a scheme. fraudulent. (thus participating dishonestly in the perpetuation of this regime).
The trial took place over five weeks in June and July 2018 (approximately 9 years after the relevant events). There was then a 19-month gap until the judgment was handed down in March 2020. One of the central questions at the trial was whether traders were aware (or at least suspected) of the fraud. VAT at the time they bought the USA. The trial judge heard testimony from the traders involved and concluded that much of their testimony was not credible. He concluded that they had been aware at all times of the facts that the USA was likely sold to them as part of a larger fraudulent arrangement, and therefore held them responsible for dishonest aid and for knowingly participating in fraudulent transactions.
The decision of the Court of Appeal
The gist of the defendants’ appeal was that the judgment of the trial court failed to take into account a number of contemporary documents which were At first glance potentially inconsistent with the judge’s finding that the traders had been dishonest. Although the judge had to consult these documents during the observations, they were not mentioned in his judgment.
The Court of Appeal began by pointing out that, in a normal case (and especially in a complex case where the judge had to assess multiple and contradictory sources of evidence), a judge is not required to answer every point that he or she needs. is submitted, and the mere fact that a judgment fails to mention a particular issue that runs counter to a judge’s general conclusion is insufficient grounds for allowing an appeal. Indeed, when it is rendered in due time, a judgment “”may be assumed to have been prepared with full recollection of the relevant evidence”.
However, the Court of Appeal went on to say that when there had been a considerable delay in the delivery of the judgment, this last hypothesis could no longer hold. More specifically, when a deferred judgment did not expressly mention certain factors, it could not simply be assumed that the trial judge had nevertheless taken those factors into account in reaching his decision. The relevant test in such circumstances was not whether the judge’s conclusions were patently wrong, but whether the Court of Appeal could be satisfied that the initial conclusion was correct. This in turn would warrant a much closer examination of the trial judge’s reasoning than would normally be appropriate in an ordinary appeal.
In Natwest itself, the Court of Appeal concluded that the documents the judge omitted from his open analysis were, at least on the face of it, potentially inconsistent with the trial judge’s findings that the traders had been actively dishonest. She therefore could not be satisfied that the judge’s findings were necessarily correct, and therefore allowed the appeal and ordered a new trial with a different judge.
It should be noted that the Court of Appeal reached this conclusion despite the fact that it also concluded: (i) that there was no reason to doubt the judge’s conclusion as to the overall credibility of the witnesses for the defendants, (ii) that the judgment had been prepared with “great care and attention to detail”, (Iii) that the judge had a clear evidentiary basis on which to draw the conclusions he drew, and (iv) that the additional documents may ultimately not change the conclusions that another trial judge instance can shoot. Any of these factors, even in isolation, may well have been fatal to an ordinary appeal. The Court of Appeal did not provide any indication as to the length of the delay which would generally justify the application of this less strict test. However, he noted that judgments are generally expected to be rendered within 3 months of the conclusion of the trial, and so it may be that any significant delay beyond this time frame potentially engages this lower standard. .