Andrew Perkins and Liam Tolen of Ashfords LLP’s Dispute Resolution Team recently acted in De Sena & Anor v Notaro & Ors [2020] EWHC 1031 (Ch) for the First and Second Defendants in successfully defending claims of undue influence and breach of fiduciary duties arising out of a demerger of a family business.
In the judgment, His Honour Judge Paul Matthews provides insight as to how the Court’s approach decision making at trial. It provides for a helpful and user-friendly overview which anyone involved in proceedings in the English Courts should read. We have set out the relevant paragraphs below. HHJ Matthew’s comments address the burden of proof and the standard of proof in civil cases and provides a helpful reminder of how the Courts account for the fallibility of memory when it comes to oral evidence along with the interplay between oral evidence and documentary evidence as articulated the Gestmin case (in which Ashfords LLP also acted).
“Factfinding
23. For the benefit of the parties, and any others who are interested, I should say something about how English judges in civil cases decide cases of this kind. First of all, judges are not superhuman, and do not possess supernatural powers that enable them to divine when someone is not telling the truth. Instead they look carefully at all the oral and written material presented, with the benefit of forensic analysis (including cross-examination of oral witnesses), and the arguments made to them, and then make up their minds. But there are certain important procedural rules which govern their decision-making, some of which I shall briefly mention here, because lay readers of this judgment may not be aware of them.
The burden of proof
24. The first is the question of the burden of proof. Where there is an issue in dispute between the parties in a civil case, one party or the other will bear the burden of proving it. This is however subject to some important nuances which I shall mention later. In general, the person who asserts something bears the burden of proving it. The significance of who bears the burden of proof in civil litigation is this. If the person who bears the burden of proof of a particular matter satisfies the court, after considering the material that has been placed before the court, that something happened, then, for the purposes of deciding the case, it did happen. But if that person does not so satisfy the court, then for those purposes it did not happen.
The standard of proof
25. Secondly, the standard of proof in a civil case is very different from that in a criminal case. In a civil case it is merely the balance of probabilities. This means that, if the judge considers that a thing is more likely to have happened than not, then for the purposes of the decision it did happen. If on the other hand the judge considers that the likelihood of a thing's having happened does not exceed 50%, then for the purposes of the decision it did not happen. It is not necessary for the court to go further than this. There is certainly no need for any scientific certainty, such as (say) medical experts might be used to.
Failure to call evidence
26. Thirdly, where a party could give or call relevant evidence on an important point without apparent difficulty, a failure to do so may in some circumstances entitle the Court to draw an inference adverse to that party, sufficient to strengthen evidence adduced by the other party or weaken evidence given by the party so failing. Such a suggestion has been made in the present case. I deal with it in more detail later on.
Reasons for judgment
27. Fourthly, a court must give reasons for its decisions. That is what I am doing now. But judges are not obliged to deal in their judgments with every single point that is argued, or every piece of evidence tendered. Moreover, it must be borne in mind that specific findings of fact by a judge are inherently an incomplete statement of the impression which was made upon that judge by the primary evidence. Expressed findings are always surrounded by a penumbra of imprecision which may still play an important part in the judge's overall evaluation.
Overall
28. So decisions made by civil judges are not necessarily the objective truth of the matter. Instead, they are the judge's own assessment of the most likely facts based on the materials which the parties have chosen to place before the court, taking into account to some extent also what the court considers that they should have been able to put before the court but chose not to. And, whilst judges give their reasons for their decisions, they cannot and do not explain every little detail or respond to every point made.
29. In cases where witnesses give evidence as to what happened based on their memories, which may be faulty, civil judges nowadays often prefer to rely on the documents in the case, as being more objective. In Gestmin SGPS SPA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [16]-[20], an experienced commercial judge, Leggatt J (as he then was), commented on modern research into the nature of memory and the unreliability of eyewitness evidence. In my judgment, the problems of memory over the years mean that the documentary evidence available to the court becomes even more important.
30. Indeed, in the Gestmin case, Leggatt J said this (at [22]):
"In the light of these considerations [about the unreliability of memory], the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth."
31. This approach has been followed in many subsequent cases. Of course, its main application will be in commercial cases (such as Gestmin was), because in such cases it is likely that the bulk of the relevant facts and matters are recorded or referred to in written documents. In domestic cases, where typically there are fewer documents, it is less obviously applicable. And, in any event, even where it does apply, it does not mean that a judge should ignore the oral evidence, or even devalue it. In the extract above, Leggatt J made express reference to the usefulness of oral evidence”.
Those who are parties to Court proceedings in England and Wales should take comfort from the fact that the English Courts have a well established reputation as a world leader in determining disputes. Often parties outside of the jurisdiction will agree to nominating the English Courts to determine a dispute because of the certainty of judicial and procedural fairness and because it provides a platform for detailed analysis by an expert Judge.
Litigants are of course free to ensure their own certainty as to outcome by reaching a compromise between the parties and the vast majority of Court proceedings settle before reaching trial. The English legal system has a well established process of alternative dispute resolution which parties are encouraged to make use of throughout the litigation process.
If you would like any further information on the issues addressed in this article, you should contact the author, Liam Tolen.
