Judge’s Own Idea Decided Case

A finding that properties, both before and after transfer, were held on trust for an individual was not part of either party’s case, and was the Deputy Judge’s (the Judge’s) own idea.

That was the uncontested position before the Court of Appeal and was the main ground of the Claimant’s appeal: Satyam Enterprises Ltd v (1) John Vincent Burton (2) JVB Seven Properties Ltd [2021] EWCA Civ 287 Lewison, Arnold, Nugee LJJ

The Judge had dismissed claims against both the first and second respondents, but the Claimant appealed only in respect of the dismissal against the first respondent.

Almost everything in the case, except for the basic facts, was disputed.  Allegations were made that documents had been forged and fabricated and the Judge found much of the evidence given on both sides unreliable.

Giving the main judgment of the Court today, with which the other Lords Justices agreed, Nugee LJ observed that in those circumstances there were few secure footholds for the Judge as he picked his way through the allegations.

Such a case posed particular difficulties for a trial judge and required careful findings of fact, firmly set in the context of what each party alleged, and which of the allegations had either been admitted or proved to the requisite standard.

Regrettably, that had not happened here.  The judgment could not stand, the appeal would be allowed, and the matter remitted to the High Court for further hearing.

It was deeply unfortunate, and very unsatisfactory for the parties, but there was no other course open in the circumstances.

This was not a case of one party seeking to depart from his pleaded cases, but one where the parties addressed in their evidence and submissions the cases that had been pleaded, but the Judge decided the case on a basis that had neither been pleaded nor canvassed before him.

In our system of civil litigation that was impermissible, and a misunderstanding of the judge’s function which was to try the issues the parties had raised before him.

The relevant principles were stated by the Court of Appeal in Al-Medenni v Mars UK Ltd [2005] EWCA Civ 1041.  There the trial judge had rejected the claimant’s pleaded allegation of how she had sustained an accident, but nevertheless found the defendant liable on the basis of his own theory (referred to as the “third man theory”) of what had happened, which had never formed any part of either party’s pleaded case.

Other members of the Court agreed with Dyson LJ who said there: “In my view, the judge was not entitled to find for the claimant on the basis of the third man theory.  It is fundamental to our adversarial system of justice that the parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other.

“The function of the judge is to adjudicate on those issues alone.  The parties may have their own reasons for limiting the issues or presenting them in a certain way.

“The judge can invite, or even encourage, the parties to recast or modify the issues.  But if they refuse to do so, the judge must respect that decision.”

Dyson LJ went on to say that, having rejected the claimant’s pleaded case, the judge should have dismissed the claim, and by making findings for which the claimant was not contending, had crossed the line which separates adversarial and inquisitorial system; what he did might have been legitimate in an inquisitorial system, but it was impermissible in our system.

In the present case, the possibility that properties were held on trust for an individual did not appear to have been canvassed by the Judge during the hearing, but as far as was known, first emerged fully-formed in the judgment.

That, for the reasons given by Dyson LJ in Al-Medenni, was not a course that was open to the Judge.

If a judge’s own theory was wholly outside the scope of the pleaded issues, that was nothing to the point, and to decide a case on a basis that had not been explored in evidence or addressed in submissions, was likely to leave at least one, if not both, parties with a profound and justified sense of unfairness.

Lewison LJ added that it was doubly regrettable that the Judge had also failed to make crucial findings of fact on pleaded matters that were in issue.