Good judges are not verbose and they are positively encouraged to give reasons for their decisions as succinctly as possible. However, as a case concerning an alleged Ponzi scheme showed, fairness demands that they deal thoroughly with the evidence so that litigants understand why they have won or lost.
Two investment companies had entrusted millions to a foreign exchange trader who operated offshore and who apparently achieved very good returns. Following heavy losses, however, they launched proceedings in London, claiming that those profits were entirely fictitious and that the trader had been operating a Ponzi scheme. The prospects of making any recovery against the trader and his corporate vehicles was, however, viewed by the companies’ lawyers as extremely small.
In those circumstances, the companies also sued a group that owned the platform on which the trading had supposedly taken place and held trading accounts in their names. The group was said to have provided confirmations which appeared on their face to confirm that the companies held balances on those accounts worth $292 million when they were in fact devoid of funds.
The group’s defence was a root and branch denial of the companies’ claims that it had provided dishonest assistance to the trader. It asserted that a major investor in the companies, who instructed their solicitors, had been aware throughout that the confirmations were in respect of demonstration accounts which related to notional, as opposed to real, balances. The group was acquitted of dishonesty by a judge and the companies’ claim against it was dismissed.
In appealing against that ruling, the companies pointed out that the judge’s decision, following a three-week trial at which much live evidence was given, ran to only 13 pages. It was argued that his judgment failed to address many of the central issues in the case, and that his conclusions were cursory and his reasoning limited.
In upholding the challenge, the Court of Appeal found that the judge’s ruling plainly failed to take into account evidence that needed to be taken into account. Apparent findings of fraud made against the investor and another individual connected to the companies had been inadequately reasoned. Whilst recognising the grave consequences of its decision, not least in terms of costs, the Court ruled that the overriding objective of fairness required a complete re-hearing of the case before a different judge.
