The Court of Appeal has ruled.

Bank St Petersburg PJSC v Arkhangelsky [2020] EWCA Civ 408 was a complex case in which a bank claimed £16.5m from the defendants – a husband and wife and their company. The defendants mounted a counterclaim for damages for alleged conspiracy unlawfully to raid and seize the assets of two of their main businesses in Russia (this failed). It was also alleged that the bank had been dishonest in respect of realisation of the assets.

The claimant bank succeeded in full and the defendants appealed. The issues raised on appeal included issues of dishonesty; and issue of delay, particularly did the 22 months delay between the trial and judgment mean that the judgment was unsafe?

Delay

The case was heard by Mr Justice Hildyard across 46 sitting days between 28th January and 11th July 2016. It took 22 months from the ending of the trial for judgment to be given – on 9th May 2018.

For his part, Hildyard J explained in his judgment the “tortuous process” he had followed to satisfy himself he had reached a decision after full and fair consideration of the evidence and of the competing submissions and legal arguments. He tried to explain the delay in handing down his judgment and expressed his regret at the situation.

The court heard that Hildyard J had been asked seven months after the trial about the delay thus far, and he said the delay was caused by needing to write the judgment in a preceding case. Later enquiries were met with reasons relating to further cases and to medical problems.

In the Court of Appeal, Sir Geoffrey Vos described the 22-month delay as inexcusable and said that it denied justice to the winning party. He made clear that the unwritten rule (in both the Business and Property Courts and the Court of Appeal) is that judgments should be delivered within three months of the hearing.

But did that delay, in and of itself, justify requiring a retrial? Previous authorities on delayed judgments were considered. Notably, as Peter Gibson LJ said in his ruling in Goose v. Wilson Sandford [1998] TLR 85): “A judge's tardiness in completing his judicial task after a trial is over denies justice to the winning party during the period of the delay. It also undermines the loser's confidence in the correctness of the decision when it is eventually delivered.” In that case, a retrial was ordered because some of the judge's conclusions were held to be unsafe because of the 20-month delay in that case.

He also highlighted how stressful litigation is while a trial is going on, but “compelling them to await judgment for an indefinitely extended period after the trial is over will only serve to prolong their anxiety, and may well increase it”. He warned that such conduct weakens public confidence in the whole judicial process and left unchecked would be ultimately subversive of the rule of law. He stressed: “Delays on this scale cannot and will not be tolerated.”

Back to the present case, and Sir Vos pointed out that the judge had mitigated the delay by reading the transcripts assiduously and undertook a minute, “commendable”, analysis of the evidence on a separate point. But though the 20-months delay may have meant he was less able to deal with findings he made “in the round” he did not allow the appeal for that reason.

To drive home the general point, he stressed that the ‘three month’ rule applied even in long and complex cases. He said: “Justice delayed is justice denied. Any other approach will lead to a loss of public and business confidence in our justice system.”

Dishonesty

The appeal was in fact allowed on other grounds, one of those we highlight here. The appeal court decided that Hildyard J had applied too high a standard of proof, which had created inconsistencies in his decision.

One of the two key grounds for appeal was that the judge misdirected himself as to the standard of proof, by refusing to draw inferences of dishonesty and conspiracy from the factual elements the defendants had relied on. This, it was argued, set the bar too high for dishonesty to be established.

The Court of Appeal ruled that the judge's statement that the "burden of proof that could only be discharged by showing the facts to be incapable of innocent explanation" was wrong. He had strayed from applying the correct standard of proof, applying “too exacting a standard”, with multiple references throughout the critical fact-finding on the counterclaim and various mis-directions. For example:

He directed that “[t]he Counterclaim always faced the difficulty that it relied on proof of the inherently improbable, and a burden of proof that could only be discharged by showing the facts to be incapable of innocent explanation such as to give rise to the inference of the conspiracy or conspiracies pleaded”.
“In relation to the complicity of the auction organisers, the judge said: "But once again, unanswered questions and surprising indifference is not proof of impropriety if there are any benign explanations which are not implausible".
In his conclusions on auction sales, the judge said: "However, in the end I have concluded that the Bank being entitled to sell assets separately pledged separately, the justifications advanced by the [respondents] for the packaging and process of sale are not so implausible that they must be rejected, bearing in mind the heavy onus of proof in the context of an assertion of dishonesty".

This showed that the judge had misdirected himself as to the standard of proof that had to be satisfied. Therefore, his findings as to the absence of dishonesty on the part of the Bank in the realisation of the assets could not stand. The appeal was allowed.

“There is only one rule of law, namely that the occurrence of the fact in issue must be proved to have been more probable than not”, as Lord Hoffmann said In re B (Children) [2008] UKHL 35.