England and Wales Court of Appeal (Civil Division) Decisions

Case No: A2/2000/2308

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

MR LEIGHTON WILLIAMS QC (SITTING AS A DEPUTY JUDGE)

Royal Courts of Justice

Strand, London, WC2A 2LL

Friday 8th December 2000

Miss F. Aslam (instructed by O'Callaghan & Co for the Respondents)

Mr J. Smouha (instructed by Gouldens for the Appellants) who did not appear in the court below

SIR CHRISTOPHER SLADE:

1. The Appellant, Mr Rahim, seeks permission to appeal from an Order dated 7th April 2000 made by Mr Leighton Williams QC, sitting as a Deputy Judge in the Queen's Bench Division, by which he ordered that the Appellant should pay to the Claimant, Mr Jawad, the sum of £266,143.29 inclusive of interest, by way of repayment of a loan. The Appellant also seeks permission to adduce fresh evidence on the appeal. By an Order dated 27th June 2000, May LJ adjourned both applications to be heard on notice, the appeal to follow immediately if permission were given. We have thought it the convenient course to begin by hearing argument on the merits of the appeal itself de bene esse, without reference to any further evidence, and then to hear argument, likewise de bene esse, on the application to adduce further evidence.

2. I take the background facts largely from the Deputy Judge's judgment. The Claimant is a retired Iraqi politician who has lived in this country since 1979. The Appellant, is also an Iraqi, but now has U.S. Citizenship. He is or was a property developer. Until this dispute arose, the two of them were good friends; their ages appear to be in the seventies.

3. In the early 1980's, the Appellant, who had been living in London, moved to Washington, U.S.A, where he was dealing in property. In 1985, he set up a company, Alancar NV ("Alancar") in order to develop a plot of land in Washington which was bought that year. To raise capital he invited some of his friends to invest in the company. One of the original shareholders was a Mr Marrow but not, at least at that stage, the Claimant.

4. The matters in issue start in 1987 as to which the Claimant's version of events was briefly as follows: In 1987, when the Appellant was in England, the Appellant told him that he was not getting on with Mr Marrow, that he wished to buy Mr Marrow out, and invited the Claimant to replace Mr Marrow in the business as a shareholder. When the Claimant declined this suggestion, according to the Claimant's evidence, the Appellant suggested that the Claimant should lend him the money so that the Appellant himself could buy Mr Marrow's shares. The Claimant agreed and was told that the sum involved was $225,000 and that repayment would be within three years. When the Claimant suggested a promissory note from the Appellant and his wife to secure the loan, the Appellant said in effect that this was not necessary. The Appellant asked for the money to be sent to a Mr Bregy. There is no dispute that in mid July 1987 the sum of $225,000 was debited from the Claimant's account to the credit of Mr Bregy, who was a lawyer practising in Geneva. The Claimant told the Deputy Judge that his nephew Shadwan Jawad was present at the time when the transaction occurred and that he had told his nephew, in the Appellant's presence, that he had made a loan of $225,000 to the Appellant and that, if he died, the Appellant was to repay the money to the nephew.

5. In 1989, the Appellant's son Basil Mehdi Al-Rahim came to London. According to the Claimant, at a meeting over lunch, the son on behalf of the Appellant asked him for a further loan or investment, but the Claimant said that the original loan should be repaid first. Then in 1990 according to the Claimant the Appellant came to see him and told him that he was facing financial ruin, with the result that the Claimant granted him an extension of time to repay the loan on notice.

6. Subsequently in July 1992, the Claimant said, he sent a telemessage to the Appellant asking for repayment of the loan. No copy of that telemessage is in evidence. There is however in evidence a copy of a telemessage from the Claimant to the Appellant dated 20th December 1992 which began with the words:

"This is my third telegram to you without any response. Apparently you are avoiding keeping your word and your promises. I told you of my critical financial situation, ....."

The Appellant said he responded to this or perhaps another telemessage at about the same time with a telephone call.

7. Until very shortly before the trial, there was no letter in evidence in which the Claimant in terms demanded repayment of a loan. About a week before the trial, however, the Claimant or his solicitors produced the copy of a letter dated 20th October 1996 which began with the words: "As you well remember, I have lent to you a substantial sum of money which not only belongs to me..." and demanded repayment of the loan. The Appellant said he did not remember receiving this letter. Finally on 5th October 1997 the Appellant sent a telemessage, addressed to both the Appellant and his wife, demanding a repayment of a "large sum of money", which he said he had lent to both of them, "following your persistent requests". To this the Appellant replied by a letter of the 9th October 1997 saying: "I would like to confirm that neither of us have never [sic] borrowed money from you, therefore your claim that we owe you an unspecified amount is completely groundless".

8. On 18th July 1998, the Claimant issued a writ seeking repayment of the alleged loan.

9. The Appellant's account of the relevant transactions was very different from that of the Claimant. Before they occurred, he said, there were 1400 issued shares of a nominal value of $1000 each in Alancar, of which 200 were held by himself, 200 by Mr Kafil-Hussain and 350 by Mr Marrow. He said that in May 1997 Mr Marrow told him that he wished to sell his 350 shares in the company and wanted a price of $450,000 to take into account the increased value of the Washington land. The subsequent events according to the Appellant were as follows. As the real estate market at that time was strong, he wished to offer his friends the opportunity to invest in the Washington project and to buy Mr Marrow's shares from him. The Appellant found two people who were interested in investing in the company, namely, the Claimant and his brother-in-law, Aziz Saidi. It was agreed, so the Appellant said, that each of them would purchase 175 shares in the company for a sum of $225,000. He said he was with Mr Saidi in May 1987 when he transferred this sum to the account in Geneva of Mr Bregy, whom he described as Mr Marrow's lawyer. He said that they were in the Earls Court Branch of BCCI when the transfer was effected. He said he recalled that the Claimant did not transfer money to Mr Bregy until July 1987 as he had a deposit which did not mature until July, and he wanted to wait for the money to become available.

10. It is not disputed that later in 1987 Alancar became a wholly owned subsidiary of the company called Monoceros Investments NV ("Monoceros") as its sole shareholder and holding company. Monoceros and Alancar were both incorporated in Curacao. The Appellant's evidence was that the shares in Monoceros, which were all bearer shares, were allotted to the same persons as had previously been shareholders in Alancar, in the same numbers and same proportions, save that Mr Marrow received no shares and the Claimant and Mr Saidi each received 175 shares in his place.

11. These were the most essential features of the Claimant's and Appellant's respective evidence, though they were substantially elaborated in their oral evidence. There was thus, as the Deputy Judge said, a stark conflict between the parties' respective versions of the relevant events. Had the sum of $225,000, which had indisputably been paid by the Claimant to Mr Bregy in July 1987, been paid to him by way of a loan to the Appellant to enable the Appellant to purchase shares in Alancar from Mr Marrow, as the Claimant asserted? Or had it been paid as consideration for the purchase by the Claimant from Mr Marrow of 175 shares in Alancar, as was the Appellant's assertion?

12. In support of his own evidence, the Claimant called his nephew, Shadwan Jawad, who is now 27 and has lived with the Claimant ever since 1980. He said he was present on occasions when the Appellant visited the Claimant. He supported the Claimant's account of being invited by the Appellant to become involved in the business, and said that, shortly after the invitation was made, his uncle called him into the room in which he was speaking to the Appellant to tell him that he was in the process of lending the Appellant $225,000 following persistent requests on the part of the Appellant, and that, if anything should happen to the Claimant the Appellant was to repay the money to him. The nephew was at this stage about 15 years old. He also supported the Claimant's version of a 1990 meeting, when he said an extension of the time to repay was granted to the Appellant.

13. The Deputy Judge formed a favourable impression of both the Claimant and his nephew. He described the Claimant as a voluble witness, but thought him genuine. He said: "My own assessment of him is that he was a trusting man, probably willing to carry that trust over into lending money when his sympathy was aroused but probably ultimately naive in business matters although I am sure he has a certain business sense. Certainly I would regard him as naive when compared with the Defendant".

14. The Deputy Judge regarded the nephew as a clear and persuasive witness. He accepted his evidence that he was in the room when the alleged loan was made, and that his uncle told him that, if he should die, the money should be paid to him, and that in 1990 the time for repayment of the loan had been extended. That finding, the Deputy Judge said, sufficed to decide the case in the Claimant's favour. But he proceeded to make a number of further findings or observations. He said that he did not find the Appellant a credible witness. He described him as intelligent and quick thinking. He considered that he sought to use that to his advantage when giving evidence.

15. The Appellant's son also gave evidence, in the course of which he denied that he asked the Claimant for further monies on his visit to London in 1989. The Judge was equally unimpressed with him as a witness, and did not accept this denial. He was satisfied that he had been sent as an emissary to try to obtain further monies to bolster his father's business interests.

16. The last witness for the Appellant was Mr Hussein, the original shareholder in Alancar whom I have already mentioned. Mr Hussein had referred in his statement to a meeting at which he, Mr Marrow and the Appellant and one other person had been present, at the time when Mr Marrow wanted to dispose of his shareholding. In that statement he had described Mr Marrow's reasons for wishing to withdraw from the company as being dissatisfaction with the running of the project and a lack of belief in its future success. When he dealt with the meeting in his evidence, Mr Hussein expressed the opinion that perhaps the Appellant was not present when Mr Marrow had expressed his dissatisfaction. The Deputy Judge inferred that Mr Hussein's motive in expressing this opinion was to help his friend, the Appellant, who in evidence had said he had never known why Mr Marrow had wanted to sell. Mr Hussein also said it would not have made sense for the Appellant to have bought back Mr Marrow's shares at that time, because the Appellant did not have the extra money to spare. The Appellant, in contrast, had given evidence to the effect that money was not a problem for him, his concern being not to have many eggs in one basket. In cross-examination Mr Hussein said that his comment that the Appellant did not have the extra money had been presumption on his part and that he had never discussed the matter with the Appellant. Why he should make such a presumption was not clear to the Deputy Judge, who regarded it as another example of his unsatisfactoriness as a witness and, at the end of his judgment described him as a "dishonest witness attempting to tailor his evidence to suit the Defendant's case". He thought that unintentionally Mr Hussein supported the Claimant's case on whether or not the Appellant had money at the relevant time.

17. The Deputy Judge proceeded to refer to three factors, in addition to his assessment of the witnesses, on which he relied as reasons for rejecting the Appellant's case. First, he referred to the Claimant's telemessage of 20th December 1992, which he regarded as consistent with the existence of an outstanding loan, but inconsistent with a complaint about a share purchase transaction which had gone wrong. Secondly, he referred to what he described as an astonishing lack of documentary evidence to support the Appellant's assertions. In particular he observed that there was no documentary evidence to show that Mr Saidi purchased any shares.

18. Thirdly, the Deputy Judge referred to the pleadings. The statement of claim, which was served on 15th July 1998, referred to a loan in the sum of $225,000, which was said to have been transferred at the request of the Appellant to the account of Mr Bregy in Switzerland. It referred to the requests for repayment of July 1992, 20th December 1992, and 5th October 1997. The defence to that pleading, which was served on 19th October 1998, was a straightforward defence denying the loan and raising the question of limitation. It did not suggest that the $225,000 transferred to Mr Bregy, was paid by the Claimant for the purchase of shares rather than by way of loan. Paragraph 3 of the amended defence which was served in August 1999 did raise the question of the sale of Mr Marrow's shares. It stated that Mr Marrow told the Appellant he wished to sell his shares, and:

"Thereafter the Defendant who had known the Plaintiff socially for several years informed the Plaintiff and the Defendant's brother-in-law, one Aziz Saidi, of Marrow's wish to sell the shares. Both the Plaintiff and Mr Saidi expressed an interest in acquiring certain of the shares from Marrow".

It then went on to say that the Claimant paid the sum of $225,000 to Mr Marrow's lawyer, Mr Bregy, in consideration of the transfer to the Claimant of 175,000 shares. It did not suggest that in fact Mr Saidi pursued his interest further and purchased the shares.

19. In the light of this allegation, the Claimant's advisers sought particulars as whether or not Mr Saidi had acquired any of the shares. In the request his name was mis-spelt as SAUDI, rather than Saidi. The response (literally accurate) was that, as far as the Appellant was aware, he did not. It was suggested that the mis-typing of the name Saidi gave rise to confusion, but the Deputy Judge regarded this as an unconvincing explanation for the answer to the request for particulars. He expressed himself as not satisfied on the Appellant's evidence that Mr Saidi ever bought any of the shares and that, if he had to opt for probabilities, he would say that the assertion was invented.

20. The Deputy Judge concluded: "I am satisfied that in this case the Defendant took advantage of the Claimant's kindness and lack of business acumen when he obtained that loan and he obtained the loan because he needed the money which he could not obtain elsewhere. He took advantage of the friendship. On my findings the limitation argument also fails and so there will be judgment for the Claimant." The Deputy Judge gave the Claimant relief accordingly.

21. The Deputy Judge's task was not made any easier by some striking gaps in the evidence. First, apart from the production by the Appellant of a share certificate relating to a holding of 200 bearer shares in Monoceros, there was no relevant documentary evidence relating to the shareholdings in Alancar or Monoceros. If there had been available clear documentary evidence that, in or shortly after May 1987 175 shares in Alancar and/or Monoceros had been newly allotted to each of the Claimant and Mr Saidi, this would have been strong evidence in favour of the Appellant's version of the events. If on the other hand there had been available clear evidence that in or shortly after that month 175 shares in Alancar and/or Monoceros had been allotted in favour of the Appellant, additional to his existing holding, that would have been strong evidence supporting the Claimant's version of events. But no such evidence was available to the Deputy Judge.

22. Secondly, there was no evidence from Mr Marrow or from Mr Saidi, both of whom had died. If they had been alive and willing to give evidence, they could presumably have refuted or confirmed the Appellant's version of the relevant transactions of 1987. Thirdly, there was only very limited information available from Mr Bregy, who had played a crucially important part in the transaction of 1987, I will revert to his position later.

23. In the circumstances it was inevitable that the Deputy Judge's decision on the disputed matters of fact would depend substantially on his views as to the credibility of the parties' respective witnesses, in particular the Appellant and the Claimant themselves. Miss Aslam, for the Claimant, rightly reminded us of all the advantages enjoyed by a trial judge in assessing the credibility of witnesses. In a frequently cited passage from his speech in Watt or Thomas v. Thomas (1947) AC 484 at pages 487 to 488 Lord Thankerton said this:

"I. Where a question of fact has been tried by a judge without a jury and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses could not be sufficient to explain or justify the trial judge's conclusion.

II. The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence."

24. Lord Thankerton, however, then went on to qualify his general statement of principle as follows:

"III. The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court. It is obvious that the value and importance of having seen and heard the witnesses will vary according to the class of case, and, it may be, the individual case in question."

25. In summary, therefore this Court is ordinarily very slow to interfere with the findings of fact made by a trial judge in a case where those findings have depended primarily on his assessment of the credibility of the parties' witnesses. In such a case, the onus on a party seeking to persuade this Court to set aside the judgment of the Court below is a heavy one. Nevertheless, the "demeanour" of witnesses (to repeat an often used phrase) may be misleading if viewed on its own. It remains incumbent on the trial judge to test the credibility of witnesses against the more important factors which may throw light on such credibility and have been drawn to his attention in the course of argument. Correspondingly, in my judgment, the trial judge is under an obligation to give reasons for his decision sufficient to show that he has carried out this exercise and has grasped the nettle presented by any particular difficulties which may arise in accepting the version of the relevant events presented by one side or the other.

26. In the recent case of Flannery & Another v. The Halifax Estate Agencies Limited [2000] 1 WLR 377 the Court of Appeal held on the facts that, since the Judge in the court below had heard reasoned analysis and accepted the defendant's expert evidence, he was under a duty to supply reasons in the form of a coherent rebuttal of the plaintiff's expert evidence, and that his failure to do so justified setting aside his judgment and remitting the case for re-trial. Henry LJ delivering the judgment of the Court, made the following general comments on the duty to give reasons (at pages 381 to 382).

"(1) The duty is a function of due process, and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties especially the losing party should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know (as was said in Ex parte Dave) whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not.

(2) The first of these aspects implies that want of reasons may be a good self-standing ground of appeal. Where because no reasons are given it is impossible to tell whether the judge has gone wrong on the law or the facts, the losing party would be altogether deprived of his chance of an appeal unless the court entertains an appeal based on the lack of reasons itself.

(3) The extent of the duty, or rather the reach of what is required to fulfil it, depends on the subject matter. Where there is a straightforward factual dispute whose resolution depends simply on which witness is telling the truth about events which he claims to recall, it is likely to be enough for the judge (having, no doubt, summarised the evidence) to indicate simply that he believes X rather than Y; indeed there may be nothing else to say. But where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence; but it is not necessarily limited to such cases.

(4) This is not to suggest that there is one rule for cases concerning the witnesses truthfulness or recall of events, and another for cases where the issue depends on reasoning or analysis (with experts or otherwise). The rule is the same: the judge must explain why he has reached his decision. The question is always, what is required of the judge to do so; and that will differ from case to case. Transparency should be the watchword."

27. Mr Smouha for the Appellant, relying on the principles expounded in the Flannery case, submitted that this Court should order a retrial of this case on the grounds that:

(1) the Deputy Judge gave no adequate reasons for preferring the evidence of the Claimant and his witnesses to that of the Appellant and his witnesses;

(2) he failed to take sufficiently into account elements relevant to the credibility of the parties;

(3) the reasons which he gave for preferring the evidence of the Claimant to that of the Appellant are open to serious criticism.

28. Mr Smouha made a number of points in support of his submission that the judgment would have to be set aside. I will only refer to what I regard as the most significant of these points.

29. The first and to my mind most important of them related to Mr Bregy. On any footing he had been a key figure in the relevant transaction of 1987 because he had received the $225,000. If he had been able and willing to give evidence as to the capacity in which he received that sum and what he did with it, his evidence might well have been conclusive. In the event, Mr Bregy who is a lawyer working in Geneva, was not called to give evidence. The Deputy Judge, however, was shown copies of the two following letters:

(a) A letter dated 14th March 2000 written by Mr Bregy to the Appellant's solicitors in which he said:

"I have to repeat to you that I have no file Alancar NV, that I have no answer from the bank and that I have recollection whatsoever about this transaction. The only thing I may confirm is that I acted on behalf of Mr Marrow, but it is not sure [sic] that it was for Alancar NV. If there has been an Alancar NV the file must be destroyed, because older than ten years of age but not by me."

(b) A fax dated 4th April 2000 addressed by Mr René Merkt of the firm of René Merkt and Associés Advocates in Geneva, to the Appellant's solicitors saying:

"In reply to your fax of April 3^rd, I confirm that I was the older member of a partnership constituting our firm in 1987 and that Mr Bregy was a partner of it. I also confirm that Mr Bregy was more connected with Mr Marrow's affairs than the other members of our firm".

These letters did not go very far, but it is, I think, common ground that they did at least show that, whether or not he acted for other persons as well, Mr Bregy was indeed the lawyer of Mr Marrow in 1987.

30. The Deputy Judge did not refer to these letters, even though they lent substantial support to the Appellant's case. He had consistently asserted that the $225,000 had been paid by the Claimant to Mr Bregy in his capacity as the lawyer for Mr Marrow: (see para. 4 of the amended defence; para. 5 of the Appellant's statement dated 26th November 1999; Day 1.72B and Day 2.6F of the transcript of evidence); the Appellant's evidence as regards the status of Mr Bregy was thus entirely consistent with the information provided by Mr Bregy himself.

31. On the face of it, however, the Claimant's evidence relating to Mr Bregy was much less easily acceptable. In paragraph 12 of his statement of 25th October 1999 he said: "Mr Rahim informed me that Mr Bregy was the lawyer for his company and payment to him was in accordance with "our procedures"". In his evidence-in-chief, (Day 1 4G-5A), the Claimant gave a slightly different version of this conversation. The Appellant, he said, had stated: "This is my lawyer, the company lawyer and all the transactions go through that channel". In paragraph 22 of his statement of 25th October 1999, the Claimant had said: "I showed Mr Marrow the transmission form with Mr Bregy's name on it and asked if he knew who he was. He said that perhaps it was the company's lawyer or Mr Rahim's lawyer. At no time did he suggest that he was his own lawyer". A little later in chief, (Day 1 5B), the Claimant said he "never, never, never ever", knew that Mr Bregy was Mr Marrow's lawyer. In cross-examination (Day 1 37B) the Claimant said that after he had asked Mr Marrow if he knew who Mr Bregy was, Mr Marrow had replied "Well perhaps it is the company's lawyer, Mr Rahim's lawyer". He said that Mr Marrow never mentioned that Mr Bregy was his own lawyer.

32. I do not say that the Claimant's evidence on this point is necessarily incredible, but it gives rise to substantial difficulties. One asks oneself whether it is really likely that Mr Marrow would have expressed any doubts as to why the transmission form had Mr Bregy's name on it, and why he should have failed to disclose to the Claimant that Mr Bregy was his own lawyer, even if Mr Bregy was not acting in that capacity in receiving the money. The Deputy Judge in his judgment made only three brief references to Mr Bregy. He referred to the Claimant's evidence that "the Defendant asked for the money to be sent to a Mr Bregy in Switzerland whom he said was his lawyer". He referred to the Claimant's evidence that, when Mr Marrow was asked about the name Bregy, he said perhaps he was Alancar's lawyer or the Appellant's lawyer but did not suggest that he was his own lawyer. He referred to the Appellant's evidence that he "understood the Claimant had sent $225,000 to Marrow's lawyer Bregy".

33. At the trial, (see Day 2 65A-C) the Appellant's counsel specifically drew the attention of the Deputy Judge to the difficulties regarding the Claimant's version of the evidence concerning Mr Bregy, which was in striking contrast to the consistency of the Appellant's evidence on this crucial point. The Deputy Judge however did not advert to these difficulties in his judgment. He gave no reason why he preferred the evidence of the Claimant on the point to that of the Appellant. In my judgment he should have entered into these issues which had been canvassed before him and should have explained why he preferred the evidence of the Claimant to that of the Appellant. As things were, he made no finding whatever as to the capacity in which Mr Bregy received the $225,000, which was an essential feature in the case. He did not apparently recognise the impact of this point on the credibility of the Claimant's and the Appellant's respective versions of the relevant events.

34. Another feature of the Claimant's evidence had been drawn to the attention of the Deputy Judge, which was relevant to the Claimant's credibility. In chief, (Day 1.9-10) the Claimant was asked to explain the words "which not only belongs to me" relating to the loan, in his letter of October 20th 1996. Though he had not so stated in his statement, he gave evidence that the money had been advanced from a joint account held by him with his two brothers. As the Appellant's counsel pointed out to the Deputy Judge, (Day 2.70) that on the face of it this was entirely inconsistent with the Claimant's and his nephew's evidence that the Claimant had told the Appellant, that in the event of his prior death, the alleged loan should be repaid to the nephew. The inconsistency was not satisfactorily explained in the Claimant's cross-examination. I do not say that every point relating to the credibility of the Claimant or of the Appellant which was advanced to the Deputy Judge should have been referred to in his judgment. Some of the points by Mr Smouha on this appeal were in my judgment of sufficiently little weight to entitle the Judge to omit reference to them in his judgment. But since the evidence concerning the monies in the alleged joint account related to the very same monies which were in issue in this action, and also, threw doubts on the credibility of the Claimant's and his nephew's versions of the relevant events, the Deputy Judge should in my view have dealt with this issue in his judgment.

35. The same comment applies to the copy letter bearing date 20th October 1996. This letter was not referred to in the Claimant's witness statement or in his list of documents and it was produced only about a week before the trial. Its significance was that it was the document earliest in date produced by him which made any specific mention of a loan. The Claimant said that he had recently found in it in his desk. The Appellant's counsel submitted that its emergence at such a very late stage was highly suspicious, and suggested that it had been produced for the purpose of supporting the claim made in the proceedings. While the Deputy Judge heard evidence on the point and could have dealt with it, he did not do so. It was a point clearly of substantial importance in the context of the Claimant's credibility.

36. In my judgment there is also substance in Mr Smouha's submission that the Deputy Judge attached undue weight to the principal factors other than his assessment of the credibility of the two parties on which he relied in rejecting the Appellant's case. One of these factors, to which he seems to have attached great importance, was his very decided view as to the unreliability of the evidence of Mr Hussain; he devoted two or three pages of his judgment to demonstrating such unreliability, in striking contrast to the far shorter reasons he gave for accepting or rejecting the evidence of the other witnesses in the case. But Mr Hussain had not been present between the Claimant and the Appellant by which the relevant transaction was concluded. His evidence, whether true or false, in my opinion threw little light on the credibility of the Claimant himself.

37. As to the pleading point arising from the mis-spelling of the name Saidi, to which again the Deputy Judge seems to have attached considerable importance, it would have been difficult to assess the true weight of the point without knowing anything of the circumstances in which the Appellant's solicitors' answer to the request for further and better particulars was given, and on what instructions from him. It is to be noted that, since the particulars were given, the Appellant has changed his solicitors. As to the telemessage of 20th December 1992, this made no specific request for the re-payment of a loan as one might possibly have expected, if that was the substance of the demand. As to what the Deputy Judge described as the astonishing lack of documentary evidence, there was indeed a marked lack, as I have already explained. In my judgment however, this point by itself assists the Claimant no more than it assists the Appellant. It has to be remembered that the transaction on which the Claimant relies took place more than 12 years ago, and it is far from improbable that relevant documents, in particular documentation relating to Alancar and Monoceros has been destroyed or lost, as Mr Bregy himself suggested.

38. Miss Aslam stressed the advantage enjoyed by the Deputy Judge, by reason of having seen and heard the witnesses. She rightly submitted that he could not reasonably have been expected to deal with every point relating to the credibility of the witnesses that was addressed to him. Nevertheless, while far from saying that he reached a wrong conclusion, either in regard to such credibility or in regard to the ultimate question of fact which he had to decide, with due respect to the Deputy Judge I have to say that his judgment leaves me with a considerable sense of unease. In my view it does not sufficiently explain to the Appellant why the Claimant's version of the transaction was accepted by the Court in preference to his own, despite the significant problems raised by the Claimant's version, to which I have referred. The Deputy Judge had a difficult task. But as I have indicated, he should in my view have grasped the nettle of these problems, and, in failing to do so, in my judgment also failed to discharge the duty to give sufficient reasons, exemplified by the Flannery decision.

39. Particularly in the light of the objectives sought to be achieved by the Civil Procedure Rules 1988, it must require a strong case before this Court sets aside a decision of a judge of first instance, which embodies a decision on a bare question of fact and depends primarily on his assessment of the credibility of the witnesses before him. The prospect of a new trial and the additional expense involved must be a daunting one in any case. Nevertheless, for the reasons which I have given, I am for my part of the opinion that justice demands that the Appellant should be given the opportunity of a re-trial in the present case. I would accordingly give him the leave to appeal which he seeks. Albeit with regret and some reluctance, I would set aside the Deputy Judge's judgment and order a re-trial before a different judge. In the circumstances, I do not find it necessary to express any conclusion on the Appellant's application to adduce further evidence and would make no order on that application.

LORD JUSTICE ALDOUS:

40. I agree.

ORDER: Application for permission to appeal granted; appeal allowed; order of the judge set aside; retrial before a different judge ordered; costs of the appeal and of the trial to be reserved to the judge who retries the case.