COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE EVANS-LOMBE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LATHAM
LORD JUSTICE CARNWATH
| SIR ALEXANDER MORRISON & ANR
|- and -
|AWG GROUP LIMITED & ANR
Mr Philip Marshall QC & Mr Deepak Nambisan (instructed by Olswangs for the Second Appellant
Mr Charles Aldous QC and Mr Charles Bear QC (instructed by Herbert Smith ) for the Respondent
Hearing date: 5th December 2005
Crown Copyright ©
Lord Justice Mummery :
"1. I have to deal with an application made by the defendants Sir Alexander Fraser Morrison ("FM") the 1st defendant and Stephen John McBrierty ("SM") the 2nd defendant, made on Wednesday the 30th November the week immediately preceding the intended commencement of the trial on the 5th December, that I should recuse myself from trying the case. The application arises in this way: in the course of my pre-reading into the case I noticed that it was intended to call as a witness for AWG Group Ltd ("AWG") Mr Richard Jewson ("Mr Jewson") who, at all material times until March 2002 was a director of AWG and chairman of the audit sub-committee of its board. Alerted by the name I then discovered that Mr Jewson is well known to me of which fact I then alerted the parties on the 29th November. The response of the claimants was to indicate that, rather than risk my withdrawal and the consequent delay in obtaining another judge and his completing the pre-reading process on which I had already spent a week, they would not call him to give evidence since they did not regard him as other than a relatively peripheral witness. The response of the defendants is contained in a letter from Messrs Dechert LLP of the 30th November the conclusion of which was to ask me to withdraw.
2. The case arises from the takeover by AWG of Morrison plc ("Morrison") in which FM and SM were respectively the chairman, and, in effect, the chief executive officer. They also held between them a substantial proportion of AWG's shares. In August 2000 AWG made an approach to Morrison with a view to bidding for the whole of the issued share capital of that company. In due course a bid was made which AWG declared to have gone unconditional on the 21st September 2000. It is AWG's case that it was procured to make the bid and to declare it unconditional as a result of a representation that Morrison's profits in the full year to March 2001 would be £30.5m, that that representation was made to the board of AWG by the defendants at a time when they had no bona fide belief that such a level of profit would be achieved, and that, in making the representation, the defendants fraudulently procured Morrison to conceal from AWG's "due diligence" inquiries, material facts from which AWG might well have concluded that that level of profit was unachievable and that they should withdraw their bid.
3. At the outset of the hearing of the defendants' application I described my connection with AWG and with Mr Jewson in the following terms: AWG is a company whose primary business is supplying water to industry and the public in East Anglia and in particular in Norfolk. My family are farmers/landowners in Norfolk and so in the area of operation of AWG. I have had dealings with AWG, not always harmonious, over the years on such subjects as access for the purpose of sinking boreholes and running pipelines. Mr Jewson lives in the next village to the village where I and my family live being approximately 1 mile distant. Our families have known each other for at least 30 years. Our children are friends and we have dined with each other on a number of occasions. Mr Jewson and I in the past were tennis players. Mr Jewson has recently been appointed Lord Lieutenant of Norfolk. I would have the greatest difficulty in dealing with a case in which Mr Jewson was a witness where a challenge was to be made as to the truthfulness of his evidence.
4. As is apparent the case which the claimants seek to make out against the defendants involves serious allegations against prominent businessmen for whom, if those allegations are found proved, most serious consequences would follow both in the damages which they might be required to pay and in the consequences that such findings would have for their future careers.
The test for apparent bias
"25. By contrast, a real danger of bias might well be thought to arise if there were personal friendship or animosity between the judge and any member of the public involved in the case; or if the judge were closely acquainted with any member of the public involved in the case, particularly if the credibility of that individual could be significant in the decision of the case…or if, for any other reason, there were real ground for doubting the ability of the judge to ignore extraneous considerations, prejudices and predilections and bring an objective judgment to bear on the issues before him…In most cases, we think, the answer, one way or the other, will be obvious. But if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal."
"11. In deciding whether I should recuse myself from the case I have first to decide, applying the test derived from the authorities which I have set out above whether all circumstances which have a bearing on the suggestion that I might arrive at a conclusion in the case through bias would lead "a fair-minded and informed observer to conclude that there was a real possibility" that that might be the result of my failure to withdraw."
"12. I have come to the conclusion that my continuation as judge in the case will not fail the test. Mr Jewson's witness statement is mainly directed to the issue of causation of loss and to the impression made on the board of AWG of the representations made by the defendants in the course of AWG's "due diligence" inquiries. I can see no reason why the proposed new witnesses will not be able to give the evidence which Mr Jewson would have given. The fact that they are giving it in his place should not constitute an unfair advantage to the defendants. The same is true of the evidence given by Mr Jewson of the impact of the letter of 11th September 2000 on the AWG board; see item (ii) in Messrs Dechert's letter of the 30th November. It does not seem to me that Mr Jewson's supervisory role as chairman of the audit committee and any recommendations that he may have given as to the treatment of financial information from Morrison in the accounts of the new AWG Group can have be relevant to any judgment that I give. It will be for me to decide, if necessary, whether the accounts properly record such information applying my view of the appropriate accounting principles which may or may not agree with the view of the audit committee of precisely the terms in which the financial information was provided to the auditors, or to the committee itself, the new proposed new witnesses are just as able to give that evidence as Mr Jewson.
13. It has always been within the discretion of the claimants as to which AWG board members to call to give evidence and it is not prima facie unfair to the defendants that late in the day they may elect not to call a witness who has given a witness statement but substitute other witnesses, provided proper notice is given of what those replacement witnesses are going to say. It will be open to the defendants to criticise the claimants' case if a comparison between the evidence given by the replacement witnesses diverges from the witness statement which has been delivered by Mr Jewson. In those circumstances my role will be whether any such divergence undermines the evidence of the replacement witnesses. I observe that if this happens the reliability of Mr Jewson's witness statement will come into question but I do not regard this as presenting a significant problem.
14. It is point (iv) of Messrs Dechert's letter which seems to me to be the high point of the argument that I should recuse myself. However I have come to the conclusion that it does not drive me to do so. Mr Jewson was not an executive member of the board responsible for the day to day trading decisions of Morrison after the acquisition. The question will not be whether particular trading decisions were ill judged but whether or not they caused relevant loss. I do not think that "a fair minded and informed observer" would conclude that I was less likely to decide that trading decisions of AWG during the post acquisition period were mistaken and causative of loss because at the time Mr Jewson was a non-executive member. In any event I am assured by counsel for the claimants that there is no record and no other evidence that Mr Jewson was party to any of the post acquisition trading decisions of AWG.
"15 …I have to balance whether the apparent role of Mr Jewson in the overall circumstances of the case leads to a risk that such a changed picture might emerge. I have to balance such risk against the undoubted disruption of the administration of justice generally caused by having to find a new judge to try a case of this length at short notice and also the inevitable further cost imposed on the parties resulting from the ensuing delay. I have come to the conclusion that such a risk, which must always be present, is too small to drive me to the conclusion that I should recuse myself. For these reasons I must dismiss the application."
Lord Justice Latham:
Lord Justice Carnwath: