Court of Appeal
In the context of a dispute as to whether funding provided from a father to his son to purchase a property constituted a gift or a loan, the Court of Appeal rearticulated the very limited circumstances in which an appeal court may interfere with a trial judge's conclusions on primary facts. The trial judge must be "plainly wrong", in the sense that their conclusion was "rationally insupportable" in order to warrant such interference. The Court also considered a list of features of purely factual appeals that are unlikely to succeed in the appeal court.
The underlying dispute arose between Gabriele Volpi, a businessman in the oil industry, and his son, Matteo, who had, at times, worked for his father.
In 2012, Matteo, working with a long-time business associate of and advisor to his father, acquired an apartment in Lugano, financed mainly by 4 million Swiss francs provided by Delta Limited, a company controlled by his father. A loan agreement between Gabriele and Matteo in this amount was signed by Gabriele by 28 February 2012.
The apartment was refurbished at significant further cost. In August 2012, a further loan agreement was circulated, bearing what appeared to be the signature of both Gabriele and Matteo, which recited Matteo's confirmation that he had received several loans from his father amounting to a total of 6 million Swiss francs.
On 22 August 2012, a representative of Matteo, acting pursuant to a power of attorney, signed a mortgage in respect of the Lugano apartment, securing borrowing of up to 6 million Swiss francs.
Relations between Matteo and his father eventually broke down, and Gabriele claimed repayment of the total loaned amount of 6 million Swiss francs. Matteo disputed the authenticity of his signatures on both the loan agreement and the power of attorney, claiming that his understanding was that the Lugano property had been bought by a family trust of which he was the beneficiary.
At first instance, there was expert evidence on the authenticity of the signatures on the August 2012 loan agreement and the power of attorney, and factual evidence from Matteo and various other representatives who had been involved in the acquisition of the property and drawing up the relevant agreements. The trial judge found that the balance of probability fell firmly on the side of the funding being provided by way of loan to Matteo, with the weightiest factors being that:
- all arrangements had been put in place for a loan agreement, driven by the fact that (as explored in evidence) Gabriele had been, at the time, "obsessed" with protecting family assets against possible claims by his daughters-in law; and
- the preponderance of the expert evidence suggesting that it was likely that the August 2012 loan agreement had been signed by Matteo.
Matteo's appeal proceeded on the basis that there was no oral or contemporaneous evidence that the parties had ever agreed a loan or that Matteo had signed the purported loan agreement in August 2012. That left only the expert evidence, which, Matteo submitted, was inconclusive and insufficient to satisfy the burden of proof. The Court of Appeal roundly rejected these submissions and dismissed the appeal.
Lewison LJ considered the evidence before the trial judge and concluded that they had clearly been entitled to draw the conclusions they had made in Gabriele's favour. The August 2012 loan agreement, and the earlier agreement signed by Gabriele only in February 2012, both stood as contemporaneous evidence of Gabriele's intention to provide a loan. Matteo's own contemporaneous understanding – that the property was to be purchased by the trustees of a discretionary trust – was itself inconsistent with the making of an immediate outright gift to him personally.
The judge had also been entitled to find that it was more probable than not that the signatures on the August 2012 loan agreement were genuine. Lewison LJ noted that the expert evidence, taken at its highest in Matteo's favour, did not positively assert that any of the signatures on the August 2012 loan agreement had been forged.
Whether the appeal court would have reached the same conclusion as the judge at first instance is not the point: it was not for the appeal court to come to an independent conclusion as a result of its own consideration of the evidence. The question before the Court of Appeal was whether the judge's finding that the money provided by Gabriele and Delta had been a loan rather than a gift was rationally insupportable. It was not.
In the judgment, Lewison LJ also considered the submissions on behalf of the appellant to demonstrate many of the features of factual appeals that are unlikely to be successful, including:
- seeking to retry the case afresh;
- resting on a selection of evidence rather than the whole of the evidence that the judge had heard;
- seeking to persuade an appeal court to form its own evaluation of the reliability of witness evidence when that is the "quintessential function" of the trial judge;
- seeking to persuade the appeal court to reattribute weight to the different strands of evidence; and
- concentrating on particular verbal expressions that the judge had used rather than engaging with the substance of their findings.
The judgment both articulates and applies well-established principles that appeal courts will not trespass on findings that are for the trial judge to make, particularly in areas such as the reliability of witnesses and the weight to be given to the various strands of evidence. In addition, on a very practical level, Lewison LJ provided a useful checklist for practitioners to consult when considering an appeal seeking to go beyond issues of law in order to improve the chances of a successful appeal.
For further information on this topic please contact Sean Cannon or Daniel Wyatt at RPC by telephone (+44 20 3060 6000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.