Court of Appeal says no to purely factual appeals

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 re-articulated 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 which are unlikely to succeed in the appeal court.

Facts

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 CHF 4 million 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 CHF 6 million (the Loan Agreement). 

On 22 August a representative of Matteo, acting pursuant to a power of attorney (the Power of Attorney), signed a mortgage in respect of the Lugano apartment, securing borrowing of up to CHF 6 million. 

Relations between Matteo and his father eventually broke down, and Gabriele claimed repayment of the total loaned amount of CHF 6 million. 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 Loan Agreement and the Power of Attorney, and factual evidence from Matteo and various other representatives who were 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 most weighty factors being that all arrangements were put in place for a loan agreement, driven by the fact that (as explored in evidence) Gabriele was 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 Loan Agreement was signed by Matteo. 

The Decision

Matteo's appeal proceeded on the basis that there was no oral or contemporaneous evidence that the parties ever agreed a loan or that Matteo signed the purported loan agreement. 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 were clearly entitled to draw the conclusions they had done in Gabriele's favour. The 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 was also entitled to find that it was more probable than not that the signatures on the 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 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 an 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 was 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 which 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 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
• Concentrating on particular verbal expressions that the judge used rather than engaging with the substance of his findings

Comment

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 provides 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.