Our eye was caught this week by a recent judgment by Mellor J in a cryptocurrency case. Not that the subject matter of the claim especially concerns travel and cross border practitioners; but the question of whether a party can rely on determinations of fact made in one case as evidence in another matter is one of universal application.
Wright v Coinbase, Wright v Payward [2023] EWHC 1893 (Ch)
Dr Wright claims to be the creator of the Bitcoin System; the person who wrote the original Bitcoin code and (using a pseudonym) published a White Paper describing it. He is bringing four actions for passing off in the Business and Property Courts. At the heart of each of these actions is the question of whether he was the person who wrote the Code and then the White Paper under an assumed name. Mellor J has the pleasure and privilege of hearing all four actions, and heard a CMC on 25th and 26th May during which, amongst other issues such as the Defendants' application for security for costs (at [45] to [91]), he considered (at [27] to [44]) the status of findings of fact made in previous proceedings. That issue arose because both sets of Defendants wished to amend their Defences to plead that:
The First Claimant is and has been involved in various proceedings, in this jurisdiction and overseas, in which his evidence (including documentary evidence adduced by him) has been the subject of serious adverse comment.
There followed seven examples, from claims brought as far afield as Australia and Norway.
Dr Wright sought to resist the amendments on the basis of the rule in Hollington v Newthorn [1943] 1 KB 587 that a decision of another court or tribunal is inadmissible as evidence of the truth of those findings. The Defendants accepted that this principle is good law, but argued that:
the Defendants do not rely upon the decisions cited as evidence of the truth of those findings. Instead, those decisions are referred to as reason why the Defendants require the Claimants to substantiate their various assertions with hard evidence: contemporaneous documents and/or credible corroborative testimony. In circumstances where the First Claimant's evidence on relevant matters has been repeatedly undermined and disbelieved in the past, the Defendants are entitled to explain why they contend that the First Claimant's assertions should not be taken at face value.
It is therefore perfectly proper to plead, as the Defendants have done, that because of the adverse comment made by other tribunals about the evidence of Dr Wright, strict proof will be required of all facts and matters relied upon by the Claimants in these proceedings.
Readers may feel that no such explanation needed to be given; it would have been perfectly proper for the Defendants simply to put Dr Wright to proof of the truth of his allegations, without referring expressly to the cases in which he had been found to have been untruthful. After all, if the Defendants do not believe Dr Wright, would they have been prevented from pleading as much had there been no such antecedent findings? Surely not. But the existence of those findings might be thought to be prejudicial to Dr Wright, even though the rule in Hollington v Newthorn is designed to prevent such prejudice.
The Claimants relied on the explanation of the principle given by Christopher Clarke LJ in Rogers v Hoyle [2014] EWCA Civ 257:
The trial judge must decide the case for himself on the evidence that he receives, and in the light of the submissions on that evidence made to him. To admit evidence of the findings of fact of another person, however distinguished, and however thorough and competent his examination of the issues may have been, risks the decision being made, at least in part, on evidence other than that which the trial judge has heard and in reliance on the opinion of someone who is neither the relevant decision maker nor an expert in any relevant discipline, of which decision making is not one. The opinion of someone who is not the trial judge is, therefore, as a matter of law, irrelevant and not one to which he ought to have regard.
Bearing this in mind, Mellor J had no hesitation in disallowing the amendments. He found that:
As pleaded, the findings adverse to Dr Wright and his credibility in the decisions referred to are pleaded as findings of fact and as evidence of the truth of those findings. If the only purpose of the references to the decisions in Paragraph 33 was to justify the plea in Paragraph 34, it is my view that this part of the pleading would have been structured very differently. In particular, the purpose of the reliance on the adverse findings would have been made explicit.
We must all have sympathy for him when he added:
Although the purported purpose has now been made clear in correspondence, it does not supplant the terms of the pleading. Furthermore, life is far too short to have to refer to correspondence to understand what a pleading meant to say but doesn't.
We have been warned!
Comment
The judgment will be of interest to practitioners contemplating making an application for security for costs for its clear exposition of the principles relevant to such applications. It is also a helpful reiteration of the rule in Hollington v Newthorn, and a reminder that matters of fact must be determined by the trial judge and no one else. It is simply not open to the judge to delegate his or her fact finding function to anyone else, be it an expert or another judge in previous proceedings. Cross border practitioners will of course be alert to the relevance of this principle in the numerous Spanish penalty interest cases currently wending their way through the courts; any findings as to Spanish law are findings of fact which must be redetermined on every occasion, although findings as to EU or English law are of course accorded status as precedents. So it is that in every case involving foreign law the relevant provisions of that law must be pleaded and proven afresh, even if the claim involves such well-known principles as the French loi badinter or the applicability of the Spanish Baremo tables. Still, it keeps the foreign lawyers in work, telling us all what we already know so that judges can make fresh findings of fact in each case. It's a wonder really that we don't see more Notices to Admit Facts in these cases.
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