Margaret Anne Ryan v HSBC UK Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Hugh Sims |
| Judgment Date | 20 January 2023 |
| Neutral Citation | [2023] EWHC 90 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: BL-2021-001553 |
[2023] EWHC 90 (Ch)
Mr Hugh Sims KC (sitting as a Deputy Judge of the High Court)
Claim No: BL-2021-001553
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Stephen Davies KC (instructed by Horwich Farrelly Limited) for the Claimants
Ms Bridget Lucas KC (instructed by Eversheds Sutherland (International) LLP for the First Defendant
Hearing dates: 13 and 14 December 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down remotely with circulation to the parties' representatives by email. It will also be released to the National Archives for publication. The date and time for hand-down is deemed to be 10:30am on 20 January 2023.
Mr Hugh Sims KC:
Introduction
I have before me an application dated 20 September 2022 by the claimants, Mr and Mrs Ryan (“the Ryans”), seeking an order that HHJ Gerald (“the judge”) be recused from hearing their application dated 3 September 2021, for permission to continue a derivative claim under s 261 of the Companies Act 2006 (“CA 06”). The derivative claim was issued, together with a personal claim, on 3 September 2021 and is in respect of causes of action vested in the second defendant, Mar City Plc (“MCPLC”). In their capacity as shareholders in, and on behalf of, MCPLC, the Ryans seek relief in the derivative claim against the first defendant, HSBC UK Bank Plc (“HSBC” or “the bank”). I shall refer to the application before me as the recusal application (or simply the application), and the application for permission to continue the derivative claim as the permission application.
The recusal application alleges apparent bias. This is to be taken in two stages: first, all the circumstances which have a bearing on the suggestion that the judge may be affected by bias must be ascertained; second, it must then be determined whether those circumstances would lead the fair-minded informed observer (the “FMIO”) to conclude that there was a real possibility of bias; see In re Medicaments and Related Classes of Goods (No 2) [2001] WLR 700, at [85], and Porter v Magill [2002] 2 AC 357, at [102]–[103].
The application arises in unusual circumstances and includes the question of whether the judge was affected by subconscious bias. This is a topic which is gaining greater attention: see Lord Neuberger, Judge not, that ye be not judged: judging judicial decision-making, (last updated 1 October 2021, published by the Judicial Commission of New South Wales).
I stress no allegation of actual bias is made. Instead the question is one of perception of possible bias, assessed by reference to the standard of the fictional hypothetical person vested with the attributes of the FMIO. The FMIO standard reflects the well-known adage: justice must not only be done – it must be seen to be done. This reflects one of the three basic principles guiding judicial conduct, that a judge should be impartial and be seen to be so. There is also a third category of bias case – presumed bias, where disqualification is automatic. This is where the judge has an interest in the outcome of the case to be decided. That does not arise in this case.
As for the unusual circumstances in which the application has arisen, the hearing process before the judge was almost complete. He had heard submissions on the permission hearing on 21 and 22 June 2022 and judgment was handed down by him on 24 June 2022 [2022] EWHC 1874 (Ch) (“the judgment”), in which he concluded the permission application should be dismissed. As a result, not only is the application for an order that the judge be recused, on the grounds of apparent bias, but also that the judgment be set aside, on the grounds that the judge's apparent bias disqualified him from hearing and determining the permission application.
The reason the recusal application arises in this way is because the principal matters which are said to give rise to the perceived bias, relating to an alleged business association between the judge and HSBC, were only ascertained by the Ryans after the judgment was handed down, as a result of searches carried out by them. They were dissatisfied with the judgment, which dismissed their application, and they were dissatisfied with the hearing process which led to that conclusion. This prompted them to make enquiries, and this led them to raise the questions as to the business association when they did.
After their consideration of the question of apparent bias had been brought to the judge's attention by the Ryans, on 8 July 2022, he provided a statement, dated 12 July 2022, giving information in relation to the business association identified (“the judicial statement”). He did this so that they could consider whether they wished to make an application for recusal. The judge concluded, in a second judgment handed down on 15 July 2022 [2022] EWHC 2342 (Ch) (“the second judgment”), that he would not provide any further information on the matter beyond what he had given in the judicial statement. The Ryans indicated they wished to proceed with their recusal application as they remained dissatisfied. In the second judgment the judge also concluded it would be better, in the circumstances, for another judge to hear and determine the recusal application, and for no further order to be made on the permission application in the meantime. He subsequently made directions on the recusal application which has led to it being listed before me.
The grounds for recusal advanced by Mr Davies KC on behalf of the Ryans, all on the basis of apparent bias, are many. They may be summarised, however, as falling under three main headings (or cases, as they were described). The first is that the judge has a current relevant business association, which may be said to potentially impact on his impartiality in ruling on the Ryans' claim against HSBC. This is alleged to be so by reason of his interest and involvement in a company called Hot Yoga Brixton Limited (“HYB”), which has lending from HSBC, and alleged similarities between the situation HYB is or may be in and that of MCPLC in the underlying derivative claim (“(1) the business association ground”). The second heading concerns the judge's alleged failure to disclose the fact of the business association ground before the hearing commenced before him coupled with his reaction to the issue when it was raised before him, and the alleged incomplete picture arrived at following the judicial statement in relation to the business association ground (“(2) the stage 1 enquiry ground”). The third main ground is that there are manifestations, or indicators, of alleged failure by the judge to discharge his judicial functions in accordance with a fair process during the hearing, and as reflected in the judgment, such that the FMIO would conclude there was a real possibility of bias (“(3) the unfair process ground”). These three main grounds (or cases) were relied on independently and cumulatively.
The application for recusal is opposed by HSBC which contends that none of the grounds supports the conclusion that the FMIO would conclude there was a real possibility of bias. Ms Lucas KC, for HSBC, submitted that if the business association ground failed then that should really be the end of the matter and, whilst she addressed the other grounds, she submitted that any other points were really procedural unfairness points which could and should be taken on appeal. She submitted that my role was to pick up from where the judge left off, and conclude the second stage of the recusal application.
The nature of the grounds for recusal and the manner in which the issue has arisen, are such that it is necessary to consider the matter with considerable care and caution. The question needs to be assessed by reference to the nature of the enquiry which was before the judge, and on which he was embarked, and the context in which the matters complained of arose. It is all too easy to be critical after the event. But equally, as I discuss further below, the characteristic of the hypothetical FMIO does not assume judges are infallible: even experienced, well-trained and well-intentioned judges may be perceived to be affected by bias, particularly of a subconscious nature.
Recusal and apparent bias – further consideration of the legal principles
There is a useful collection and review of the authorities on the question of judicial bias in the commentary in Vol. 1 of The White Book at 1.1.3, when considering the overriding objective and equality of arms. In addition counsel provided me with much further learning on the subject. What follows is my effort to distil the points.
The starting point is to ask, what does bias mean? Bias exists where the judge may unfairly regard with favour, or disfavour, the case of a party to the issue under consideration; see R v Gough [1993] AC 646, at 670 (Lord Goff), quoted in Porter v Magill at [99] (Lord Hope). However, this description may be said to still beg the question, when will it be unfair? In Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, in a judgment of the court (Lord Bingham CJ, Lord Woolf MR and Sir Richard Scott V-C), it was stated at [2] (bold emphasis added by me):
“In determination of their rights and liabilities, civil or criminal, everyone is entitled to a fair hearing by an impartial tribunal. That right, guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms, is properly described as fundamental. The reason is obvious. All...
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