March 21, 2024
Dispute Resolution

Most civil cases tried in court do not involve a jury. 

It is usually a single judge that hears them and decides them by determining facts and applying the relevant law. In the recent case of Taylor v Savik & Anor, Judge Matthews considered whether a jury trial should be ordered in a civil trial.

Facts

The application in question follows the second respondent’s involvement in stamp trading and subsequent bankruptcy following criminal charges related to defrauding HMRC by one of his companies failing to submit VAT returns, so his other company could claim and obtain VAT repayments to which it would not have been entitled otherwise. HMRC alleged VAT fraud and the second respondent pleaded guilty. The estimated value of the fraud was £642,945.25.

On 23 April 2017, the second respondent filed for bankruptcy. 

The present application was filed by the second respondent’s trustee in bankruptcy. The trustee sought a declaration, under the Insolvency Act 1986, that the second respondent is the beneficial owner of a property known as The Grange. The Grange was held by the second respondent’s wife (the first respondent). 

The claim further suggests that the first respondent was listed as the owner to conceal the second respondent’s ownership and to avoid the asset distribution among his creditors. Directions for trial were given, with the first respondent denying the trustee’s claims, asserting full ownership of The Grange. The second respondent similarly denies the allegations and the allegation that he is the beneficial owner of The Grange. 

This judgment arises from a counter application made by the second respondent seeking a trial with a jury in this civil matter. His reasons for this were as follows: 

  • ‘My status as a convicted criminal leaves me wondering if I can be dealt with even-handedly by a single judge.’
  • ‘A judge has little discretion to take a holistic view of a major fraud that now spans 10 years.’
  • A jury of my peers is more likely to lend weight to the horror of what has happened overall.’

Current state of law

In his judgement, Judge Matthews meticulously analysed the statutory framework governing jury trials in civil claims, referring to s. 66 County Courts Act 1984. The relevant subsections are as follows: 

(2) In all other proceedings in the county court the trial shall be without a jury unless the court otherwise orders on an application made in that behalf by any party to the proceedings in such manner and within such time before the trial as may be prescribed.

(3) Where, on any such application, the court is satisfied that there is in issue—

(a) a charge of fraud against the party making the application; or

(b) a claim in respect of… malicious prosecution or false imprisonment; or

(c) any question or issue of a kind prescribed for the purposes of this paragraph,

the action shall be tried with a jury, unless the court is of opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury.

Judge Matthews clarified the interpretation of a ‘charge of fraud’ outlined in s. 66(3)(a) of the County Courts Act 1984. 

He explained that a mere false statement wouldn’t suffice; rather, it required an allegation of the complete tort of deceit, including resulting loss. In this case, the trustee’s allegation of fraud against the second respondent was considered a ‘charge of fraud’. The relevant allegation, contained in the trustee’s points of claim: 

‘5. [The second respondent’s] fraud against HMRC was carried out between (at the latest) 1 March 2013 and his arrest on 10 November 2014.

6. The modus operandi of the fraud was as follows:

a) Rare Stamp Associates Ltd (“RSAL”) … was a company registered in England and Wales, whose sole director at all material times was [the second respondent].

b) RSAL purchased stamps at auction and then sold them to [UK Philatelics Ltd] at a hugely inflated price, charging VAT on the sales.

c) RSAL deliberately failed to submit VAT returns to HMRC, thus becoming a ‘missing trader’.

d) [UK Philatelics Ltd] reclaimed the VAT on its purchases from RSAL and then sold the stamps for their true price and at a considerable loss, generating substantial quarterly VAT repayments.

e) Shortly before the end of the fraudulent scheme, RSAL’s place was taken by another company controlled by [the second respondent], PE Phylatelic Exports Limited, a company incorporated in Cyprus.

f) HMRC has calculated the estimated value of the fraud to be £642,945.25. The Trustees will say at trial that there is no reason to doubt the reasonableness of HMRC’s estimate.’

‘17e. By October 2014, [the second respondent] had been engaged in large-scale VAT fraud for some considerable time. He would have known in general terms of the risk of detection and civil or criminal action, and that such risk would increase the longer the fraud continued. A fraudster such as [the second respondent] is to be expected to have made provision to conceal his assets…’

The tort of deceit, or false misrepresentation, is complete when someone relies on it and suffers loss. The loss in this instance would be both to HMRC and, potentially, the second respondent’s creditors. The test was therefore met. 

Interestingly, Judge Matthews noted that if the trustee had abandoned the allegation of VAT fraud in its points of claim, the second respondent’s application would solely rely on the court’s discretion (considered below). In this case, the trustee did not do so. 

Therefore, s. 66 (2) County Courts Act 1984 was engaged. However, Judge Matthews was entitled to determine that the allegation of fraud could not be ‘conveniently’ examined by a jury. Judge Matthews considered the volume of documentary evidence and the complexity of financial transactions relevant to the allegation. Judge Matthews was of the opinion, that this case required a scientific investigation as well as prolonged examination of documents which cannot be conveniently made with a jury. 

Accordingly, the second respondent’s request for a jury trial was denied on this ground. 

The Court’s Discretion

However, in any event, the Court retained discretion under s. 66(2) County Courts Act 1984 to order a jury trial when a litigant applies for it. Judge Matthews therefore had to consider whether he should exercise that discretion. 

Judge Matthews referenced past precedents to contextualise the exercise of this discretion. He referred to Parsons v Provincial Insurance plc, unrep 20 February 1998, in which the decision underscored the importance of case management efficiency and consistency in trial procedures.  

In considering the exercise of discretion, Judge Matthews addressed the respondent’s concerns regarding impartiality and holistic consideration of the fraud allegations. He debunked notions of inherent bias in judge-alone trials, asserting the judiciary’s commitment to impartiality and adherence to legal duties. Moreover, he highlighted the accountability and transparency inherent in judicial decisions compared to jury verdicts.

Inspired by the decision in Parsons, Judge Matthews stated that claims of this kind by trustees in bankruptcy are routinely tried by judge alone. As stated in McGrath v Independent Print Ltd [2013] EWHC 2202 (QB), ‘trial by judge alone provides real case management advantages’.

Judge Matthews found no further discretion to exercise regarding the possibility of ordering a jury trial in this civil matter. 

Comment

This decision in Taylor provides a useful restatement of the courts’ stance when it comes to jury trials in civil claims. It reminds us that a trial by jury is not an automatic right in civil claims. And even where it is required (in respect of certain types of allegations), the court can determine otherwise. 

It is also worth noting that the position is mirrored in the High Court – pursuant to s. 69 Senior Courts Act 1981. 

Navigating civil cases where fraud may be involved is a challenging task. At EM Law, we are experts in civil litigation. If you need assistance or would like to speak to us, please reach out to our Sasha Bark Jones directly, or contact us here.