Summary
A judgment on recusal handed down by the Guernsey Court of Appeal provides helpful guidance for the role of judges when one set of litigation spawns another and lifts the veil on heretofore private proceedings in which the Guernsey-based trustees who are part of the Sequent group (Sequent), failed to obtain a blessing of a momentous decision.
The judgment in M. Salem and M. Salem v Sequent (C.I.) Limited and Guernsey Global Trust Limited [2024] GCA064 (in respect of which Fladgate’s Simon Goldring, Rosalind Hetherington and Jerry Jamieson advised members of the Salem family in successfully responding to the appeal) concerns the application made by Sequent seeking the recusal of the Guernsey Bailiff Richard McMahon from hearing breach of trust proceedings brought against them by members of the Salem family.
Background
By way of brief background as reported in the judgment, in 2019 Sequent sought the blessing of the Court, per the jurisdiction in Public Trustee v Cooper [2001] WTLR 901, for a momentous decision to make appointments from the trusts. The Bailiff refused to bless that decision and, in his judgment handed down in 2021 (the Blessing Judgment), highlighted numerous failings in Sequent’s management of the trusts and approach to dealing with conflicts of interest (including a failure to understand the certain business assets held in trust, an absence of real oversight of those business assets and prioritising their own interests over those of the beneficiaries). Sequent, in an unprecedented approach for a trustee which failed to obtain a blessing, sought to appeal the Blessing Judgment. Those appeals have not been pursued but the Court of Appeal helpfully made clear that unless and until those appeals are pursued the findings in the Blessing Judgment stand [71]. This aligns with the usual approach that an appeal does not operate as a stay of the underlying proceedings.
Breach of trust proceedings were concurrently brought by our clients in April 2022. It is from these proceedings which Sequent sought the recusal of the Bailiff claiming that there was a real risk that the Bailiff would be seen as biased due to his factual findings in the Blessing Judgment.
Despite the fact that the blessing proceedings and breach of trust proceedings are currently in private, the Court of Appeal declined to extend the privacy order to this appeal as sought by Sequent – deciding that as the issues surrounding recusal were more limited and that, as privacy is for the benefit of the beneficiaries, it should not impose privacy to protect the trustee.
The law on recusal
The test for recusal is simple: a judge must step down from hearing a case if they have a conflict of interest, if there is actual or presumed bias against a party, or if a fair-minded and informed observer would conclude that there was a real possibility of bias (Porter v Magill [2002] 2 AC 357). The Court of Appeal commented that recusal is a very personal matter for a judge to decide and the Court will “seldom interfere with this delicate jurisdiction” [40]. The Court also highlighted the Guernsey case of Sherborne Corporate Services Ltd v Kenilworth Consultants Inc 2022 GLR 97, noting the findings of Bompas JA that a “judge would be wrong to accede too readily to a recusal invitation” and that adverse orders against a party do not evidence bias [33].
Court of Appeal decision
The Court of Appeal dismissed the appeal – dealing with Sequent’s grounds of appeal as follows:
The Bailiff applied the wrong legal test: Sequent alleged that the Bailiff had not applied the test in Porter v Magill. The Court criticised this ground as being “simply unarguable” [69] and commented that even if the Bailiff had not applied the correct test they still would not have allowed the appeal as recusal is a matter of law and not an attack on the exercise of judicial discretion on which the application of the wrong test would be fatal.
The Bailiff relied on irrelevant factors: again, the Court rejected Sequent’s arguments. Notably, the Court stated that even if the Bailiff had taken into account irrelevant considerations in refusing to recuse himself, the matter in question was whether he had reached the wrong answer on the recusal. The Court did not consider that taking into account irrelevant factors would automatically vitiate the Bailiff’s decision on recusal [84].
The Bailiff relied on matters of procedure to manage or mitigate the risk of apparent bias: Sequent argued that the Bailiff wrongly considered the fact that the breach of trust proceedings might be heard by a judge and Jurats to be an answer to any implication of bias. The Court agreed that the involvement of Jurats in fact findings would not be a reason alone to refuse recusal. However, the Court emphasised that the Bailiff had properly referred to his Oath of Office in considering this ground, which includes a duty to correct his own mistake if it becomes known to him. The Court reiterated that the question was whether he had reached the wrong answer on whether the apparent bias test was satisfied – again, the Court’s view was that he had not.
The Bailiff failed to give adequate reasons: although a judge has a duty to give reasons (Bohan v Bithell [2014] GLR 347), the Court confirmed that the degree of reasoning necessary would depend on the subject-matter [94]. Whether the apparent bias test was met was a question for the judge to determine alone, and was “not capable of scientific proof” or third-party assessment [95]. The Court stated it was unlikely to interfere with the decision of a judge who had used poor reasoning or taken into account irrelevant considerations when considering recusal if the conclusion itself was correct. The Court added that recusal was a matter of law, and an appeal would only normally be allowed if the judge’s decision was wrong.
The role of the appellate court in recusal is to decide whether the test for apparent bias is met or not (Resolution Chemicals Ltd v H Lundbeck AS [2013] EWCA Civ 1515). The Court of Appeal determined the test was not met. The Court also criticised Sequent for failing to set out the detailed findings in the Blessing Judgment which led to their recusal application and for failing to acknowledge the context of the Bailiff’s comments in his decision against recusal.
Key take aways
The judgment provides useful insight into recusal when a judge has had substantive prior involvement in related proceedings. The Guernsey Court of Appeal confirmed that a judge making findings against a party in previous litigation is not in itself sufficient to meet the apparent bias test.
The judgment also clarifies the status of findings which are under appeal and the approach to privacy in the Court of Appeal. This latter point is perhaps of most relevant to the trusts industry. Parties considering an appeal from in camera proceedings ought to proceed with caution. As is demonstrated by this judgment, there is no guarantee privacy will be extended to the appeal and material which the party might prefer remain behind that veil of privacy (like failing to obtain a blessing as a professional trustee) might be made public if the Court of Appeal takes the same approach to privacy in future cases.
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A link to the judgment in from Salem & Salem v Sequent (C.I.) Limited & Guernsey Global Trust Limited [2024] GCA 064 can be found here.
