The Court of Appeal has dismissed an appeal against a finding that the sum of CHF 6m (£4.9m) paid by the second claimant to the defendant for the purchase of an apartment in Lugano, Switzerland, and for works to the property was an interest-free loan rather than a gift in Volpi and another v Volpi [2022] EWCA Civ 464 and has criticised the conduct of many appeals against findings of fact.
The first claimant was the father of the defendant and controller of the second claimant company. The property was purchased in August 2012 with funds provided by the second claimant. Loan documentation citing that the defendant had received from the second defendant loans amounting to CHF 6m was circulated and purportedly signed by the defendant along with a bearer mortgage over the property. Relations between father and son subsequently broke down, and in July 2019 the claimants served a statutory demand on the defendant for repayment of the sum loaned. The judge found that the funding of the purchase of the property was by way of an interest-free loan and not a gift.
Since no evidence of Swiss law was called, it was assumed that in all material respects it was the same as English law, which provides that where A receives money from B the money is prima facie repayable unless B can establish that the money was a gift: Seldon v Davidson [1968] 1 WLR 1083.
The Court of Appeal considered that there was ample support for the judge’s decision: the first claimant’s obsession with protecting his assets; the defendant’s initial attempt to obtain a loan to buy the apartment; witness evidence concerning the first claimant’s willingness to grant a loan; the circulation of loan documentation which was indisputably signed by the first claimant; and the existence of the bearer mortgage. The expert evidence concluded that it was more probable than not that the defendant had signed the loan documentation. The defendant’s claim that he understood that the property would be bought by a trust of which he would be beneficiary was inconsistent with a gift to him personally.
The appeal demonstrated many features of appeals against findings of fact: it sought to retry the case afresh; it rested on a selection of evidence – “island hopping” – rather than all of the evidence the judge heard; it sought to persuade the appeal court to form its own evaluation of the reliability of witness evidence, which is the quintessential function of the trial judge who has seen and heard the witnesses; it sought to persuade the appeal court to reattribute weight to the different strands of evidence; and it concentrated on particular verbal expressions that the judge used rather than engaging with the substance of his findings.
It is not for an appeal court to come to an independent conclusion as a result of its own consideration of the evidence. The question is whether the judge’s finding that the money was a loan rather than a gift was rationally insupportable. It was not: the judge was entitled to reach the conclusion that he did.
Louise Clark is a property law consultant and mediator
