Court of appeal finally concludes the 'Holocaust fund' case

Last week saw the final hearing of an application for permission to appeal in the long running ‘Holocaust fund’ case of Hamilton v Hamilton. The court’s judgment included interesting guidance for those who seek to adduce new evidence under Ladd v Marshall.

In May 2016 a High Court judgment was handed down in Hamilton v Hamilton, a case between a brother and sister concerning £3.2M of assets held offshore in a Liechtenstein Foundation, left to them by their father, David Hamilton. The assets formed part of a 'Holocaust fund', left to the siblings after their father's own experiences in, and escape from Nazi Germany, and as a result of his lifelong fear that if they were to be certain of avoiding a similar fate, they would need access to an escape fund.

The assets in the Foundation were divided unequally between the siblings, with more for the sister, whereas the assets in David Hamilton’s UK estate were divided 50/50. The central issue was whether the Foundation was established in order to evade tax. If so, it would be void, with the effect that the assets would be deemed to form part of the UK estate. However, if the Foundation was valid, the assets would pass under the Regulations of the Foundation.  

Hughes Paddison acted for the successful party, Carolyn Hamilton. Her brother, Alan Hamilton, has spent the past 18 months fighting for permission to appeal the decision.

His first application for permission was made to the trial judge, the then Mr Justice Henderson, in May 2016. The application was refused.

In June 2016 an application was made on paper to the Court of Appeal, with Lord Justice David Richards again refusing permission (on paper) in December 2016.

At that time, parties were automatically entitled to apply for an oral hearing to renew their application for permission to appeal. (This is no longer the case.) Accordingly Alan Hamilton requested an oral hearing, which was initially listed in July 2017, but adjourned to 30 November 2017. Prior to the hearing the court took the rather unusual step of inviting the Respondent’s lawyers to lodge a skeleton argument and to attend the hearing to make submissions.

Lord Justice David Richards presided over the hearing last week. The application was refused, concluding the lengthy litigation. However, the court’s reasoning is interesting, from a procedural point of view.  

Alan Hamilton argued that new, ‘similar fact’ evidence had come to light, which supported the argument run by him at trial that the Rainbow Foundation was set up with the purpose of evading tax. He had unearthed evidence of another Foundation in David Hamilton’s name, the Tellina Foundation, and of a further $1M passing through that Foundation’s account, operated by the same Swiss banks who operated the Rainbow Foundation. He sought to infer various facts from these banking arrangements.

He argued that it was only as a result of losing at trial that he and his solicitor started to dig further into certain banking arrangements in Liechtenstein and Switzerland. One month after trial, in June 2016, his solicitor returned to Switzerland to interview a new witness. As a result of that interview, further evidence came to light. Alan Hamilton only sought to set out that new evidence in his solicitor’s witness statement to the Court of Appeal in July 2017, shortly before the oral hearing. As the hearing was adjourned (through no fault of either party) that statement was not actually considered by the Court of Appeal until November 2017, some 18 months after trial.

Alan Hamilton did not obtain a witness statement from the new witness himself, because due to Swiss banking rules, Swiss bankers can only give evidence to a UK court if compelled to do so by a Swiss court. This involves a fairly protracted process whereby a UK litigant applies to the UK court for a ‘letter of request’, asking that the Swiss court put certain questions to the Swiss witness in closed proceedings in Switzerland. Alan Hamilton opted not to undertake that process unless and until he was granted permission to appeal.

Lord Justice Richards ruled that the inferences drawn by Alan Hamilton in relation to the new evidence were false, and that the trial judge’s decision on the facts and the law was correct in all respects. However, he also went on to deal with the question of when Alan Hamilton and his solicitor should have brought the new evidence to the attention of the court.

The Ladd v Marshall test is well known – an appeal court will only consider new evidence if the applicant can show that the evidence could not, with ‘reasonable diligence’, have been obtained for use at trial.

Lord Justice Richards expanded on the test. He concluded that the onus was on Alan Hamilton, as the applicant, to put the evidence before the court as soon as possible, and he took a ‘sliding scale’ approach to when that should be done. He stated:

1.   Both before and during the trial, the existence of the Tellina Foundation was mentioned, albeit very briefly, and only to the extent that an expert witness and a factual witness confirmed they knew nothing about it. If it was thought to be relevant, Alan Hamilton and his lawyers should have investigated it before trial, or at the very least, after trial but before judgment was handed down some 3 months later. As soon as any evidence was unearthed, it should have been put before the trial judge.

2.   When new evidence did in fact come to light, in June 2016, it should have been presented to the trial judge, as it was only one month after judgment had been handed down, and at that point the trial judge was still the person best placed to evaluate the relevance of the evidence.

3.   When the Notice to Appeal was lodged, later in June 2016, the new evidence should have been presented to the Court of Appeal, in addition to the grounds of appeal, as by that time the papers would not have been seen by a Lord Justice, and so the Court of Appeal could have referred it back to the trial judge.

4.   An application for a ‘letter of request’ should have been made direct to the Court of Appeal, so that process could commence and a witness statement be obtained from the new witness in Switzerland as soon as possible.

5.   In no circumstances should the new evidence have been withheld until papers were lodged for the oral hearing, in July 2017.

The court made it clear that while evidence should be available at trial where possible – in accordance with Ladd v Marshall – if that proves impossible, it is not sufficient to then simply wait for the appeal process to unfold in the Court of Appeal. Active steps must be taken to present the evidence as soon as possible, whether complete or not.

The court was critical of the lawyers for failing to act expeditiously to ensure the new evidence was before the court sooner. This is worthy of note for those who wish to avoid a similar fate.

Rachel Stewart of Hughes Paddison and David Halpern QC of 4 New Square acted for Carolyn Hamilton in the Court of Appeal