FL-2022-000014 - [2025] EWHC 2631 (Ch)

WITNESSES

My assessment of the factual witness evidence has been guided by the well-known observations about the malleability of memory and the need to test what is said against the uncontested facts, the documentary record and the inherent probabilities. The principal events took place more than four years ago and witnesses’ memories of their earlier states of mind are particularly susceptible to distortion.

The claimants called one witness, Mr Varvel. As already noted, he was the Global Head of Credit Suisse’s global Asset Management business at CSAM. Mr Varvel had relatively limited contact with Mr Greensill. Mr Degen was more involved day to day in dealing with him. This came across vividly in the course of Mr Varvel’s cross-examination. He occupied a senior managerial position and was more concerned with that than the details of the transactions with Mr Greensill. In giving evidence Mr Varvel was at times inclined to maintain a stance, rather than engaging fully with the questions. Some of his answers involved a change in his recollection as set out in his witness statement, including about the date when he became aware of the Secondary Trade. He also gave some unconvincing answers about his role in issuing a disciplinary letter to Mr Degen and Mr Mathys in July 2020. For these reasons I decided I must approach his evidence with a degree of caution. I did not however think that anything he said was deliberately misleading.

The SBDs called Mr Cheung and Mr Romeih. Mr Cheung was a Partner at SBIA. He had considerable financial experience at the time of the transactions. He is no longer employed by SoftBank. He was a careful and straightforward witness and I concluded that he would have been a conscientious and diligent employee. He was in day-to-day charge of SBIA’s investment in Greensill. He engaged fully with the questions posed and generally gave simple and concise answers. I am satisfied that he was an honest, reliable witness, able to give helpful evidence.

Mr Romeih was senior to Mr Cheung in the organisation. As already explained, he was a Managing Partner at SBIA UK and a member of the SBIA Investment Committee. He was number two at SBIA. He was less involved than Mr Cheung in the dealings with Mr Greensill until about December 2020. He was involved in IC meetings concerning over 300 companies in multiple rounds and was unable to recall as much detail as Mr Cheung about the relevant events. In his evidence he often answered by emphasising the procedural aspects of the transactions, being concerned with issues such as lines of authority and information walls. I generally gained the impression that he had had less of a grasp of the details of the transactions than Mr Cheung at the relevant times, and that his memory was less reliable. It appeared to me however that he was doing his best to assist the court.

Mr Greensill also gave evidence. He was interviewed by the liquidators of GL on 8 December 2021 (“the LG transcript”). The SBDs served a Civil Evidence Act (“CEA”) notice in respect of the transcript. The claimants belatedly applied to cross-examine Mr Greensill on it. At the hearing of their application it emerged that the claimants might wish to rely on parts of the transcript. The court ruled that, if they did wish to rely on any parts of it, the claimants should themselves serve an appropriate CEA notice and, if they did, the SBDs would also have the right to cross-examine Mr Greensill. In the event, the claimants did serve such a notice. At the trial he was therefore cross-examined by both parties.

I address the evidence of Mr Greensill in detail below, and I confine myself to some brief general remarks at this stage. Mr Greensill explained that he had not had the trial bundles and had not had a recent opportunity to review the documents in the case. This may have affected the accuracy of some of his recollection. He is clearly a very intelligent man and he engaged carefully with counsel’s questions. I considered, however, that I needed to approach some of his evidence with a degree of caution. First, as is well-established, a person’s interest in presenting himself in a good light can influence the reliability of his memory. This is particularly so with evidence about historical states of mind. It seemed to me that his evidence concerning the events of late December 2020 involved a reconstructed narrative which showed him in the best possible light. Second, some of the contemporaneous documents which Mr Greensill wrote, and in particular the email exchange with Mr Degen immediately after the 30 December WSJ article, contained untruthful statements. Mr Greensill was unable properly to explain those exchanges when shown them in cross-examination. Indeed he appeared to be embarrassed by them. The same was true of an email exchange with Mr Varvel. It appeared to me that in some of these documents Mr Greensill had an inclination to say things that helped his position at the specific moment, in the hope that improving circumstances would give him a way out. Third, there were parts of his evidence which I concluded were at odds with the documentary record. I was unable for example to accept his evidence about a call he said he had on a Sunday night with SoftBank. I also found that his evidence that the SBDs had imposed a “cone” of silence requiring him to keep the CEA secret from the Credit Suisse team dealing with the Fairymead Programme unconvincing. I concluded that I needed to be cautious about some of his evidence.

Both parties, as is now standard in trials, invited the court to draw adverse inferences from the absence of witnesses. The principles are well-known (see Efobi v Royal Mail Group Ltd [2021] UKSC 33) and I will not recite them out here.

The claimants complained in particular about the absence of Mr Son and Mr Misra. They submitted that the documentary record showed that both of them were heavily involved in the discussions with Mr Greensill and in the approval of the decisions concerning the various transactions in issue. They said that there was no adequate explanation for their absence. The claimants sought adverse inferences to be drawn about the SBDs’ failure to obtain any commitment about the use of the $440 million; the SBDs’ purpose in entering into the Impugned Transactions; the benefits to the SBDs; and their knowledge as to whether the Fairymead Notes had or had not been purchased or redeemed. I have concluded that the claimants have not established that either Mr Son or Mr Misra could have given evidence on these issues which could materially have changed the picture given by the totality of the evidence which is before the Court. I address this further below.

The SBDs complained about the absence of Mr Degen and invited the Court to draw adverse inferences. Mr Degen is no longer employed by Credit Suisse (or its successor companies). Indeed it appears that his employment was terminated as a consequence of the losses suffered by CSAM from the collapse of the Greensill Group. The principal issue on which the SBDs sought an adverse inference was the knowledge of CSV about the cancellation of the RPA at the time of the Secondary Trade and/or its cancellation. I do not consider that it would be appropriate to draw such an inference. Mr Degen is no longer employed by Credit Suisse and there is no reason to expect Credit Suisse to call him.

There was expert evidence of US law. The claimants called Professor Steven Schwarcz, an academic specialising in secured transactions and bankruptcy law. He has served as a tenured professor at Duke Law School for almost three decades and has published in the relevant areas. Before joining Duke University, he served for more than a decade as a partner in the New York offices of leading US firms. He was able to give clear, detailed explanations of the relevant principles of NY and US bankruptcy law relevant to the agreed expert questions. He was a careful witness who was properly engaged in the process and understood his duties to the court. He engaged with questions of principle and hypothetical issues.

The SBDs called Professor Eric Schaffer. He is a former practising insolvency lawyer who retired from full-time practice as a partner in Reed Smith in 2020 and, since 2019, has held a part-time teaching-only position at Pittsburgh Law School. He has not published papers on the relevant issues. He too carefully engaged with the questions and understood his duty to assist the court. He appeared to me less able than Professor Schwarcz to address hypothetical questions.

I was satisfied that both experts did their sincere best to assist the court. They also helpfully identified areas of agreement. I shall address the details of their reasoning when resolving the remaining areas of disputes.

There was also expert valuation evidence. On valuation, the claimants called Mr Marc Brown. The SBDs called Mr James Farrell and Mr Terence Mark.

Mr Brown and Mr Farrell both had some relevant experience and expertise, though in different ways. Mr Brown has had significantly more experience of bankruptcies than Mr Farrell. Mr Farrell has had far more experience of the operations of construction businesses than Mr Brown. I have taken account of these different ranges of experience in my assessment of their evidence.

I concluded that Mr Brown was often inclined to act as an advocate for the claimants and appeared unwilling to engage constructively with questions properly posed in cross-examination. At times he stubbornly maintained his position and appeared to regard his main function as avoiding giving anything away that might affect the claimants’ case. He also appeared defensive when challenged about his evidence. It appeared to me that he saw his role as being to bolster the claimants’ position and I have concluded that he was not always aware of his paramount duty to assist the Court. I give two examples here. First, there was a critical assumption in his first report that Katerra would have carried on business as a going concern if the CEA had not been entered into. This was not identified or spelt out. When asked about this he referred to a brief, cryptic, footnote which did not identify his assumption with the required clarity. Nor did his first report seek to justify the assumption. Second, he gave evidence that a reduction of the debt of a company by $440 million would always be matched by an increase of $440 million in the value of the equity in the company. When he was asked about possible cases where the assets and liabilities of the company meant that the reduction in debt would not be reflected in a corresponding increase in the value of the equity, instead of engaging properly with the question, he responded by reverting to examples where his argument would hold good. More generally he was disinclined to engage properly with counsel’s questions. I concluded that I should approach the evidence of Mr Brown with caution. Ultimately, however, the weight to be given to his evidence depended primarily on the cogency of his reasoning. I return to this below.

I have concluded that Mr Farrell was seeking to do his best to assist the Court. He willingly conceded points and accepted that there were shortcomings in some of his analysis. He was however prepared to engage with the forensic process, and to explain his reasoning and elaborate where appropriate. His reports were clear in stating the assumptions he had made. On the other hand, in some important aspects of his evidence Mr Farrell resorted to “feel” or intuition, rather than grounding his conclusions in empirical data or verifiable experience. This limited the utility of some of his reasoning. I return to this concern about the cogency of his evidence below.

Mr Mark gave evidence about the amount that a hypothetical purchaser of the Fairymead Notes would have required. He has extensive experience in relation to dealings in asset backed securities. As the case progressed it emerged that his evidence was of negligible relevance to the issues before me that have to be decided. Although the claimants referred to the value of the Fairymead Notes in their pleaded case the parties agreed that the potentially relevant issues for the purposes of section 423 were the value of the rights released by GL under the RPA, and the prejudice suffered by the claimants. It is not necessary for the resolution of these issues to determine the value of the Fairymead Notes themselves. I shall therefore not lengthen this judgment by saying any more about Mr Mark’s evidence.