CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

Mr Hogarth evidently came to the witness box itching for a fight and adopted feistiness and awkwardness as his default mode, rather than having any patience with the process. In the content of his evidence, he was frankly a bit all over the place. He was patently unreliable in his recollections of significant matters and insignificant detail alike. He acknowledged having a “terrible memory” yet simultaneously felt happy to express firm and certain matters of recollection, demonstrating overall a very limited self-awareness, unattractively bolstered by persistent argumentativeness.

All in all, I therefore found Mr Hogarth an unsatisfactory witness upon whose testimony, written or oral, I do not consider it is safe to rely on any contentious point that might matter. That does not mean he was dishonest, at the time or with the court; and I do not find that he was. Rather, my conclusion is that Mr Hogarth had limited grasp of, or ability to grasp, any of the points that matter to the claim now made against Lindisfarne. This was exemplified by evidence he gave during cross-examination by Mr Graham KC for SKAT about whether tax was withheld from the dividend compensation payments booked by Lindisfarne in respect of Maple Point Model trades:

“Q. … because the contractual payment involves the debit of the short and the crediting of the long, there is no tax that has been withheld from that payment, is there?

A. The debit of the short comes from cash flow 1, which is the summation of all the cash flows. That cash flow the market is assuming is 73% of the gross dividend, therefore there is tax -- no one has taken -- the market has turned round and said: this is what we are pricing.

Q. Is it your evidence to this court that with the contractual payment involving the accounting entries debit short, credit long, that tax has been withheld from that payment; is that your evidence?

A. Tax has not been withheld -- well, actually, all dividends, if you go back to dividends, tax is withheld at source. Has that payment -- payment reflects tax has been held at source, but I don’t think it says that the payment has been taken off there and given to SKAT.

Q. I will ask one more time. If you could answer the question, I would be grateful.

A. If I could understand it, it would help.

Q. Is it your evidence to this court that with the contractual payment involving debit short, credit long, that tax has been withheld from that payment? Is that your evidence?

A. Okay, withheld by who?

Q. Anyone, Mr Hogarth.

A. Okay, in that case, it is the market telling me that that cash flow is 73% of the gross dividend.

MR JUSTICE ANDREW BAKER: That tells me that the amount that is to be treated as a payment to be made to somebody is to be calculated in that way, but does that mean that anybody has withheld tax from anything? Or do you not
see –

A. Yes, I am just trying to clear it in my head. If the market is saying that this is the price of the equity and inside of that is just the 73% cash flows and we know that the tax is withheld at source~... I’m having difficulty with the link. I think in my mind the market is saying it has been taken off here, because it has been taken off at source, therefore I’m pricing this set of cash flows at 73% of the gross dividend.

MR JUSTICE ANDREW BAKER: I think I understand that. I may be introducing an unnecessarily homely example that later on somebody may say is completely incomparable, but if you imagine for a moment that I have an employee
and I pay that employee after deducting PAYE, so what they see in their pay packet is, whatever, 80% of their gross income entitlement, I think most of us would say one would recognise that they have had 20% tax taken off their pay when they receive that, whatever amount it is that they actually get into their bank account. If Mr Graham entered into some contract with Mr Head
where there is a cash flow item that happens to be calculated by reference to the PAYE net entitlement of my employee, and therefore Mr Graham pays Mr Head an amount of money that happens to equal the net pay
receipt of my employee, would one say that when Mr Graham makes that payment to Mr Head anybody has taken tax off it? I think that’s the sort of example that Mr Graham may -- or that may underlie a way of thinking that Mr Graham is inviting you to think about in pressing you as to whether you would say that tax has been withheld, and there may be a separate question as to whether you thought about it in that way at the time?

A. If I was one of your employees, my Lord, I would certainly think someone has taken 20% tax off me. But if that tax went into your firm, you might not pay that
off because something could be happening tax-wise inside your firm which meant you didn’t have to pay to HMRC every amount. So is Mr Graham asking me, saying that it has to be directly traceable back to SKAT or is he just saying that -- I don’t know what he is saying. I apologise, Mr Graham. I am just not getting this.”

In my judgment, that was the honest confusion and lack of understanding of an unsophisticated individual, not any kind of dishonest evasion.