UT (Tax & Chancery) UT-2022-000134 UT-2022-000135 UT-2022-000137 - [2025] UKUT 00214 (TCC)

The allegations of market abuse are very serious allegations for financial services professionals, with serious consequences for their future career and substantial penalties. The seriousness of the allegations here may mean that it is less likely that the event occurred such that the stronger should be the evidence before we conclude that the allegations are established on the balance of probabilities.

The Traders referred to Carnwath LJ’s speech in Mohammad Jafari-Fini v Skillglass Ltd & others [2007] EWCA Civ 261 where he referred to the exhaustive review of the authorities on the standard of proof in R(N) v Mental Health Review Tribunal [2006] 2 WLR 850, and said as follows:

“40.

…Thus in civil proceedings, the “presumption of innocence” is not so much a legal rule, as a common sense guide to the assessment of evidence. It is relevant not only where the cause of action requires proof of dishonesty, but, wherever the court is faced with a choice between two rival explanations of any particular incident, one innocent and the other not. Unless it is dealing with known fraudsters, the court should start from a strong presumption that the innocent explanation is more likely to be correct.”

However, it has been repeatedly emphasised that there is no heightened standard of proof where serious allegations are made. In Bank St Petersburg PJSC v Arkhangelsky [2020] EWCA Civ 408 Males LJ said at [117], before citing the judgment of the House of Lords in In re B (Children) [2008] UKHL 35:

“117.

In general it is legitimate and conventional, and a fair starting point, that fraud and dishonesty are inherently improbable, such that cogent evidence is required for their proof. But that is because, other things being equal, people do not usually act dishonestly, and it can be no more than a starting point. Ultimately, the only question is whether it has been proved that the occurrence of the fact in issue, in this case dishonesty in the realisation of the assets, was more probable than not.”

The Tribunal recognises that caution is required where a party builds their case on indirect evidence and inferences. Nevertheless, as identified in Lakatamia Shipping Co Ltd v Nobu Su [2023] EWHC 1874 (Comm) at [102] “Conspiracy claims are invariably based on circumstantial evidence, and inferences to be drawn from the material that does exist….”.

The Tribunal has been presented with competing explanations of the trading activity and needs to assess those explanations in the light of all the evidence that is available, and taking account of the evidence that is not available, which includes information that would have been available to the Traders during the Relevant Period.

Whilst the Tribunal accepts that the Traders’ inability to recall the specific details of this activity is understandable and that they cannot be criticised for this, the Tribunal does not accept the Traders’ submission that the Authority is not entitled to rely on an absence of evidence as supporting any assumption it seeks to make about the Traders’ intentions or rationale during the Relevant Period. Such an approach would come close to deciding that all factual issues in relation to which there is no supporting documentary evidence should be resolved in the Traders’ favour. The burden of proof is on the Authority to make its case, and when assessing whether the Authority has met this burden the Tribunal takes account of the evidence that is available (including, eg, the Electronic RFQs received, and cash bond transactions executed) and how the Traders explain their activity by reference to this evidence (eg as to client demand, or the identification of clients against which the Information Discovery Strategy was being tested).