In particular the court relied on Lord Thankerton's speech in Thomas v Thomas 1947 SC (HL) 45 in which he said "Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard witnesses could not be sufficient to explain or justify the trial judge's conclusion". Basically, the appeal court should only intervene if the Judge at first instance has been plainly wrong and, in McGraddie the Supreme Court (in a judgement given by Lord Reed) over-ruled the decision of Extra-Division and restored the decision of the Lord Ordinary.
Lord Reed must have had a distinct feeling of déjà vu at the end of last year when the case of Henderson v Foxworth Investments Limited [2013] CSIH 13 called before the Supreme Court. For those who follow the decisions of the Supreme Court the facts of this case will be well-known by now as this is not the first time that the matter has been down to London. The litigation is pursued by the liquidator of the company that owned the Letham Grange Golf Club. This particular strand of the litigation was concerned with the reduction of a standard security brought on the basis that the disposition of the property was a gratuitous alienation which itself was susceptible to reduction under section 242 of the Insolvency Act 1986. Lord Glennie, at first instance, had refused reduction but his decision had been reversed by the Extra Division which held that he had he had erred in law and failed to give satisfactory reasons for the factual conclusions which he had reached on the evidence before him.
The Supreme Court dealt briefly with the error in law point. In his decision, Lord Reed accepted that Lord Glennie could have dealt with the matter more clearly but it was understandable from his opinion that he had applied the correct test. Lord Reed considered in much more depth, however, what the Extra Division saw as failures by Lord Glennie to adequately deal with the evidence. He held that Lord Glennie had not been plainly wrong in the way that he had dealt with the evidence. The weight which he gave particular evidence was a matter for him as was the brevity with which he considered certain points in his decision. Even where there had not been a detailed discussion of evidence by Lord Glennie, the Supreme Court held that this did not necessarily mean that he had not considered it if it was understandable that he had done so from a reading of the judgement as a whole. Accordingly, as in McGraddie the appeal was successful.
Perhaps unsurprisingly Lord Reed felt it necessary to make certain additional observations about the principles that the court had laid down in McGraddie. His main point was this - when the appellate court is considering whether the Judge at first instance is "plainly wrong" that does not refer to how confident the appeal court is that the Judge was wrong. Far from it. The appeal court may be absolutely certain that it would have reached a different decision but that was not the test. The test was an objective one and the appeal court should only overrule the Judge's decision if it considers that it was "one that no reasonable judge could have reached". In other words, the phrase "plainly wrong" should be taken as signifying that "the decision of the trial judge cannot reasonably be explained or justified". That, according to the Supreme Court, was entirely consistent with the English and Scottish authorities and indeed consistent with the approach of the US Supreme Court and Supreme Court of Canada as well.
When McGraddie went to London there was some suggestion that the appeal should never have been brought. Lord Reed dismissed that argument saying that the failure by an appellate court to apply the relevant principles correctly was a matter of general public importance. For the same reasons, the bringing of the appeal in Henderson was not at issue. Nonetheless, one suspects that the Supreme Court will hope that this is the last time for a while that they have to reverse a decision of the Inner House on the basis that it has wrongly overruled a Judge at first instance on these grounds.
