I have written before about witness evidence and the difficulties in establishing matters without the benefit of corroboration.  The case of Brogden & Reid -v- Investec Bank Ltd [2014] EWHC 2785 (Comm) reported today illustrates this problem.


The claimants’ case was that the defendants had orally agreed to pay bonuses on certain terms.  There was no written record of this agreement and the claimants relied on their own recollection of conversations that had taken place.

“The claimants’ credibility

  1. The claimants’ unsupported testimony as to what was said at meetings which took place some seven years ago is not a promising basis on which to found a claim that they made a contract with the Bank, separate from and additional to their contracts of employment, which controlled how the Bank was required to calculate their bonuses. The fact that the claimants have a vested interest in the existence of such an oral agreement since, if their evidence is accepted, they each stand personally to win a payout of several million pounds gives all the more reason to doubt the reliability of their evidence. Nonetheless, Mr Cavanagh QC on their behalf urged the Court to reject the attacks on their honesty made by the Bank and to find that both Mr Brogden and Mr Reid gave honest and truthful testimony.
  2. I do not find the claimants to be dishonest. I accept that they genuinely believe that the discussions which they have described in detail took place exactly as they now recall them. However, I do not accept that their evidence is true. I regard their claim that an oral agreement was made to use the “institutional market rate” in calculating their bonuses as wholly incredible. This case seems to me to illustrate the truth of the observation of Lord Justice Browne that “the human capacity for honestly believing something which bears no relation to what really happened is unlimited”: quoted in Tom Bingham, ‘The Business of Judging’ (OUP, 2000) at p.15, and by Mostyn J in A County Council v M and F [2011] EWHC 1804 (Fam) at para 30.
  3. I have formed that view for three main reasons.

No documentary evidence

  1. The first is that there is no documentary record of, nor documented reference to, any such discussion or agreement. It is not merely that there is a want of proof – though there is. This is a situation in which absence of evidence is itself evidence that no agreement was in fact made. The size of the bonuses to which they would be contractually entitled, and hence the way in which such bonuses would be calculated, was clearly a matter of great significance to the claimants. On their own evidence, it featured prominently in their discussions with Mr Van Der Walt and in their decision to leave secure jobs and join Investec. If in those discussions an agreement had been reached about how the claimants’ bonuses were to be calculated which was intended to bind the Bank, I am sure that they would have thought it of sufficient importance to make some record of that fact. I would expect them, indeed, to have wanted the points agreed to be incorporated in their contracts of employment or, at the very least, in a side letter. I am equally sure that Mr Van Der Walt would have thought it necessary to make a record of any such agreement. He would also have needed to obtain internal approval for the obligations he was undertaking or proposing to undertake on behalf of the Bank.
  2. Mr Van Der Walt did set out in emails and a memorandum sent to the Bank’s two senior executives in March 2007 the terms as to remuneration and bonus that he was proposing to offer to the claimants. The very fact that he had not yet made an offer regarding remuneration makes it inherently unlikely that he had by then already made an agreement intended to have binding effect about how bonuses paid to the claimants would be calculated. In an internal email dated 20 March 2007 Mr Van Der Walt outlined the final proposal. In this email he described the proposed bonus arrangements for the first two years and stated:

“In year 3 and thereafter a normal EVA model would apply at a rate proposed of 30% which is how the other trading businesses are remunerated.”

It is unlikely that Mr Van Der Walt would have written in these terms if he was agreeing with the claimants any special terms which would apply in calculating their bonuses and which did not apply to the other trading businesses.

Inconsistent conduct

  1. The second reason why I regard the claimants’ case as incredible is that throughout the period of four years during which they were employed by Investec, not once did they suggest that the agreement now alleged had been made or allude to its existence. Moreover, that is so despite the fact that, on their evidence, the Bank’s Central Treasury stopped paying the institutional market rate on funds raised by the SED desk in about February 2009. No suggestion was made, then or later, that the failure to pay that rate was a breach of any promise nor that the claimants nevertheless had a contractual right to have their bonus pool calculated on the basis of the “institutional market rate”.
  2. The point in fact goes further. It is not just that there was silence. Mr Brogden did make arguments, particularly at the end of the financial year 2010//2011, that the bonus calculation for his desk should be adjusted because it undervalued the funds which the desk had raised for the Bank. However, those arguments were couched in terms of what was fair. Not once – not even when he decided to resign over the issue of bonuses and accused the Bank of acting in breach of contract – did he allege that he had an agreement with the Bank of which the Bank was in breach, which obliged Investec to calculate the claimants’ bonuses by reference to the “institutional market rate”.”


The crucial point here is that the judge did not find that the claimants were being deliberately dishonest. Just that, with a major vested interest in the outcome, they had come to believe their own recollection.

“Possible discussions

  1. Despite all this, I do not think it likely that the evidence given by Mr Brogden and Mr Reid about their discussions with Mr Van Der Walt is a pure invention on their part, let alone a dishonest one. Not only did they seem to me to be sincere and straightforward individuals, but the account they gave does not have the hallmarks of deliberate concoction; it much more likely has its origin in something actually said, however great the distortion in the claimants’ recollections. The effect of Investec’s credit rating and the rates of interest which the Bank would charge or pay on funds borrowed or raised by the claimants’ desk were relevant considerations for the Bank and the claimants when discussing the potential to build a profitable equity derivatives business. There is, moreover, some documentary evidence that these topics were indeed discussed….
  1. If any such statement was made, however, I am sure that it was not understood and could not rationally have been understood as a contractual promise, binding on the Bank, to pay an institutional rate of interest or any particular rate of interest if the claimants were to join the Bank and if in the course of their employment they were to raise funds from selling retail structured products. To be fair to the claimants, it is not their case that a binding promise of that nature was given. Their case, as Mr Cavanagh QC expressly reiterated in his closing submissions, is not that Mr Van Der Walt bound the Bank’s Treasury to pay the “institutional market rate” of interest on any term funds raised by the claimants at any time during their employment if they joined the Bank; it is that he made a binding agreement that any bonuses which the Bank agreed to pay to the claimants would be calculated using that rate.”


“The claimants’ own evidence does not support their case

  1. This leads me, however, to the third main reason why I consider the oral agreement alleged by the claimants to be incapable of belief. This is that the claimants’ own evidence of what was discussed with Mr Van Der Walt, even if accepted, does not support the existence of such an agreement. As counsel for the Bank pointed out, the discussions which Mr Brogden and Mr Reid described in their witness statements were discussions about the rate of interest which the Bank’s Central Treasury would pay on funds raised by the SED desk. They were not discussions about how the claimants’ bonuses would be calculated.
  2. Mr Brogden said in his oral evidence that it was all one discussion, the reason being that the rate of interest paid by the Bank’s Treasury would be one element in the performance of the desk and would therefore feed through into the calculation of the bonus. It is plainly true that the interest rate paid would affect the bonus calculation. It is one thing, however, to have had a discussion about the rate of interest which the Central Treasury would pay; it would be quite another to discuss and agree that, if for some reason the Central Treasury did not pay an institutional market rate on funds raised by the desk, the claimants’ bonuses would nevertheless be calculated as if it had. I think it inconceivable that any discussion to that effect took place at any of the meetings with Mr Van Der Walt. As the possibility is not one that was envisaged, there would simply have been no reason to have discussed how the claimants’ bonuses would be calculated if it occurred. Nor did I understand the claimants to suggest that there was such a discussion. Had they done so, I could not have accepted that they were being honest.


  1. For these reasons, I am sure that no oral agreement was made during the pre-contractual discussions between the claimants and Mr Van Der Walt about the rate of interest on funds raised by the SED desk to be used for the purpose of calculating their bonuses. I am all the more sure that no agreement was made that would require any different rate to be used than the rate that was actually paid on such funds by the Bank’s Central Treasury.”


The judgment concluded:

“149. Despite the conclusions I have reached in this judgment about the merits of their claim, I was impressed by the claimants when they gave evidence. They both struck me as decent and highly talented individuals. It is clear that they have in the past been very successful in their line of business and I do not doubt that they will succeed again. It is also clear that they have a strong sense of grievance about how they were treated by Investec and sincerely believe that the Bank’s refusal to recognise any entitlement to bonus for the 2010/2011 year was unfair. What is fair in this context is dependent on perspective. Mr Brogden and Mr Reid believe that they developed a retail structured product business for Investec which, at least in a broad sense, generated economic value for the Bank of which they should be given a share. If the lens is broadened further, I doubt there are many outside the world in which the claimants operate who would think that they were under-rewarded by Investec. The task of the court is not to adopt either of those perspectives but to judge what is fair simply in terms of adherence to contract. Judged by that standard, I conclude that the claimants had no right to be paid any bonus for the 2010/2011 year and the claim therefore fails.


The crucial point here is that it was the claimants’ recollection and not their credibility that was on trial.  The judge did not find that they had lied. Indeed they honestly believed the evidence they were giving.

This is always important in cases that depend on credibility it is always dangerous for a party to depend, wholly,  on the contention that “I am not a liar”.  The existence, or absence, of independent documentary evidence will always be a major factor.


1. Litigators must know about credibility.

2. Witness Statements and Witness Evidence: More about Credibility.

3. Which witness will be believed: is it all a lottery?