Court of Appeal summarises approach to new factual theories and delayed judgments

Whenever courts are required to assess complex commercial behaviour and dense factual records, a judge may, on occasion, introduce or rely on a theory that has not been formally pleaded by either party. Complex cases can also require additional contemplation – resulting in delayed judgments. To what extent can appellants point to these issues in bringing an appeal? These matters were considered in the Court of Appeal case, Phones 4U Ltd v EE Ltd & Ors [2025] EWCA Civ 869.

Background and the High Court’s reasoning

Phones 4U was a UK mobile phone retailer that entered administration in 2014, shortly after its supply agreements with three mobile network operators (the “Defendants”) were not renewed. Phones 4U alleged the decisions not to renew were the result of collusive and anti-competitive conduct, along with allegations that one of the Defendants had breached its duty of good faith under the contract and had unlawfully conspired with others to harm Phones 4U.

At first instance, Mr Justice Roth dismissed the claim in full. His reasoning included a finding regarding the source of information in an internal email which was said to support his conclusion that the operators had not colluded, but had instead each independently chosen to terminate their contracts for commercial and strategic reasons.

Initially in the High Court, Roth J did not allow permission to appeal under any of Phones 4U’s original eight grounds. Phones 4U then appealed to the Court of Appeal, which granted permission to appeal on six of the eight grounds sought.

The appeal

The Court of Appeal dismissed all six grounds.  Here, we are concerned with its third and fourth grounds of appeal, which are addressed further in the sections below.

Judicial approach to new theories

In its third ground of appeal, Phones 4U argued it had been deprived of a fair chance to respond given the judge’s theory in respect of EE’s internal email in August 2014 had not been pleaded by the Defendants, nor was it part of their case. Phones 4U claimed the introduction of this ‘new’ theory was procedurally unfair and outside the bounds of adversarial litigation.

In his reasons for not allowing an appeal on ground three, Roth J highlighted the fact that Phones 4U had not put the finding of fact in question to the relevant witnesses at trial nor mentioned it at all in the appellant’s lengthy closing submissions.

On the third ground, the Court of Appeal set out that the starting point is that a judge is not entitled to decide a case on a basis that has not been pleaded nor argued before the court. However, it is necessary to weigh this against the interests of justice and the question of prejudice to the losing party. Therefore, it is possible in some cases that it may be fair for the judge to depart from the scope of the pleaded issues, although generally only if this is fully addressed at trial.

In this case the Court of Appeal commented that the first instance judge’s decision on the August 2014 email should have been limited to his finding based on the witness evidence and inherent probabilities, rather than speculating on other sources for the information contained in the email. The judge’s speculation provided a basis for complaint.

However, the Court of Appeal held that Roth J’s new case theory was not relied on by him to reject the allegation of collusion on which Phones 4U actually relied, but to explain where he thought the information, relied upon by Phones 4U as evidence of collusion, could have come from in early August. The judge had rejected Phones 4U’s allegation based on analysis of other evidence earlier in his judgment and he had not erred in doing so. Therefore, there was no procedural unfairness or prejudice to Phones 4U in advancing this new theory on the evidence before the judge.

The Court of Appeal made it clear as a matter of principle that judges should exercise caution when advancing a theory which has not been put forward by the parties. If the theory is outside the scope of the pleaded case, it should generally not be advanced. However, if a judge concludes that it is necessary to his decision to address such a theory in relation to any material evidence, this should be raised with the parties so that they have sufficient opportunity to make submissions about it, and possibly even considering whether further evidence is required in order to ensure justice.

The impact of delay in producing judgments

Phones 4U’s fourth ground of appeal related to the long passage of time - 15 months - between the hearing and the judgment, which Phones 4U argued led to the judge failing to take into account material evidence.

On this ground of appeal, the Court of Appeal reiterated the general rule (as stated in Bank St Petersburg PJSC v Arkhangelsky [2020] EWCA Civ 408) that judgments should be delivered within three months of a hearing, even in long and complex cases. The court also recognised the principle that justice delayed is justice denied.

However, the Court of Appeal stressed a delay alone is not sufficient grounds to challenge a judgment - it must be shown, in accordance with the decision in Bilta v Natwest Markets Plc [2021] EWCA Civ 680, that the documents to which the lower court failed to refer “could have made a difference to the outcome”. That threshold was not met in this appeal.

In circumstances where the delay is attributable to the judge needing to take appropriate care, not rushing the judgment may well be in the interests of justice. The Court of Appeal acknowledged the level of work undertaken by Roth J in producing the High Court judgment, and concluded that in circumstances (a hard-fought case, concerning serious allegations and involving several multi-national organisations), he had not erred.

Comment

For litigants, especially in complex competition cases, this case demonstrates the discretion courts may exercise when evaluating commercial conduct. Parties should be prepared for the possibility that judges may draw reasonable inferences from the evidence before them at trial, that go beyond the strict confines of the pleadings.

This is not to diminish the importance of pleadings and ensuring that a party’s statement of case includes all points and issues on which a party seeks to rely. However, it does highlight that a failure to engage with all plausible explanations during trial could weaken or be fatal to an appeal, such as Phones 4U’s, on grounds of procedural unfairness. Should this arise, parties should consider whether cross-examination of witnesses or if further evidence is needed in light of a ‘new theory’ arising from the evidence before the court.

Additionally, potential appellants should note that while an appellate court may be concerned by a seriously delayed judgment, there is no inviolable time limit – the appellate court will consider factors that may have contributed to the delay, such as complexity and the volume of evidence. A delay in itself will not be sufficient grounds to bring an appeal. Appellants will be required to show that they were actually prejudiced, and that any omission or error tied to the delay could have actually made a difference to the outcome.