England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Ferris)

		Royal Courts of Justice Strand London WC2 Monday, 13th May 2002

Monday, 13th May 2002

1. LORD JUSTICE PETER GIBSON: I will ask Longmore LJ to give the first judgment.
2. LORD JUSTICE LONGMORE: This is the third occasion on which this court has been invited to consider whether the defendant, Mr Smilovitch, should have permission to appeal from the judgment of Ferris J given on 31st July 2001. Robert Walker LJ refused a paper application for permission to appeal. Mr Smilovitch then renewed his application orally to Aldous LJ who granted it after a short oral hearing. This has caused such consternation to the claimant, Mr Nathan, that he has now applied to set aside the permission granted on the grounds, as it is put in paragraph 6 of the skeleton:

"(a)the proposed appeal is bound to fail; and

(b)it would have been screened out had Aldous LJ not fallen into error".

3. The matter now comes before the full court. So the parties will have had the benefit of no less than five Lords Justices deciding whether there should be permission to appeal. On the face of it, this is a startling misuse of scarce resources. It is not, therefore, surprising to find authority stating that this court is most reluctant to entertain applications of this kind.
4. The most recent authority to which we have been referred is Hunt v Peasgood, dated 26th July 2000, in which the leading judgment was given by, as it happens, Aldous LJ. He followed the guidance given by Lord Donaldson of Lymington MR in The Iran Nabuvat [1990] 1 WLR 1115 and said that that guidance was still apposite, despite the change in the wording of the rules. He quoted (and I will also quote) two paragraphs from that judgment:

"If a Lord Justice of Appeal, having studied the matter on paper, is satisfied that there is an arguable case and grants leave, I think it would require some very cogent reasons for disagreeing with his decision and it would certainly not be a reason that the court who was asked to reconsider his decision did not itself think that the matter was arguable.

...

But the point I am making is that if one Lord Justice thinks an appeal is arguable, it is really necessary in my view for anybody seeking a reconsideration of that to be able to point fairly and unerringly to a factor which was not drawn to the Lord Justice's attention because perhaps it did not feature in the documents which had been studied or to the fact that he has overlooked some statutory provision which is decisive or some authority which is decisive, in the sense that the appeal will inevitably fail. That is really what leave to appeal is directed at - screening out appeals which inevitably fail."

5. Aldous LJ also cited the guidance given by Lord Woolf MR in Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1538. There Lord Woolf said (at page 1539C):

"... it should be borne in mind prior to making such an application [that is an application to set aside] that this court is likely to be very unsympathetic to it being made if it will in effect involve the parties in exactly the same expense as determining the appeal itself, and will not necessarily save the time of the court but risk the court having to have two hearings when only one would be necessary if there were no application to set aside. It is appreciated that any litigant will feel aggrieved by being faced with delay in waiting to have an appeal heard which has no prospect of success. However, the only consequence of applications such as this having to be heard is to delay the hearings of appeals the determination of which serves some purpose. There are circumstances where an application to set aside leave is fully justified, but the present application does not fall within that category."

6. The idea behind the phrase of Lord Donaldson MR "some very cogent reason" has been adopted by the current form of the Civil Procedure Rules 52.9, which provide:

"(1) The appeal court may-

(a)strike out the whole or part of an appeal notice;

(b) set aside permission to appeal in whole or in part;

(c) impose or vary conditions upon which an appeal may be brought.

(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so."

7. I do not for my part read the word "compelling" as any different from the word "cogent" used by Lord Donaldson.
8. The cautionary note, as it is described, to that rule then provides:

"This tempting provision should not lure advocates into tactical skirmishing or into manoeuvres designed to wear down the opposition. Save in exceptional circumstances, it is a misuse of the court's resources and a waste of costs for the court to consider the substance of an appeal on some intermediate date between the permission hearing and the full appeal. Rule 52.9(2) provides that the power will only be exercised where there is `a compelling reason'. One example of a compelling reason may be that the appellant misled the appeal court on an application for permission made without notice to the other party."

9. For my part, unless the nature of the application shows that some decisive authority or decisive statutory provision has been overlooked by the Lord Justice granting permission to appeal, an applicant would normally have to show that the single Lord Justice had actually been misled in the course of the presentation of an application. Paragraph 6 of the skeleton does not amount to such an allegation, but later in the skeleton some sidling up to such suggestion is made. We therefore asked Mr Bard, who has presented this application with economy (of which the court is appreciative), to say whether he was saying that Aldous LJ had been misled. He said that he did not wish to allege that there had been any intentional misleading of Aldous LJ, but, he said nevertheless, that the Lord Justice was allowed to believe certain matters on the application which he submitted he should not have been allowed to believe.
10. On analysis, that came down to five points, with which I would propose to deal in the circumstances extremely briefly since the nature of these applications must ensure that they are dealt with briefly. First of all, he submitted that the Lord Justice was allowed to believe that Ferris J had accepted the evidence of Mr Cohen. He submitted that that was not the case; that although the evidence had been recited, it had not been stated by Ferris J that it had been accepted and Aldous LJ should not have been allowed to proceed on the basis that it had been. Second, he submitted that Aldous LJ should not have been allowed to proceed on the basis that there was an agreement that Mr Nathan had not provided any of the money towards the purchase price of any of the three properties when in fact he did pay £75,000. Third, Mr Bard said that the Lord Justice should not have been allowed to believe that the judge had found, not merely that no parity principle had been established, but that finance for leg-work on the part of Mr Smilovitch had been established. Fourth, he submitted that the Lord Justice was not made alive to the fact that all three of the properties that were in dispute were originally part of the alleged joint venture but had ceased to be so with implications for the burden of proof. Lastly (and this is the only matter in the skeleton argument where it is positively alleged that there was a misleading on the presentation of the application), that in the course of an exchange at the end of the application the Lord Justice had said to counsel presenting it, "Your client never agreed that this one [viz the property he was there considering] should go into the joint venture." It was submitted that to use the word "never" was quite wrong when the position had been that that property had originally been in the joint venture. Aldous LJ observed in terms that he had no doubt that the applicant had an uphill task; but nevertheless thought it right to give permission to appeal.
11. In my judgment none of the five matters on which Mr Bard has relied comes anywhere near being a compelling reason to set aside the permission granted. All of the matters on which he relies are within the realm of argument, and it would do more justice to the submissions than they deserve if I were to go into the detailed refutation which is contained in the skeleton arguments presented by Mr Strachan. There is clearly no statutory provision or decisive authority which was overlooked. In my judgment, it is impossible to say that the application was presented in a misleading way. There was a careful skeleton argument before Aldous LJ referring to all relevant matters. I am quite satisfied that, if one looks at the whole of the five-page transcript of the application before Aldous LJ, Aldous LJ would never have had any misapprehension as to the nature of Mr Nathan's case, in particular that the properties were originally part of the joint venture. But the issue was whether they had ceased to be so. In my judgment, this application to set aside the permission granted by Aldous LJ was doomed from the start.
12. There is a second application made for security for costs, and to that I turn. It is made pursuant to CPR 25.13(2)(g), which says that the court may make an order for security for costs - and that will include the security for costs of appeal - on certain conditions. Condition (g) is that:

"The claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him".

13. Mr Bard has taken us to paragraph 10 of the judgment of Ferris J, and has submitted in the light of the facts there found that Mr Smilovitch has made his assets untraceable and that it is a suitable case for security for costs in respect of counsel's fees of the appeal in the sum of £48,250 plus VAT. Arrangements have been made between Mr Nathan and his solicitors that render it inappropriate for any security for costs to be given in relation to their costs. The fact of the matter, however, is that as the account stands today Mr Smilovitch is in fact owed a substantial sum of money by Mr Nathan: £1.2 million. Mr Bard submits that in due course Mr Nathan will recover, according to the terms of this judgment in respect of the three properties, sums that will easily over-top that 1.2 million. So, submits Mr Bard, it is necessary for his client to have security for the costs of the appeal if the appeal were in fact to fail.
14. The truth is that the claim by Mr Nathan in monetary terms is still a somewhat speculative claim. There are contentions that the sum recovered in respect of two of the properties will be no more than £250,000, and in respect of the third property that there will be nothing to be recovered. Mr Bard submits that that is the highest at which Mr Smilovitch can put his case. But it seems to me that where the account is so heavily in Mr Smilovitch's favour at the moment, it would be an inappropriate case to award security for costs. Having said that, if it emerges on the hearing of further preliminary issues, which we understand are likely to be tried in July, that substantially greater sums will in fact be due to Mr Nathan, that could, in theory, amount to a change of circumstance so that the position could, if necessary, then be reviewed. I need hardly say that for my part I would not encourage any such application. But I only wish to make it clear that the judgment I am now giving should not rule out that possibility.
15. In my opinion both these applications will have to be dismissed.
16. LORD JUSTICE JONATHAN PARKER: I agree with the orders which my Lord has proposed on both these applications for the reasons which he has given.
17. LORD JUSTICE PETER GIBSON: I too agree.
18. There is no appeal from a Lord Justice's order granting permission to appeal in open court, and it requires some special circumstance for this court to set aside the Lord Justice's order. The Lord Justice has only indicated that, in his view, the appeal is one which is arguable and has a real prospect of success, not that the appeal is more likely than not to succeed. This court must now find a compelling reason for setting aside the grant of permission if it is to accede to the application made to us today.
19. The claimant has seen fit to accuse the defendant's counsel of allowing Aldous LJ to have been misled. I think it regrettable that the accusation was made. It has to be borne in mind that on a renewed application for permission to appeal in this court the Lord Justice will have read the papers and is very likely to have formed a preliminary view on the application even before the hearing starts, particularly when the applicant is represented by counsel who have provided a full skeleton. The Lord Justice will know on what matters he can best be assisted on the application on which the applicant will be confined normally to just 20 minutes. One must assume that Aldous LJ had read the skeleton in the present case with care. I agree with Longmore LJ that counsel for the first defendant did not allow the Lord Justice to be misled, and there is no other compelling reason for setting aside the permission to appeal.
20. On the application for security, I agree with Longmore LJ that on the facts as they now stand this is not an appropriate case for making an order for security.
21. I too would dismiss both applications.
Order: Applications dismissed with costs subject to detailed assessment.