BST Properties Ltd v Reorg-Aport Penzugyi RT

On a renewed application for permission to appeal, the court asks whether the proposed appeal has any real prospect of success. It need not resolve the merits at that stage. A contractual clause requiring conciliation and giving a foreign court sole competency may be material where it was not considered below and may affect whether winding-up proceedings should continue in England. If that issue means the court cannot say that the appeal has no real prospect, permission should be granted. Granting permission does not decide the jurisdiction issue or endorse the eventual appeal.

BST Properties Ltd sought permission to appeal against an order of Laddie J dated 15 February 2001, refusing to restrain proceedings following presentation of a winding-up petition based on an alleged US$5 million debt. A winding-up order was subsequently made. The applicant relied on clause 18 of the loan agreement, which required conciliation and gave the Metropolitan Court of the Republic of Hungary sole competency if conciliation failed. The central issue was whether that clause gave the proposed appeal any real prospect of success.

Application allowed. Lord Justice Chadwick granted permission to appeal.

1. The court's task on the renewed application was limited to deciding whether an appeal against Laddie J's order had any real prospect of success. It was not required to determine the ultimate merits of the jurisdiction argument or the underlying debt dispute.
2. The lower court had treated the documents as showing that US$5 million had been lent and remained unpaid. It had rejected the contention that the arrangements were a sham or that BST Properties had acted as the lender's agent.
3. The lower court's attention did not appear to have been drawn to clause 18 of the loan agreement. The clause required the parties to attempt conciliation and, if that failed, provided that the Metropolitan Court of the Republic of Hungary had sole competency. The applicant argued that a Hungarian court might have access to information unavailable to an English court and that this affected the propriety of continuing winding-up proceedings in England.
4. In light of clause 18, Chadwick LJ found it impossible to say that the appeal had no real prospect of success. Permission was therefore granted, without encouragement as to the eventual outcome.
5. The appellant's notice was to be served within the ordinary short period, stated to be seven days, and the costs of the application were ordered to be costs in the appeal.

• High Court: Laddie J refused on 15 February 2001 to restrain proceedings following presentation of the winding-up petition. A winding-up order was subsequently made.
• Court of Appeal (Civil Division): On the renewed permission application, the court held that the proposed appeal had a real prospect of success and granted permission: [2001] EWCA Civ 1071.