Perotti v Watson & Ors

Permission to appeal against discretionary case-management orders should be refused where there is no real prospect that the Court of Appeal would find that the judge erred. Where funds are preserved and available to abide the final determination, the court may hold the ring and permit related foreign proceedings to continue subject to safeguards. Potential prejudice can be addressed by a further order. Disclosure should not be ordered where the underlying negligence claim is tenuous, causation uncertain, and production risks prejudice or breach of confidence affecting third parties. An appellate court will not interfere merely because another course is arguable.

Mr Perotti made three applications for permission to appeal against recent orders of Neuberger J. The first two concerned permission for Mr Watson to continue Swiss proceedings concerning approximately £100,000 and the preservation of any recovered funds pending determination in England. The third concerned refusal to order production of bank documents in proceedings against Mr Perotti’s former legal advisers, Collyer-Bristow and Mr Hinks.

The applications followed earlier litigation involving committal, freezing and search-and-seizure orders. The central questions were whether there was a real prospect of the Court of Appeal interfering with Neuberger J’s discretionary decisions, and whether the proposed disclosure was justified despite the weakness of the claim and possible prejudice to third parties.

Applications 2001/2656 and 2001/2657. Chadwick LJ, giving the first judgment, held that Neuberger J was entitled to adjourn Mr Watson’s application and to permit the Swiss proceedings to continue for the limited purpose of preserving the money. The important consideration was that the funds would remain preserved in the account of Swiss lawyers, subject to undertakings controlling their use and to the order of the English court. They would therefore be available to abide the eventual decision as to their destination.

Mr Perotti identified no concrete prejudice arising from the transfer of control to the Swiss lawyers’ account. Any unfair advantage resulting from the admitted contempt could be addressed when the substantive application was determined. The Court of Appeal was concerned only with whether there was a real prospect that it would regard the judge’s decision to hold the ring pending the earlier appeals as wrong. No such prospect existed. Pill LJ agreed, adding that any alleged disadvantage in the Swiss proceedings could be raised before Neuberger J when the application was relisted.

Application 2001/2658. Neuberger J was entitled to treat the renewed disclosure application as permissible because circumstances had changed: the trial was nearer and the perceived purpose of obtaining documents for the struck-out proceedings against Mr Watson had fallen away. He nevertheless acted within his discretion in refusing disclosure.

The proposed documents would have assisted only if Mr Perotti could establish that his former advisers negligently failed to plead fraud and dishonesty against Mr Watson. The judge was entitled to regard that claim as exceptionally tenuous. He considered the absence of a sufficient causal link between the alleged failures and the discovery of fraud, together with the risk of prejudice and disclosure of confidential information belonging to unrelated clients of the solicitors. No grounds demonstrated a real prospect of appellate interference.

All three applications were dismissed. There was no order as to costs.

1. Court of Appeal (Civil Division): Applications for permission to appeal dismissed. No order as to costs.
2. High Court: Neuberger J adjourned and controlled Mr Watson’s Swiss-proceedings application, permitted the proceedings to continue subject to safeguards, and refused the renewed application for production of bank documents.