Nicholson -v- HSBC Bank Plc & Ors

On an application for permission to appeal out of time, the Court of Appeal may adjourn the application for a fuller hearing on notice where substantial financial, livelihood and home interests and important points justify that course, even though the proposed appeal faces serious difficulties on the merits. The court may grant an extension of time while leaving permission undecided. In assessing the apparent merits, a secured creditor is entitled to consider its own interests. Objective evidence about alternative courses or asset values may assist an allegation of bad faith, but does not itself establish bad faith. Challenges to factual findings and the refusal of expert evidence may present particular difficulty.

Mr Nicholson, a farmer, sought permission to appeal out of time from findings made by His Honour Judge McGonigal in the Leeds District Registry Mercantile Court. The dispute followed HSBC's decision to call in an overdraft and appoint a receiver during a farming-finance crisis. Mr Nicholson alleged that BOCM had breached confidence by disclosing financial information to HSBC and that HSBC had acted in bad faith for BOCM's benefit. The judge rejected those complaints and refused to admit two expert reports concerning alternative ways forward and valuation. The central issue before the Court of Appeal was whether the application should be determined immediately or adjourned for a fuller hearing on notice, given the apparent merits difficulties, the substantial interests involved and the importance of the points raised.

Decision

1. Disposition. Lord Justice Rix adjourned the application for permission to appeal and granted the extension of time sought. Permission to appeal was not determined.
2. Reason for adjournment. Despite serious reservations about the proposed appeal, justice required a fuller hearing because the dispute concerned a farming enterprise worth approximately £1 million to £2 million, and Mr Nicholson's livelihood, life and home. The points he sought to raise were also considered important. The respondents were entitled to notice before the application was determined.
3. Apparent merits. The confidentiality complaint faced substantial difficulties. The trial judge had found either that the information was not confidential or that BOCM was entitled to disclose it in its own interests. In any event, Mr Nicholson had subsequently authorised HSBC and BOCM to discuss his financial affairs without restriction. The allegation of bad faith also faced difficulty because the bank was entitled to consult its own interests, the judge found no bad faith, and the burden of proving bad faith rested on Mr Nicholson.
4. Expert evidence. The proposed reports addressed possible ways forward and the value of the farming enterprise. They were advanced as objective background supporting an inference of bad faith, rather than on the basis that the court had to decide what the bank objectively ought to have done. The proposed appeal therefore encountered the additional difficulty of challenging factual findings.
5. The adjourned application was directed to be heard on notice by a court consisting of two Lords Justice. Half a day was allowed, with an appeal to follow immediately if permission were granted. Lord Justice Rix warned Mr Nicholson that the respondents' resulting expense might ultimately fall upon him.

1. Court of Appeal (Civil Division) — In [2001] EWCA Civ 484, Lord Justice Rix adjourned the out-of-time permission application, granted an extension of time, and directed a subsequent on-notice hearing before two Lords Justice.
2. High Court of Justice, Leeds District Registry Mercantile Court — His Honour Judge McGonigal made the decision from which permission to appeal was sought. The judgment found no bad faith, rejected the confidentiality complaint and refused the two expert reports. No citation was stated.