Luk Leamington Limited v Whitnash plc & Anor

Permission to appeal requires either a realistic prospect of success or some other compelling reason for the appeal to be heard. The threshold is not a prediction that the appeal is likely to succeed. It excludes only prospects that are fanciful. Where evidence or technical and commercial background may materially affect the evaluation of an arguable contractual issue, the application may warrant a full hearing.

The claimant, a joint venture company, sought permission to appeal from a decision of the High Court, Queen's Bench Division, Commercial Court. The underlying dispute concerned alleged omissions from a shareholder agreement relating to patents and an alleged breach of contractual disclosure warranties. The judge rejected the rectification claim and dealt briefly with the warranty claim under clause 8.1. Mance LJ had refused permission on paper, but the claimant renewed the application before the Court of Appeal. The central issue was whether the proposed appeal had a real prospect of success or otherwise raised a compelling reason for a hearing.

1. Permission granted. The Court of Appeal granted permission to appeal. It did not determine the merits of the proposed appeal. The order provided for costs in the appeal.
2. Chadwick LJ stated that, under CPR 52.3(6), permission may be given only where the appeal has a real prospect of success or there is some other compelling reason why it should be heard. The present application relied on the first limb.
3. The real-prospect threshold should not be set too high. The applicant need not establish that success is likely. The question is whether the prospect is realistic rather than fanciful. The Court's limited resources should not be spent on appeals whose prospects are merely fanciful, but a realistic prospect warrants access to a full court.
4. Mance LJ considered that the evidence concerning the omitted patents, including evidence about their significance and a possible mixed hydraulic-electrical patent, was sufficient to justify a full hearing. Although there was no evidence that the patents had actually been used to hinder competition, their potential relevance could not properly be assessed without a better understanding of the joint venture agreement and the technical background.
5. The appeal was to be listed for an estimated two days. The parties were encouraged to agree a statement of the technical background and to allow the court proper opportunity to pre-read.

• High Court of Justice, Queen's Bench Division, Commercial Court: Mr Justice David Steele rejected the rectification claim and reached conclusions adverse to the claimant on the contractual warranty issue.
• Court of Appeal (Civil Division): Mance LJ had refused permission on paper. On renewal, the Court of Appeal granted permission to appeal.