Deg-Deutsche Investitions-Und Entiwicklungsgesellschaft MBG v Koshy & Ors

Permission to appeal should be granted where the proposed ground has a real prospect of success, but permission may be confined to the issue that properly warrants appellate consideration. A party will generally be refused permission to introduce on appeal a point or evidence that could and should have been raised at trial. For fraud limitation purposes, knowledge that a representation may be false is distinct from knowledge that it was made fraudulently. The court may adjourn a related costs appeal where its outcome depends on the substantive appeal. The decision concerned permission applications and did not finally determine the underlying limitation, costs or accounting issues.

The proceedings arose from funding arrangements for a Zambian cotton-farming project. DEG claimed against Thomas Koshy and others in deceit and sought an account of profits. In parallel proceedings, Gwembe Valley Development Company Ltd pursued related relief.

After a lengthy trial, Rimer J dismissed DEG’s claim principally on limitation grounds, ordered an account of profits in the GVDC proceedings, and made associated costs orders. The Court of Appeal considered renewed applications for permission to appeal, an application to adduce further evidence concerning exchange-control arrangements, and related costs issues.

1. DEG’s limitation appeal. Permission was granted on the limited ground concerning section 32 of the Limitation Act 1980. The judge’s finding that DEG could not have repatriated the funds before November 1990 was treated as a finding of fact that could not properly be challenged through the proposed new material.
2. DEG had had sufficient opportunity at trial to raise the effect of the German-Zambian treaty and to adduce evidence about it. It was therefore too late to seek to raise that issue on appeal or introduce the treaty as further evidence.
3. Section 32 requires consideration of whether the claimant could have discovered the fraud with reasonable diligence. Knowledge that a representation might be untrue is not equivalent to knowledge that it was made fraudulently. The judge had not expressly addressed that distinction, giving the proposed appeal a real prospect of success.
4. Related costs applications. Mr Koshy’s application concerning the costs order in the DEG action was adjourned to the hearing of the substantive appeal. Permission was granted to appeal the costs order made in the GVDC proceedings because the court identified a question of principle concerning liability for the costs of an account where no profit was ultimately shown.
5. Permission to appeal against the 1998 costs order relating to the freezing-order proceedings was granted, subject to reliance only on specified findings in Rimer J’s judgment. The remaining permission application was refused. Costs of the applications were made costs in the relevant appeals.

• Court of Appeal (Civil Division): [2002] EWCA Civ 484. Permission to appeal was refused in reference 2001/2661, granted on limited grounds in references 2002/0090 and 2002/0094, and the application in reference 2002/0091 was adjourned.
• High Court, Chancery Division: Rimer J dismissed DEG’s claim principally on limitation grounds, ordered an account of profits in the related GVDC proceedings, and made associated costs orders.