MacDonald & Anor v Polaine & Anor

Permission to appeal should be refused where the proposed grounds have no real prospect of success. An appellate court will generally respect a trial judge’s findings of fact where they were reached on a careful assessment of the evidence and were reasonably open to the judge. This includes findings that parties knowingly joined in intentional misrepresentations. Where precise valuation evidence is unavailable, a trial judge may assess damages as best possible on the evidence, including evidence of an actual transaction. A legal issue that is unnecessary to the outcome should not be determined.

The claimants sold their shares in EFM Publishing Ltd to Guy Polaine. They alleged that Polaine and Hill Publishing Ltd had concealed the extent of negotiations for Hill’s subsequent acquisition of the company and had made or participated in misleading representations. McCombe J found both defendants liable in conspiracy to commit deceit and awarded the claimants damages exceeding £100,000.

Hill applied for permission to appeal. Permission was refused on paper, and the application was renewed before the Court of Appeal. The central issues were whether the judge’s factual findings, his rejection of an estoppel argument, and his assessment of damages had any real prospect of being successfully challenged.

1. Application dismissed. The renewed application for permission to appeal was refused because none of the proposed grounds had a real prospect of success.
2. The estoppel argument depended on the claimants having knowingly completed the transaction while reserving a deliberate strategy to sue later. McCombe J had rejected that factual basis and had found nothing unconscionable in the claimants’ conduct. Those findings were supported by the judgment and disclosed no arguable basis for appellate intervention.
3. The judge was entitled to find that Hill joined in the misleading fax of 8 October 1998. The statement that negotiations were at an early stage was reasonably found to be false, and both defendants knew that it was false. The later disclosure that Hill was funding the purchase did not provide the full picture. The evidence supported the conclusion that the defendants combined to leave material misrepresentations uncorrected with the intention of injuring the claimants.
4. The proposed legal issue concerning whether unlawful means in a conspiracy to commit a lawful act must be actionable at the claimant’s suit did not arise. The claim was upheld on the separate conspiracy-to-deceive basis.
5. The damages challenge also had no real prospect of success. Having heard substantial evidence, including evidence of the price paid for all the company’s shares, the judge was entitled, and required, to make the best assessment possible. The absence of extensive expert valuation evidence did not make the award unsustainable.

Lord Justice Peter Gibson agreed with May LJ. The application was dismissed.

• Court of Appeal (Civil Division): The renewed application for permission to appeal was dismissed.
• Chancery Division: McCombe J gave judgment on 11 February 2002, finding Hill Publishing Ltd and Guy Polaine liable and awarding damages exceeding £100,000.
• Permission stage: Permission to appeal was refused on paper by Peter Gibson LJ on 28 March 2002.