First Discount Ltd v Cranston

An extension of time to appeal is discretionary. The court must consider the length and explanation of the delay together with the merits, viewed in the circumstances of the case as a whole. A late attempt to introduce an unpleaded fraud defence will rarely justify disturbing a judgment where the proposed case remains uncertain, especially as to the representation, falsity and reliance alleged. Bills of exchange are generally treated as cash after the time for appeal has expired. Even where there is a reasonable case that a bill was fraudulently procured, the appropriate course may be to pursue a separate cross-action rather than reopen the original judgment.

First Discount Ltd obtained summary judgment against James Neil Percival Cranston on dishonoured bills of exchange. Cranston had endorsed the bills personally. He later sought, after substantial delay, permission to appeal and an extension of time, relying on further evidence to support an allegation that he had been induced by fraudulent misrepresentation to endorse them and that First Discount was party to the fraud.

Mr Justice Buckley refused to extend time. He found the delay inadequately explained and considered the proposed defence weak, although he indicated that conditional leave to defend might have been granted had the application been made in time. The central issues before the Court of Appeal were whether the further evidence should be admitted, whether time should be extended, and whether the judge's exercise of discretion was flawed.

The appeal was dismissed with costs. The applications to extend time, admit fresh evidence and obtain permission to appeal were granted, but the substantive appeal failed.

1. Fresh evidence and merits. The further evidence gave somewhat greater support to the suggestion that First Discount and City Europe were controlled by Mr Tuli, and therefore to the possibility that First Discount was party to any fraud. It did not materially strengthen the separate issue whether a fraudulent misrepresentation had been made or relied upon.
2. Fraudulent misrepresentation. The proposed case remained difficult to formulate. The alleged representation concerned the purpose of signing the reverse of the bills, whereas the pleaded falsity concerned personal liability on dishonour. The case also raised difficulties concerning reliance, the alleged continuing nature of the representation, and the fact that bills had been signed before the alleged representation and before First Discount existed. A bill of exchange could not be affected by fraud in the absence of a fraudulent misrepresentation: Credito Italiano v Birnhak [1967] 1 Lloyd's Rep 314, 317.
3. Delay and appellate discretion. The delay from the summary judgment and the subsequent delay in progressing the proposed appeal were very substantial and not satisfactorily explained. The judge had applied the correct criteria and was entitled to conclude that, absent the time problem, the case would at most warrant conditional leave to defend. The Court of Appeal would have reached the same conclusion even with the further evidence.
4. Finality. Bills of exchange are ordinarily treated as cash, subject to the possibility of a reasonable fraud case. Parties entitled to judgments must ordinarily be able to regard them as final once the appeal period has expired. Any good fraud claim could be pursued by cross-action. Lord Justice Sedley additionally emphasised the elementary obligation to provide a draft pleading when seeking to raise a new fraud defence.

An interim payment on account of costs of £20,000 was ordered.

• Court of Appeal (Civil Division): Applications to extend time, admit fresh evidence and obtain permission to appeal granted; substantive appeal dismissed with costs.
• High Court of Justice, Queen's Bench Division: Mr Justice Buckley refused an extension of time to appeal from Master Rose's summary judgment.
• Master Rose: Summary judgment entered for First Discount Ltd on the dishonoured bills of exchange.