Nathan v Smilovitch & Anor

Permission to appeal granted in open court may be set aside only for a compelling reason. Mere disagreement about whether the appeal is arguable is insufficient. A compelling reason may arise where the granting judge overlooked decisive legislation or authority, or was materially misled.

Security for the costs of an appeal under rule 25.13(2)(g) depends on the circumstances existing when the application is determined. An anticipated recovery which remains speculative may not justify security where the current account stands substantially in the appellant’s favour.

Ferris J gave judgment in a dispute concerning an alleged property joint venture. After Robert Walker LJ refused permission to appeal on paper, Aldous LJ granted the first defendant permission at a renewed oral hearing. The claimant applied to the full court to set that permission aside, alleging that the proposed appeal was bound to fail and would otherwise have been screened out.

The claimant also sought £48,250 plus VAT as security for the costs of the appeal under rule 25.13(2)(g) of the Civil Procedure Rules 1998. The central questions were whether there was a compelling reason to set aside permission and whether the first defendant’s dealings with his assets justified security.

Both applications were dismissed unanimously, with costs subject to detailed assessment.

1. Longmore LJ, with whom Jonathan Parker LJ and Peter Gibson LJ agreed, held that permission to appeal granted by a Lord Justice could be set aside only for a compelling reason under rule 52.9(2) of the Civil Procedure Rules 1998. The word “compelling” did not differ materially from the “cogent” reason required in The Iran Nabuvat [1990] 1 WLR 1115. Mere disagreement with the granting judge’s assessment that an appeal was arguable could not satisfy the threshold.

2. A compelling reason would normally require a decisive authority or statutory provision overlooked by the judge who granted permission, or proof that the judge had actually been misled during the application. The claimant’s five complaints concerned matters of argument. None showed that Aldous LJ had overlooked decisive law or misunderstood the nature of the case. The permission application had been supported by a careful skeleton argument, and counsel had not allowed the Lord Justice to be misled.

3. Peter Gibson LJ added that permission indicated only that the appeal was arguable and had a real prospect of success. It did not indicate that the appeal was more likely than not to succeed. Special circumstances were therefore required before the full court would interfere with the permission order.

4. Security for costs was inappropriate on the circumstances then existing. Although it was alleged that the first defendant had made assets difficult to trace, the current account showed that the claimant owed him about £1.2 million. The claimant’s prospective recovery concerning the properties remained speculative. The existing balance therefore weighed against security under rule 25.13(2)(g).

5. A materially different result on forthcoming preliminary issues could amount to a change of circumstances permitting the question of security to be reviewed. The court did not encourage a renewed application.

1. Court of Appeal (full court): Dismissed the claimant’s applications to set aside permission to appeal and for security for costs.
2. Court of Appeal (Aldous LJ): Granted the first defendant permission to appeal after a renewed oral application.
3. Court of Appeal (Robert Walker LJ): Refused permission to appeal on the papers.
4. Chancery Division (Ferris J): Gave the underlying judgment on 31 July 2001. No citation is stated.