Ultraframe (UK) Ltd v Fielding & Ors

The Court considered five applications for permission to appeal from extensive Chancery Division judgments of Lewison J arising from long-running litigation. The appellate test applied was whether the decision below was "wrong"; the Court emphasised the usual appellate deference to a trial judge who saw and heard witnesses. The judge below had found extensive dishonesty by Mr Fielding (including forgery, perjury and orchestration of an illegal conspiracy) but nevertheless held that the transfers of assets from Northstar and Seaquest and the grant of an intellectual property licence were lawful. On the basis of the judge's detailed findings of fact the Court found no realistic prospect of success on appeal against the main judgment, the strike-out decision and the IP licence decision. The Court granted permission to appeal only in relation to the costs order for the main action because of arguable questions about whether pervasive dishonesty by a successful party should displace the usual costs rule. The Court considered s.727(1) of the Companies Act 1985 but concluded it did not affect the outcome on the judge's findings.

This was an application for permission to appeal from multiple interlocutory and final decisions of Lewison J in a long Chancery Division trial (over 90 hearing days; judgment running to 1929 paragraphs). The applicants sought permission to appeal the main substantive judgment, the costs decision for the main action, the striking-out of the Leeds proceedings, the decision on an intellectual property licence (the "IP Action") and the refusal to permit contempt proceedings.

Parties and posture: Ultraframe (appellant) challenged findings and orders made after trial of claims involving Northstar Systems Ltd, Seaquest Systems Ltd and various Burnden companies and individuals, with Lewison J finding that Mr Fielding had acted dishonestly but nevertheless upholding certain asset transfers and an IP licence. The appeals were from determinations in the Chancery Division; the record included earlier decisions of Lewison J ([2005] EWHC 1638 (Ch); preliminary issues [2004] EWHC 2624 (Ch); and costs and related rulings including [2005] EWHC 2506 (Ch)).

Issues framed by the Court: (i) whether there were realistic prospects of success on a full or partial appeal against the main findings that the transfers of assets and the licence were lawful despite findings of dishonesty; (ii) whether the costs order should be disturbed in light of the successful party's dishonest conduct and the expenses of exposing forgeries and perjury; (iii) whether the Leeds proceedings were rightly struck out as seeking reflective loss; (iv) whether the IP licence could be impugned; and (v) whether contempt proceedings should have been permitted.

Reasoning and conclusions: the Court reiterated the appellate standard that an appeal must show the judge was wrong and gave deference to Lewison J's careful, granular findings of fact and his assessment of witnesses. On the main action the Court concluded there was no realistic prospect of upsetting the judge's detailed findings that the transfers were lawful and of little value and that there were good commercial reasons for them. The attempted analogy with The Ikarian Reefer was distinguished because Lewison J had already found pervasive dishonesty but nevertheless analysed individual transactions and did not make the error the Court of Appeal there had identified. The Court held the Leeds claim was properly characterised as reflective loss and was at odds with Ultraframe's earlier stance; the IP licence was found on the facts to be a genuine transaction and affirmed by the liquidator; contempt proceedings were a discretionary matter appropriately refused by the judge, who had taken account of the overriding objective and the need to avoid re‑litigation beyond reasonable doubt. The single point on which permission was granted concerned costs: the Court recognised arguable grounds to challenge whether pervasive dishonesty by a successful party should affect the usual costs rules and whether the costs order below adequately reflected the costs of exposing dishonesty.

This Court refused permission to appeal in respect of the main action, the strike-out of the Leeds action, the IP action and the contempt proceedings. Permission to appeal was granted only in relation to the costs order for the main action. The Court reasoned that given Lewison J's detailed and careful factual findings (including that transfers and the IP licence were lawful and of little value) there was no realistic prospect of showing legal error or that he was "wrong" on the principal matters; by contrast there were arguable legal and public‑policy grounds to permit an appeal on costs because pervasive dishonesty by a successful party raised questions about whether the usual costs rule should be displaced and whether the costs order adequately reflected the expense of exposing forgeries and perjury.

Appeal from the High Court of Justice, Chancery Division (Lewison J) (see HC 03 CO3199 / HC 02 C03545 / HC 03 C00992 / HC 02 CO2548). The judgment under appeal included Lewison J's main judgment [2005] EWHC 1638 (Ch), his preliminary issues judgment [2004] EWHC 2624 (Ch), and subsequent costs and related rulings including [2005] EWHC 2506 (Ch). The present decision is a determination of five separate applications for permission to appeal to the Court of Appeal (Civil Division), dated 08 August 2006 [2006] EWCA Civ 1133.