Ultraframe (UK) Ltd v Fielding & Ors

Permission to appeal requires a realistic prospect of success. It is insufficient that the appellate court might prefer a different view of the evidence from the transcript, particularly where the trial judge heard the witnesses and made a detailed analysis.

A proposed point of law must arise on the findings below. Dishonesty in some respects does not make every statement or act dishonest. A shareholder’s claim may be reflective loss suffered by the company and therefore unrecoverable. Serious dishonesty by a successful party may justify reconsidering the usual costs order.

Ultraframe sought permission to appeal from judgments of Lewison J arising from extensive disputes involving Northstar, Seaquest and related companies. The principal judgment was [2005] EWHC 1638 (Ch); related decisions included the preliminary judgment at [2004] EWHC 2624 (Ch) and a costs judgment later reported at [2005] EWHC 2506 (Ch).

The High Court found serious dishonesty by Mr Fielding, but held that the relevant asset transfers were lawful and that an intellectual-property licence was valid. Ultraframe made five applications concerning the main action, costs, the Leeds action, the IP action and contempt proceedings. The central issue was whether any proposed appeal had a realistic prospect of success.

Lord Justice Jacob gave the reasons, with which Lord Justice Waller agreed.

1. Disposition. Permission was refused in the main action, the Leeds action, the IP action and the contempt proceedings. Permission was granted in relation to the costs of the main action. Whether that permission extended to the costs of other actions was left for further submissions.
2. Appellate threshold. The proposed appeal had to show that the decision below was wrong and a realistic prospect of success. It was insufficient merely to show that the Court of Appeal might take a different view of evidence from the transcript. Particular respect was required for the trial judge’s assessment of witnesses, especially after a lengthy trial. An appeal could be confined to inferences from primary facts or points of law, but those points had to arise on the findings below.
3. Main action. There was no realistic prospect of disturbing the judge’s detailed findings concerning the assets transferred, the timing and reasons for the transfers, or the validity of the intellectual-property licence. The legal transfer of a business involved transfers of the assets used to conduct it, including tangible assets, goodwill, customer lists, know-how and intellectual-property rights. The comparison with The Ikarian Reefer [1995] 1 Lloyd's Law Rep. 455 did not assist because the judge had not treated all of Mr Fielding’s evidence or conduct as dishonest; he had analysed each matter separately.
4. The argument under Companies Act 1985 s.727(1) disclosed no error. On the findings concerning the transfer of the business, the relief provision did not arise. The failure to declare an interest which was already known was treated as no more than a technical breach.
5. Other applications. The Leeds claim was in substance a claim for reflective loss suffered by the companies and was inadequately particularised and unrealistic. The IP licence was found to be genuine, partly paid for and affirmed by the liquidator. The refusal to permit contempt proceedings was a discretionary decision supported by ample material. Any contempt would require proof beyond reasonable doubt, and the judge was entitled to consider the overriding objective and whether the exercise should be undertaken by Ultraframe.
6. Costs. It was arguable that a successful party’s serious dishonesty, including lying, maintaining forgeries and lengthening the trial, could displace the usual costs rules or require the order to reflect the costs of exposing that conduct. That issue warranted permission to appeal.

• Court of Appeal (Civil Division): On 8 August 2006, permission was granted only in relation to the costs of the main action; the other applications were refused.
• High Court of Justice, Chancery Division: Lewison J determined the main dispute in [2005] EWHC 1638 (Ch), related preliminary issues in [2004] EWHC 2624 (Ch), and costs in [2005] EWHC 2506 (Ch).