Dadourian Group International Inc & Ors v Simms & Ors

Permission to appeal may be extended to additional grounds where they are materially connected with grounds already permitted and are necessary for a fair consideration of the appeal. Factual issues should be confined, and challenged findings identified precisely. A costs discretion will rarely justify permission where the judge applied the correct principles and adopted a sound overall approach. Permission may nevertheless be appropriate where an indemnity costs order arguably lacked a sufficient evidential basis. An appeal concerning material non-disclosure affecting freezing orders may examine whether the non-disclosure was innocent or deliberate. Issues concerning the interpretation of a first-instance order should ordinarily be referred to the judge who made it before being pursued in the Court of Appeal.

The respondents brought Chancery proceedings to recover substantial damages following an arbitral award arising from a failed option agreement concerning production-line assets. Warren J found that representations about the ownership and control of the purchasing company were fraudulent and held the appellant liable as a joint tortfeasor with other defendants.

After judgments and orders made in November 2006, March 2007 and July 2007, the appellant renewed applications for permission to appeal. The proposed grounds concerned implied representations, inducement, joint-tortfeasor liability, costs, indemnity costs, an inquiry as to damages, and the validity of freezing orders following alleged material non-disclosure. A further issue concerned the interpretation of a stay in the first-instance order.

The Court of Appeal granted permission on Grounds 2, 3, 6, 10 and 14. Permission on Ground 13 was granted on the assumption that Grounds 11 and/or 12, for which permission had already been granted, succeeded. Permission on Ground 9 was refused. The application to vary or clarify the stay order was adjourned to Warren J, and costs were reserved.

1. Additional grounds. Grounds concerning inducement, the claimants’ knowledge and the use of presumptions were sufficiently connected with the permitted grounds concerning the meaning of the two emails and the appellant’s alleged joint-tortfeasor liability. It would therefore be inappropriate to prevent those arguments being advanced. The factual issues were to be kept as narrow as possible, with each challenged finding specifically identified.
2. Costs. The correct approach required consideration of the parties’ success and failure on the issues, the time taken by each issue, and an overall assessment. Warren J had applied those principles and was entitled to treat the ownership and concealment of the purchasing company as the essence of the claim, despite the claim having been advanced in several ways. There was no realistic prospect of successfully challenging that exercise of discretion.
3. Indemnity costs. Permission was appropriate because the indemnity costs order raised an arguable issue with a real prospect of success. The documents were voluminous, the documents criticised were few, there was no clear finding of deliberate conduct, and the primary disclosure obligation may have rested on other defendants.
4. Freezing orders. If the appellant succeeded on the liability grounds or established that the freezing orders had been improperly granted, he was entitled to argue for an inquiry as to damages. The appeal concerning material non-disclosure necessarily required examination of the circumstances of the non-disclosure, including whether it was innocent or deliberate.
5. Interpretation of the stay order. The bankruptcy-related issue could not properly be determined on the ex parte application. Since it principally concerned the interpretation of Warren J’s order, it should first be referred to him on notice.

• Court of Appeal (Civil Division): on the renewed application, permission was granted on Grounds 2, 3, 6, 10 and 14, conditionally on Ground 13, refused on Ground 9, and the stay-order issue was adjourned to Warren J: [2008] EWCA Civ 474.
• High Court of Justice, Chancery Division: Warren J had determined the underlying proceedings and subsequently made orders concerning permission to appeal, costs, indemnity costs and freezing orders.