Brown & Ors v Innovatorone Plc & Ors

On an application for permission to appeal, the court may grant permission for specific arguable grounds while refusing grounds with no prospect of success. New points not taken below may be excluded. The court may also refuse fresh relief against parties that did not participate at trial. A negligence claim may add little to a trust claim, although lack of appropriate skill and care may remain relevant to relief under section 61 of the Trustee Act 1925. Extensive grounds should be reformulated concisely before a complex appeal proceeds.

The applicants invested in geared technology investment schemes promoted through partnerships and claimed substantial losses after the expected tax advantages failed. They brought claims including breach of trust, breach of fiduciary duty, negligence, dishonest assistance and breaches of the Financial Services and Markets Act 2000.

Hamblen J dismissed the claims in the Commercial Court in [2012] EWHC 1321 (Comm). The applicants sought permission to appeal on numerous grounds concerning Quistclose trusts, partnership status, powers of attorney, fiduciary duties, statutory claims and alleged document alterations. The central issue was which grounds had sufficient prospects to proceed.

The Court of Appeal granted permission to appeal in part and refused it in part. It did not determine the merits of the proposed appeal.

1. Prospects and scope. The court refused permission for claims of fraud and dishonest assistance, the alleged subscription money agreement, and representation claims, since those matters had been comprehensively rejected and disclosed no sufficient prospect of success. Conspiracy claims were no longer pursued. Permission was confined to specified arguable grounds and sub-grounds.
2. Trust and fiduciary issues. Permission was granted for selected issues concerning implied conditions, including the deadlines condition, the exercise of powers of attorney, whether subscribers became partners, the application of subscription monies, breach of fiduciary duty and selected allegations concerning amendments to executed deeds. Other proposed conditions, grounds and challenges were refused. The court refused permission for the negligence ground because negligence added nothing to the trust claim save complication. It nevertheless observed that acting without appropriate skill and care might be relevant to an application for relief under section 61 of the Trustee Act 1925.
3. Statutory claims. The trial judge had found that the schemes were collective investment schemes and that the agreements were unenforceable under the Financial Services and Markets Act 2000. The court granted permission on specified Financial Services and Markets Act and fiduciary-duty grounds relating to some defendants, but did not decide the statutory merits.
4. Procedural limits. A proposed new point was refused. Permission for another point was granted subject to the respondents’ argument that it had not been taken below. Fresh relief against LLPs that had not participated at trial was inappropriate. The grounds and skeleton argument were ordered to be reformulated, with directions for the anticipated lengthy appeal.

• Court of Appeal (Civil Division): On oral renewal of the permission application, Longmore LJ and Lloyd LJ granted and refused permission on specified grounds in [2012] EWCA Civ 1587.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Hamblen J dismissed the applicants’ claims in [2012] EWHC 1321 (Comm).