McGuire v Rose

Permission for a second appeal requires more than a real prospect of success. Under CPR Part 52.13, the proposed appeal must raise an important question of principle or practice, or there must be some other compelling reason for the Court of Appeal to hear it. Where the material provided is inadequate for a fair assessment, and a detailed review would be disproportionate and risk error, the application may be adjourned to a full court. A bankruptcy order that was not successfully challenged cannot be reopened in later proceedings.

Michael McGuire sought an extension of time and permission for a second appeal against an order of Lewison J dismissing his appeal with costs. The order under appeal concerned an application for leave to bring a claim against Robert Rose, the trustee in bankruptcy, under section 304(1) of the Insolvency Act 1986. Lewison J had concluded that the proposed claims could not realistically turn the bankruptcy estate’s deficiency into a surplus. Arden LJ refused permission on the papers. The central issues were whether the delay should be extended and whether the statutory criteria for a second appeal were satisfied.

1. The application was a renewed application for an extension of time and permission to appeal. Because the proposed appeal was a second appeal, CPR Part 52.13 required an important question of principle or practice, or some other compelling reason for the appeal to be heard. A real prospect of success alone was insufficient.

2. The bankruptcy order had been made in 1996 and the challenge to it had ended when permission to appeal out of time was refused and that refusal was endorsed by the Court of Appeal in 2002. The court therefore had to proceed on the basis that the bankruptcy order was properly made and could not be reopened.

3. The proposed claim against the trustee depended on showing realistic prospects in relation to the alleged undervalue sale of properties, estate solicitors’ fees, the trustee’s remuneration, and the conversion of the estate’s shortfall into a surplus. The existence of a possible surplus was critical because, without one, McGuire had no interest in pursuing the claim. Rimer LJ had no confidence that Lewison J’s careful assessment was materially wrong.

4. The material initially provided did not include evidence essential to a proper assessment. A detailed trawl through the extensive bundle would have taken days, been disproportionate to a permission application, and carried a risk of error without adequate assistance. The fairest course was therefore to adjourn the application to a full court on notice to the respondent, with the appeal to follow immediately if an extension and permission were granted.

5. The hearing was directed to be before two Lords Justices, one with Chancery experience, with one day allowed. Rimer LJ doubted that the appeal raised an important question of principle or practice, but left open the possibility of a compelling reason if McGuire could show that he had wrongly been deprived of an opportunity to bring an otherwise available claim.

1. Court of Appeal (Civil Division) — Arden LJ refused permission on the papers. On renewal, Rimer LJ adjourned the application for an extension of time and permission to a full court, with the proposed appeal to follow if permission were granted.

2. High Court (Chancery Division) — Lewison J dismissed McGuire’s appeal against the County Court order, with costs: [2010] EWHC 2835 (Ch).

3. Norwich County Court — District Judge Sparrow had dismissed the application for leave to bring a claim against the trustee in bankruptcy under section 304(1) of the Insolvency Act 1986.