Shearer & Ors v Spring Capital Ltd & Ors

On an application for permission to appeal an interim decision, the court must ask whether the proposed appeal has a real prospect of success or whether there is another compelling reason for it to be heard. Where pleadings raise arguable issues of mixed fact and law, particularly in an underdeveloped area of law, strike out or summary judgment is inappropriate unless the point is self-evidently bad and a trial would be pointless. The court may depart from the general costs rule where the successful party’s success is qualified by the nature of the interim proceedings, evidential developments, overlap with the trial, or the need to provide security. An interim appeal may properly be refused where it risks duplicating a later appeal and delaying the final determination.

The claimants sought continuation of an interim injunction restraining enforcement of security and resisted the first defendant’s challenge to pleadings concerning an alleged tender of the debt. In an earlier judgment, [2013] EWHC 3148 (Ch), the court refused strike out and summary judgment on the tender issue and granted interim relief.

This judgment determined the remaining issues concerning fortification of the cross-undertaking in damages, costs, and permission to appeal. The central questions were whether the security offered was sufficient, what costs order fairly reflected the interim success, and whether an appeal against the refusal of summary disposal had a real prospect of success.

1. Cross-undertaking. The claimants’ proposed security over shares in the third claimant was sufficient for the time being. The evidence indicated that the shares were likely to provide ample security for realistic damages, while the order permitted either party to seek variation. A further charge over Docklands property was therefore unnecessary.
2. Costs. CPR rule 44.2 made the general rule that the unsuccessful party pays the successful party’s costs only a starting point. The court could depart from it where the interim proceedings substantially overlapped with the trial, helped refine the issues, involved late evidence, required additional security, or included an interim injunction application for which costs in the case were common. The appropriate order was that the costs of both applications be the claimants’ costs in the issue of the validity of the tender.
3. Permission to appeal. Under CPR 52(5), permission could be given only if the appeal had a real prospect of success or there was another compelling reason for it to be heard. The pleaded tender issue involved interlocking questions of fact and law, including conditionality, availability of funds, and the formalities of redemption. It was not appropriate to determine those questions summarily. The test was whether a trial would be pointless because the case was self-evidently bad, not whether the defendant’s legal submissions might ultimately succeed.
4. The authorities, including Hughes, Mentmore and Doncaster, required a particularly high degree of confidence before summary disposal. The court was not persuaded that it had erred in law, taken irrelevant matters into account, omitted relevant matters, or was plainly wrong in directing a trial. Permission to appeal was refused. The court also noted, as a practical matter rather than part of its reasoning, that an interim appeal risked duplicating a later appeal, increasing cost, and delaying final resolution.

The judgment records an earlier decision of the same court, [2013] EWHC 3148 (Ch), which granted interim relief and refused strike out and summary judgment on the tender issue. Permission to appeal that decision was refused in the present judgment.