Tanner v Millar

Permission to appeal should be refused where the proposed appeal has no real prospect of success and no other compelling reason supports an appeal. Fresh evidence will generally be admitted only where it could not have been obtained with reasonable diligence, would probably materially influence the result, and is presumably credible. Lawyers’ defaults do not, without more, satisfy the reasonable-diligence requirement.

For insolvency purposes, a debtor’s insolvency is not avoided by the possibility that a friend might voluntarily provide funds, where the friend has no legal obligation to do so. The exceptional discretion not to order repayment of a transaction at an undervalue requires good grounds arising from the established facts.

The appellant sought renewed permission to appeal against a Cambridge County Court judgment made by District Judge Pelly on 31 May 2012. The district judge had ordered repayment of £425,000 under section 339 of the Insolvency Act 1986, finding that payments by the bankrupt to the appellant were transactions at an undervalue.

The proposed grounds concerned fresh evidence about the authenticity of artwork, the bankrupt’s alleged access to financial support, the character of a £100,000 payment, an alleged obligation arising from financial support and accommodation, and the discretion under section 399. The central questions were whether the evidence could properly be admitted and whether any ground gave a real prospect of success.

1. Application dismissed. The appellant failed to show any real prospect of success on appeal, and there was no other compelling reason for an appeal.
2. Under rule 52.11(2)(b) of the Civil Procedure Rules 1998, the court’s discretion to receive fresh evidence must give effect to the overriding objective. The principal considerations were whether the evidence could have been obtained with reasonable diligence for use at trial, whether it would probably have an important influence on the result, and whether it was presumably credible. The guidance in Campbell v Daejan Properties Limited [2012] EWCA Civ 1503, adopting the factors stated in Ladd v Marshall [1954] 1 WLR 1489, was applied.
3. The proposed evidence concerning the Italian proceedings and the authenticity of the drawings failed all three considerations. It could have been obtained with reasonable diligence, including by approaching an obvious witness. It would not probably have altered the insolvency finding, which rested on existing judgments establishing the bankrupt’s substantial damages liability. Nor was the evidence sufficiently credible or expert to displace the evidence relied on below.
4. The same reasoning applied to evidence that the appellant might have provided funds to meet the bankrupt’s liabilities, and to evidence concerning the £100,000 payment. A friend’s willingness to make a voluntary gift, without legal obligation, did not prevent the bankrupt from being insolvent for the purposes of section 339 of the Insolvency Act 1986.
5. The evidence supported the finding that financial support and free accommodation were provided without an intention to create binding legal obligations or a constructive trust. The payments therefore remained transactions at an undervalue.
6. The exceptional discretion recognised in Singla v Brown [2008] 2 WLR 283 did not assist the appellant. This was a clear case for repayment, there were no good grounds for withholding the order, and the discretion had not been invoked at trial.

• High Court (Chancery Division): Renewed application for permission to appeal dismissed. The court supplemented and affirmed its earlier refusal of permission on the papers.
• Cambridge County Court: District Judge Pelly ordered repayment of £425,000 under section 339 of the Insolvency Act 1986 after finding that payments to the appellant were transactions at an undervalue.