Barons Finance Ltd v Barons Bridging Finance & Anor

On an application for permission to appeal, permission is appropriate where the proposed appeal has a realistic prospect of success. That threshold may be met where procedural decisions prevented a party from adducing or testing evidence concerning fraud, a transaction at an undervalue, debt valuation or enforceability. A litigant in person should have a proper opportunity to meet an allegation of fraud, including by giving evidence and, where necessary, being cross-examined. Where relevant evidence has been excluded, it may be procedurally unfair to resolve evidential doubts against that party by applying the principle in Armory v Delamirie (1722) 1 Strange 505. These were permission-stage conclusions, not final merits findings.

A liquidator applied to set aside a deed of assignment by which Barons Finance Ltd was said to have assigned its book debts. The appellants maintained that the deed, purportedly dated 31 March 2012, was executed later, after the winding-up petition had been issued and before the winding-up order was made. The proceedings involved allegations of backdating or fraud and a transaction at an undervalue.

Before the Court of Appeal, the appellants complained that disclosure was refused and that a substantive witness statement was excluded as late, while the FCA was permitted to participate and rely on documents. They also challenged the first-instance analysis of the value and enforceability of the debts. The central issue was whether the proposed appeal had a realistic prospect of success.

1. Permission granted. The court granted permission because the proposed appeal had a realistic prospect of success. It did not determine whether the assignment was fraudulent, made at an undervalue, or otherwise invalid.
2. Procedural fairness and fraud. The allegation that the assignment had been backdated amounted in substance to an allegation of fraud, although fraud had not been expressly pleaded. The exclusion of the appellants’ substantive witness statement appeared to deprive Mr Gopee of an opportunity to give evidence and be cross-examined. As an experienced litigant but not experienced counsel, he may not have understood how to meet the allegation. It was therefore arguable that the proceedings were procedurally unfair and that the evidence had not been adequately considered.
3. Valuation and undervalue. The first-instance judgment appeared not to analyse the alternative undervalue claim adequately. It did not address the company’s filed accounts or reconcile them with the liquidator’s schedule of debts. There were also arguable issues concerning the value of a judgment debt, the priority of Kensington’s security, and whether particular debts were enforceable.
4. Consumer credit evidence. The appellants’ case was that some contracts were void or unenforceable under the Consumer Credit Act. In those circumstances, it was arguable that it was procedurally unfair to apply the evidential principle in Armory v Delamirie (1722) 1 Strange 505 against them when they had been prevented from adducing relevant evidence.
5. The appellants were permitted to amend their grounds within 28 days. The appeal was directed to be listed for one day. Costs of the permission application were reserved, and the stay was continued.

• Court of Appeal (Civil Division): Granted permission to appeal, permitted amended grounds addressing fraud and undervalue, reserved costs, and continued the stay.
• High Court, Chancery Division: The judgment under appeal was given by Mr Halpern QC. Its citation is not stated in the judgment.