Kovarska v Otkritie International Investment Management Ltd & Ors

Where permission to appeal out of time is obtained on the papers, the applicant owes the court a duty of full and frank disclosure of material facts. Under rule 52.9 of the Civil Procedure Rules 1998, serious misleading of the single Lord Justice may provide a compelling reason to set aside a composite order extending time, granting permission and admitting further evidence. The court must assess delay, merits and alleged new evidence on the true facts. Evidence available at trial, known errors, earlier concessions and the applicant’s actual financial position may be decisive. A lengthy delay cannot be justified by an incomplete account of the applicant’s previous opportunities, resources or legal representation.

Otkritie group companies obtained judgment against Ms Kovarska following a 46-day Commercial Court trial concerning the laundering of fraud proceeds. Eder J gave judgment on 10 February 2014 and made the final order on 14 March 2014. Ms Kovarska did not appeal within the extended time limit.

On 21 November 2016, a single Lady Justice extended time by two years, granted permission to appeal on nine grounds and permitted claimed new evidence. Otkritie applied to set aside that order, alleging serious misrepresentations and non-disclosures concerning Ms Kovarska’s earlier legal advice, the availability of evidence, concessions at trial and her financial resources. The central issues were whether the court had been misled and whether any extension, permission or permission to adduce further evidence should stand.

1. The respondents’ application was granted. The order of 21 November 2016 was set aside in all three respects: extension of time, permission to appeal and permission to adduce further evidence. Ms Kovarska’s application for permission to appeal was dismissed.

2. The paper procedure for permission to appeal was essentially without notice: Jolly v Jay [2002] EWCA Civ 277 at [46]. The applicant therefore owed a duty of full and frank disclosure. Under rule 52.9 of the Civil Procedure Rules 1998, the court could set aside permission in whole or in part where there was a compelling reason. The authorities treated actual misleading of the single Lord Justice as a recognised basis for relief: Barings Bank v Coopers & Lybrand [2002] EWCA Civ 1155 and Nathan v Smilovitch [2002] EWCA Civ 759. Obsession Hair and Day Spa v Hi-Lite Electrical [2011] EWCA Civ 1148 confirmed that the route applied to a composite order extending time and granting permission. The court also had an alternative power under rule 3(7).

3. A strict approach applied to an application made after the 21-day period for seeking permission to appeal, as recognised in R (Hysaj) v Home Secretary (Practice Note) [2014] 1 WLR 2472 (CA). The court nevertheless had to consider whether the interests of justice and a real prospect of success justified relief. Ms Kovarska had in fact considered an appeal while represented by experienced trial lawyers, had obtained advice and funding, and had chosen not to appeal or seek a further extension. Those facts were material to the delay and had not been fairly disclosed.

4. The alleged new evidence concerning the Pleator power of attorney was available before judgment, had been in the trial bundles and concerned an issue already addressed in closing submissions. Ms Kovarska and her lawyers had the opportunity to correct the judge’s alleged error before judgment, at the consequentials hearing or within the extended appeal period. The failure to disclose those matters materially undermined the application to rely on fresh evidence and to appeal out of time.

5. The factual bases of Grounds 7 and 8 were also misstated. Ms Kovarska had been permitted to investigate the allegedly tampered email and had adduced further evidence. On the allocation of recoveries, her leading counsel had been neutral and the judge had treated the point as abandoned or inapplicable to her. Those matters should have been disclosed.

6. The asserted inability to instruct English lawyers was inconsistent with Ms Kovarska’s ability to fund lawyers and litigation in other jurisdictions, own or access valuable property and receive financial support. On the full facts, no extension was justified and the proposed appeal grounds lacked a real prospect of success. The order was therefore set aside and permission to appeal refused.

• Court of Appeal (Civil Division): Set aside the order of 21 November 2016 extending time, granting permission to appeal and permitting further evidence. Dismissed Ms Kovarska’s application for permission to appeal.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Eder J gave judgment on 10 February 2014 and made the final order on 14 March 2014. The Court of Appeal proceedings concerned whether permission to appeal from that decision should remain available.