Yongxiong v Gate Ventures Plc

Permission to amend grounds of appeal should be granted where the proposed ground has a real prospect of success. An application to admit fresh evidence is assessed by reference to the Ladd v Marshall criteria, applied in the context of the overriding objective. Evidence may have an important influence on an administration decision by undermining the general cogency of the evidence on which the discretion was exercised, even if the evidence concerns only one matter. Where fresh evidence suggests that the original judgment may have been obtained by fraud, the appeal court should ordinarily require the fraud issue to be determined separately unless the fraud is admitted or incontrovertible. A prima facie prospect of proving deliberate misleading is sufficient for permission to appeal, but not for determining the fraud issue itself.

The appellant, a shareholder and creditor of Gate Ventures Plc, sought to amend his grounds of appeal against the dismissal of his application for an administration order. The first-instance judge had accepted that the company was cash-flow insolvent and that the purpose of administration could be achieved, but declined to make the order because the company appeared better able to trade out of its difficulties outside formal insolvency.

The proposed amendments relied on later evidence concerning the reliability of the company’s cash-flow forecasts and alleged that the court had been deliberately misled. Permission to appeal had previously been refused on the original grounds. The central issues were whether the proposed fresh evidence satisfied the applicable criteria and whether the fraud allegation could properly be determined within the appeal.

1. Amendment and permission. The applicable test for both applications was whether the proposed new ground had a real prospect of success.
2. Fresh evidence. The criteria in Ladd v Marshall were applicable, subject to the overriding objective: the evidence could not reasonably have been obtained earlier; it would probably have an important influence on the result, although it need not be decisive; and it was presumably credible. The first and third criteria were satisfied.
3. The later evidence showed that the company’s forecast had presented the position of Ginger & Moss Limited too optimistically. Although the payments concerned were relatively small compared with the company’s wider forecast income, the evidence had a real prospect of undermining the general cogency of the company’s evidence. The exercise of discretion had been finely balanced, and the first-instance judge had expressly balanced the cogency of the evidence on each side. The proposed fresh-evidence ground therefore had a real prospect of success.
4. Alleged fraud. Under Noble v Owens, where fresh evidence suggests that the original judgment may have been obtained by fraud, the fraud issue should ordinarily be determined separately. An appeal and retrial may be ordered where the fraud is admitted or the evidence is incontrovertible. The issue may be referred for determination by a High Court judge under CPR 52.20(2)(b), rather than necessarily requiring a fresh action.
5. The company denied deliberate misleading. The allegation could not be determined without cross-examination and was not incontrovertible. Nevertheless, there was a real prospect of establishing at least a prima facie case that the court had been misled, and permission was granted on that ground as well. The judge left open whether a direction under CPR 52.20(2)(b) should be made before the appeal was determined.

• High Court (Chancery Division): Permission to appeal had been refused on the papers by Roth J. On renewal, permission was again refused on the original grounds. Mr Justice Zacaroli granted permission to amend the grounds and permission to appeal on the proposed fresh-evidence and deliberate-misleading grounds.
• The judgment under appeal was the order of ICC Judge Prentis dismissing the application for an administration order. Its citation was not stated.