UCP Plc v Nectrus Limited

A judge may ordinarily reconsider an earlier decision because professional judges are expected to retain an open mind. Recusal may nevertheless be required where a later application directly challenges the fairness of that judge’s own procedural conduct. The question remains whether all the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility of bias.

Permission to appeal already granted may be set aside only for a compelling reason. Where the parties advance opposing interpretations of a decisive authority, fairness may require full submissions before permission is withdrawn. A final permission decision may be reopened under CPR 52.30 only where reopening is necessary to avoid real injustice, the circumstances are exceptional, and no alternative effective remedy exists.

UCP recovered approximately £7.8 million in damages from Nectrus for breach of an investment management agreement. The High Court rejected Nectrus’ argument that UCP’s loss was reflective loss recoverable only by its subsidiary.

Flaux LJ granted Nectrus permission to appeal on the reflective-loss ground, with the papers to be returned after the Supreme Court decided Marex. After receiving opposing letters from the parties, he withdrew permission without requesting full submissions. He subsequently refused Nectrus’ first application under CPR 52.30, despite its request that another judge hear the application.

Following Primeo Fund v Bank of Bermuda [2021] UKPC 22, Nectrus made a second CPR 52.30 application. The Court of Appeal considered apparent bias, recusal, the validity of the earlier decisions, and whether the final refusal of permission should be reopened.

1. Application allowed. The first CPR 52.30 decision and the decision withdrawing permission to appeal were set aside. Nectrus’ permission to appeal on the reflective-loss ground was confirmed.

2. The governing test was whether all the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility of bias. A judge’s prior determination of an issue does not, by itself, satisfy that test. Judges routinely and properly reconsider decisions when presented with new circumstances or arguments.

3. The position is materially different where the judge’s own procedural fairness is under direct challenge. Flaux LJ had withdrawn previously granted permission without full submissions, despite knowing that the parties advanced diametrically opposed interpretations of the Supreme Court’s decision. His subsequent imposition of a 24-hour deadline and refusal to permit the application under CPR 3.3(5) to be issued appeared unorthodox and progressively harder towards Nectrus. Taken together, those circumstances would have led the informed observer to perceive a real possibility of bias.

4. Flaux LJ ought to have recused himself from the first CPR 52.30 application. The standard response that a professional judge can reconsider a decision is appropriate initially, but it does not replace judicial consideration of the particular recusal grounds. Judges should consider recusal carefully where their own procedural decisions are attacked as unfair and should give reasons, however brief, for refusing recusal.

5. The withdrawal of permission was in substance a decision under CPR 52.18. Permission already granted could be set aside only for a compelling reason. Given the importance of the issue and the parties’ conflicting positions, withdrawing permission without full argument critically undermined the integrity of the process.

6. The requirements of CPR 52.30(1) were satisfied. Reopening was necessary to avoid real injustice, the circumstances were exceptional, and no alternative effective remedy existed. In light of Primeo Fund v Bank of Bermuda [2021] UKPC 22, there was also a powerful probability that the refusal of permission had produced an erroneous result. The second application therefore succeeded.

1. Court of Appeal (Civil Division), constituted as a three-judge court: The court allowed the second CPR 52.30 application, set aside Flaux LJ’s first CPR 52.30 order and his withdrawal of permission, and confirmed Nectrus’ permission to appeal on the reflective-loss ground: [2022] EWCA Civ 949.

2. Court of Appeal, Flaux LJ: On 21 January 2021, the judge dismissed Nectrus’ first CPR 52.30 application. On 24 July 2020, he had withdrawn permission to appeal after earlier granting permission on 29 May 2020.

3. High Court, Commercial Court: Sir Michael Burton awarded UCP approximately £7.8 million and rejected the reflective-loss defence. No citation is stated in the judgment.