KL Capital Limited v Kenneth Townsley & Ors

Permission to appeal should be refused where the proposed ground has no real prospect of success and no other compelling reason justifies an appeal. A first-instance judge may reconsider the underlying arguments and refuse permission where firmly satisfied that the decision was correct. The fact that an issue concerns a developing area of law does not, by itself, provide a compelling reason for an appeal where the decision applies recent Supreme Court guidance to the facts. Nor is permission justified merely because a contractual construction point was resolved by applying well-known principles and there is no real prospect of appellate intervention.

The claimant had obtained permission to amend its claim. The Third Defendant’s alternative application to strike out the claim or obtain summary judgment had been dismissed in an earlier judgment of the same court.

The Third Defendant applied for permission to appeal on two grounds. The first challenged the conclusion that the claim was not barred by the rule against reflective loss. The second challenged the construction of the definition of Proposed Claims, which the court had held was at least arguably broad enough to include the Stage II claims. The court considered whether either proposed ground satisfied the requirements of Civil Procedure Rules 1998, rule 52.6.

1. Permission test. Under CPR 52.6, permission to appeal required either a real prospect of success or some other compelling reason for the Court of Appeal to hear the case.
2. Reflective loss ground. The judge reconsidered the argument that the claimant’s loss was reflective loss suffered in its capacity as a shareholder. He remained firmly of the view that the claim was based on loss suffered as an investor, because it was said that the claimant would not have subscribed for shares but for the defendants’ deceit. The proposed appeal therefore had no real prospect of success on that ground.
3. The developing nature of the doctrine of reflective loss did not provide a compelling reason for an appeal. The Supreme Court had recently considered the doctrine, and the decision was regarded as an application of that guidance to the facts. The issue arose in the context of a strike-out and summary-judgment application, and an appeal was not necessary merely because the factual pattern might recur.
4. Contractual construction ground. The conclusion that the definition of Proposed Claims was at least arguably broad enough to include the Stage II claims resulted from applying established principles of contractual construction to the agreement and the facts. There was no real prospect that the Court of Appeal would reach a different conclusion.
5. The application for permission to appeal was rejected.

The court’s earlier judgment allowed the claimant’s application for permission to amend and dismissed the Third Defendant’s application to strike out the claim or obtain summary judgment. The present judgment refused permission to appeal from that decision.