Case closed: Court of Appeal has no inherent jurisdiction to review decision by single Court of Appeal Judge refusing permission to appeal if refusal is 'arguably wrong'

The Court of Appeal has confirmed that it has no inherent jurisdiction (outside Civil Procedure Rule.52.30 which applies in very limited circumstances) to reopen an appeal where a single judge has refused permission

The Court of Appeal noted that it is never enough to demonstrate that the refusal was arguably wrong, and that instead the rules around reopening a refusal of permission are narrowly confined.(1)

Facts

The claimant was incorporated in 1998 to take over a project to recycle furniture which had been started some years earlier by volunteers in Aberystwyth.  One of the volunteers was the first defendant / appellant who became a director of the claimant, along with four others.  In 2003 the claimant purchased a property (a derelict platform at Aberystwyth Railway Station) and adjacent waste land.  The claimant company moved into a property developed on the land. The first and second defendants took financial and accountancy advice in relation to the provision for themselves of pensions from the claimant, which resulted in the property being largely transferred (in several transactions) to the pension fund with a leaseback to the claimant. 

In March 2019, the claimant issued a claim against the first and second defendants for breach of directors' duties in relation to the property transactions. The defendants denied any wrongdoing, contending that, as the claimant was a company limited by guarantee with no shareholders, they were entitled as the only members and directors to make the relevant property transfer and their actions could be attributed to the claimant, so that they had acted lawfully.

At first instance, the High Court held that the defendants were in breach of their duties under sections 171 to 177 of the Companies Act 2006 (the 2006 Act) and of their fiduciary duty to the company but that they had not acted dishonestly.  The defendants appealed on the grounds that the High Court was wrong as a matter of law to draw a distinction between the capacity and powers of the claimant company and to find that the first and second defendants had acted outside the powers and in breach of duty, and that the Court ought to have found that the company, acting by or with the unanimous agreement of its members, had capacity and power to deal with its property in any lawful manner. 

Popplewell LJ refused permission to appeal.  In August 2021 the defendant applied under CPR 52.30 and the Court of Appeal's inherent jurisdiction permission to reopen the appeal.  The application to reopen the appeal came before Andrews LJ on paper.  Andrews LJ considered that Popplewell LJ had not directly engaged with one of the issues raised by the first defendant's proposed appeal and ordered that the application to reopen should be dealt with at the same time as the application for permission to appeal (if reopening the appeal was allowed) at a hearing before the full Court of Appeal.

Decision

The Court of Appeal began by noting that the appellant's submissions proceeded on the "fundamental misapprehension" that the Court of Appeal had some inherent jurisdiction to review a decision by a single Court of Appeal judge to refuse permission to appeal if the issue raised on appeal was an arguable one, so that the decision to refuse permission was "wrong".   The Court of Appeal said that such supposed jurisdiction would be completely contrary to CPR 52.30(1) and (2), which is a tightly constrained jurisdiction.  The Court of Appeal will only reopen a refusal of permission to appeal if the criteria in that rule are satisfied.  Those rules provide that an appeal – including a decision on permission to appeal – will not be reopened unless: (a) it is necessary to do so in order to avoid real injustice; (b) the circumstances are exceptional and make it appropriate to reopen the appeal; and (c) there is no alternative effective remedy.

The Court of Appeal further noted that the existence of such an inherent jurisdiction would also contradict a number of decisions of the Court of Appeal regarding the appeal jurisdiction, which make it clear that it is never enough to demonstrate that the refusal of permission was arguably wrong.(2)

The Court of Appeal also rejected the appellant's argument that the inherent jurisdiction derived from or was supported by the power given in CPR 3.1(7).  

The Court of Appeal confirmed that whilst an exhaustive definition of the circumstances in which this discretion could be exercised was not possible, as a matter of principle it could normally only be exercised: (a) where there has been a material change of circumstances since the order was made or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated.(3)

Accordingly here any application to reopen the appeal could only be made under CPR 52.30. 

As to the satisfaction of the criteria set out in CPR 52.30(1) itself, the Court of Appeal endorsed the commentary in the White Book, which states that the rule is drafted in highly restrictive terms, is truly exceptional, and that both practitioners and litigants should note the high hurdle to be surmounted and should refrain from applying to reopen the general run of appellate decisions.  The Court of Appeal confirmed that the jurisdiction could only be properly invoked where it is demonstrated that the integrity of the earlier proceedings had been critically undermined.

As to whether the present case met that high threshold, the Court of Appeal held that it did not.  Whilst Popplewell LJ had not expressly dealt with a point raised by the appellant under section 39 of the 2006 Act regarding the ultra vires doctrine, the Court of Appeal held that this was a "bad point": the fact that section 39 abolished the ultra vires doctrine as between the company and third parties did not relieve the directors from liability to the company for their breach of duty or wrongdoing merely because, as members of the company, they agreed with the course which was taken. 

As to Popplewell LJ's reasoning in dismissing the appeal, the Court of Appeal held that Popplewell LJ had dealt expressly with the appellant's main argument in refusing permission to appeal.  The Court noted that Andrews LJ herself had recognised on paper that the High Court's reasons for rejecting the defendant/appellant's main argument and Popplewell LJ's reasons for refusing permission to appeal in respect of it, were unimpeachable. The Court of Appeal held that it followed that, although Popplewell LJ had not dealt expressly with all of the appellant's arguments, he had been right to refuse permission to appeal.  From this, it had to follow that the appellant could not begin to satisfy the first two criteria for reopening an appeal under CPR 52.30.  There could be no question of it being necessary to reopen the appeal to avoid real injustice, and the appellant could not show that he had suffered any injustice from his application for permission to appeal being refused. Furthermore, there was no question of the circumstances of the case being exceptional.  

The Court of Appeal held that it was clear from the authorities that "exceptional" meant more than merely out of the ordinary run of cases, but rather that an obvious and egregious error has occurred in the permission to appeal process which error has vitiated or corrupted the very process itself or, the integrity of that process has been critically undermined. In circumstances where Popplewell LJ did not expressly deal with a particular point, but was right to refuse permission to appeal, the appellant came nowhere near satisfying that test.

This application to reopen the refusal of permission to appeal therefore failed.

Comment

Once again the Court of Appeal has confirmed the highly restrictive nature of the appeal rules. In doing so it has closed down, for sound policy reasons, any suggestion of there being any special jurisdiction to re-open an appeal beyond the strict criteria contained in the Civil Procedure Rules.   However, that decision did appear to turn on the fact that the analysis undertaken by the appeal judge was "unimpeachable".  Parties seeking to reopen an appeal permission decision must consider if they meet the very high threshold.

(1) Ceredigion Recycling and Furniture Team v Pope [2022] EWCA Civ 22.
(2) (R (Goring on Thames Parish Council) v South Oxfordshire District Council [2018] EWCA Civ 860.
(3) Tibbles v SIG plc [2012] EWCA Civ 518.