UCP Plc v Nectrus Ltd

Factual and Procedural Background

This case concerns the circumstances under which judges should recuse themselves and the procedural approach in the Court of Appeal when parties apply to set aside permission to appeal or to re-open a final refusal of permission to appeal under CPR Part 52.30.

In brief, Company A brought proceedings against Company B for breach of an investment management agreement, claiming losses due to diminution in value of shares in its subsidiary, Company C. After a quantum trial, a High Court Judge awarded Company A approximately £7.8 million in damages, rejecting Company B's defence that the loss was reflective loss recoverable only by Company C. Notably, Company A had sold Company C at a reduced value between the loss and the start of proceedings.

Company B applied for permission to appeal the reflective loss decision. Permission was granted on a contingent basis, pending the Supreme Court's decision in a related case (Marex v Sevilleja). Following the Supreme Court's reversal of the related Court of Appeal decision, Company B requested unconditional confirmation of permission to appeal, while Company A requested refusal of permission. The judge refused permission to appeal on the ground that it was no longer arguable.

Company B challenged the judge's second permission to appeal decision, applying to set it aside under CPR Part 3.3(5) and alternatively to re-open the refusal under CPR Part 52.30. The judge directed that the Part 3.3(5) application was inappropriate and that any application should be under CPR Part 52.30.

Company B applied to re-open the appeal and to set aside the second permission to appeal decision, requesting a different judge hear the application. The judge refused permission to re-open, dismissing the application after an oral hearing. Company B applied again to re-open both the second permission decision and the first Part 52.30 decision following a Privy Council decision that cast doubt on the judge's earlier conclusion regarding the reflective loss principle.

Legal Issues Presented

1. Whether the judge's handling of the first CPR Part 52.30 application was affected by apparent bias;
2. Whether the judge ought to have recused himself from making the first Part 52.30 decision;
3. Whether the judge's first Part 52.30 order and second permission to appeal decision should be set aside;
4. Whether (a) permission should be granted to apply to re-open the second permission to appeal decision, and (b) whether the second permission to appeal decision should be re-opened.

Arguments of the Parties

Appellant's Arguments

• The judge's refusal to allow full submissions before determining the second permission to appeal application was unfair.
• The judge improperly refused to permit or extend time for an application under CPR Part 3.3(5).
• The judge imposed an unreasonably short time limit for the CPR Part 52.30 application.
• The judge had already decided the substantive point on the application of the Supreme Court decision to Company B's appeal, closing his mind to contrary arguments.
• These circumstances amounted to apparent bias, requiring the judge's recusal from the first Part 52.30 application.
• Under CPR Part 52.30(1), it was necessary to re-open the second permission to appeal decision to avoid real injustice, given exceptional circumstances and the absence of alternative remedies.
• The integrity of the second permission to appeal application was critically undermined, and there was a real possibility that an erroneous result had been reached.

Respondent's Arguments

• It is acceptable for a judge who decided a case on paper to resolve challenges to that decision without recusal.
• The judge maintained an open mind and was capable of reconsidering the matter if new material or arguments were presented.
• Company B did not explicitly request an opportunity to file further submissions in its initial letter.
• Company B delayed at every stage of the process, which required prompt handling.
• Economic circumstances had changed, and third parties would be affected if the second permission to appeal decision were re-opened.
• Delay and failure to renew recusal requests after initial refusals undermined Company B's position.

Table of Precedents Cited

Court's Reasoning and Analysis

The court applied the established test for apparent bias from Porter v. Magill, assessing whether a fair-minded and informed observer would conclude there was a real possibility of bias. It distinguished between judges reconsidering issues on new arguments and situations where the judge's own procedural conduct was challenged.

The court found that the judge erred in refusing to call for full submissions when deciding to set aside permission to appeal he had granted, especially given the parties' diametrically opposed views on the Supreme Court decision. This procedural unfairness was compounded by the judge's refusal to permit or extend time for a CPR Part 3.3(5) application and by imposing an unreasonably short deadline for the CPR Part 52.30 application.

These actions, taken together, could lead a fair-minded observer to see a real possibility of bias. Although the judge had already decided the substantive issue on paper, that alone did not meet the bias test, but it formed a backdrop increasing the significance of other procedural errors.

The court held that the judge ought to have recused himself from hearing the first Part 52.30 application because his prior procedural decisions were under direct challenge, and fairness required sensitivity to this. The judge's failure to recuse and to give reasons for declining the recusal request was inappropriate.

Accordingly, the first Part 52.30 decision and the second permission to appeal decision were set aside.

On whether to grant permission to re-open the second permission to appeal decision, the court applied the tests in CPR Part 52.30(1) and recent case law, concluding that (a) re-opening was necessary to avoid real injustice, (b) exceptional circumstances existed, and (c) no alternative effective remedy was available. The integrity of the process was critically undermined by the judge's failure to call for full submissions. Furthermore, the Privy Council decision in Primeo Fund v. Bank of Bermuda indicated a strong likelihood that Company B's reflective loss arguments would succeed on appeal.

Holding and Implications

The court's final decision was to SET ASIDE both the first CPR Part 52.30 order and the second permission to appeal decision.

Additionally, the court granted Company B permission to appeal on the reflective loss ground originally granted on 29 May 2020. This means that the appeal on that ground will proceed, reversing the previous refusal of permission.

No broader precedent was established beyond the immediate effect on the parties. The decision underscores the importance of procedural fairness in judicial conduct, particularly regarding recusal and the handling of applications to set aside or re-open permission to appeal.