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Set Aside or Appeal, or both?


Bank of Scotland v Pereira & Pain & Pain [2011] EWCA Civ 241

This is a rather odd one. Although the case involves fraudulent sale and rent back agreements, mortgage possession and a rescinded sale and transfer of title, that isn’t why we’re writing it up. The reason this Court of Appeal case is worth attention is that it deals with, and gives guidance on, the routes available to someone seeking to overturn an order at trial that they did not attend, and specifically the interrelation of an application to set aside under CPR 39.3 and an appeal of the original order.

The background was that Mr and Mrs Pain owned their home. They were short of money to fund litigation they were engaged in on behalf of the family firm.  They met a Mr James:

who said that he could arrange for them to sell the Property, on terms that they could continue to live there rent free for the rest of their lives. In order to induce them to do this, he told them that, if they did so, a company he controlled, Styllpoint Ltd, which had £11 million of assets under its control, would provide them with access to funds of £250,000 to assist them with the legal costs of the litigation in which they were involved.

Mr James agreed with, or persuaded, Ms Pereira, who was in a relationship with Mr James at the time, to be the contracting purchaser of the Property, and that was accepted by the Pains. The purchase price was recorded in the paperwork as being £276,000. To enable Ms Pereira to purchase the Property, the Bank agreed to advance her £238,000, which was to be secured by way of a first legal charge over the Property. On 23 January 2004, the purchase was completed, and the Pains transferred the Property to Ms Pereira in return for £238,000, the balance of the recorded purchase price of £276,000 being pure fiction. Shortly thereafter, Ms Pereira was registered as the proprietor at the Land Registry, and the Bank’s charge was registered against the title.

The £238,000 was paid to Styllpoint rather than the Pains, who received no benefit from that money, save to the extent of £10,109.96 which was used to discharge an existing registered charge over the Property. Furthermore, the Pains never got access to the alleged £250,000 funds, promised by Mr James: this was unsurprising, as the funds plainly never existed.

Styllpoint made a few mortgage payments, then stopped. In 2006, the bank brought possession proceedings against the Pains as occupiers and against Ms Pereira as registered title holder. The Pains defended and counterclaimed against Mr James (now in prison) and Ms Pereira for rescission of the transfer and, by a late amendment, for damages. Ms Pereira did not defend the claim or counterclaim. Trial was listed for 21 June 2007. On 12 June 2007 Ms Pereira wrote to the Court asking for an adjournment and on 20 June 2007 Ms Pereira apparently faxed the court to say she wouldn’t be there (she later claimed this was a forgery). The hearing went ahead, Ms Pereira not attending.

Judge Milligan ordered

  • The Bank recover possession of the Property;
  • Ms Pereira pay the Bank £298,183.60, being the sum loaned plus interest and costs;
  • The sale and transfer of the Property be rescinded, and the title be rectified accordingly; and
  • Ms Pereira pay damages to the Pains, such damages to be assessed following completion of the sale of the Property, and to include the Pains’ costs of the proceedings

A letter, apparently from Ms Pereira was sent on 5 July 2007, asking for an extension of time to appeal. Ms Pereira later claimed this was forged.

In July 2009, over 2 years later, Ms Pereira applied under CPR 39.3 to set aside the part of the order dealing with rescission and damages. This was rejected by Judge Ellis on the basis that Ms Pereira knew of the hearing and had no good reason for not attending. Further, she had known the result of the hearing shortly afterwards. Time for acting promptly therefore ran from early July 2007 and she was way out of time. Even on her own case that she first knew of the judgment in February 2009, the 7 month delay was not ‘acting promptly’, regardless of her argument that her then solicitors had caused the delay.

Ms Pereira then i) appealed the decision of Judge Ellis not to set aside to the High Court and ii) appealed the original order of Judge Milligan to the Court of Appeal, seeking permission to appeal out of time. Both applications were joined in the present hearing.

The initial and main issue was the interrelation of making an application under CPR 39.3 to set aside and applying for permission to appeal that same judgment.

On CPR 39.3, the 3 part rule was clear and strict, however:

the rigour of the rule is modified by three factors. First, what constitutes promptness and what constitutes a good reason for not attending is, in each case, very fact-sensitive, and the court should, at least in many cases, not be very rigorous when considering the applicant’s conduct; similarly, the court should not pre-judge the applicant’s case, particularly where there is an issue of fact, when considering the third hurdle. Secondly, like all other rules, CPR 39.3 is subject to the overriding objective, and must be applied in that light. Thirdly, the fact that an application under CPR 39.3 to set aside an order fails does not prevent the applicant seeking permission to appeal the order. It is not very convenient, but an applicant may be well advised to issue both a CPR 39.3 application and an application for permission to appeal at the same time, or to get agreement from the other party for an extension of time for the application for permission to appeal.

On such concurrent applications, in Tennero Ltd v Arnold [2006] EWHC 1530 (QB), an application to appeal an order following the rejection of an application to set it aside under CPR 39.3, was dismissed as an abuse of process. Jack J had held that to pursue both routes was an abuse, that the applicant did not have a choice and that CPR 39.3 provided the appropriate route. Tennero was distinguished by the Court of Appeal in Attorney General of Zambia v Meer Care & Desai [2008] EWCA Civ 754, on the basis that the appellant in that case had fresh evidence and other grounds of appeal. However, “where there was no basis for a separate appeal, and where the appellant had taken the proper course, applying under CPR 39.3”, Jack J’s reasoning was agreed with.

The Court of Appeal in the present case sought to clarify the position. Lord Neuberger set out six points of guidance which would apply ‘in the great majority of cases’.

1. “Where the defendant is seeking a new trial on the ground that she did not attend the trial, then, even though she may have other possible grounds of appeal, she should normally proceed under CPR 39.3, provided she reasonably believes that she can satisfy the three requirements of CPR 39.3. The fact that she wishes to raise other arguments for attacking the trial judge’s decision should not preclude her proceeding under CPR 39.3, because that is the specific provision which applies if she did not appear at the trial (and gives her a potential right to a new trial) as Jack J pointed out. Further, if she has a retrial, the other arguments which she wishes to raise could be raised at the retrial (and they may be considered by the judge who hears her CPR 39.3 application).” If no CPR 39.3 application was made, this does not rule out an appeal, but that would normally require unusual facts.

2. “If the defendant concludes that she cannot establish that she had a good reason for not attending the trial and/or that she made her CPR 39.3 application promptly, it would obviously be silly for her to make a CPR 39.3 application. In such a case, she can nonetheless seek to appeal against the trial judge’s decision in the same way as any other defendant.” Simply because the judgment was made in the appellant’s absence did not remove their appeal rights in principle, if the decision or a decision in the course of the hearing was appealable. However, this is ‘in principle’ and the appellant would likely face greater difficulties, not least because the appeal would almost inevitably be made out of time and the appellant would be more likely to have to persuade the appellate court to let them adduce evidence or raise arguments of law not adduced or raised at trial. See 5. below.

3. “Where a defendant makes an application under CPR 39.3 and that application fails on the ground that she had no good reason for not attending the trial and/or that she did not make her CPR 39.3 application promptly, it seems to me that her right to appeal the trial judge’s order should, in principle, be no different from what it would have been if she had not made the CPR 39.3 application. Unless she appeals against the dismissal of her CPR 39.3 application, she would not be able to argue on any attempt to appeal the trial judge’s order that the judgment should be set aside simply because it was given in her absence”. However, if the appellant had made written application for an adjournment and been refused, that would be open to appeal, even if the CPR 39.3 application had been rejected. Further, “where a defendant seeks to appeal against the trial judge’s order after making a failed CPR 39.3 application, I do not consider that, in the light of the discrete and interlocutory nature of a CPR 39.3 application, strict issue estoppel would apply on any question of fact so far as the appellate court is concerned. However, the appellate court considering an appeal or an application to appeal should take a great deal of persuading before departing from a conclusion expressed by the judge who heard the application to set aside”.

4. “Where the defendant has made a CPR 39.3 application which failed on the ground that her arguments on the substantive issues would have no prospect of succeeding at any retrial, she should not normally be entitled to raise the same arguments through the medium of an appeal against the trial judge’s decision. The proper course would usually be to challenge the refusal of the CPR 39.3 application on this ground. However, there will be exceptional cases. For instance, where the CPR 39.3 application was also refused on the grounds that there was no good excuse for not appearing at the trial and/or that there was a lack of promptness in making the CPR 39.3 application, it may well be pointless to appeal the refusal, as it would be upheld on those grounds. In such a case, at least as at present advised, I think it would be wrong if the defendant were precluded from seeking permission to appeal the trial judge’s decision, simply because she was seeking to say that he was wrong for reasons which had been rejected in her CPR 39.3 application.”

5. “Where the defendant’s CPR 39.3 application fails, she will normally be in severe difficulties in seeking to contend, by way of appeal against the trial judge’s order, that she should be entitled to rely on evidence which was not before the trial Judge, or that she should have a retrial. In such cases, the appellate court’s approach must depend to some extent on the facts. In general, the appellate court will bear in mind not only the requirements of CPR 39.3, but also the post-CPR application of the Ladd v Marshall principles”. If the new evidence would not have been reasonably have been available at trial even if the appellant had attended, then the usual Ladd v Marshall principles would apply, as that ground of appeal would not be related to non-attendance. However, if the appeal was based solely on evidence that would have been presented at trial and thus on non-attendance, “if she has already failed in her CPR 39.3 application, it seems to me that to allow her to appeal against the trial judge’s order on such a ground would involve letting her in through the back door after having firmly locked the front door”. This would be wrong in principle and against the policy of CPR 39.3.

6. “If the defendant makes no CPR 39.3 application, but appeals the trial judge’s decision and seeks to put in new evidence or an order for a retrial, very similar considerations seem to me to apply. However, as it will not have been determined whether the three requirements of CPR 39.3.5 have been satisfied, the appellate court may have to make that decision for itself (unless it decides that the defendant should first have applied under CPR 39.3 to set aside the trial judge’s order (in which case the appellate court may nonetheless decide the issue itself, remit the issue to the court below as a CPR 39.3 application, or make some other appropriate order)”.

On Ms Pereira’s appeals:

There was no basis for challenging the refusal of the application under CPR 39.3. Judge Ellis’ finding that she had not acted promptly and did not have good reason for not attending trial was fatal for her.

The appeal from the original judgment of Judge Milligan was also dismissed. While Ms Pereira’s evidence that she was nothing more than the agent or appointee for Mr James/Styllpoint would have an arguable prospect of success against the damages order, although not the rescission order, this was not new evidence. It was evidence that would have been reasonably available at trial had she attended. It therefore fell under guideline 5 above. The appeal was dismissed.

The guidelines are useful, making it clear that a CPR 39.3 application and an appeal are not mutually exclusive, but also setting out the circumstances in which a failed CPR 39.3 application (or the failure to make one) would be likely to doom any attempt to appeal the trial judgment.

Entirely unrelated to the judgment or the guidelines, there is one more passage that I have to quote, including Lloyd LJ’s dry and restrained comment, because behaviour of this kind by a solicitor should not pass without note:

At first the Pains were represented in relation to the transaction by Buchanan & Llewellyn as their solicitors. That firm asked pertinent questions of Soorii Ayoola & Okri, the solicitors acting for Ms Pereira, about the relationship between Ms Pereira and Styllpoint and as to the fate of the proceeds of sale. If these points had been persisted in, the Pains would probably have been saved from entering into the transaction. No doubt because these properly raised queries did put the transaction in jeopardy, and no doubt at the instance of Mr James, on 12 January 2004 the Pains instructed a different firm, Winman Okri, as their solicitors. They confirmed to those solicitors that they expected to receive no money from the transaction other than the benefit of the payment of debts, including the discharge of the prior mortgage, and that the balance of the purchase money would be paid by the purchaser’s solicitor directly to Styllpoint, represented as being a creditor. The new solicitors were content to proceed on those instructions, possibly helped by the fact that Mr Okri was not only practising alone under the style Winman Okri but was also the senior partner of the firm of Soorii Ayoola & Okri.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.


  1. Chris B

    For what its worth I see that Mr Godwin Okri of Winman Okri/Soorii Ayoola & Okri was struck off back in December 2008.


    And I see that the case which lead to him being struck off also involved the nefarious ‘Doctor’ Neville James and his company Styllpoint Ltd.

    What is the world coming to when you can’t trust a medical man or a solicitor?

  2. JayGee

    Neville James is not, and never was, a doctor – of anything. [edited by NL, as we can’t allow accusations without a court’s finding of facts].


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