text stringlengths 5 5.67k |
|---|
(m) Were the court able to take his financial position into account in assessing Onurs ability to make the payment into court, its application to discharge the condition could not succeed. RLC |
(n) In exceptional circumstances the ability of a company to have access to funds from a third party could be taken into account in assessing the likelihood that it could make a payment into court. RLC |
(o) To take it into account would not be the same as to oblige that third party to comply with a condition imposed on a company. RLC |
(p) exceptional. RLC |
(q) Onur had failed to establish that the condition for payment into court would stifle its appeal. RLC |
(r) So Onurs cross-application failed and, in that it had resolved not to satisfy the condition, its appeal should be dismissed. RLC |
In the light of all the above features the circumstances were RLC |
PRINCIPLES Ratio |
To stifle an appeal is to prevent an appellant from bringing it or continuing it. Ratio |
If an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it. Ratio |
It is as if, on an application of summary judgment, the court were to grant leave to the defendant to defend the claim and then to attach a condition for payment which he could not satisfy. Ratio |
In the words of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449B: that would be a wrongful exercise of discretion, because it would be tantamount to giving judgment for the plaintiff notwithstanding the courts opinion that there was an issue or question in dispute which ought to be tried. Ratio |
Application of article 6 of the European Convention on Human Rights (being an article which confers its rights on companies as well as on human beings) yields the same conclusion. Ratio |
The article does not require a member state to institute a court of appeal but, if it does so, it must ensure that litigants in that court enjoy its fundamental guarantees: Delcourt v Belgium (1970) 1 EHRR 355. Ratio |
There will seldom be a fair hearing within article 6 if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it. Ratio |
There is a variety of situations in which a party submits that the effect of granting or refusing an application would be to stifle his continued participation in the proceedings. Ratio |
He may do so, for example, as a claimant of a specified character, in response to an application by (a) a defendant for him to provide security for costs; or (b) as a defendant, in response to an application by the claimant for summary judgment in which the latter contends, as a fall-back, that, were leave to be given ... |
There is a qualitative difference between imposing a condition which requires a defendant/appellant to provide security for the future costs of the claimant/respondent and one which requires him to pay into court the sum awarded against him. Ratio |
The effect of the former is that, were his appeal to be dismissed, the burden of expenditure to be incurred by the claimant/respondent in resisting the appeal would not be borne by him. Ratio |
The effect of the latter is, by contrast, even more beneficial for the claimant/respondent. Ratio |
It is that, in the event (again) of the dismissal of the defendants appeal, the judgment sum would be there, as it were upon a tray, for the claimant to sweep into his pocket without his needing to undertake any attempt to enforce the courts order for payment of it. Ratio |
No doubt a court asked to impose a condition for the payment into court of the sum awarded will have well in mind that extra advantage for the claimant and corresponding disadvantage for the defendant. Ratio |
But a partys participation in proceedings can be as much stifled by an order for security for costs as by an order for payment into court of the sum claimed or awarded. Ratio |
So it is without further reference to that distinction that one may proceed to address the circumstances in which an order can be said to stifle the continuation by an appellant of an appeal. Ratio |
There is no doubt - indeed it is agreed - that, if the proposed condition is otherwise appropriate, the objection that it would stifle the continuation of the appeal represents a contention which needs to be established by the appellant and indeed, although it is hypothetical, to be established on the balance of probab... |
But, for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed. Ratio |
It is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum. Ratio |
As Brandon LJ said in the Court of Appeal in the Yorke Motors case, cited with approval by Lord Diplock at 449H: The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his ho... |
It seems that, in particular and as exemplified by the present case, difficult issues have surrounded the ability of a corporate appellant, without apparent assets of its own, to raise money from its controlling shareholder (or some other person closely associated with it); and this is the context of what follows. Rati... |
When, in response to the claim of a corporate appellant that a condition would stifle its appeal, the respondent suggests that the appellant can raise money from its controlling shareholder, the court needs to be cautious. Ratio |
The shareholders distinct legal personality (which has always to be respected save where he has sought to abuse the distinction: Prest v Prest [2013] UKSC 34, [2013] 2 AC 415, 487, para 34) must remain in the forefront of its analysis. Ratio |
The question should never be: can the shareholder raise the money? The question should always be: can the company raise the money? Ratio |
So one turns to the leading authority of the Court of Appeal in this area, namely Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, [2002] CP Rep 21, which Onur contends to be, in part, erroneous in principle. Ratio |
In the Hammond Suddard case the respondent solicitors sued the appellant company for unpaid fees and it counterclaimed for damages for negligence. PRE |
The claim succeeded and in effect the counterclaim failed. PRE |
The appellant obtained permission to appeal. PRE |
It unsuccessfully sought a stay of execution of the orders made by the judge on the basis that, were they to be enforced, its appeal would be stifled. PRE |
The respondents sought the imposition of conditions upon the permission to appeal. PRE |
They sought a condition for provision of security for the costs of the appeal, which the appellant conceded to be appropriate. PRE |
But they also sought a condition of payment into court of the judgment debt and of the sums awarded under interim orders for costs, to which, analogously, the appellant objected that its consequence would be to stifle its appeal. PRE |
The appellant had been incorporated in the British Virgin Islands and was owned by trustees on discretionary trusts for an unidentified but apparently wealthy family. PRE |
The appellant had, so it said, no assets. PRE |
But could it raise from its beneficial owners a sum equal to the judgment debt and costs in order to enable it to make the payment into court? If so, there was a compelling reason within the meaning of Rule 52.9(2) for imposing the condition sought by the respondents. PRE |
In the Hammond Suddard case the judgment of the court was delivered by my Lord, Lord Clarke (Clarke LJ, as he then was), on behalf of himself and Wall J (as he then was). Ratio |
Having observed, at (1) of para 41, that it would be difficult for the respondents to exercise the normal mechanisms of enforcement against the appellant and, at (2), that the appellant had had access to resources which had enabled it to secure representation of the highest quality in the proceedings to date, the court... |
No criticism has been directed at the above conclusion. Ratio |
It was an impeccable summary of the courts reason for acceding to the respondents application. Ratio |
The court proceeded, at para 41(4), to find that the appellants disclosure of its financial affairs had been inadequate. Ratio |
But then, at the end of the subparagraph, it added an observation in relation to the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt including the outstanding orders for costs. Ratio |
Indeed, in para 43, the court added a second observation to the same effect: Thus we see nothing unjust in providing the trust which owns the appellant with a choice. Ratio |
If it is in the interests of the appellant for the appeal to continue, the trust must procure payment of the current orders. Ratio |
I am driven to the view that Onur is right to criticise the phraseology of the courts two additional observations. Ratio |
Their intended meaning may well have been, as Goldtrail suggests, that the appellant had failed to establish that funds with which the company could make the payment into court would not be made available to it by its beneficial owners. Ratio |
But, strictly speaking, it was wrong for the court to express its reasoning in terms of whether they could themselves make that payment. Ratio |
In Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695 the Court of Appeal was required to determine applications by Socit Gnrale SA (the bank), which was the respondent to appeals which the two appellants had been permitted to bring against orders made against each of them for pay... |
The first appellant (Saad) was a limited Saudi Arabian partnership and the second appellant (Mr Al- Sanea) was a general partner of Saad and owned 90% of its share capital. PRE |
One of the banks applications was for a condition to be imposed upon the continuation of each of the appeals that the appellants should pay the award of US$49m into court; to which the appellants each responded that any order for payment into court would stifle their appeals. PRE |
The courts conclusion, explained in the judgment of Aikens LJ with which Rimer LJ agreed, was that a condition, which it proceeded to impose, for their joint and several payment into court of (only) $5m would not stifle their appeals. PRE |
In reaching this conclusion Aikens LJ punctiliously addressed the factors identified by the court as relevant in the Hammond Suddard case. PRE |
Nothing turns on his analysis of why Mr Al-Sanea had failed to make good his contention that his appeal would be stifled. PRE |
In relation, however, to the analogous contention of Saad, Aikens LJ addressed the additional observation which that court had made in para 41(4). PRE |
At paras 54 and 55 of his judgment Aikens LJ said that it was difficult to judge the legitimacy of imposing upon a company a the question was whether Saad had a wealthy owner who could not, if i) minded to do so, make the payment into court on its behalf; ii) condition which would effectively require an owner to fund i... |
Possibly ham-strung by the doctrine of precedent, the court in the Socit Gnrale case evidently considered it best to treat the first additional observation in the Hammond Suddard case by consigning it to that over-used store-room in the mansion of the law which is designated as exceptional circumstances. PRE |
Such a criterion is on any view dangerous because it is not, on the face of it, linked to its context: see Norris v Government of United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487, para 56. PRE |
It sets a snare for it may lead to the wrongful downgrading of the significance of circumstances just because they happen not to be exceptional or to their wrongful upgrading just because they happen to be exceptional: H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening) [2012] UKSC... |
Having, however, an unconstrained ability to reject the phraseology of the additional observations, we in this court have no need to approve the superimposition upon the relevant criterion of a test of exceptional circumstances which neither party before the court seeks to defend. Ratio |
In this context the criterion is: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition? Ratio |
The criterion is simple. Ratio |
Its application is likely to be far from simple. Ratio |
The considerable forensic disadvantage suffered by an appellant which is required, as a condition of the appeal, to pay the judgment sum (or even just part of it) into court is likely to lead the company to dispute its imposition tooth and nail. Ratio |
The company may even have resolved that, were the condition to be imposed, it would, even if able to satisfy it, prefer to breach it and to suffer the dismissal of the appeal than to satisfy it and to continue the appeal. Ratio |
In cases, therefore, in which the respondent to the appeal suggests that the necessary funds would be made available to the company by, say, its owner, the court can expect to receive an emphatic refutation of the suggestion both by the company and, perhaps in particular, by the owner. Ratio |
The court should therefore not take the refutation at face value. Ratio |
It should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) its affairs and is supporting (and has supp... |
APPLICATION TO THE PRESENT CASE Ratio |
There has been lively argument before the court as to whether, in making the orders under appeal, Patten LJ must be taken to have concluded, in accordance with the correct criterion, that Onur had failed to establish that Mr Bagana would not make 3.64m available to it in order to enable it to comply with any order for ... |
There are grounds for thinking that such a conclusion might have been open to him. Ratio |
Mr Bagana signed a statement admitted by Rose J into evidence, in which, so Onur tells this court, he admitted that he was responsible for its overall operation and made the ultimate decisions referable to it; and Patten LJ made findings accordingly. Ratio |
Moreover Mr Baganas massive recent loans to Onur to enable it to continue to trade were on any view of substantial relevance to the probability of a further, modest advance. Ratio |
Oddly no statement was filed on behalf of Onur by Mr Bagana himself but the Chief Financial Officers evidence was that he would contemplate making further advances only to enable Onur to make commercial payments necessary in order to keep itself in business. Ratio |
This second- hand assertion called for careful scrutiny. Ratio |
But, in circumstances in which Patten LJ concluded that it seems clear to me that Mr Bagana has decided not to fund the payment by the company, I am driven to the view that this court cannot proceed on the basis that Onurs application for discharge of the condition was refused by reference to the correct criterion. Rat... |
Goldtrail submits with force that Patten LJ meant to conclude only that, up until that point, Mr Bagana had declined to fund the payment and that the evidence in support of any wider conclusion was far too thin. Ratio |
It further submits that for Patten LJ to have found that Mr Bagana had made a final decision never to fund it would be inconsistent with his refusal of Onurs application. Ratio |
Unfortunately, however, I cannot accept the further submission. Ratio |
The key to the proper construction of his judgment is that, following a lengthy quotation from the judgment of Aikens LJ in the Socit Gnrale case, Patten LJ concluded that the circumstances of the present case were exceptional. Ratio |
In other words he was proceeding by reference to the Court of Appeals misconception, born of the additional observations in the Hammond Suddard case and developed in the Socit Gnrale case, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be j... |
So I would allow Onurs appeal and remit both applications to Patten LJ for him to determine Onurs application for discharge of the condition by reference to the correct criterion. Ratio |
I should record that Goldtrail put forward to him an alternative argument against discharge; of course he had no need to address it but he may now need to do so. Ratio |
I have reached a different conclusion from that arrived at by Lord Wilson. Ratio |
I am not persuaded that Patten LJ materially misstated the relevant principles or arrived at the wrong conclusion. Ratio |
It is important to put his decision in context. Ratio |
The issue throughout has been whether there was a compelling reason for imposing a condition upon which an appeal may be brought under what were then CPR 52.9(1)(c) and (2). Ratio |
Before the case came before Patten LJ it had a long history, largely before Floyd LJ. Ratio |
As Lord Wilson explains, at no stage when the issues were before Floyd LJ did Onur contend that payment of the judgment sum of 3.4m (or the provision of security in lieu) would or might stifle the appeal. Ratio |
Instead it advanced a whole series of mutually inconsistent explanations, in response to which Floyd LJ made a series of orders and gave a number of judgments, notably on 11 June, 27 July and 21 October 2015. Ratio |
Onurs applications included an application for permission to pay the judgment sum in monthly instalments of 500,000. Ratio |
Floyd LJ rejected that application on the papers, giving clear reasons, on 27 July 2015. Ratio |
His reasons included this passage, quoted in para 14 of his judgment given on 21 October 2015: There is no explanation of how these sums will be funded. Ratio |
If [the appellants] are now contending that the imposition of the order would stifle the appeal, the evidence falls far short of showing that to be the case. Ratio |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.