The judge gave judgment for the claimant’s liquidators against the third defendant, an airline company, in the sum of £3·64m. The Court of Appeal gave the third defendant permission to appeal but subsequently, on the liquidators’ application under CPR r 52.9 (now rule 52.18), imposed a condition on which the appeal might be brought, that the judgment sum be paid into court. The third defendant appealed but did not make such payment. The liquidators applied for the appeal to be dismissed for non-compliance with the condition and the third defendant cross-applied under CPR r 3.1(7) for discharge of the condition on the ground that the payment in of the judgment sum was beyond its means and its continuation would therefore stifle its ability to appeal. The court found that the third defendant was in effect owned by a single individual who effectively controlled its financial affairs and whose wealth was such that the payment would not represent a significant outlay and, applying Court of Appeal authority that 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, held that the third defendant’s allegation that the appeal would be stifled had not been made out and, since it had resolved not to satisfy the condition, its appeal would be dismissed.
On the third defendant’s appeal—
Held, appeal allowed (Lord Clarke of Stone-cum-Ebony and Lord Carnwath JJSC dissenting as to the result). (1) A condition on the grant of permission to appeal which would probably have the effect of stifling an appeal, in the sense of preventing the appellant from bringing or continuing it, should not be imposed. Where a corporate company which appeared to have no realisable assets of its own with which to satisfy an award of damages against it had been granted permission to appeal that award on condition that it pay the judgment sum into court, and its claim that such order, given its lack of resources, would stifle its appeal was challenged by the respondent on the ground that it had access to the resources of others, the question for the court was whether the company had 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. That test fell to be applied without examination of whether the circumstances were “exceptional”; but proper account was to be taken of the parties’ distinct legal personalities. The court was not to take at face value any refutation by the company that the necessary funds would be made available to it, but rather was to judge the probable availability of the funds by reference to the underlying realities of the company’s financial position, looking at all aspects of its relationship with its owner including the extent to which he previously, and currently, was directing its affairs and providing financial support (post, paras 12, 15–18, 22, 23–24, 38–42, 46).
(2) The Court of Appeal had erred in asking whether the third defendant’s ultimate owner probably could advance the necessary funds to the company, rather than whether the company itself had failed to establish that funds would not be made available to it by that person.. Accordingly, the application for the discharge of the condition fell to be remitted to the Court of Appeal for reconsideration by reference to the correct criterion (paras 25–26).
Per Neuberger of Abbotsbury PSC, Lord Wilson and Lord Hodge JJSC. A party’s participation in proceedings can be as much stifled by an order for security of costs as by an order for payment into court of the sum claimed or awarded (para 14).
Michael Gibbon QC and Hannah Ilett (instructed by Druces LLP) for the third defendant.
Robert Miles QC and Hilary Stonefrost (instructed by Fieldfisher LLP) for the claimant.