P13: Payment of costs pending appeal

But an appeal does not automatically operate as a stay

 

“By CPR rule 52.7, unless the appeal court or the lower court orders otherwise, an appeal does not operate as a stay of execution of the orders of the lower court. It follows that the court has a discretion whether or not to grant a stay. Whether the court should exercise its discretion to grant a stay will depend on all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or other or both parties if it grants or refuses a stay. In particular, if a stay is refused what are the risks of the appeal being stifled? If a stay is granted and the appeal fails, what are the risks that the respondent will be unable to enforce the judgment? On the other hand, if a stay is refused and the appeal succeeds, and the judgment is enforced in the meantime, what are the risks of the appellant being able to recover any monies paid from the respondent?” (Hammond Suddards’ Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 1915, §21; Contract Facilities Ltd v. Estate of Rees [2003] EWCA Civ 46, §8, Waller LJ).

 

Stay is an exception rather than the rule (solid grounds required)

 

“A stay is the exception rather than the rule, solid grounds have to be put forward by the party seeking a stay, and, if such grounds are established, the court will undertake a balancing exercise weighing the risks of injustice to each side if a stay is or is not granted.” (Department for Environment, Food and Rural Affairs v. Georgina Downs [2009] EWCA Civ 257, §8).

 

Grant of permission to appeal not solid grounds

 

“The fact that there has been permission to appeal is not, as is clear from the notes in the White Book, in themselves “solid grounds”.” (Mahtani v. Sippy [2013] EWCA Civ 1820, §15).

 

Merits/significance of appeal not relevant

 

“It is in my judgment inappropriate to address the merits or significance of a pending appeal as a weighty factor in the balancing exercise relevant to the imposition of a payment condition or the grant or refusal of a stay. Generally, the court's approach is to avoid such assessments because of their propensity to generate satellite litigation. I am not persuaded that this case justifies any exception to that healthy self-denying ordinance.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §44).

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Irremediable damage rather than temporary inconvenience required 

 

“It is fair to say that those reasons are normally of some form of irremediable harm if no stay is granted because, for example, the appellant will be deported to a country where he alleges he will suffer persecution or torture, or because a threatened strike will occur or because some other form of damage will be done which is irremediable. It is unusual to grant a stay to prevent the kind of temporary inconvenience that any appellant is bound to face because he has to live, at least temporarily, with the consequences of an unfavourable judgment which he wishes to challenge in the Court of Appeal.” (Department for Environment, Food and Rural Affairs v. Georgina Downs [2009] EWCA Civ 257, §9).

 

Must be proven by evidence rather than assertion

 

“The appellants have served substantial evidence about their financial means, resources and on-going commitments in support of their claim that the imposition of a condition, or the withholding of a stay, would stifle this appeal.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §19).

 

“Is there an “irremediable harm” that is shown on the evidence if no stay is granted?" (Mahtani v. Sippy [2013] EWCA Civ 1820, §15).

 

"Mr. Justin Fenwick QC, for the appellant, submitted that we were bound to take Ms Marr's statement at face value, that it represented credible evidence of the appellant's financial position and that in the light of Ms Marr's assertion that the refusal to grant a stay could "stifle" the appeal, a stay should be granted. We are quite unable to accept any of those submissions…In our judgment, the evidence in support of an application for a stay needs to be full, frank and clear." (Hammond Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065, §§12…13).

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“In my judgment, there is inadequate evidence in this case in support of the suggestion that the appeal will be stifled…The onus is upon Mr Goldsmith to provide full, frank and clear evidence of the risk that he faces. He has not done so.” (Goldmsith v. O’Brien [2015] EWHC 510 (Ch), §§12…16).

 

Stifling the appeal (irremediable damage)

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“Whether the court should exercise its discretion to grant a stay will depend upon all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or other or both parties if it grants or refuses a stay. In particular, if a stay is refused what are the risks of the appeal being stifled?” (Hammond Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065, §21).

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Bankruptcy does not necessarily stifle an appeal

 

“I am not going to assume that his silence means that he has no way of meeting the judgment sum. In any event, bankruptcy would not necessarily be an end of the litigation. It would then be for the trustee in bankruptcy, acting in the interests of the creditors, to decide whether to proceed and whether the appeal was worthwhile…In my judgment, it is wrong to approach cases of this sort upon the basis that insolvency will necessarily stifle the litigation, though it would, of course, have to be funded.” (Goldmsith v. O’Brien [2015] EWHC 510 (Ch), §§13…14).

 

Funding the appeal points against lack of impecuniosity 

 

“For the reasons which we have given we are not persuaded that there is any significant risk of the appeal being stifled if a stay is refused. On the contrary, it seems to us that the appellant will continue to finance the appeal in whatever way it is doing at present.” (Hammond Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065, §23).

 

“As it happens, Mr Goldsmith, who, as I have said, says very little about his assets, is funding these proceedings in sums which, judged by costs statements, are not insubstantial. The court simply does not know how he is doing that, given the impecuniosity that it is asked to infer preventing payment of the judgment sums.” (Goldmsith v. O’Brien [2015] EWHC 510 (Ch), §14).

 

Corporate appellant: consider assets of interested persons (directors/shareholders etc.)

 

"However, the court should consider not only whether the plaintiff company can provide security out of its own resources to continue the litigation, but also whether it can raise the amount needed from its directors, shareholders or other backers or interested persons. As all this is likely to be peculiarly within the knowledge of the plaintiff company, it is for the plaintiff company to satisfy the court that it would be prevented by an order for security from continuing the litigation…” (Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 at 540 per Peter Gibson LJ).

 

“We simply note in passing that, in our judgment, although that case [Keary Developments] was decided before the advent of the CPR, the principles in it are relevant to the determination of any case in which the appellant asserts that an order for security for costs (or an order for security for costs above a certain amount) will stifle an appeal, or indeed where it is said that a refusal of a stay of execution will have that effect.” (Hammond Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065, §27).

 

Respondent would be unable/would not repay if appellant wins (possible irremediable damage)

 

“Mr Zaiwalla in his statement says that there is a fear that if the stay is not continued then if the costs were to be paid then it might be difficult, if not impossible, for the appellants to recover them thereafter were they to win the appeal. That is stated at paragraph 17. However, there is no more than assertion in that paragraph. There is no evidence to suggest that the respondent is impecunious or that attempts would be made by the respondent to ensure that those monies would not be available to pay costs to the appellant if the appeal were to succeed.” (Mahtani v. Sippy [2013] EWCA Civ 1820, §§15…16).

 

Substantial evidence required:

 

“Of course there is always some risk that a substantial sum of money, such as the judgment sum with interest in this case, may prove difficult to recover, but if that were enough then there would be a stay in every case, which is clearly not the position.” (Goldmsith v. O’Brien [2015] EWHC 510 (Ch), §15).

 

Balancing exercise if solid grounds demonstrated

 

“A stay is the exception rather than the rule, solid grounds have to be put forward by the party seeking a stay, and, if such grounds are established, the court will undertake a balancing exercise weighing the risks of injustice to each side if a stay is or is not granted.” (Department for Environment, Food and Rural Affairs v. Georgina Downs [2009] EWCA Civ 257, §8).

 

Appellant’s conduct amounts to continuing abuse of process

 

“The second [observation] is that proof that the imposition of a condition for payment or security will probably stifle an appeal is only a factor against the imposition of the condition, rather than an absolute bar to it. Thus for example, where an appellant's conduct amounts to a continuing abuse of process, this may be sufficient to justify the imposition of a condition, even if that would stifle an appeal. This is because the losing party has no absolute right of appeal, but only a right to the discretionary grant of permission to appeal: see the Hammond Suddard case at paragraph 38.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §26).