P14: (Re)payment of tax pending further appeal

Appeal subject to condition of payment

"An order giving permission may –
(a) limit the issues to be heard; and
(b) be made subject to conditions.” (CPR 52.3(7)).

(1) The appeal court may –
(a) strike out the whole or part of an appeal notice;
(b) set aside permission to appeal in whole or in part;
(c) impose or vary conditions upon which an appeal may be brought.
(2) The court will only exercise its power under paragraph (1) where there is a compelling reason for doing so.” (CPR 52.9)

Compelling reason necessary but not sufficient

“…the existence of a compelling reason is only a necessary rather than sufficient factor. Even where a compelling reason is shown, the question remains a matter for the court's discretion…” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §23).

Non-payment is not sufficient

“Nor is the fact that an unsuccessful defendant wishes to appeal to be taken as a routine shortcut to the need to enforce a judgment, by the obtaining of the requisite condition for payment. Something more than mere non-payment of the judgment debt needs to be shown although, as both cases show, a deliberate failure to pay by a judgment debtor with the resources to do so may be a factor supportive of the imposition of a condition.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §22).

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Factors

“Nonetheless the following emerged from those cases as factors which, depending on the overall circumstances, may point towards the imposition of a condition:
(1) Difficulties of enforcement of the court's judgment in a foreign jurisdiction;
(2) An apparent sufficiency of resources to enable the judgment debtor to continue to fund litigation;
(3) The absence of convincing evidence that the appellant lacks the resources, or access to the resources, which would enable it to pay the judgment debt;
(4) Inadequate disclosure by the appellant of its financial affairs, or a lack of confidence on the part of the court that it has been shown the truth;
(5) The combination of
i) A deliberate breach of an order to pay the judgment debt
ii) The refusal of a stay, and
iii) Ability to pay, but a failure to do so cynically based upon the difficulties for the respondent in enforcing the judgment in a foreign jurisdiction.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §25).

Stifling appeal is main factor against imposition of condition

“Plainly, the main factor which, if it is sufficiently demonstrated, is likely to tell against the imposition of a condition is where to do so would stifle the appeal.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §26).

“We would also add that the position would be very different if the appellant were able to produce convincing evidence that the appeal would be stifled if it were required to take these steps. If it were able to produce evidence of the kind identified by Peter Gibson LJ in the passage from Keary quoted above, the position might well be different because it may well be that in that event justice would require that the appeal be allowed to continue. We should add in this regard that we are very conscious of the danger that orders such as those which we propose to make in this case could have the effect of deterring genuine appellants from prosecuting an appeal. Nothing we have said in this judgment is intended to have that effect. The key point here is that the evidence put before the court does not show that these orders will stifle the appeal.” (Hammonds Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065, §45).

Unless self-induced

“The concept of stifling an appeal (or claim) is well-known in the context of applications for security for costs. It needs no elucidation here, beyond the following two observations. The first is that a corporate appellant is unlikely to persuade the court that an appeal will be stifled by an order for payment or security merely by reference to its own assets. The court will wish to consider whether the company's backers or supporters have the resources and motivation with which to assist: see Calltel Telecom Limited v Revenue and Customs Commissioners [2008] STC3246, at paragraph 13. The second 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. In the context of this case, where a present inability to comply with the condition can be shown to have been caused by an appellant deliberately putting out of its reach assets with which it might have done so, at a time when an application for the imposition of the condition was pending, then an assertion that, thereafter, the imposition of the condition would stifle the appeal may fall on stony ground, because the appellant's predicament will have been self-induced.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §26).

No right to shelter funds to pay for litigation

“But a judgment debtor has no right to ring-fence money otherwise available to pay the judgment debt for the purpose of deployment to meet future litigation needs, even in this jurisdiction.” (Sunico A/S v. HMRC [2014] EWCA Civ 1108, §34).

Merit or significance of appeal not usually a weighty factor

“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).

Examples

Sunico A/S v. HMRC [2014] EWCA Civ 1108 – condition of payment of judgment sum imposed. The compelling reason was that the appellants had deliberately failed to pay the sum when due despite having the resources and took steps to put money outside HMRC’s reach (§39). The Court was not satisfied that payment would stifle the appeal (§41), but even if it would, that was due to the appellants’ actions in putting cash beyond their reach (§42).

Hammonds Suddard Solicitors v. Agrichem International Holdings Ltd [2001] EWCA Civ 2065 – condition of payment of judgment sum and security for costs imposed where appellant was outside jurisdiction, had assets to fund the appeal and had not supplied any evidence it could not afford to pay.