Bell Electric Ltd v Aweco Appliance Systems GmbH and Company KG
| Jurisdiction | England & Wales |
| Judge | Lord Justice Potter,Lord Justice Carnwath |
| Judgment Date | 31 October 2002 |
| Neutral Citation | [2002] EWCA Civ 1501 |
| Docket Number | Case No: A2/2002/1082 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 October 2002 |
[2002] EWCA Civ 1501
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (Mr Justice Elias)
Lord Justice Potter and
Lord Justice Carnwath
Case No: A2/2002/1082
Mr Adam Tolley (instructed by Haarmann Hemmelrath) for the appellant/defendant
Mr Philip Coppel (instructed by Parrott & Coales) for the respondent/claimant
Introduction
On 8 May 2002 Elias J gave judgment for the claimant ('Bell') against the defendant ('Aweco') for damages for breach and/or repudiation of an agency agreement dated 10 August 1999 pursuant to which Bell acted as agent for Aweco in the United Kingdom, selling Aweco's components to United Kingdom manufacturers of large domestic appliances on advantageous commission terms.
Elias J made an award of £100,000 to be paid by way of interim damages, the balance of damages to be assessed, and a further sum of £35,000 to be paid on account of costs. Both sums were ordered to be paid within 14 days. Aweco made application to Elias J for a stay of the orders for payment pending Aweco's intended appeal, but a stay was refused. Aweco appealed from that judgment and the appeal is presently listed for a two-day hearing in February 2003.
Aweco's application for permission to appeal was made on 22 May 2002, and permission was granted on paper by Longmore LJ on 19 July 2002. Again Aweco applied for a stay of execution in relation to the total sum of £135,000 due by way of interim payment. However, Longmore LJ refused that application. At that stage Aweco made no application to the full court in respect of the refusal of Longmore LJ to grant a stay. It simply ignored the order of Elias J and refused Bell's request for payment.
There is no suggestion that Aweco are unable to pay. Aweco are a very substantial German company. They have simply been unwilling to pay on two grounds. The first is that their business assets lie in Germany. They thus fear no execution here, and they have informed Bell that, if Bell sought to enforce the judgment in Germany prior to the hearing of the appeal, they would be faced with an application by Aweco to stay enforcement pending the appeal which they assert would be granted by the German court. The second reason which Aweco advance is that, Bell being a relatively small family business which made a loss last year, Aweco fear that, if they pay over the monies and win the appeal, Bell would be unable to make repayment.
Against that background Bell make three interlocutory applications, which Aweco seek to counter with a belated application of their own.
Bell's applications
Bell's first application is that the time permitted for them to file a respondent's notice to Aweco's appeal be extended to 8 August 2002, the date upon which it was in fact filed and served. It is by no means clear that the notice was in fact out of time and Aweco make no objection in principle to the application. However, Mr Tolley who appears for Aweco, points out that Additional Ground 6 identified in the respondent's notice is in reality a cross-appeal against one of the judge's findings, concerning as it does the judge's refusal to permit Aweco to amend their claim on the last day of trial to raise a new claim under the Commercial Agents (Council Directive) Regulations 1993. As such, it required an application for permission to appeal to be made to Elias J, which application was not made at the time of Aweco's application to him for permission to appeal. At first sight, it seems that Additional Ground 6 stands little chance of success in the light of the judge's wide discretion in respect of amendment. Nonetheless, I would grant permission for Bell to cross-appeal in the present form of their respondent's notice.
Bell's second application is made pursuant to CPR 52.9 which provides:
"52.9 – (1) The appeal courts 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 powers under paragraph (1) where there is a compelling reason for doing so."
The form of the application is to the effect that Aweco's notice of appeal be struck out and its appeal dismissed with costs under paragraph 1(a) because of what is stated to be Aweco's 'wholesale disregard' of the judge's orders for an interim payment, the judge and Longmore LJ both having refused a stay of execution. However, it has been made clear to the court by Mr Coppel, who appears for Bell, that the application is equally intended to be made under paragraph (1)(c) of CPR 52.9, Bell being content with an order that, unless Aweco pay the interim sum within 28 days, the appeal be stayed.
Bell's third application is made as an alternative to this second application. It seeks an order for security for costs under CPR 25.15 which provides:
"25.15 -(1) The court may order security for costs of an appeal against –
(a) an appellant …
on the same grounds as it may order security for costs against a claimant under this Part.
(2) The court may also make an order under paragraph (1) where the appellant … is a limited company and there is reason to believe that it will be unable to pay the costs of the other parties to the appeal should its appeal be unsuccessful."
Security for Costs
Although this application is made in the alternative, it is really self-standing and may be dealt with briefly. The grounds on which the court may order security for costs against a claimant, as referred to in CPR 25.15(1), are set out in CPR 25.13. By paragraph (1), in order to make an order for security the court must be satisfied that one or more of the conditions in paragraph (2) applies. The relevant conditions where the claimant is a company are either that it is ordinarily resident out of the jurisdiction and is not a body against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention or the Regulation as defined by section 1(1) of the Civil Jurisdiction and Judgments Act 1982 or it is a company (whether incorporated inside or outside Great Britain) in respect of which there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so. This latter provision is echoed in paragraph (2) of CPR 25.15 in respect of the costs of other parties to the appeal, should the appeal be unsuccessful. In this case, Aweco being a company incorporated and resident in Germany, the condition in CPR 25.13(2) is not satisfied and, in order to succeed, Bell must demonstrate that Aweco is a company in respect of which there is reason to believe it will be unable to pay Bell's costs if the appeal is unsuccessful. Mr Coppel has recognised before us that his case in this respect cannot be made out on a literal reading of the rule. Indeed it is part of his case that the attitude of Aweco is the attitude of an asset-rich company which is acting oppressively in respect of a smaller company desirous of securing compliance with the order for interim payment for the purposes of increased liquidity in its business. He seeks to equate Aweco's 'unwillingness' to pay with their 'inability' to do so. Not surprisingly, he did not spend long in this submission. It seems to me unsustainable. The jurisdiction to order security for costs against a claimant at first instance or an appellant on appeal is concerned with securing an appropriate sum by way of protection for the defendant/respondent against the risk that, having been successful, the normal processes of enforcement or execution are rendered nugatory by a lack of available assets against which to enforce the original judgment. There is no realistic suggestion of such danger or deficiency in the case of Aweco and, in those circumstances, a case for security under CPR 25.15 cannot be demonstrated.
I therefore return to the application upon which Bell have principally relied as providing a solution for their unsatisfactory situation.
CPR 52.9
Mr Coppel's argument for Bell is a straightforward one. He submits that the deliberate flouting of the order of Elias J by Aweco following their failure to procure a stay of execution and their refusal to make payment of the interim sums due simply on the ground that, if Bell took proceedings for enforcement in Germany, such proceedings would be stayed pending the appeal constitutes 'a compelling reason' for this court to require such payment to be made as a condition of prosecuting the appeal. He submits that, not only would such an order reflect the justice of the case, but it enables the court to mark its disapproval of Aweco's disobedience in failing to comply with the order of the court below in circumstances where both the trial judge and Longmore LJ, on the grant of permission to appeal, considered and refused a stay upon the judgment sum. He points out that, strictly speaking, such conduct amounts to a contempt of court.
Mr Tolley for Aweco acknowledges that the failure of Aweco to comply with the order of Elias J is regrettable, but seeks to justify it on two grounds. The first is a point of principle, taken in reliance upon EU Council Regulation No.44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial matters ("the Regulation"), which replaces the former Brussels and Lugano Conventions on the same subject-matter.
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