CONTRACT FACILITIES Ltd v ESTATES of REES (Deceased) and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER |
| Judgment Date | 13 May 2003 |
| Neutral Citation | [2003] EWCA Civ 708,[2003] EWCA Civ 465 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | A3/2002/2734(A)(C),A3/2002/2734(D) |
| Date | 13 May 2003 |
[2003] EWCA Civ 465
Lord Justice Waller
A3/2002/2734(A)(C)
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(His Honour Judge Weeks QC)
Royal Courts of Justice
Strand
London, WC2
MR STEPHEN COGLEY (instructed by Tasselli & Co, 55-56 St James' Street, London SW1A1LA) appeared on behalf of the Applicant.
GRAHAM EKLAND QC and MR NEIL HEXT (instructed by Gartsides, Brand House, 2 Corn aStreet, Newport, South Wales) appeared on behalf of the Respondents.
Monday, 24th March 2003
On 6th December 2002 His Honour Judge Weeks QC, sitting as Deputy High Court Judge, dismissed a claim by the appellant, a company called Contract Facilities Ltd (whom I shall refer to as "Contract"). They were claiming specific performance, or damages as it ultimately became, by reference to a contract for the purchase of certain shares of a company or companies which owned two retirement homes.
Contract had been struck-off the Register. It was ultimately restored under the provisions of the Companies Act. The issues that the judge had to decide revolved around that aspect and the judge gave judgment against Contract. He gave permission to appeal, and the appeal is due to come on in July 2003. So far as Contract itself is concerned, its common ground that it is a company without assets and without any work. Certain individuals funded the action. They were a Mr Shuck, a Mr Shacklock and Abrahams Dresden, who were the solicitors acting. So far as the appeal is concerned, it seems that Mr Shacklock and Abrahams Dresden have dropped out. Mr Shuck appears to be the main funder of the appeal, although he may have an arrangement with the now solicitors in relation to their fees. I do not know the details of it, but in one sense the application before me can be seen as part of a battle under which the respondents are seeking to make the individuals who funded the litigation and are funding the appeal responsible for the costs.
Certain orders have been sought and certain orders made. In relation to the trial, Contract was ordered to put up security for costs and the individuals were ordered to put up £15,000. Some complaint was made of the fact that in relation to the application for security the full details of the funding arrangements with, for example, Mr Shacklock were not before the court. When the action was lost in the court below and when judgment had just been given, the respondents sought orders for costs against the individuals —that is the three: Shacklock, Abrahams Dresden and Shuck —as well as the Contract. It was, however, recognised that they would need to join those individuals to the action if they were to get an order for costs against them. On that day any question relating to the obtaining of costs against the individuals was adjourned and, without prejudice to any such application, an order for costs was made against Contract. The judge also ordered an interim payment of the costs by ordering the payment out of the £15,000 which had been put up as security. It was on that day that the judge gave permission to appeal, and he did not impose any conditions in relation to the appeal.
Applications were then made to join the individuals and to obtain costs orders against them. Those applications came on before the trial judge last month. In the result, the individuals were joined, but the application to make them liable for the costs of the trial was stayed pending the appeal. What did not happen on that day was that there was no application to stay the order for costs that had been made at the trial pending the appeal. I am told that the judge was aware that this application was being made and that it was said by him that this would be a matter that would be left to the Court of Appeal.
Mr Cogley, who appears for Contract, seeks to pray in aid today the fact that the judge on that occasion adjourned the question of liability of the individuals for costs, seeking to suggest that what is happening today by the resistance of the application for a stay by him is an attempt to circumvent the order that the judge was making on that day. As it seems to me, that is not a point that he is entitled to make. He could have made his application to stay before the judge. The judge would then have had to consider the complete picture. He chose not to do so. It was common ground that the matter was then coming to the Court of Appeal and, as it seems to me, what has to be recognised is that when it comes before the Court of Appeal the normal rules will apply.
It is fair to say that on that day also the respondents attempted to get the judge to revisit whether conditions should be imposed on permission to appeal by reference to circumstances not known at the time when he granted permission previously. He accepted that there had been a change in circumstances, but again it is fair to emphasise that he refused to vary the terms on which permission was granted.
The respondents also applied for security for costs of this appeal. That application might have come on before me at the same time as this application for a stay, but it has been compromised. The application was for a sum of £35,000, I am told, and an agreement was reached under which £20,000 has been put up as security. Mr Cogley sought to gain some benefit from that application by reference to the sums. In my view, again a compromise of that sort is not a material factor in considering what the court should do on this application for a stay. So the application is for a stay of the order for costs made by the judge pending the appeal.
Of course, it is common ground that, unless that stay is granted, then the fact that there is permission to appeal will not operate as a stay. The normal rule is neatly summarised in paragraph 21 of the judgment in Hammond Suddards' Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 1915:
"By CPRrule 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?"
The real question in this case, accordingly, is whether the refusal of a stay would risk stifling the appeal. As already indicated, the point about prejudging issues seems to me not to be a legitimate point.
On the question as to whether there might be a stifling of the appeal, again a further paragraph of Agrichem is material. That is paragraph 18. All I need to quote from that paragraph is that the court made it clear that where somebody seeks to stay orders what they need to do is:
"…produce cogent evidence that there is a real risk of injustice if enforcement is allowed to take place pending appeal".
The court was, of course, recognising in that context, which should be stressed, the principle that it is not just a question whether the actual party to the appeal can raise the money. The question is whether money can be raised from its directors, shareholders, other backers or interested persons. This was made clear, in the context of a security for costs application, by Peter Gibson LJ in Keary Developments v Tarmac Construction.
What is the evidence about the possibility that this appeal might be stifled? The answer appears from paragraph 11, and paragraph 11 alone, of Mr Shuck's affidavit. What he says there is:
"I would find it very difficult to come up with the costs of the Court below for the Company and could not readily do so. The reason I entered into funding arrangements on behalf of the Appellant in the Court below was that I could not afford to advance the monies necessary to fund the action alone. I do have an income but I can not keep funding this case. I will provide the £20,000 Security for Costs of the Appeal and I also have to pay Counsel's brief for the hearing to which this witness statement relates as well as the brief fee for the Appeal itself —this will amount to around a further £15,000. My personal liability for costs will be determined after the appeal, should it prove unsuccessful, following the Order of HHJ Weeks QC in Bristol. The Respondents estimate their costs at around £130,000. The Respondents had their opportunity to obtain security for costs, knowing they were in litigation against a company with no assets. As mentioned above they obtained £15,000."
It seems to me that that is exceedingly weak evidence that this appeal will be stifled if a stay is not granted. The normal position is that somebody is entitled to the fruits of the judgment below. A stay will not be granted, unless there is cogent evidence that the appeal will be stifled. As it seems to me, there is no cogent evidence that there would be a stifling of this appeal if this stay is not granted.
What, however, I am somewhat concerned about is the possibility that...
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