Goldtrail Travel Ltd ((in Liquidation)) v Aydin and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten |
| Judgment Date | 21 January 2016 |
| Neutral Citation | [2016] EWCA Civ 20 |
| Docket Number | Case No: A3/2014/2468 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 January 2016 |
[2016] EWCA Civ 20
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MRS JUSTICE ROSE
HC12D02320
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Case No: A3/2014/2468
Michael Gibbon QC and Hannah Ilett (instructed by Druces LLP) for the Third Defendants
Hilary Stonefrost (instructed by Field Fisher LLP) for the Respondent
Hearing date: 14 January 2015
Judgment Approved
On 22 May 2014 Rose J ordered Onur Air ("Onur") to pay to Goldtrail Travel Limited ("Goldtrail") the sum of £3.64m with interest as equitable compensation for its dishonest assistance of various breaches of fiduciary duty against the company by its sole director, Mr Aydin. The claim by Goldtrail, which is now in liquidation, was that Mr Aydin (who was the 100 per cent owner of the company) had misapplied its money by causing the company to enter into two separate transactions with Black Pearl Investments Limited ("Black Pearl") and with Onur under which Goldtrail agreed to purchase seats on charter flights run by an airline called Viking (in which Black Pearl had a 50 per cent interest) and by Onur. As part of the same transactions, Black Pearl and Onur each agreed to buy 50 per cent of Mr Aydin's shareholding in Goldtrail and substantial sums of money were paid directly to Mr Aydin through a Seychelles company which the liquidators claimed were due to Goldtrail as commission on the sale of the seats.
In the end, Mr Aydin absconded leaving Goldtrail in administration and its customers stranded in various parts of the world. Their repatriation was secured at the expense of the Air Travel Trust, which is the principal creditor, to the tune of more than £20m. Black Pearl and Onur were found by the judge to have dishonestly assisted Mr Aydin in his various breaches of duty by their participation in the agreements I have referred to. They, for their part, continue to deny the giving of dishonest assistance and claim that they are also victims of Mr Aydin's fraud. He received their money but never transferred the shares.
The judge (by paragraph 12 of her order) stayed execution of the judgments against both sets of defendants pending the decisions on their applications for permission to appeal. The stay was to continue until after judgment in the appeal in the event that permission to appeal was granted.
Rose J refused permission to appeal but it was granted to Onur by Floyd LJ on 15 December 2014 and to Black Pearl on 10 February 2015.
As part of its Respondent's notice Goldtrail challenged the judge's order for a stay as regards Onur and sought an order that the prosecution of Onur's appeal should be made conditional upon the payment by Onur of the interim costs ordered by the judge to be paid; the provision of security for costs; and the payment into court of the judgment sum plus interest. On 7 April 2015, on a consideration of the papers, Floyd LJ directed that the "continuation of the appeal" should be conditional on the three payments referred to and that, in the case of the judgment sum, payment should be made by 30 April 2015.
The application by Goldtrail to vary in effect the terms of the stay in this way was based upon the decision by Onur to stop flying into the UK. The liquidators contended that this would have an impact on its ability to enforce the judgment against Onur in the event that the appeal was unsuccessful. But they also recognised that the liquidation of Goldtrail meant that it would be inappropriate for the judgment sum to be paid and utilised by them in advance of the outcome of the appeal. Floyd LJ gave effect to these considerations by ordering the £3.64m to be paid into court by 30 April 2015 as a condition of the continuation of the appeal.
Onur requested this decision to be re-considered at an oral hearing which took place on 11 June 2015 and Floyd LJ extended time for compliance with the condition until after the hearing. At the hearing Floyd LJ confirmed his earlier order and directed that the continuation of the appeal should be conditional upon Onur paying the £3.64m into court within 28 days (i.e. by 9 July 2015) or providing security for the sum by that date. In his judgment, he noted that Onur had served no evidence in answer to the liquidators' original application under CPR 52.9 but had provided evidence for the oral hearing explaining its decision to stop flying to the UK. This was said to be for purely operational reasons and not with a view to obstructing the enforcement of any judgment. Mr Gürbüz made a witness statement dated 27 May 2015 in which he said that there was insufficient demand from tour operators for flights to Turkey to make it economical to continue to fly from the UK in 2015 and a decision was made to concentrate on routes from other European cities. At that time Onur was providing charter flights for 44 different tour operators mostly in Europe.
Floyd LJ's view was that even absent any intention to avoid enforcement of the judgment the change in Onur's operation provided a compelling reason to justify the condition for the payment of the £3.64m into court since it impacted on Goldtrail's ability to enforce the judgment by normal means against assets within the jurisdiction. In terms of the impact on Onur of the condition, Floyd LJ noted that there would be no prejudice at all beyond the losses caused by placing the money in court for the period of the appeal. It was not suggested in Onur's evidence or by Mr Gibbon QC, who appeared for Onur, that there was any risk of the appeal being stifled which would have been a significant factor in deciding whether to grant a stay or to impose a condition of this kind under CPR 52.9: see Hammond Suddards v Agrichem International Holdings Ltd [2001] EWCA Civ 2065.
On 7 July 2015, two days before the deadline for the satisfaction of the condition expired, Onur's solicitors contacted the Civil Appeals Office by e-mail to ask for the date for payment in of the judgment debt to be extended to 17 July 2015. They went on to say that Onur would make a "substantial partial payment" into court on 9 July 2015 but needed perhaps another 10 days to pay in the full £3.64m because of the unforeseen delay in the payment to Onur of some $4.837m from Saudi Arabian Airlines in relation to the leasing of four aircraft. This payment could be delayed for up to 10 days but, once received, would be used to pay the balance of the £3.64m.
Although asked for informally, this was, technically speaking, an application to vary the order of 11 June under CPR 3.1(2) relying on the change of circumstances created by the delay in the Saudi Airlines payment. In the event, Floyd LJ was not prepared to make the order without Onur issuing a formal application for an extension of time supported by a witness statement from a proper officer explaining:
"why the payment has not been made, why instructions were given to tell the court that a substantial part payment would be made on 9 July 2015, why that part payment was not made and precisely when and how the order will be complied with if an extension is to be granted."
Floyd LJ's direction was couched in these terms because by 10 July, when it was issued, no substantial or any part of the judgment sum had been paid into court as promised in the e-mail of 7 July 2015 and Onur's solicitors had confirmed that the interim payment would not be made. On 14 July Mr Gübüz made a further witness statement in support of the application to extend time. He said:
"4. Onur Air had hoped to pay the judgment sum into court from funds to be received on about 6 July from Saudi Arabian Airline, but receipt of that payment was delayed.
5. Onur Air therefore instructed its solicitors on 7 July to apply to the court for an extension of time for payment of the judgment sum until 17 July and to tell the court that a partial payment would be made on 9 July which it then hoped to do to demonstrate to the court Onur Air's intention to comply with the Order.
6. In the event, Onur Air was not in a position to make the Interim Payment on 9 July 2015 and following further consideration of its cashflow position and its commitments to third parties necessary for the business, Onur now seeks permission from the court to pay the judgment sum into court by monthly payments of £500,000. Onur intends to put its solicitors in funds of £640,000 by 15 August 2015 with instructions to send a cheque for the first instalment to be sent immediately to the Court Funds Office. After that Onur will make further payments of £500,000 on the first banking day of each month until the judgment sum has been paid in full. Onur Air acknowledges that if any of these payments is not made then it will be unable to continue with the appeal."
On 27 July 2015 Floyd LJ refused to extend time after a consideration of the application on the papers. In his written ruling he said that there were grounds for believing that Onur had no intention of complying with the order for payment and that Mr Gürbüz's witness statement did not explain what had happened to the Saudi Airlines payment as he had previously directed. Nor did it explain how the staged payments were to be funded. He continued:
"I am not satisfied on the material before me that it would be right to extend this indulgence to the appellants. If they are now contending that the imposition of the order would stifle the appeal, the evidence falls far short of showing that to be the case. It is well settled that a party who wishes so to contend must show that he has explored all...
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