Goldtrail Travel Ltd v Aydin and Others

On 22nd May 2014 Rose J gave judgment in this action against six defendants. This application only concerns the third defendant, Onur Air Tasimacilik AS ("Onur Air"). Onur Air is a Turkish company with its headquarters in Istanbul. Onur Air was found liable by Rose J for dishonest assistance in the misapplication of the claimant, Goldtrail Travel Ltd ("Goldtrail"), as money. By consequent order Rose J required Onur to pay £3,640,000 with interest, to make an interim payment on account of costs of £450,000 and a further payment of £150,000 representing half the costs of an ATE insurance policy. She refused permission to appeal. She ordered without, as I understand it, resistance from Goldtrail, a stay of execution of the judgment sum pending any application for permission to appeal and thereafter if permission was granted. The other financial elements of her order, that is to say the interim payment on account of costs and the payment on account of the ATE insurance policy were not stayed and were payable shortly thereafter.

I gave permission to Onur Air to appeal on the 15th December 2014. Included in the respondent's notice was an application under CPR 52.9 that it be made a condition of the continuation of the appeal that the appellant pay £600,626 plus interest of 8% from the 19th June 2014 being sums due from the appellant to the respondent pursuant to paragraphs 9(c) and (d) of the order of Rose J of 22nd May 2014 and (ii) paying the following sums into court (a) £150,000 being security for the respondent's costs and (b) £3,640,000 being the principal damages due from the appellant to the respondent pursuant to paragraph 9(a) of the order plus interest at 8% thereon from the 19th June 2014.

The reason given in the respondent's notice for the imposition of such a term was that:

"the appellant has failed to satisfy the interim costs award ordered by Rose J, the appellant ceased flying to the UK. The respondent is concerned that if the appellant is allowed to continue with the appeal and fails the respondent will be unable to pay any damages award."

In his witness statement in support of the application Mr Christopher Jarvis, who is the solicitor with the conduct of the matter on behalf of Goldtrail, relied primarily on the provisions of the rules which enable a court to make an order for security for her costs. At paragraph 14 he said this:

"In December 2014, the Liquidators were made aware that Onur had ceased flying its aircraft to the UK. In view of this, and Onur's continued failure to satisfy the interim costs order, on 19 December 2014 my firm put Onur's solicitors on notice that the Liquidators intended to make an application for security for costs if Onur obtained permission to appeal (which, at that point, was still pending as far as the Liquidators and my firm were aware: it was not until the Court of Appeal's letter of 5 January 2015 was received … that my firm became aware that Onur had obtained permission from the Court of Appeal). We also indicated that the Liquidators would seek an order that Onur should pay the outstanding judgment debt into an escrow account. In Onur's solicitors' response later that day, they did not comment on whether or not Onur was able and/or willing to satisfy the outstanding interim costs order…".

Then in paragraph 16, he says:

"On 23 December 2014, Onur solicitors confirmed that 'Onur Air ceased operating to the UK following the end of the holiday season for operational reasons. Onur Air continues to fly to other destinations in Europe'. They also stated that: 'Pressure on [Onur's] cash flow have made it unable to make the interim payment on account of costs.'"

On 10th March 2015 Goldtrail served a skeleton argument in support of their application for security for costs. The skeleton referred to a number of cases in which the payment of the judgment debt was made a condition of continuation with an appeal. It relied heavily on the cessation of flying for operational reasons.

In paragraph 69 of that skeleton are set out the factors relied on as amounting to compelling reasons for imposition of conditions in this case:

"(1) Onur is incorporated in Turkey and runs its operations from Istanbul. Onur has stated in correspondence that it ceased to fly to this jurisdiction in October 2014 and is not, at present, flying to jurisdiction for 'operational reasons'. Onur has not provided any explanation in evidence to this Court for this decision. Other than the planes that used to fly here, the Liquidators believe that Onur has no other assets in this jurisdiction.

(2) The mechanisms of normal enforcement are unlikely to be available. Onur is incorporated in Turkey. Goldtrail, an insolvent company with no funds, would be faced with having to bring enforcement proceedings in Turkey. Alternatively, if Onur is still flying to other Brussels Convention/Lugano countries when the appeal process has ended, Goldtrail could attempt to enforce payment against a plane owned by a Turkish company in one of those states.

(3) Onur, given its conduct (as demonstrated by its dealings with Goldtrail, in particular the acts of dishonest assistance set out above and the position taken by Onur in correspondence since the trial), is not likely to pay or co-operate with the enforcement process.

(4) Onur has the resources to pay. Mr Hasancebi's evidence is clear on that point. Onur has not adduced any evidence in the Application, as might have been expected, to support the assertions made in correspondence that it does not have the resources meeting the conditions were they to be ordered. The Court of Appeal can conclude that Onur has not made payment of the costs it has been ordered to pay not because it cannot do so but chosen not to do so.

(5) Onur has not provided any evidence concerning its financial affairs to Goldtrail or to the Court of Appeal.

(6) Given what Mr Hasancebi has told the Court at trial, and the absence any evidence as to Onur's financial position, the Court of Appeal can reasonably conclude that Onur's appeal not be stifled…"

Onur served no evidence in answer to the application. But in its skeleton of 10th March 2015 it stated that it expected to be in a position to pay the £600,000 interim costs and after the event insurance amount by 13th March, some three days later, and £150,000 security for costs sought by Goldtrail by the same date. It stated that this was on a voluntary basis. Not surprisingly, it devoted the bulk of its skeleton argument to the judgment sum application which it characterised as an appeal from the stay of that order by Rose LJ. It thus resisted the admission of Mr Jarvis's evidence as new evidence on appeal. Quite apart from that, it was submitted that there was no compelling reason to grant the judgment sum application.

Onur summarised its position in paragraph 12 by saying:

(a) Rose J ordered there be a stay of execution of judgment. As set out above it is Onur's submission this should not be disturbed on appeal.

(b) It would be an unusual case where an order imposing a requirement to pay the judgment sum into court were made. This is not an unusual case.

(c) There is no suggestion on the part of Goldtrail that Onur has taken or would take steps to render it judgment proof.

(d) Goldtrail correctly asserts that Onur has stopped flying to the UK. This may, which is not admitted, make execution more difficult as the cases above demonstrate. The key question is not whether it will be difficult to execute but whether an appellant had taken steps to defeat the judgment.

(e) £3.64 million would be a very significant amount to remove from a trading business and

(f) Onur will pay the interim costs money and security for costs.

In a supplementary skeleton Goldtrail placed some reliance of what it called Onur's ...