Onur Air Tasimacilik as v Goldtrail Travel Ltd ((in Liquidation))
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten |
| Judgment Date | 16 November 2017 |
| Neutral Citation | [2017] EWCA Civ 1830 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2014/2468(E) and 2468(F) |
| Date | 16 November 2017 |
[2017] EWCA Civ 1830
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MRS JUSTICE ROSE
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Case No: A3/2014/2468(E) and 2468(F)
Mr Michael Gibbon QC and Ms Hannah Ilett (instructed by Druces LLP) for the Appellant
Mr Robert Miles QC and Ms Hilary Stonefrost (instructed by Fieldfisher LLP) for the Respondent
Hearing date: 8 November 2017
In January 2016 I heard and dismissed an application by Onur Air ("Onur") for a variation of the order of Floyd LJ of 11 June 2015 which directed that Onur should pay the sum of £3.64m into court as a condition of continuing its appeal against an order of Rose J made on 22 May 2014. As I explained in my judgment ( [2016] EWCA Civ 20), Rose J had ordered Onur to pay the £3.64m plus interest to the claimant, Goldtrail Travel Limited ("Goldtrail"), as compensation for its dishonest assistance in various breaches of fiduciary duty against the company by its former director. Rose J refused permission to appeal but it was granted by Floyd LJ on 15 December 2014. The trial judge had ordered a stay of execution in the event that permission to appeal was granted and, by way of counter to this, Goldtrail sought to make the grant of permission to appeal conditional on the payment of costs which had been ordered (but not yet paid); the provision of security for costs; and the payment into court of the amount of the judgment sum. Floyd LJ had originally acceded to this application on 7 April 2015 on a consideration of the papers but, after an oral hearing, confirmed his original order and directed that the payment in should take place within 28 days: i.e. by 9 July 2015.
The application by Goldtrail was motivated by and based on the fact that Onur had by then ceased to operate flights into the UK and therefore had no readily identifiable assets within the jurisdiction which would be available to satisfy the judgment in the event that the appeal were to fail. Onur served no evidence on the application but contended that there was no compelling reason to make the order as required under CPR 52.9(2). It did not argue that it could not pay the money if required to do so or that the requirement to pay the money would stifle the appeal.
On 7 July 2015 Onur emailed the Civil Appeals Office asking for an extension of time to 17 July 2015 for the payment in of the judgment debt. The company indicated that it would make a substantial payment into court on 9 July 2015 but needed extra time in which to complete the payment of the £3.64m. This was attributed to an unforeseen delay in the receipt of some $4.837m from Saudi Arabia Airlines which Onur proposed to use to complete the payment in.
Floyd LJ was not prepared to grant an extension of time without a formal application supported by evidence from an officer of the company which explained:
"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."
This, as explained in my earlier judgment, was because by then (10 July 2015) the substantial payment promised on 9 July 2015 had not in fact materialised and Onur's Solicitors had said that it would not be made. The evidence in support of the application was contained in a witness statement of 14 July 2015 made by Mr Nedim Gurbuz. 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."
Mr Miles QC for Goldtrail submitted that this explanation was materially misleading because it did not disclose that the Saudi Airlines payment of $4.837m had in fact been received by Onur on 7 July 2015 but then used to meet other debts of the company. This was not disclosed until Onur came to make its application under CPR 3.1(7) of 7 December 2015 which I heard in January 2016. In the event, Floyd LJ refused to extend time because he considered that there were grounds for believing that Onur had no intention of complying with his previous orders. He noted that if what was being suggested was that the imposition of the condition would stifle the appeal then the evidence fell far short of establishing that.
Onur sought and obtained an oral re-hearing of the application which was fixed for 21 October 2015 but withdrew the application on the morning of the hearing. In a further witness statement of 19 October 2015 Mr Gurbuz again made no suggestion that Onur could not pay or that the condition would stifle the appeal. He simply said:
"Board of Onur Air is of the opinion that this decision is unlawful and against the principles laid down by the European Court of Human Rights. Therefore, the foresaid sum will not be paid."
It is common ground that Onur's failure to comply with the condition requiring payment in of the judgment debt did not have the effect of dismissing the appeal. Although not an express term of the order, the result was that the appeal was in effect stayed indefinitely or until further order because Onur could not continue with the appeal unless and until it complied with the condition. It would undoubtedly have been open to Floyd LJ to have made an order on 21 October either striking out or dismissing Onur's appeal but he did not do that. Instead, he said:
"20. I have said enough to indicate that the whole history of this appeal is extremely unsatisfactory. I am however very reluctant to strike out an appeal for which permission has been given without giving to the appellants one final chance of explaining their position. If it is now their position that they are so inhibited by the order for payment of the judgment sum that it is stifling their ability to appeal, then they should say so. I appreciate that is not something which they have so far said. They have had ample opportunity, it might be said, to put forward every argument, but stifling of the appeal is one matter which they have thus far declined to put forward. It may be that they are embarrassed by what was apparently said to Rose J about the fact, as [Mr Hasancebi] said in evidence, that the company was of such a size that £5 million was not a large sum of money. Whatever the reasons for their silence, it seems to me that they ought to come forward with their evidence now.
21. What I therefore propose to do is to dismiss the application for an oral renewal of my order and make an appropriate order for costs in relation to that, but to direct that any application for a final order on the appeal should be made on notice to the appellants and that appropriate opportunity should be given to both sides to file evidence in relation to it. It may be that not much further evidence is required from the respondents. I am very anxious that the appeal should not be disposed of without a proper application on notice for the precise order which the respondents now seek."
Goldtrail proceeded to issue an application for an order dismissing the appeal which was met by an application by Onur under CPR 3.1(7) to vary Floyd LJ's order of 11 June 2015 by deleting the condition which required payment in of the judgment debt. Onur based its application on the ground that compliance with the condition would stifle the appeal. In [16] to [24] of my judgment of 21 January 2016 I analysed the evidence which both parties had filed in relation to that issue. Since neither Mr Gibbon nor Mr Miles has criticised the accuracy of that summary, I do not intend to repeat it. It is, I think, common ground that Onur could not continue to trade without the financial support of Mr Bagana who is its chairman and controlling shareholder. The most recent accounts in the evidence (for 2014) indicate that he has lent the company at least $68m secured against its assets which he funded (at least in part) out of dividends received from the company. As I said at [23] of my judgment:
"Mr Bagana therefore appears to have removed equity from the company and to have used the money to establish himself as a secured creditor. His position as the company's largest single (and secured creditor) has...
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Court looks to shareholder to make payment on behalf of litigant
...would (not could) have made the payment on the appellant’s behalf: Onur Air Tasimacilik AS v Goldtrail Travel Ltd (in liquidation) [2017] EWCA Civ 1830 We first covered this case in 2015 when the court granted Onur Air Tasimacilik AS (Onur Air) a conditional appeal against a judgment for Go......