Conditional permission

2017 SCMR 1675 SUPREME-COURT-OF-UK Judicial Precedent

Permission to appealConditional permissionCourt imposing conditions for continuation of appealPayment of judgment sum in courtPrinciplesRight to fair trialScopeCompany as a separate legal entity from its owner (controlling shareholder)ScopeRespondent-company was awarded damages at trialAppellant-company sought to appeal the award

Respondent made an application [under then R. 52.9(1)(c) of the Civil Procedure Rules (UK)] requesting that the court should impose on the appellant a number of conditions for the continuation of its appeal; one requested condition was that the appellant should pay into court the judgment sum which Trial Court had awarded to the respondent, on the basis that the appellant was likely to have no other assets even temporarily in the jurisdiction (of England and Wales)

Appellate court agreeing with the respondent imposed said condition for the continuation of the appeal

Appellant disputed said condition but did not claim that it would stifle the appeal

Subsequently the judgment sum was not paid into court, and the respondent applied for the appeal to be dismissed, while the appellant applied for discharge of the condition on the ground that payment of sum was now beyond its means and its continuation would stifle its appeal

Appellate court held that the appeal should be dismissed on the grounds that, in exceptional circumstances, the ability of a third party to provide funds - in the present case the appellant's wealthy owner - could be taken into account in assessing the likelihood that a company could make a payment into court; that the appellant's owner had decided not to fund the payment, and that the appellant had not established that the condition for payment would stifle its appeal

Legality

[Per Lord Wilson (Majority view); Stifling an appeal was to prevent an appellant from bringing it or continuing it

When an appellant had permission to bring an appeal, it was wrong to impose a condition which had the effect of preventing him from bringing it or continuing it

For the purposes of right to a fair trial [Art. 6 of the European Convention on Human Rights] there would seldom be a 'fair hearing' if a court which had permitted a litigant to bring an appeal then, by indirect means, did not permit him to bring it

Appellant must establish on the balance of probabilities that a proposed condition would stifle the continuation of its appeal

Courts could proceed on the basis that, were it to be established that the condition would probably stifle the appeal, the condition should not be imposed

Even if an appellant appeared to have no realisable assets, a condition for payment would not stifle its appeal if it could raise the sum, however, the court must be cautious in respect of a suggestion that a corporate appellant could raise money from its controlling shareholder/owner

Owner's (shareholder's) distinct legal personality must remain in the forefront

Question should never be if the shareholder/owner could raise the money, the question should always be, could the company raise the money

Key question was whether a third party would, rather than could, pay the money in court

Criterion which should be applied in the present case was whether the appellant-company had established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition

Where a company and/or its owner denied that the necessary funds would be made available to the company, the court should not take such assertion at face value; it should judge the probable availability of the funds by reference to the underlying realities of the company's financial position, and by reference to all aspects of its relationship with its owner, including, the extent to which he was directing (and had directed) its affairs and was supporting (and had supported) it in financial terms

Appellate Court had not applied the correct criterion at the time of dismissing the appeal and instead followed the "misconception" that in exceptional circumstances an order for a payment into court could be justified by whether another person probably could advance the necessary funds, irrespective of whether he probably would do so

Supreme Court remitted the application back to the Appellate court to determine the appellant's application for discharge of the condition by reference to the correct criterion]

[Per Lord Clarke, dissenting (Minority view); Where a company did not have resources of its own and the issue was whether it had access to the resources of others, the question was whether the company would (not could) have had access to the resources

Onus that it would not was on the company concerned

On the facts of the present case, the question was whether appellant had shown on the balance of probabilities that it did not have access to the relevant resources

On the basis that the only resources available to appellant were through its owner, the question was whether, on the balance of probabilities he would have provided the funds

No direct evidence was provided by the appellant's owner on the question of whether he would have declined to provide funds

Evidence available on record fell far short of establishing that the condition would stifle the appeal]

[Per Lord Carnwath, dissenting (Minority view); No direct evidence was provided by the owner of appellant-company on the question of whether he would have declined to provide funds

Only relevant evidence was that of appellant's Chief Financial Officer who stated that the owner would contemplate making further loans to the appellant, but only in 'exceptional circumstances' to enable it to make commercial payments necessary to keep it in business

No explanation was provided as to why the owner did not regard the present case as sufficiently 'exceptional', which was why the appellant fell far short of proving, on the balance of probabilities, that the condition would in fact stifle the appeal]

Appeal was allowed accordingly.