Hammond Suddard Solicitors v Agrichem International Holdings Limited

An appeal does not itself stay enforcement. When deciding whether to grant a stay, the court assesses the risks of injustice to both parties, including whether refusal would stifle the appeal, whether a successful respondent could later enforce, and whether money paid could be recovered if the appeal succeeded.

A foreign corporate appellant seeking relief must provide full, frank and clear evidence of its resources, including funds obtainable from owners or other backers. The court may, for a compelling reason, condition permission to appeal on payment or security for the judgment debt and costs. Such a condition is appropriate where enforcement is at real risk and the appellant can obtain the necessary resources. It should not be imposed where convincing evidence shows that it would stifle a genuine appeal.

Hammond Suddard Solicitors v Agrichem International Holdings Limited arose from a solicitors' claim for unpaid fees and a former client's counterclaim alleging negligent advice. Silber J substantially rejected the allegations of negligence, awarded nominal damages of £5 on the counterclaim and ordered the client to pay the agreed judgment debt and substantial interim costs.

After Silber J refused permission to appeal, Mance LJ granted permission but refused a stay of the costs order. The foreign corporate appellant renewed its application for a stay. The solicitors sought security for their appeal costs and an order making continued prosecution of the appeal conditional upon payment or security for the judgment debt and existing costs orders.

The central issues were whether the financial evidence established a risk that enforcement would stifle the appeal, and whether the court could and should impose the requested conditions under the Civil Procedure Rules.

1. The application for an unconditional stay was refused. Clarke LJ and Wall J, giving the joint judgment of the court, held that a stay under rule 52.7 depends on the risks of injustice to both parties. The appellant's specially prepared balance sheet and assertions of impecuniosity were neither full nor clear. They did not establish a significant risk that enforcement would stifle the appeal, particularly given earlier evidence of wealthy owners and the continuing funding of solicitors and counsel.

2. The principles in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 were applicable when assessing an allegation that security or enforcement would stifle an appeal. The court must consider resources available from directors, shareholders, backers and other interested persons. The company bears the burden of proving that those sources cannot provide the required funds.

3. Security for the respondents' appeal costs was ordered in the sum of £85,000. Rules 25.15 and 25.13 authorised security because the appellant was a foreign company outside the relevant enforcement conventions, and the making of an order was conceded to be just. The estimate was based on a four-day appeal and moderated charging rates. Costs associated with the respondents' notice properly formed part of the appeal costs.

4. Rules 52.3(7), 52.9 and 3.1(3) empowered the court to make permission to appeal conditional upon payment into court or other security. After permission had been granted, rule 52.9 required a compelling reason. That requirement justified a cautious approach, but did not remove the jurisdiction.

5. A compelling reason existed. Enforcement against the appellant was likely to be difficult; it had access to funds for the appeal and security for costs; there was no convincing evidence that it or its owners could not satisfy the existing orders; its financial disclosure was inadequate; and the proposed condition had not been shown to stifle the appeal. Societe Eram Shipping Co Ltd v Compagnie Internationale de Navigation [2001] EWCA Civ 568 was materially different because the inference there was that the appellant could not pay.

6. The appellant was required, by 1 March 2002, to pay or secure the judgment debt and existing costs orders and provide £85,000 security for appeal costs. In default, the appeal would stand struck out without further order. If security was provided, execution would be stayed. Its reasonable cost was to be treated as an appeal cost, and the appellant was ordered to pay £12,000 for the applications.

1. Court of Appeal (Civil Division): In [2001] EWCA Civ 2065, the court refused an unconditional stay, ordered £85,000 security for appeal costs and conditioned continued prosecution of the substantive appeal on payment or security for the judgment debt and existing costs orders.

2. Court of Appeal, single Lord Justice: Mance LJ granted permission to appeal on paper, refused permission to adduce fresh evidence and refused a stay of the costs order.

3. High Court, Queen's Bench Division: Silber J substantially rejected the appellant's negligence case, awarded nominal damages of £5 on its counterclaim, entered judgment by consent on the solicitors' claim and made interim costs orders. He refused permission to appeal and refused a stay of the first interim costs payment.