Carr v Cotton (A Firm)

An appeal should not be stifled by requiring an impecunious appellant to make a payment which cannot be funded from his own resources. Where the appeal is also pursued for others who may be able to indemnify or contribute to the appellant, those persons should not obtain the benefit of the appeal without addressing an existing costs order. Permission to appeal granted on the basis that there is a real prospect of success means only that the prospect is real rather than fanciful. It does not indicate that the appeal is likely to succeed or that the court has expressed a view on its merits. Time for complying with a conditional appeal order may be extended where there is a real prospect of compliance and no identifiable prejudice to the respondent.

Mr Carr appealed against Blackburne J’s dismissal of his claim to recover approximately US$4 million allegedly paid away without authority. The claim included US$200,000 in which he was personally interested and approximately US$3.8 million held for other investors as nominee or trustee. Blackburne J ordered him to make an interim payment of £250,000 on account of costs, leaving £155,000 to be paid after credit for security already in court.

Permission to appeal was granted. The respondent applied under CPR 52.9 for the appeal to be struck out unless the outstanding costs payment was made or secured. The court had previously ordered that the appeal be restricted to Mr Carr’s personal claim unless the payment was made. The issue was whether time should be extended and whether the appeal had already been automatically struck out.

1. Application granted. The time for complying with the order of 9 May 2002 was extended to 4 pm on 19 July 2002 for payment or security of £155,000 with interest.
2. The earlier order was not an automatic strike-out order. Mr Carr had made a relevant application to amend his appellant’s notice within the required period. The condition was therefore satisfied, even though he sought to preserve alternative arguments.
3. The proper approach under the overriding objective in the Civil Procedure Rules 1998 was to extend time. There was a real possibility that the full sum would be paid or secured within days, and no identifiable prejudice to the respondents. If the appeal were limited to Mr Carr’s personal interest, its costs were unlikely to be materially reduced.
4. The court reaffirmed the distinction between Mr Carr’s personal claim and the claim brought for the other investors. An impecunious appellant should not be prevented from pursuing an appeal for his own benefit merely because he cannot pay an adverse costs order. Persons who may be able to indemnify or fund litigation pursued for their benefit should not obtain the benefit of the appeal while refusing to meet the existing costs liability.
5. Permission to appeal based on a real prospect of success means that the prospect is real rather than fanciful. It is not an indication that the appeal will or is likely to succeed. The court had formed no view on the merits.
6. The application to amend was adjourned. It could be withdrawn if payment was made, or pursued on paper if the anticipated funds did not arrive. The respondents were to pay £6,000 costs, and time for filing their respondent’s notice was extended to 6 September 2002.

• Court of Appeal (Civil Division): Blackburne J had dismissed the claim and ordered an interim payment on account of costs. Permission to appeal was subsequently granted, and the Court of Appeal extended time for compliance with its conditional order.