Bell Electric Limited v Aweco Appliance Systems GmbH & Co KG

Under Civil Procedure Rules r 52.9, the Court of Appeal may make payment of, or security for, a judgment debt a condition of continuing an appeal where there is a compelling reason. The power is not confined to cases where eventual enforcement will fail.

A compelling reason may arise where a party able to pay deliberately disobeys an unstayed order and exploits the practical difficulty of foreign enforcement. The condition must not require a premature reconsideration of the appeal’s merits. Security for appeal costs, however, requires reason to believe that the appellant will be unable, rather than unwilling, to pay costs.

Bell obtained judgment from Elias J on 8 May 2002 for breach or repudiation of an agency agreement. The judge ordered interim damages of £100,000 and £35,000 on account of costs. He refused a stay pending Aweco’s substantive appeal.

Aweco, a German company with no assets in England, did not pay. It relied on the prospect that enforcement proceedings in Germany would be stayed while its appeal was pending. Bell applied to extend time for its respondent’s notice, to impose a condition under Civil Procedure Rules r 52.9, and alternatively for security for costs. Aweco made a late renewed application for a stay.

The central issue was whether the practical difficulty of enforcing an unstayed English judgment abroad could amount to a compelling reason to condition the continuation of an appeal on payment into court.

1. The court ordered that Aweco’s substantive appeal be stayed unless, within 14 days, it paid £135,000 into court to abide the appeal’s outcome. Potter LJ gave the reasons and Carnwath LJ agreed.

2. Civil Procedure Rules r 52.9(1)(c) confers an unfettered power to impose or vary conditions on an appeal, subject to the requirement in r 52.9(2) of a compelling reason. The power may properly require payment into court or satisfactory security for the judgment debt and first-instance costs. It is particularly apt where the condition concerns post-permission conduct and does not require the court to revisit the appeal’s merits.

3. The availability of ordinary enforcement machinery does not, by itself, defeat an application under r 52.9. A compelling reason may exist where an appellant who can pay has deliberately breached an unstayed order, has unsuccessfully sought a stay, and cynically relies on the practical problems of enforcing abroad. Those were the material circumstances here.

4. Article 46 of EU Council Regulation No.44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters gave the German court a discretion, not an obligation, to stay enforcement. Aweco’s solicitors’ assertion that a stay would be granted was not expert evidence and carried little weight. The Article did not justify refusing to obey the English order.

5. Bell’s alternative request for security for costs failed. Aweco’s refusal to pay did not establish an inability to meet Bell’s costs, as required by Civil Procedure Rules rr 25.13 and 25.15.

6. The court extended time for Bell’s respondent’s notice and granted permission for its cross-appeal ground. It refused Aweco permission to renew its stay application out of time, save on the same payment-into-court terms.

• Court of Appeal (Civil Division): In [2002] EWCA Civ 1501, the court granted Bell’s interlocutory application under Civil Procedure Rules r 52.9(1)(c) and stayed Aweco’s pending substantive appeal unless it paid £135,000 into court within 14 days.

• High Court, Queen’s Bench Division (Elias J): On 8 May 2002, judgment was given for Bell, including interim damages and costs payments totalling £135,000. A stay pending appeal was refused.