Leicester Circuits Limited v Coates Brothers Plc

A stay of execution pending an appeal is governed by the interests of justice. The court has a broad discretion and must balance the injustice likely to each party under the competing orders. The ordinary position is that a judgment should not be stayed. A material risk that the successful respondent cannot repay the judgment sum if the appeal succeeds is relevant, but it is not conclusive. The court may also consider the apparent strength of the appeal, the parties’ relative resources, and whether the respondent has sufficient financial substance to meet a repayment obligation.

The claimant manufactured printed circuit boards using ink supplied by the defendant. After blistering problems developed, the claimant succeeded before His Honour Judge Bradbury in the Queen’s Bench Division. It recovered approximately £343,000 after the counterclaim, together with £150,000 on account of costs.

The defendant sought permission to appeal against findings that the ink was not reasonably fit for its purpose and that its terms and conditions had not been incorporated or did not exclude the losses. It also sought a stay of execution, contending that the claimant might be unable to repay the judgment sum if the appeal succeeded. The claimant sought permission to cross-appeal on issues concerning Tyco and a withdrawn Part 36 offer.

1. Permission to appeal was granted on the defendant’s proposed grounds concerning fitness for purpose, incorporation and construction of its terms, and damages. Potter LJ considered that the defendant faced a substantial task in challenging the judge’s evaluative finding, but should have the opportunity to do so. Arden LJ agreed that the appeal was not without substance and met the threshold for permission.

2. The stay of execution was refused. The governing question was which order best accorded with the interests of justice. Although there was a normal rule against a stay, the court had to balance the competing risks of injustice. A relevant consideration was whether the defendant could recover the judgment sum if its appeal succeeded.

3. The claimant was prima facie entitled to its judgment. The evidence gave sufficient assurance that it would have enough substance to discharge a repayment obligation if necessary. The defendant was a large and financially strong business, while the claimant was much smaller and should be permitted to use the judgment sum in its business pending the appeal. Potter LJ also regarded the defendant’s appeal as difficult; Arden LJ did not express a view on its likely success, but reached the same conclusion on the stay.

4. Permission to cross-appeal was granted, subject to properly drafted grounds, on the Tyco issue and the costs consequences of the withdrawn Part 36 offer. The defendant was ordered to pay the claimant’s costs of the stay application, summarily assessed at £6,800. Costs of the permission application were costs in the appeal.

• Court of Appeal (Civil Division): In [2002] EWCA Civ 474, permission to appeal and cross-appeal was granted, but a stay of execution was refused.
• Queen’s Bench Division: His Honour Judge Bradbury gave judgment for the claimant after a 15-day trial, awarding a net balance of approximately £343,000 and £150,000 on account of costs. No citation for that judgment is stated.