Butlergrove Limited v Cicely Commercials Limited

Where a judgment debtor fails to comply with an order to pay money into court pending an appeal, the court should adopt a proportionate enforcement response. It should not allow the appeal as a sanction without investigating its merits. An unless order may instead require payment by a specified date and provide for debarment from participating in the appeal on default. Immediate sequestration or committal requires strict compliance with procedural formalities. The court may also grant a temporary injunction restraining distributions and disposals outside normal trading, while leaving the High Court free to vary or discharge it.

Butlergrove Limited v Cicely Commercials Limited arose from a commercial judgment in the Queen’s Bench Division. Her Honour Judge Kirkham gave judgment for Butlergrove after liability had been conceded, but refused permission to appeal and a stay of execution. The Court of Appeal later granted limited permission and a limited stay. After the judgment debt had been enforced, the court ordered Butlergrove to pay a specified sum into court, but Butlergrove failed to comply after transferring its remaining business and assets within its group and asserting that it was a shell company.

Cicely sought sequestration, committal and other enforcement relief. The central issue was the proper and proportionate response pending the appeal, including whether contempt remedies could be imposed immediately and how the assets should be preserved.

The Court of Appeal dealt with an enforcement application during a pending appeal. Lord Justice Robert Walker gave the judgment and Lord Justice Clarke agreed. The court did not decide whether Butlergrove or its officers were guilty of contempt. The late disclosure about the group rationalisation and Butlergrove’s alleged lack of assets called for investigation, but did not justify immediate imprisonment or sequestration.

1. Sanction for non-compliance. Allowing the appeal as a sanction was inappropriate without an inquiry into its merits, since that would necessarily suggest that the trial judge had been wrong. A receiver would also have offered no practical solution where Butlergrove claimed to have no assets and recovery might require proceedings under the Insolvency Act 1986.
2. Procedural safeguards. The application did not comply in several respects with the requirements of Order 45 and the Practice Direction to Order 52 of the Rules of the Supreme Court, as incorporated into the Civil Procedure Rules. The court therefore proposed an unless order, endorsed with a penal notice under Order 45, rule 7(4), requiring payment of £184,696.98 into court by 12 noon on 3 April 2002. If Butlergrove defaulted, it would be debarred from appearing or taking further part in the appeal. Cicely would then be at liberty to apply for sequestration, committal or examination of officers under Order 48.
3. Preservation of assets. A temporary injunction was granted against Michael Brandrick and every company in the group, restraining distributions of profits and disposals of assets except in the course of normal trading. The injunction was to continue until the appeal or further order, and the High Court remained free to vary or discharge it.

• Court of Appeal (Civil Division): On 22 March 2002, Lord Justice Robert Walker, with Lord Justice Clarke agreeing, granted enforcement relief by an unless order and temporary injunction. [2002] EWCA Civ 491
• High Court of Justice, Queen’s Bench Division, Birmingham District Registry: Her Honour Judge Kirkham gave judgment on 16 October 2000 for approximately £268,000, with interest and costs on the indemnity basis, and refused permission to appeal and a stay of execution. An earlier summary judgment had been overturned on appeal.