CIBC Mellon Trust Company & Ors v Stolzenberg & Ors

A court may make permission to appeal subject to payment or security conditions only where there is a compelling reason. The discretion is fact-sensitive. Relevant considerations include repeated wilful breach of court orders, a real risk that enforcement will fail, access to third-party funding, the funder’s interest in the litigation, and whether the appeal would be stifled. A prior ruling on an earlier application does not prevent consideration of materially different facts, including later findings at first instance. Fairness may justify conditions for later costs while excluding earlier costs where the funder’s responsibility for that period is not established.

The claimants sought security for the costs of an appeal and conditions requiring payment of past and first-instance costs. The appeal challenged Etherton J’s judgment of 3 February 2003 dismissing Mora Hotel Corporation NV and Chascona NV’s applications to set aside judgments entered against them after repeated non-compliance with freezing and unless orders.

Permission was refused by Etherton J and a single Lord Justice, but granted by Mummery LJ and Mance LJ on 11 November 2003 in relation to the exercise of discretion. Other grounds were adjourned. The present interlocutory application concerned the amount of security and whether the appeal should be conditional on payment of costs, with Mr Cavazza funding the litigation.

Application granted in part. The court imposed security and costs conditions, but declined to require payment of all the sums sought.

1. Power and threshold. The power to make permission to appeal conditional arose under the Civil Procedure Rules, including CPR 3.1 and rule 52.3(7)(b). The applicable principles were the same under both provisions, although the factual material available after a first-instance hearing could differ. The authorities established that a condition requiring payment of a judgment debt, past costs or appeal security required a compelling reason. The discretion was not confined by the particular type of condition sought.
2. Relevant circumstances. The court treated the assessment as fact-sensitive. The considerations identified in Hammond Suddard Solicitors v Agrichem International Holding [2001] EWCA Civ 2065 included enforcement difficulty, access to resources, ability to pay, inadequate financial disclosure, absence of a risk that the appeal would be stifled, and repeated disobedience of court orders. The defendants’ wilful and deliberate breaches, their residence outside the jurisdiction, the enforcement risk, Mr Cavazza’s ample resources and his interest in the litigation supplied compelling reasons. The appeal would not be stifled.
3. Changed circumstances and fairness. The Court of Appeal’s earlier decision had not considered the merits of the applications to set aside. Etherton J’s later findings therefore materially changed the factual position. The court nevertheless had to balance protection of the claimants against the practical effect on the defendants and the relevance of Mr Cavazza’s involvement. The court imposed a condition for specified costs incurred in December 2002 and July 2003, but did not impose conditions for earlier past costs or the costs of detailed assessment.
4. Orders. The defendants were required to provide £450,000 as security for the appeal costs. Permission was also made conditional on payment of £600,000, being £700,000 towards the specified costs less £100,000 already paid into court. No order was made for the additional £500,000 detailed-assessment costs or the £1 million sought for past assessed costs.

• Court of Appeal (Civil Division) Permission to appeal was refused by Etherton J and by a single Lord Justice. Mummery LJ and Mance LJ granted permission on 11 November 2003 concerning the exercise of discretion, while adjourning other grounds and the present application. The court then imposed security of £450,000 and a £600,000 costs condition.
• Chancery Division Etherton J dismissed the defendants’ applications on 3 February 2003 to set aside judgments entered after repeated non-compliance with court orders.