Vodafone Ltd v GNT Holdings (UK) Ltd & Anor

Payment of a judgment sum as a condition of pursuing an appeal under CPR 52.9 requires a compelling reason. Ordinarily, non-payment by a UK appellant after refusal of a stay should be addressed through execution or winding-up. Very exceptional circumstances may justify payment into court where the appellant appears to have divested itself of assets to defeat enforcement and has failed to give frank evidence about its resources or those financing the appeal. The court must examine the particular facts. The six considerations identified in Hammond Suddard are a useful broad approach, not a definitive checklist. An appellant claiming that the condition would stifle the appeal must show that it cannot raise funds from directors, shareholders, backers or other interested persons. Any payment condition must remain just and proportionate.

Vodafone obtained judgment against GNT Holdings for sums due under a guarantee. The High Court gave judgment on 10 March 2004 for £495,419.61 plus interest, and refused a stay of enforcement. Holdings appealed on a narrow legal point concerning the authority to execute the guarantee.

Before the appeal, Vodafone sought security for costs and an order requiring payment into court of part of the judgment sum. The central issues were whether there was reason to suppose that Holdings could not pay Vodafone’s costs if unsuccessful, and whether exceptional circumstances supplied the compelling reason required by CPR 52.9.

1. Security for costs. The relevant question was whether there was reason to suppose that, if unsuccessful, Holdings would be unable to pay Vodafone’s costs. The evidence showed that Holdings claimed to have no funds, depended on opaque third-party support, and had provided inadequate information about its financial arrangements. Security was therefore ordered. Although paragraph 13 records £16,400, the operative order required payment of £16,500.
2. Payment into court. CPR 52.9(2) permits a condition on pursuing an appeal only where there is a compelling reason. The court adopted the ordinary rule identified in Bell Electric Ltd v Aweco Appliance Systems GmbH & Co KG [2002] EWCA Civ 1501: absent very exceptional circumstances, execution, bankruptcy or winding-up is the appropriate enforcement route for a UK appellant or one with UK assets.
3. The circumstances here were very exceptional. The probabilities indicated that Holdings had taken steps, after learning of Vodafone’s demand, to render itself judgment-proof. The continuing lack of frank disclosure about Holdings, Elios and Chepha, together with the possibility that interested persons would continue funding the appeal, justified protecting Vodafone beyond an order for security of costs.
4. The six considerations identified in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 were a useful broad approach, but were not definitive. The reference in that case to a substantial counterclaim fortified, rather than replaced, the earlier reasoning. The result depended on close examination of the particular facts.
5. Applying Agrichem International Holdings Ltd v Hammond Suddard Solicitors (No 2) [2002] EWCA Civ 335, Holdings had not shown that it could not raise funds from directors, shareholders, backers or other interested persons. The appeal was plainly arguable, so a proportionate order for half the judgment sum was made.

The applications were allowed. Holdings was ordered to pay £16,500 as security for costs, £250,000 into court under CPR 52.9, and £13,000 in costs by 4.30 pm on 8 October 2004. Default would result in the appeal being struck out without further order.

• Court of Appeal (Civil Division): On 24 September 2004, allowed Vodafone’s applications and imposed conditions on the continuation of the appeal. The judgment is reported at [2004] EWCA Civ 1242.
• High Court of Justice, Queen’s Bench Division: Mr Christopher Moger QC, sitting as a Deputy Judge of the High Court, gave judgment for Vodafone on 10 March 2004 for £495,419.61 plus interest and refused Holdings’ application for a stay of enforcement.