Peer International Corporation & Ors v Termidor Music Publishers & Ors

Rule 52.9 permits the Court of Appeal to make payment of existing costs orders a condition of pursuing an appeal where compelling reasons exist. Relevant considerations include enforcement difficulty, access to litigation resources, the absence of convincing evidence of inability to pay, and inadequate financial disclosure. The condition should be limited to sums genuinely exposed to recovery risk; joint liability with solvent co-obligors may make a further condition inappropriate. Security for costs should be fixed at a reasonable sum, taking account of likely recoverability, appeal complexity and costs attributable to a respondent’s notice.

The respondent sought interlocutory relief in an appeal by the appellant group against costs orders made by Lindsay J in the Chancery Division following a trial. It asked the Court of Appeal to require payment of specified existing costs as a condition of prosecuting the appeal and to order security for the appeal costs. The application concerned EMC, a Cuban entity, and liabilities shared with Termidor companies. The central issues were whether rule 52.9 permitted the payment condition, which liabilities should be included, and the proper amount of security.

Application granted. Lord Justice Lloyd held that the Court of Appeal had jurisdiction under rule 52.9 to vary the conditions on which permission to appeal had been given by requiring payment of existing, unchallenged costs orders.

1. The relevant threshold was a compelling reason. The leading authority was Hammond Suddards v Agrichem International [2001] EWCA Civ 2065, in which six relevant factors had been identified. The circumstances described included difficulty enforcing against an overseas appellant, access to resources sufficient to instruct solicitors and counsel, no convincing evidence of inability to pay, and inadequate disclosure of financial affairs. Those considerations were materially present. The fact that the condition might not stifle the appeal did not remove the respondent’s substantial risk of failing to recover sums due if the appeal failed.
2. The payment condition had to reflect the actual recovery risk. EMC was required to pay £28,000 for the adjournment costs and £7,404.25 under the February 2007 costs order, totalling £35,404.25, as a condition of pursuing the appeal. The court declined to require payment of the separate £54,000 liability. Although EMC was jointly and severally liable, the Termidor companies were also liable and there was no evidence that they could not pay. Any effective set-off did not alter that conclusion.
3. An order for security for costs was appropriate. The court assessed the amount reasonably likely to be recoverable, rather than simply adopting the respondent’s total estimate. It allowed for the substantial nature of the appeal and made only a modest allowance for costs attributable to the respondent’s notice. Security was fixed at £40,000.
4. The court considered that EMC should have at least twelve weeks to make the required payments and that the fixed appeal might need to be postponed. The precise timetable and implementation details were reserved for further submissions. A respondent’s notice was directed to be filed by 7 December.

• Court of Appeal (Civil Division) granted the respondent’s application, imposing payment of £35,404.25 as a condition of pursuing the appeal and requiring £40,000 security for costs: [2007] EWCA Civ 1308.
• High Court of Justice, Chancery Division Lindsay J made the relevant costs orders following the trial, including orders dated 4 December 2006 and 26 February 2007. The judgment gives no citation for those orders.