Trustees of Olympic Airlines SA Pension & Life Assurance Scheme v Olympic Airlines SA

Under the Civil Procedure Rules 1998, the court has discretion to order security for appeal costs where a company is unlikely to pay. The discretion is not governed by an automatic rule in winding-up cases. Security should be refused for stifling only where it is probable that the appeal will thereby be prevented. The appellant must address both its own ability to provide security and its ability to raise funds from interested bodies behind it. A non-frivolous appeal and manifest unfairness to the respondent may justify security despite foreign-law constraints on the company’s ability to pay.

The Trustees sought security for the costs of Olympic’s appeal against a winding-up order made by the Chancellor of the High Court on 29 May 2012. Olympic was already in special liquidation in Greece, and the Trustees had obtained the English winding-up order to open secondary insolvency proceedings. Permission to appeal and a stay were granted by Rix LJ. The application concerned whether Olympic satisfied the company-insolvency condition under CPR 25.13(2)(c), and whether an order would unfairly stifle the appeal because Greek law allegedly prevented Olympic or its liquidator from providing security.

Application granted. The Court of Appeal ordered security for costs in the sum of £60,000, subject to either party having liberty to apply on any issue of Greek law before payment out.

1. Under the Civil Procedure Rules 1998, r 25.15, the court could order security for the costs of an appeal on the same grounds as against a claimant. The condition in r 25.13(2)(c) was satisfied because there was reason to believe that Olympic would be unable to pay the Trustees’ costs.
2. Once the threshold condition was met, the court had a complete discretion. Lord Justice Kitchin declined to be bound by any general practice in winding-up cases. The discretion had to be exercised by balancing all the circumstances, including the applicable Greek insolvency law and the fact that the appeal was plainly not frivolous.
3. Security should not be used as an instrument of oppression. However, refusal on the ground that security would stifle an appeal required a probability that the appeal would be stifled. Applying Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534, the court had to consider not only whether Olympic itself could provide security but also whether it could raise the money from other interested bodies. The relevant information was particularly within Olympic’s knowledge.
4. The reasoning in Olympic Airlines SA (in special liquidation) v ACG Acquisition XX LLC [2012] EWCA Civ 1659 was materially applicable. The Greek State had a primary interest in the liquidation, yet Olympic produced no evidence about the State’s ability or willingness to provide the relatively modest sum required. The assertion that Olympic itself could not provide security was therefore inadequate. It would be manifestly unjust for the Trustees to incur costs resisting an appeal by an insolvent company without protection for those costs.
5. The amount sought was excessive. A fair and proportionate sum was £60,000.

• High Court of Justice, Chancery Division The Chancellor made a winding-up order against Olympic on 29 May 2012 and refused permission to appeal and a stay.
• Court of Appeal Etherton LJ refused permission on the papers. Rix LJ later granted permission and a stay pending the appeal.
• Court of Appeal (Civil Division) The court granted the Trustees’ application for security for costs.