Sunico A/S & Ors v Revenue And Customs

Permission to appeal may be made conditional on payment or security for the judgment debt only where there is a compelling reason, followed by a discretionary assessment of all the circumstances. Deliberate non-payment, foreign enforcement difficulties, inadequate financial disclosure and the diversion of available assets may justify a condition.

Probable stifling of the appeal is an important countervailing consideration, but it is not an absolute bar. It carries little weight where the appellant deliberately created the inability to comply. A stay pending appeal requires the court to balance the respective risks of injustice, including stifling the appeal and frustrating later enforcement.

HMRC obtained judgment in the Chancery Division for £1,278,527.71, plus an interim costs payment of £150,000, following findings that the appellants had conspired to defraud HMRC through transactions connected with missing trader intra-community fraud. The judgment concerned 23 sample transaction chains, while claims based on hundreds of other chains remained pending.

The first five appellants sought permission to appeal. HMRC requested a condition requiring prior payment of the judgment sum. The appellants contended that such a condition, or enforcement without a stay, would stifle the appeal.

The central questions were whether compelling reasons justified conditional permission and whether execution should be stayed pending the substantive appeal.

1. Permission to appeal was granted conditionally, and a stay was granted on corresponding terms. The appellants were required to pay the judgment sum into court by 30 September 2014. Execution was stayed until that date and would remain stayed if the payment condition was satisfied. The substantive appeal was adjourned.

2. Although Civil Procedure Rules 1998, rule 52.3(7), does not expressly reproduce the compelling-reason restriction in rule 52.9(2), the court proceeded on the accepted assumption that a compelling reason was required. Such a condition is not routine. Mere non-payment does not permit a judgment creditor to use conditional permission as a shortcut to enforcement. Even where a compelling reason exists, imposition of the condition remains discretionary.

3. Compelling reasons existed. Enforcement in Denmark faced serious and unusual legal and practical uncertainty. The appellants had deliberately failed to pay when a company they controlled held sufficient cash. They instead placed the money beyond their immediate reach through a long-term loan while HMRC's application was pending. Their disclosure of available assets was also unsatisfactory. These circumstances fell squarely within the analysis in Bell Electric Ltd v Aweco Appliance Systems GmbH & Co KG [2003] 1All ER 344.

4. The appellants had not proved that compliance would probably stifle the appeal. They had not disclosed the terms of the substantial loan receivable or established that repayment could not be demanded. Nor had they provided sufficiently reliable disclosure of all available resources. In any event, any inability to comply resulted directly from their deliberate diversion of cash which could have met the judgment. Self-induced inability therefore provided no bar, and little countervailing weight, against the condition.

5. The alleged public importance and merits of the pending appeal did not justify a different conclusion. Courts should generally avoid assessing those matters when deciding conditions or stays because doing so encourages satellite litigation.

6. Payment into court was preferable to immediate payment to HMRC. It protected enforcement while preserving the possibility that a modest amount might later be released to fund the appeal itself. A stay accompanied the condition to protect the appellants from enforcement while raising the payment and, after payment, from double exposure and bankruptcy proceedings. Underhill and Patten LJJ agreed with Briggs LJ.

1. Court of Appeal (Civil Division): Granted permission to appeal subject to payment of the judgment sum into court by 30 September 2014. It stayed execution until that date and thereafter upon compliance, and adjourned the substantive appeal.
2. Chancery Division: Proudman J found HMRC's conspiracy claim proved on 23 of 26 sample transaction chains and ordered payment of £1,278,527.71 plus £150,000 on account of costs. She initially granted permission to appeal and refused a stay. That permission was later revoked by consent so that permission, conditions and a stay could be determined together by the Court of Appeal.