Hearst Holdings Inc & Anor v AVELA Inc & Ors

An appeal does not automatically stay the lower court’s order. The court must assess all circumstances and balance the risks of injustice, including the risk that payment will stifle a genuine appeal and the parties’ enforcement and recovery risks. An appellant relying on stifling must provide full and candid financial evidence, including evidence of possible funding from directors, shareholders, backers or other interested persons. Where a party attended the hearing at which permission was granted, CPR Part 52.9(3) bars a later application for conditions on the appeal. An application made before a filing deadline expires is not formally relief from sanctions, although the Denton factors may remain relevant.

After a contested trial, Birss J gave judgment for the claimants on trade mark infringement and passing off, granted permission to appeal, and ordered the defendants to pay £475,000 on account of costs. The substantive appeal remained pending.

The appellants sought a stay of the interim costs order and an extension of time for filing their appeal skeleton argument. The respondents sought an order making payment of £475,000 a condition of continuing the appeal. The Court of Appeal considered the statutory procedural powers governing stays, conditions on appeals, variation of orders and extensions of time.

1. Condition on prosecution of the appeal. CPR Part 52.9(3) prevented a party who had been present when permission to appeal was granted from subsequently applying for conditions to be imposed under Part 52.9. The respondents’ application requiring payment of £475,000 as a condition of continuing the appeal was therefore dismissed.

2. Stay of the interim costs order. Under CPR Part 52.7, an appeal did not automatically operate as a stay. The court had to consider all the circumstances and balance the risks of injustice in granting or refusing a stay. The approach identified in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 required consideration of the risk that refusal would stifle the appeal, the respondent’s ability to enforce if a stay were granted and the appellant’s ability to recover money if the appeal succeeded. The principles developed in Keary Developments v Tarmac [1995] All ER 534 applied. The appellants bore the burden of showing that payment would prevent continuation of a genuine appeal.

3. The financial evidence was inadequate. It was unsigned, largely unvouched and failed to explain the appellants’ financial position, the disappearance of substantial assets, expected receipts, or whether funds could be obtained from persons behind the corporate appellants. The appellants had not established that the appeal would be stifled. The stay application was dismissed.

4. Skeleton argument. Because the application for an extension was made before the deadline expired, it was not formally an application for relief from sanctions: Hallam Estates v Baker [2004] EWCA Civ 661. Nevertheless, the Denton factors remained relevant. The application was not properly treated as one to vary the earlier order under CPR Part 3.1(7), since there was no substantial change of circumstances; the approach in Tibbles v SIG plc [2012] EWCA Civ 518 was not central.

5. Repeated failures to comply with orders were significant, but the appellants had provided an explanation and new counsel was preparing the skeleton. One final extension was granted until 5.00 pm on 17 October 2014. Lack of funds would not justify further delay. If the skeleton was not filed by that time, the appeal would stand struck out without further order.

• Court of Appeal (Civil Division): Determined interlocutory applications concerning a stay of an interim costs order, a proposed payment condition and the filing of the appeal skeleton argument.
• High Court of Justice, Chancery Division, Intellectual Property Community Trade Mark Court: Birss J gave judgment for the claimants after trial, granted permission to appeal and ordered payment of £475,000 on account of costs.