Goldsmith v O'Brien

An appeal does not operate as a stay unless the appeal or lower court orders otherwise. The applicant bears the burden of providing full, frank and clear evidence of the risks of injustice created by refusing a stay. The central question is whether refusing or granting a stay risks stifling the appeal or impairing enforcement of the judgment. A general assertion that payment will cause insolvency is insufficient. The applicant should disclose relevant means, assets, income and available funding. Insolvency does not necessarily stifle litigation, since a trustee in bankruptcy may decide whether to continue an appeal. The ordinary risk that money may be difficult to recover if an appeal succeeds does not justify a stay in every case. A stay remains exceptional, and the applicant must establish solid grounds, normally involving some form of irremediable harm.

Mr O'Brien obtained a default judgment against Mr Goldsmith for £325,000, interest and costs arising from dealings concerning linked joint ventures. Master Bragge refused to set aside the default judgment and ordered Mr Goldsmith to pay costs, including £25,000 on account.

Mr Goldsmith applied for a stay of enforcement pending his proposed appeal against Master Bragge’s decision. He argued that enforcement would lead to bankruptcy and stifle the appeal. The issue was whether the evidence established a sufficient risk of injustice to justify departing from the ordinary position under Civil Procedure Rules 1998, CPR 52.7.

1. The application was dismissed. The stay application concerned both the £325,000 default judgment and the £25,000 costs order. The court assumed, without deciding, that permission to appeal might be granted.
2. Under CPR 52.7, an appeal does not operate as a stay unless the appeal court or lower court orders otherwise. The appellant must persuade the court that a stay is justified.
3. The governing approach was that the evidence supporting a stay must be full, frank and clear. The court must consider all the circumstances and assess the risk of injustice to either party. Relevant questions include whether refusal may stifle the appeal, whether enforcement may be irrecoverable if the appeal succeeds, and whether granting a stay may prejudice enforcement if the appeal fails.
4. The expression solid grounds adds nothing to that test and is consistent with the requirement for full, frank and clear evidence. A stay is exceptional rather than the rule, and solid grounds normally require some form of irremediable harm.
5. Mr Goldsmith’s evidence did not establish that enforcement would stifle the appeal. He gave no adequate details of his income, business activities, assets, attempts to raise funds or other means of payment. His past ability to invest £325,000, and his unexplained ability to fund the proceedings, made it unsafe to infer that payment was impossible.
6. Insolvency would not necessarily end the litigation. A trustee in bankruptcy could decide, in the interests of creditors, whether the appeal should continue. The speculative risk that Mr Goldsmith might be unable to recover money if the appeal succeeded was also insufficient. Although no serious prejudice to Mr O'Brien from a stay was established, that did not discharge Mr Goldsmith’s burden or justify departing from the default position.

The judgment concerned an application for a stay pending a proposed appeal from Master Bragge’s refusal to set aside the default judgment. The permission application had not been determined at this hearing.