BTI 2014 LLC v Sequana S.A. Antoine & Ors

Under CPR Part 3.1(7), an order may be varied or revoked where there has been a material change of circumstances or material non-disclosure. The question is whether the change is material, not whether the original court would necessarily have made a different order. A stay of execution is exceptional and depends on the risk of injustice to each party. Where a foreign pre-insolvency process gives the debtor an automatic moratorium, an English stay granted to prevent an appeal being stifled may become otiose. The English court should not second-guess the foreign court’s insolvency process and may revoke the stay, while preserving liberty to apply if circumstances later change.

Rose J. had dismissed BTI’s claim and had partially allowed BAT Industries plc’s claim against Sequana. In a subsequent remedies judgment, she granted Sequana a stay of execution pending its appeal because immediate enforcement might stifle that appeal. Sequana then obtained a French sauvegarde proceeding, which imposed an automatic moratorium on enforcement. BAT applied under CPR Part 3.1(7) to revoke the stay, alleging material change of circumstances and non-disclosure. The central issues were whether the court had jurisdiction to revisit the stay and, if so, whether it should be continued.

The application also concerned the time for performance of Sequana’s obligations under the earlier order.

1. Jurisdiction. CPR Part 3.1(7) confers a broad but principled power. Its usual applications include a material change of circumstances or material misstatement or non-disclosure of the facts underlying the original order. The jurisdiction is exceptional or out of the ordinary, having regard to the importance of finality. The relevant question is whether the subsequent change is material, not whether the original order would necessarily have been different if the change had been known.
2. Sequana’s successful application for a French sauvegarde proceeding, made shortly after the stay was granted, and the resulting automatic moratorium constituted a material change of circumstances. The moratorium substantially removed the risk that Sequana’s appeal would be stifled. It could also be recognised in England and Wales through an administrative process.
3. Reconsideration of the stay. The court adopted the legal analysis and financial assessment in Rose J.’s remedies judgment, but had to reconsider the stay in light of the new circumstances. The relevant balancing exercise required consideration of the risk of injustice, including the risk of stifling the appeal and the parties’ ability to enforce or recover the judgment.
4. There was no longer any real risk of the appeal being stifled. The effect of the French process on BAT’s eventual recovery was inherently uncertain and neutral. As a matter of comity, the English court should not second-guess the mature French insolvency process. The English stay achieved nothing and was therefore revoked.
5. A future stay was left entirely open if the sauvegarde process failed and circumstances then justified relief. BAT’s undertaking not to enforce for 28 days after such failure provided appropriate interim protection. An order could not properly be stayed without a time for performance. CPR Part 40.11 applied, but the performance date was varied by agreement to 4 pm on 16 June 2017.

• High Court (Chancery Division) Rose J. dismissed BTI’s claim and partially allowed BAT’s claim in [2016] EWHC 1686.
• High Court (Chancery Division) Rose J. granted a stay of execution pending appeal in the remedies judgment, [2017] EWHC 211.
• High Court (Chancery Division) The present court revoked the stay under CPR Part 3.1(7), granted liberty to apply, and varied the time for performance.