Colt Technology Services v SG Global Group SRL

Permission to appeal requires a realistic prospect of success or another compelling reason for the appeal to be heard. Contractual notification requirements remain effective unless the agreement expressly excludes them. The appointment of a contractual point of contact does not, without more, satisfy separate notification provisions. Under the Ralli Bros principle, a contract may be unenforceable where it requires, expressly or impliedly, performance which would be illegal in another jurisdiction; the contract need not expressly require illegal conduct. A proposed alternative performance will not remove that issue without evidence establishing that the risk of illegality has been eliminated. A stay of execution requires an evidential basis for exercising the court’s discretion under the CPR 52.16.

The claimant obtained an order for payment of its costs following an earlier judgment. The defendant sought permission to appeal and a stay of enforcement. It argued that invoices gave sufficient notification under clauses 4.6 and 9.1, that the agreement did not require unlawful performance, and that the judge’s factual findings were wrong. It also submitted that immediate payment would frustrate any appeal because the claimant’s refusal to pay invoices had left it without funds. The court determined whether the proposed grounds had a real prospect of success or disclosed another compelling reason, and whether the evidence justified a stay.

1. Permission to appeal refused. None of the proposed grounds had a real prospect of success, and no other compelling reason justified an appeal.
2. The express notification provisions in clause 9.1 were not negated or excluded by clause 10.2, which appointed Colt Italy as the defendant’s point of contact. Invoices therefore did not, on the stated case, satisfy the separate contractual notification requirements.
3. The proposed illegality ground involved a misapplication of the Ralli Bros principle. The principle applies where the contract requires, expressly or impliedly, an act of performance which, if carried out, would be illegal in another jurisdiction. It is unnecessary for the contract itself to specify that the act must be done illegally. The court maintained its conclusion that the agreement required payment in Italy in circumstances where payment might be illegal under Italian law.
4. There was no undisputed expert evidence that the defendant’s offer of 24 March 2020 removed the risk of illegality. Nor was there a realistic prospect of showing that the judge had applied the wrong evidential test or was otherwise wrong in making the challenged factual findings.
5. The application for a stay was also refused. The submission that immediate payment would frustrate an appeal was unsupported by evidence and was inconsistent with the picture of an active trading company advanced by the defendant’s evidence. Under CPR 52.16, an appeal does not operate as a stay unless ordered by the first-instance or appellate court. The court therefore had no evidential basis for exercising its discretion. The order was made in the form proposed, subject to a minor change in wording and the addition of information required by CPR 40.2(4).

The judgment concerns the defendant’s application for permission to appeal and for a stay of enforcement of a costs order made following the court’s judgment of 3 June 2020. Permission and a stay were refused.