Hart & Anor v Large & Ors

A stay of execution pending appeal is exceptional. The court must first determine whether enforcement would stifle an effective appeal and must then exercise a residual discretion by assessing whether a stay would create a risk of injustice to either party. The court should balance the competing risks and impose the minimum stay necessary in the interests of justice. A party’s inability to fund litigation from existing means is not conclusive: the court may consider alternative sources of funding. Where an effective appeal requires legal representation, the court may allow the judgment debtor to retain a reasonable sum for counsel’s fees, while requiring payment of the balance to the judgment creditor.

The claimants had obtained judgment for damages, interest and costs against the defendants. Permission to appeal was granted on one ground concerning the recoverable measure of loss, and the appeal was pending before the Court of Appeal. The first defendant applied for a stay of execution, arguing that enforcement would stifle the appeal because his professional indemnity insurance limit had been exhausted and his available capital was limited.

The court considered whether a stay was necessary to permit an effective appeal, the amount which should be retained for appeal costs, the sum which should immediately be paid to the claimants, and the conditions of any stay.

1. Applicable principles. The starting point was that an appeal does not operate as a stay. A stay is the exception and should be granted only where enforcement would stifle an effective appeal. Even then, the court retained a residual discretion. The essential question was whether granting or refusing a stay created a risk of injustice to one or both parties.
2. The court had to balance the competing consequences. It considered the risk that refusal would prevent an effective appeal, the risk that a successful appeal would leave the first defendant unable to recover money paid, and the risk that a failed appeal would leave the claimants unable to enforce their judgment. The first defendant’s inability to fund the appeal from his own means was not conclusive; possible assistance from other sources had also to be considered.
3. Although the appeal could technically proceed without representation, justice required that it be effectively and properly argued. The first defendant should have access to experienced counsel, but there was no sufficient reason to permit the retention of funds for solicitors as well as counsel. The stay therefore had to be limited to the minimum sum required.
4. The court accepted that £24,000, including VAT, was a reasonable allowance for counsel directly instructed in the appeal. A further £13,000 was required for outstanding legal work, producing a total retention of £37,000. The first defendant had available capital of £123,317. The balance, £86,317, was to be paid to the claimants within 14 days.
5. The stay was granted on terms that the retained £37,000 be used only to fund the appeal and pay the outstanding legal fees. The fact that the retained money might not be available to satisfy the judgment if the appeal failed was outweighed by the justice of enabling an effective appeal. Costs and the precise form of order, including VAT, were left for further submissions.

The judgment records that judgment had previously been entered for the claimants, with damages of £374,000, general damages of £15,000, interest and costs. Permission to appeal was granted on one ground concerning the recoverable measure of loss. The Court of Appeal refused further permission on two other grounds. The appeal was pending; this judgment determined the first defendant’s stay application.