Hart & Anor v Large & Ors

Where a judgment debtor obtains a stay of execution pending appeal, costs of the stay application may properly be treated as costs in the appeal where both parties acted reasonably and the hearing was an inevitable consequence of the appeal. The court may also define the permitted use of sums retained under the stay undertaking, including amounts for existing legal liabilities and appeal costs. The undertaking need not prohibit reasonable flexibility in the choice of legal representative, provided retained funds are spent solely on the permitted appeal-related purpose.

This was a consequential judgment following the substantive trial between the Harts and Mr Large and others. The court had awarded the claimants damages, interest and costs, and had granted Mr Large permission to appeal on one ground concerning the recoverable measure of loss. The Court of Appeal refused further permission on two other grounds.

The court had subsequently granted a partial stay of execution, allowing Mr Large to retain £37,000. The remaining issues were the costs of the stay application and the precise terms of the undertaking governing the retained money.

1. The court applied CPR Rule 44 in determining the costs of the stay application. Neither party could fairly be described as the winner. The claimants were reasonable to protect the assets available to satisfy their judgment and to investigate the defendant’s financial position. Mr Large was reasonable to seek a stay in order to avoid stifling his permitted appeal. Although a correction to the evidence was required, the court found no deliberate attempt to conceal assets or mislead it.

2. The stay hearing was an inevitable cost of the appeal. Both parties had legitimate concerns and materially different positions about how the appeal should proceed. The costs of the stay application were therefore ordered to be costs in the appeal.

3. The undertaking was defined by reference to the two components of the £37,000 retained. The £13,000 could be used to satisfy the defendant’s existing liability for work in progress as at the date of the stay hearing. The £24,000 had to be spent solely on costs relating to the appeal.

4. The court accepted that some appeal work might conveniently be undertaken by a solicitor rather than counsel. That did not breach the undertaking, provided the £24,000 was used solely for appeal-related costs. The parties were expected to finalise the order on that basis.

• High Court (Technology and Construction Court): Following the substantive judgment, damages of £374,000 and general damages of £15,000 were awarded, with interest and costs. A partial stay of execution was later granted.
• Court of Appeal: Further permission to appeal on two grounds was refused by Coulson LJ on 7 July 2020. An appeal on one permitted ground was listed to be heard in December 2020.