Spicejet Limited v De Havilland Aircraft of Canada Limited

The Court of Appeal may use its case-management jurisdiction to make a strike-out unless order which effectively imposes a payment condition, despite the restriction on later applications to impose conditions under CPR 52.18. The jurisdiction must be exercised cautiously and ordinarily requires a material change since permission to appeal was granted.

A compelling reason is required. Foreseeable non-payment, absence of a stay, or foreign enforcement difficulties are insufficient alone. Abusive attempts to reopen issues outside the permitted appeal may constitute a material change. The order must not stifle an arguable appeal. Security for costs against an overseas party requires a substantial additional enforcement burden; residence abroad alone is insufficient.

Sir Michael Burton granted summary judgment for De Havilland, declaring that it had validly terminated the aircraft purchase agreement and awarding liquidated damages and interest. The High Court granted SpiceJet permission to appeal on a narrow contractual interpretation issue, but refused permission on the penalty issue and refused a stay of execution.

De Havilland then applied for an order that the appeal be struck out unless SpiceJet paid the judgment sum into court, and alternatively sought security for the appeal costs. After SpiceJet relied in Indian enforcement proceedings on the previously rejected penalty argument, the Court of Appeal considered whether there had been a material change of circumstances, whether payment would stifle the arguable appeal, and whether security for costs was justified.

Disposition. De Havilland’s application succeeded in part. The Court ordered that, unless SpiceJet paid £5,000,000 into the Court Funds Office by 4pm on 18 August 2021, its Appellant’s Notice would stand struck out without further order. Security for the costs of the appeal was refused. SpiceJet’s later application for an extension of time was also refused.

1. Jurisdiction and reconsideration. The Court of Appeal retains case-management powers in addition to its powers under CPR 52.18 and may make an order under rule 52.18(1)(a) which effectively imposes a condition that could not be imposed under rule 52.18(1)(c). This jurisdiction must be exercised carefully because it can circumvent the policy of rule 52.18(3). Ordinarily, a material change since permission was granted is required. Contract Facilities Limited v The Estate of Rees [2003] EWCA Civ 1105, Spar Shipping v Grand China Logistics Holding (Group) Co Limited [2016] EWCA 520 and Morris v The Highland Group International [2016] EWCA Civ 1361 informed that approach.
2. Compelling reason. The question under CPR 52.18 was whether there was a compelling reason, assessed as a value judgment on the facts. The judgment, the absence of a stay, foreseeable enforcement difficulty in India, and SpiceJet’s funding of legal representation did not suffice because those matters were available before permission was granted. SpiceJet’s Delhi objections were different. They sought abusively to reopen the penalty issue, which had been fully argued and rejected and was outside the permitted appeal. That constituted a significant change of circumstances and a compelling reason for an unless order.
3. Stifling the appeal. The Court applied the approach in Merchant International Company Limited v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2016] EWCA Civ 710 and Goldtrail Travel Limited v Onur Air Tasimacilik AS [2017] 1 WLR 3014. SpiceJet had to establish, on the balance of probabilities, that funds would not be made available by its owner or another closely associated person. The assessment required attention to the underlying financial realities, the owner’s wealth, control, incentive and past support, and the prospects of the appeal. SpiceJet produced no convincing evidence from its majority shareholder. Given the appeal’s real but limited prospects, £5,000,000 was proportionate and would not stifle it.
4. Security and extension. Under Nasser v United Bank of Kuwait [2002] 1 WLR 1868, security for costs must reflect a substantial additional burden of enforcement. De Havilland was already enforcing the judgment in India, so the appeal costs added no significant burden. Security would therefore have been based solely on SpiceJet’s residence and was improper. The extension application disclosed no material change and was a delaying tactic. Nugee LJ agreed with Phillips LJ.

1. Court of Appeal (Civil Division) — On De Havilland’s application, the Court made an unless order requiring payment of £5,000,000 into court, refused security for costs, and refused SpiceJet’s later extension application.
2. High Court (Commercial Court) — Sir Michael Burton granted summary judgment for De Havilland, awarding liquidated damages, interest and costs, and granted permission to appeal on one narrow contractual issue: [2021] EWHC 362 (Comm).