Daly & Anor v Ryan & Anor

Payment of existing costs orders may be made a condition of pursuing an appeal where there is a compelling reason, assessed as a value judgment on the particular facts. Such a condition is not an automatic means of enforcement and must be imposed with caution. A compelling reason may arise from conduct suggesting that assets will be put beyond ordinary enforcement, or from considerable practical difficulties in execution.

The appellant bears the burden of showing, on the balance of probabilities, that the condition would stifle the appeal. That requires cogent and full disclosure of assets, income and the ability to raise funds from other sources. A litigant in person may receive procedural latitude, but is not generally subject to a lower standard of compliance.

The claimants sought a condition under CPR rule 52.18(1)(c) requiring the defendants to pay two unpaid costs orders before pursuing an appeal against an order dismissing their application to set aside judgment in the underlying proceedings.

The defendants relied on impecuniosity and argued that payment would stifle the appeal. The claimant relied on evidence suggesting evasion of enforcement, inadequate financial disclosure and the defendants’ conduct in the underlying litigation. The central issues were whether there was a compelling reason for the condition, whether the costs orders justified a debarring condition, and whether the condition would infringe Article 6 by stifling the appeal.

1. Condition imposed. Payment of the First Costs Order and Second Costs Order within 14 days was made a condition of the defendants pursuing their appeal. The court would hear the parties on costs and consequential matters.
2. Under CPR rule 52.18(1)(c), the essential question is whether there is a compelling reason to require payment of a judgment sum, costs and interest, or part of them, as a condition of pursuing an appeal. This is a value judgment on the particular facts. The power is not an ordinary alternative enforcement mechanism and must be exercised with caution. A compelling reason may exist where the judgment debtor has taken, or is likely to take, steps to put assets beyond ordinary enforcement, or where execution presents considerable practical difficulties: Merchant International Company Limited v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2016] EWCA Civ 710.
3. The principle applies to an individual resident within the jurisdiction as well as to a foreign corporation, provided that a compelling reason is shown: Pourghazi v Kamyab [2015] EWCA Civ 562. The court treated the formulation in Bell Electric Ltd v Aweco Appliance Systems GmbH [2003] 1 All ER 344 as superseded to the extent that it was inconsistent with the later test.
4. There is a default position that a debarring order should be made for non-payment of an existing and non-appealed final costs order unless there is good reason to depart from it. The court must consider the overriding objective, Article 6, enforcement alternatives and all relevant circumstances. A claim that payment would stifle the appeal is material but not conclusive. The rationale also applies where the underlying litigation has ended, if the appeal would revive that litigation: Siddiqi v Aidinantz [2020] EWCH 699 (QB); Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm).
5. The appellant must establish on the balance of probabilities that the proposed condition would stifle the appeal. Even an appellant without realisable assets may avoid stifling by raising funds from friends, relatives or business associates: Goldtrail Travel Ltd v Onur Air Taşimacilik AŞ [2017] 1 WLR 3014. In this case, the defendants’ general assertions, failure to produce supporting financial documents and failure to explain substantial historic resources or possible assistance from third parties fell far short of the required cogent evidence.
6. Allowances may be made for a litigant in person in case management and at hearings, but self-representation does not ordinarily justify a lower standard of compliance with rules or orders: Barton v Wright Hassall LLP [2018] 1 WLR 1119.

The judgment concerned an application made in connection with an appeal for which Michael Green J had granted permission on 4 December 2020. The present court imposed a payment condition under CPR rule 52.18(1)(c); it did not determine the merits of the forthcoming appeal.