Case Alert - [2016] EWCA Civ 710  

Court of Appeal decides whether security condition should be imposed on permission to appeal

Hogan Lovells for applicant, Gowling WLG for respondent

The respondent sought an order (pursuant to CPR r52.9) that a condition be imposed on the permission to appeal (granted earlier by the Court of Appeal) that the appellant provide security for the full amount of the unpaid judgment debt (plus unpaid costs and the estimated costs of the appeal).

The Court of Appeal reviewed prior caselaw in which an application for security of the judgment debt as a condition of the appeal was made. It summarised the position as follows:

(1) A compelling reason is required to impose such a condition, and the court should exercise caution.

(2) The fact that judgment has been entered against the appellant, and no stay sought, does not in itself amount to a compelling reason.

(3) Each case turns on its particular facts, but a court is likely to find a compelling reason where the judgment debtor has previously taken steps to puts its assets beyond the reach of normal enforcement processes (or is likely to do so in the future). However, even if this factor cannot be established, there may still be a compelling reason if there are considerable practical difficulties in effecting execution.

Applying those principles to this case, the Court of Appeal agreed to impose the condition. The appellant was an entity against which it will be very difficult to exercise the normal mechanisms of enforcement. It has the resources both to mount the appeal and pay the judgment debt and so the appeal would not be stifled. Furthermore, the appellant had shown that it has no intention of honouring the judgment against it unless forced to do so, and would attempt to dispose of its assets to put them beyond enforcement procedures (although that factor alone would not have been enough to justify imposing the condition).

Finally, the Court of Appeal held that the fact that this was an execution appeal (ie not against the judgment in favour of the respondent, but against an order made as part of the process of execution) did not justify the court adopting a different stance.