In Goldtrail Travel Ltd (in liquidation) v. Onur Air Taşimacilik AŞ[2017] UKSC 57, the UK Supreme Court has allowed the appeal of a Turkish airline against a Court of Appeal ruling regarding the circumstances in which a court will require an appellant to meet certain conditions when granting the appellant permission to appeal.

As a matter of English law, the court will only exercise its power to impose conditions on bringing an appeal where there is a compelling reason for doing so.  The starting principle being that an appellant should not be prevented from pursuing an appeal which the court has found to be legitimately brought by the imposition of onerous conditions.  To do so would not only breach common law, but also breach a party’s right to a fair trial, as guarded by Article 6 of the European Convention on Human Rights.

In this case, the airline (the Appellant) was granted permission to appeal a first instance judgment made against it to the Court of Appeal.  Continuation of that appeal was later made conditional on the Appellant paying the judgment sum (amounting to £3.64 million) into court on the basis that, as a Turkish company, it was unlikely to have any assets within the jurisdiction.  The Court of Appeal therefore found it was necessary for the judgment sum to be held securely pending the outcome of the appeal. When Appellant failed to make the payment, the Respondent applied for the appeal to be dismissed.  The Appellant cross-applied for an order that the condition be discharged because it could not comply and the requirement would stifle the appeal.

The Supreme Court found that the Court of Appeal had applied the wrong test when considering whether the condition would stifle the appeal. The Court of Appeal had taken into consideration whether the Appellant’s owner would be able to make payment, rather than reaching a decision by reference to the Appellant’s own financial position.

Patten LJ in the Court of Appeal found, when applying the criteria set down by Anthony Clarke LJ in Hammond Suddard Solicitors v. Agrichem International Holdings Ltd. [2001] EWCA Civ 2065, that the fact that the Appellant company had an “extremely wealthy” owner who could provide the funds meant that the appeal would not be stifled by a condition requiring payment of the judgment sum into court. On appeal however, the Supreme Court found that the Court of Appeal had applied the wrong test, in that it had considered whether the third party “could” provide the money rather than whether there was any evidence that they “would” do so.

Given that companies are separate legal entities, parties need to be wary of assuming that the existence of a wealthy owner or affiliated company will automatically satisfy the court that funds will be available to allow an appellant to satisfy a condition requiring payment into court.  By the same token, an appellant with no realisable assets of its own may not be able to satisfy the court that a condition requiring payment would stifle its appeal if it could, in fact, raise the sum by some other means, but the court will always look to the appellant itself rather than the wider corporate group.  The burden will fall to the appellant to show “on the balance of probabilities” that no such funds would be made available to it either by its owner or by some other closely associated person by reference to their relationship or control with that third party.

The case has been remitted to Patten LJ for consideration under the correct test.