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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Otis Vehicle Rentals Ltd v Cicely Commercials Ltd [2002] EWCA Civ 154 (30 January 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/154.html Cite as: [2002] EWCA Civ 154

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION TO COMPLY WITH ORDER
APPLICATION FOR PERMISSION TO SET ASIDE
GRANT OF STAY OF EXECUTION
AND TO STRIKE OUT THE APPEAL

		Royal Courts of Justice Strand London WC2 Wednesday, 30th January 2002

1. LORD JUSTICE CLARKE: This is an application to strike out the appeal notice under CPR 52.9 which provides:

"(1) The appeal court may -

(a) strike out the whole or part of an appeal notice;

(b) set aside permission to appeal in whole or in part;

(c) impose or vary conditions upon which an appeal may be brought.

(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so."

2. The following "cautionary note" appears in paragraph 52.9.2 of Volume 1 of the Civil Procedure Rules (Autumn 2001):

"This tempting provision should not lure advocates into tactical skirmishing or into manoeuvres designed to wear down the opposition. Save in exceptional circumstances it is a misuse of the court's resources and a waste of costs for the court to consider the substance of an appeal on some intermediate date between the permission date and the full appeal. Rule 52.9 (2) provides that the power will only be exercised where there is `a compelling reason'. One example of a compelling reason may be that the appellant misled the appeal court on an application for permission made without notice to the other party."

3. I entirely agree with the contents of that note.
4. Mr de Waal submits that the appellant misled the court in its appeal notice. He observes that the first ground of appeal is that the judge was wrong to have given judgment for the price under the contract instead of for damages. He also observes that in paragraph 4 of the skeleton argument, in support of the grounds of appeal, it is said that the judge was of the opinion that the true nature of the buy-back agreement was that of a contract of indemnity whereunder the buyer agreed with the seller to pay the amount of the "balloon" after two or three years as the case might be, and that this entitled the seller to obtain judgment for the price. It is submitted that the judge's view of the buy-back agreement is wrong. Then there follow a number of detailed submissions in support of that basic point.
5. Mr de Waal submits the judge made that finding directly as a result of a concession made by counsel for the appellant, Mr Johnson, in the course of his closing submissions. In those submissions Mr Johnson said:

"This is not, my Lady, the typical sale of goods case where the buyer is keen to receive the goods whatever they might be, whether they are ascertained, unascertained or in specie or whatever. The way to categorise, in my submission, in this contract is that back in 1994 Cicely wanted to make a sale of a volume of tractors. In order to clinch the sale it was necessary to have recourse to finance through Mercedes Benz Finance and therefore when one entered into that contract the instalment terms became crucial, particularly the size of the final balloon payment. In reality, what Brandrick wanted was to be indemnified, to be indemnified irrespective of the value of the vehicles against the size of that balloon payment at the end of the contract term. That was purely a matter of pounds and pence, my Lady. It had nothing to do with whether Cicely were going to get the vehicles back."

6. Brandrick is, as I understand it, a former name of Otis, the claimant and respondent.
7. Mr de Waal submits that the passage contained a concession on behalf of the defendant that the buy-back agreement was a contract of indemnity. Mr Johnson submits, on the other hand, that it is not such a concession and that it simply states what it was that Brandrick or Otis was saying. He further says that he certainly did not intend to make any such concession and nor did the defendant. While I can see that that passage can just be read in the way that Mr de Waal suggests, I do not, for my part, so read it. I do not think Mr Johnson was intending in that passage to make any such concession and I observe that the judge did not characterise her conclusion as based upon a concession made by Mr Johnson.
8. I do not think in those circumstances that this is a case in which it would be right to strike out the appeal notice under CPR 52.9. I granted permission to appeal on the basis that it is arguable that on the true construction of the buy-back agreement the respondent was only entitled to the price in return for the transfer of the property and the delivery up of the vehicles. In those circumstances it is arguable that credit should have been given in respect of the value of the vehicles against the price, or that the judge should have given judgment for damages in lieu of the price on equitable grounds. It appears to me, on the materials I have seen so far at least, that the appellant should be permitted to argue grounds 1 and 2 of the appeal, as I indicated in my earlier decision, and that I should neither strike out the appeal notice nor set aside permission to appeal.
9. I will therefore consider the application for the stay.
(Submissions were made to the court)
10. LORD JUSTICE CLARKE: On 16th October 2001, after what I think was a two-day trial on quantum, Her Honour Judge Kirkham gave judgment for the claimant for £362,104.03 inclusive of interest. Liability had been admitted shortly before the trial. The judge also made certain orders for costs. She refused both permission to appeal and a stay of execution.
11. The defendant subsequently sought permission to appeal and a stay of execution. The defendant served a respondent's notice. In that respondent's notice it set out not only its position in relation to the application for permission to appeal but also responded to an application for a stay of execution. In support of the application for a stay the defendant relied on a statement of Mr Franklin, the defendant's sales director. In paragraph 17 of that statement he said if the court was not attracted by the point he was making upon interest -

"17 ..... the damages award plus interest, should the appeal succeed, would be of the order of [£177,943.58]. The difference between that figure and £362,104.03 is £184,160.45."

12. In support of the application for a stay he said:

"15 It is within my knowledge that the trading and cash-flow position of the appellant would suffer severely if it is obliged to pay over to the respondent, pending the outcome of the appeal, the difference between the judgment amount awarded by the judge and what we say was the correct amount to award for damages and interest. The amount of the difference is approximately £186,000. At the moment, due to the state of the market, the appellant cannot afford an extra £186,000 to be taken out of working capital as it would seriously affect the viability of the appellant if this was to happen.

16 In these circumstances, the appellant respectfully requests the court to grant a stay of execution ..... "

13. In opposition, in its respondent's notice or rather in the skeleton argument submitted in support of the respondent's notice, Mr de Waal said:

"18 The respondent opposes the appellant's application for a stay of execution.

19. If a stay is granted, it should be a stay of such part of the judgment sum that represents the difference between £177,407.05 and £362,104.03 namely £184,696.98.

20. If a stay is granted it should be on terms that the appellant pays the balance of £184,696.98 to abide the event. It appears from paragraph 15 of Mr Franklyn's statement in support of the appellant's application that there is considerable risk that the respondent will not recover the balance of the sum due under paragraph 1 of the order of Judge Kirkham if the appellant is permitted to avoid parting with this sum now."

14. I considered the application for permission to appeal and the application for a stay on 7th December. I cannot now recall whether when I did so I had before me Mr de Waal's skeleton argument, but it may well be that I did. By the time I considered the application I was aware that the sheriff had been instructed and that to avoid execution the defendant had paid the whole amount of the judgment debt. I did not however know whether the sheriff, to whom the moneys had apparently been paid, had parted with those moneys to the claimant.
15. I thought it appropriate both to grant permission to appeal and to grant a stay although in identifying the figure in respect of which the stay was granted I chose the wrong sum. It is now agreed that if it were appropriate now to grant a stay or some similar relief the appropriate figure would be £184,696.98. It is right to observe that there was no hint in the respondent's notice or the skeleton argument, to which I have referred, that the claimant intended to enforce the judgment before the application for a stay was determined. I do not criticise the claimant for that, although it might have been better if it had put the whole of its intentions before the court. I quite understand, as Mr de Waal frankly says, that this was and continues to be hard fought commercial litigation. My order also contained a liberty to both parties to apply as to the stay. Both parties have taken advantage of that liberty. It is not necessary for me to recite the terms of each of the applications.
16. In my judgment, it is correctly accepted by Mr de Waal, on behalf of the claimant, that the court has power to make an appropriate order preserving the position pending the appeal if it would be right to do so, having conducted the balancing exercise contemplated by, for example, Winchester Cigarette Machinery Ltd v Payne (No 2) The Times, 15th December 1993, a decision of this court, albeit a decision before the advent of the CPR.
17. Mr de Waal submits that the court should only act on evidence and that in carrying out the balancing exercise it should have regard to the general principle reflected in the CPR that a judgment does not operate as a stay unless the court otherwise orders and that, in principle, a successful claimant should be permitted the fruits of his victory in the absence of compelling evidence that some other order should be made. He submits moreover that once the moneys have been paid the position is significantly different from the position as it would be if the moneys had not been paid. In principle, I accept that the position is different or potentially differerent, although this case is unusual in that the court was not informed that that was indeed the claimant's intention.
18. The question is what steps should be taken now. Mr Johnson's primary case is that I should order the money to be repaid to the defendant pending the hearing of the appeal. He submits that the evidence of Mr Franklin would support that conclusion.
19. Against that, Mr de Waal submits that there is no evidence of the defendant's financial position now that it has paid the money.
20. In my judgment, it would not be right, carrying out the balance I have indicated, to order the moneys to be repaid to the appellant. The question is whether I should make some order securing the position pending the hearing of the appeal. Mr de Waal says that I should not because of the absence of evidence. There is undoubted force in that submission, but Mr de Waal, in the course of his submissions, mentioned this was a case in which there is a risk or at least a hint of insolvency on both sides. Mr Johnson, in his skeleton argument, observes that the respondent puts forward no evidence as to its financial position or as to how easy or difficult it might be in practice for the respondent to repay the money. It would have been very easy for the respondent to produce evidence to show that there were no risks at all if it were permitted to retain the money, the subject matter of the appeal, pending the hearing of the appeal.
21. Doing the best I can, looking at the matter in what I hope is a realistic way, it seems to me that the matter can most fairly be met by an order that does secure the position between now and the appeal. There are various ways in which that could be achieved. I could direct that the sum of £184,696.98 be paid into court or into a joint account in the names of both firms of solicitors or I could make some order for security. If the respondent wished to provide security by way of bank guarantee I would certainly be quite content with that, and I would think it right that the order in those circumstances should provide for the respondent to provide a bank guarantee in the sum I mentioned by a bank, the identity of which to be to the reasonable satisfaction of the appellant's solicitors and on terms that the reasonable costs of providing that guarantee should be treated as costs in the appeal. So, if the appeal fails the appellant would have to pay the costs of the respondent providing the guarantee. Alternatively it would be satisfactory for the moneys to be paid into a joint account of the kind I have mentioned.
22. In those circumstances it appears that the most sensible course is for me to order the moneys be paid into court within 7 days, provided that if the parties agree to one or other of the methods then one or other of those methods can take its place. Is there any difficulty about that as an order?
23. MR JOHNSON: Not as an order.
24. LORD JUSTICE CLARKE: If the respondent wants to provide a bank guarantee I would think that is entirely appropriate and it may be I would require you to undertake on your side that you would not subsequently contend that those costs were not properly treated as costs of the appeal.
25. MR JOHNSON: I think I can take it that I am instructed to give that undertaking on the basis that your Lordship has provided that it must be a bank, the identity of which is to the reasonable satisfaction of the appellant's solicitors.
26. LORD JUSTICE CLARKE: Or in the case of dispute, as directed by the court. I cannot help but feel the parties can agree about that. However hard fought the litigation is, the parties can at least agree that.
27. MR de WAAL: Presumably any clearing bank. I am sure we can get that far.
28. LORD JUSTICE CLARKE: It is entirely up to your side whether you do that.