Onur Air Tasimacilik AS v Goldtrail Travel Ltd (In Liquidation) (2017)
The court refused to vary an order requiring an airline to make a £3.64 million payment into court as a condition of its appeal against the payment of the same to settle a judgment debt. The airline's chairman, who had made a very substantial investment in the company and continued to provide funding, could and would provide the necessary financial support to enable the payment into court to be made.
The court was required to reconsider an airline's application under CPR r.3.1(7) to vary an order requiring it to pay £3.64 million into court as a condition of its appeal against an order to pay the same to the respondent tour operator.
In 2014, the airline had been ordered to pay the sum to the operator as compensation for its dishonest assistance in various breaches of fiduciary duty against the operator by its former director. The airline was granted permission to appeal. The operator successfully applied to make that grant of permission subject to the condition that the airline would make a payment into court. Two days before the deadline for making the payment, the airline informally applied to vary the order asking for a further 10 days to comply. The judge requested a formal application with supporting and explanatory evidence. The airline did not make the promised payment, explaining that it had not received an expected payment, and formally requested permission to make monthly payments to clear the balance. The judge refused, holding that the airline did not intend to comply and that the evidence did not explain what had happened to the expected payment. The airline withdrew its application to vary and refused to make the payment. Consequently, the operator applied to dismiss the airline's appeal, and for payment of the judgment sum. The airline applied again to vary the order, requesting removal of conditional payment. It gave evidence that it had no means to pay the judgment debt. Analysis of the airline's financial information identified that the chairman, who was also the single largest secured creditor, was the airline's primary source of funding and had loaned it millions of pounds. The Court of Appeal, relying on Societe Generale SA v Saad Trading, Contracting and Financial Services Co  EWCA Civ 695, found that the case was a clear example of an exceptional circumstance where it could require a third party to pay into court a judgment debt or part of it, that the chairman effectively controlled the airline's financial affairs and could have made the payment, and that the airline had failed to establish that it could not satisfy the judgment debt or that satisfying it would stifle its appeal. The Supreme Court reversed that judgment, stating that reliance could not be placed on the fact that a company's owner could potentially make the payment, without considering whether he would actually do so. The issue was remitted for reconsideration.
The issue was whether the chairman would provide the financial support necessary to enable the payment into court to be made.
It had not been suggested that the chairman could not afford to provide the necessary support if he chose to do so. There had been no direct evidence from him, and the reasons given for refusing to make the payment were untenable. The chairman had made a very substantial investment in the airline and it was unrealistic to suppose that he would put such investment at risk by allowing the appeal to be dismissed for want of a sum which he could easily pay resulting in an enforceable judgment. If the airline's financial position remained the same as previously then there was a need for the chairman to continue to provide funding. In those circumstances, there was no reason why the payment of the £3.64 million did not fall into the same category. The court was entitled to consider the fact that no allegation of stifling was made until very late in the day when the airline was threatened with an order dismissing the appeal. The burden was on the airline to satisfy the court that continuing the condition would stifle the appeal. It had failed to do so (see paras 23-24 of judgment).
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16 Nov 2017
Court of Appeal (Civ Div)
LTL 16/11/2017 :  11 WLUK 386
Michael Gibbon QC