In Goldtrail Travel Ltd v Onur Air, the Supreme Court looked at the circumstances in which a court can take into account the resources of a corporate appellant's wealthy majority owner in deciding whether imposing a condition for payment of the judgment sum into court would stifle an appeal.


Background

Onur is a Turkish airline, largely owned by the wealthy Mr Bagana. Goldtrail, prior to its liquidation, was a holiday tour company owned by a Mr Aydin. Rose J found that the appellant had dishonestly assisted Mr Aydin in defrauding the respondent, and ordered the appellant to pay damages to the respondent in the sum of £3.64 million.

The appellant received permission to appeal to the Court of Appeal, and the respondent requested that the court should impose on the appellant a number of conditions for the continuation of its appeal. One condition sought was that the appellant should pay the sum of £3.64 million into court, on the basis that the appellant was not likely to have any assets in England and Wales against which the respondent could be able to enforce. Floyd J imposed the condition as requested by the respondent.

The appellant failed to pay the sum into court, and applied for the condition to be discharged on the grounds that payment was beyond its means, and its continuation would stifle the appellant's appeal. Patten LJ, in dismissing the appellant's appeal, held that in exceptional circumstances the ability of a third party to provide funds could be taken into account in assessing the likelihood of a company being able to make a payment into court. The third party, Mr Bagana, had decided not to fund the payment, and Patten LJ found that the appellant had not established that the condition for payment would stifle its appeal.

Judgment of the Supreme Court

By a majority of 3 to 2, the Supreme Court allowed Onur Air's appeal.

The Supreme Court found that where an appellant has been given permission to appeal, it was wrong to impose a condition which had the effect of preventing that appellant from bringing or continuing the appeal. Lord Wilson noted in his Judgment that, for the purposes of Article 6 of the European Convention on Human rights, "There will seldom be a "fair hearing" within Article 6 if a court which has permitted a litigant to bring an appeal, by indirect means, does not permit him to bring it."

It was for the appellant to establish, on the balance of probabilities that a proposed condition would stifle the continuation of its appeal, and if so established, then the courts could proceed on the basis that the condition should not be imposed. The court ruled that where there is a suggestion that a controlling shareholder, like Mr Bagana, could raise funds on behalf of a company, the shareholder's distinct legal personality should be respected.

At paragraph 23 of the Judgment, Lord Wilson gave the following criterion to apply, "Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition?".

Lord Wilson noted that it should not be taken at face value when a company and/or its owner denies that they can raise the funds required. Instead the court should, "judge the probable availability of the funds by reference to the underlying realities of the company's financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) it affairs and is supporting (and has supported) it in financial terms".

In remitting the matter back to Patten LJ, the Supreme Court held that the Court of Appeal had applied the wrong principles, (Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, and Societe Generale SA v Saad Trading, Contracting and Financial Services Co and Al-Sanea [2010] EWCA Civ 695), and that in exceptional circumstances the court could take into account whether a third party would provide funds to meet another party's condition of payment. The question was whether the appellant's controlling shareholder would have helped to meet the condition of payment, not whether he could have.

Goldtrail Travel Limited (in liquidation) (Respondent) v Onur Air Taşimacilik AŞ (Appellant) [2017] UKSC 57

On appeal from [2016] EWCA Civ 20

Key contact

Umesh Bhudia

Umesh Bhudia

Associate, Commercial Litigation
London, UK

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