In Goldtrail Travel Ltd v Aydin & ors [2015] EWCA Civ 926, 11 June 2015, the court granted conditional permission to appeal, ordering Turkish airline Onur Air Tasimacilik AS (Onur Air) to pay the judgment sum of GBP 3.64 million into court as a condition of being allowed to continue with its case. There was a "compelling reason" for imposing this condition: Onur Air had stopped flying to the UK and Floyd LJ considered it would be unlikely to pay the judgment sum if its appeal failed. Companies should be aware of this decision when seeking permission to appeal, especially if they are considering changes to their UK business activities after trial.

The High Court found Onur Air liable for dishonestly assisting with the misapplication of money from Goldtrail Travel Limited (Goldtrail), but stayed payment of the judgment sum of GBP 3.64 million until after any appeal. However, Goldtrail argued that the airline, as a condition of appeal, should pay the judgment sum into court because it had stopped flying to the UK after the first court hearing and no longer had any assets there. Floyd LJ, agreeing with Goldtrail, made Onur Air's appeal conditional on payment of the entire GBP 3.64 million. Onur Air applied to have this set aside.

Test − "compelling reason"

The Civil Procedure Rules provide the test for whether to impose conditions on an appeal. Under CPR 52.9, the court will only exercise its power to impose conditions on an appeal where there is a compelling reason for doing so. Floyd LJ considered the factors in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, where a compelling reason had been found to exist because:

• there was a real risk that the claimant would be unable to recover the judgment sum if successful;
• the defendant had been in breach of a court order to pay the judgment sum;
• the defendant had not been forthcoming about its financial affairs;
• the appeal would not be stifled if the condition was imposed; and
• the defendant had the resources to fund the costs of the appeal and pay the judgment sum.

Noting that these factors should not be taken as a checklist for future cases, Floyd LJ suggested that they were "indications which may be material" in constituting a compelling reason.

Onur Air's behaviour

Floyd LJ found three factors amounting to a compelling reason to impose the condition.

First, Onur Air had stopped flying to the UK and had no aircraft there. Enforcing any judgment against the airline was therefore significantly harder than it had been at the time of the first hearing. Onur Air's motives for stopping flights to the UK were not relevant.

Second, Onur Air was late paying certain sums due after the first hearing and did not provide an adequate explanation for this. Floyd LJ concluded that he could not be confident that the appellant would pay the judgment sum if its appeal failed.

Finally, Floyd LJ noted that the condition would not prevent the airline from appealing. He recognised that the first two factors might not amount to a compelling reason in another case, but appeared more willing to impose the condition because he could not see a disadvantage to either side in doing so (beyond the loss of enjoyment of the funds  caused by placing them into court).

Comment: The judge has a difficult balance to strike when considering imposing conditions on a company as part of its permission to appeal. One side has already won the case and is entitled to the judgment sum but the judge has granted an appeal because there is at least some doubt as to whether the court decided the case correctly. In such circumstances, imposing onerous conditions can be a barrier to justice. The judge has to be careful not to obstruct an appeal by imposing conditions that make it unaffordable.

Perhaps this is why it is relatively rare to see conditions imposed, especially those requiring payment of the entire judgment sum into court. Indeed, Floyd LJ was clear that the court would only impose conditions where there is a sufficiently compelling reason for doing so. Onur Air had removed its assets from the jurisdiction and was not likely to cooperate with payment of the judgment sum if it lost the appeal, and, crucially, Floyd LJ did not think that he was obstructing its appeal by imposing the condition (despite Onur Air's protests that it had cash flow difficulties).

Onur Air's motives for removing its assets from the jurisdiction were not relevant. It is therefore important for companies to tread carefully when considering changes to their UK business activities after trial, if they have not complied with any judgment against them. Even if the court accepts that there are legitimate reasons for such changes, it may still impose costly conditions on a permission to appeal.