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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 >> Aoun v Bahri & Anor [2002] EWCA Civ 1141 (31 July 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1141.html Cite as: [2003] CPLR 89, [2002] EWCA Civ 1141, [2003] CP Rep 6

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
COMMERCIAL COURT
Moore-Bick J

		Royal Courts of Justice Strand, London, WC2A 2LL
		31st July 2002

Lord Justice Brooke : This is the judgment of the court.

1. On 19th February 2002 Moore-Bick J, sitting in the Commercial Court, made an order requiring the claimant Mohamad Ali Aoun to provide security for the costs of the two defendants Hassan Bahri and Costas Angelou in the sums of £200,000 and £175,000 respectively. This order was expressed to cover their costs up to and including the conclusion of any alternative dispute resolution proceedings. The judge directed that the action should be stayed if this security was not provided by 4.30pm on 12th March 2002. He also ordered Mr Aoun to pay the defendants £35,000 and £25,000 respectively on account of their costs of the application within 28 days. The judge made his order pursuant to the provisions of CPR 25.12 and CPR 25.13(2)(g), having been satisfied that Mr Aoun had taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.
2. Mr Aoun now appeals to this court against this order pursuant to permission granted by Mance LJ on 28th March 2002. Both defendants have filed and served respondent's notices whereby they seek to uphold the judge's orders on additional grounds. The appeal is now pending, but the defendants now seek orders from this court providing for security for their costs of the appeal and also providing that permission to appeal should be set aside unless Mr Aoun complies with the judge's order to provide security and to pay the costs ordered to be paid on account within 14 days of the date of the order the defendants are now seeking from this court. The first of these applications was made under CPR 25.15(1) and the second under CPR 52.9(1). The first defendant sought security for their costs of the appeal in the sum of £41,759.50 and the second defendant in the sum of £26,520. Agreement was reached just before the hearing as to the amount of the security for the costs of the appeal which Mr Aoun should provide for each defendant. He was also in the process of paying the costs ordered by the judge to be paid on account. The only unresolved issue arose out of the defendants' application under CPR 52.9(1). We said at the end of the hearing that we were dismissing this application, and we are giving our reasons for doing so in this judgment.
3. Before considering the issues raised on that application it is necessary to say a little about the evidence in the court below and the judge's findings on the evidence, following the cross-examination of Mr Aoun.
4. It was not in dispute that until some time after October 2000, when the defendants first sought orders for security for their costs of the action, Mr Aoun had no connection of any kind with this country. The evidence showed that he had a peripatetic lifestyle, living variously in Switzerland, Australia, Greece, Dubai and elsewhere in the Middle East, and spending a great deal of time in other places such as Pakistan. He lived away from his wife and children for long periods. His business, personal and family connections were all with the Middle East and Australia. In particular he was born in Lebanon, and his family and his wife are Lebanese. He used a Lebanese passport and has addresses in Lebanon. He also had long term residence in Dubai. So far as his Australian connections are concerned, his parents and his wife's family and brother live there, and his children attended school there. He has Australian joint nationality.
5. The judge found that Mr Aoun's evidence was unsatisfactory and contradictory and shot through with inconsistencies and discrepancies. We were told, for instance, that in November 2000 his solicitors told the defendants' solicitors that their client lived in Greece. In December 2000 Mr Aoun told a Greek court that he had no assets in Greece and that he and his family were permanently in Australia. In the spring of 2001 he told the Commercial Court that he had been living with his family in England since the previous December. In November 2001 he never answered a question put to him in cross-examination as to the date when he had formed an intention to move to England.
6. In about July 2001 Mr Aoun mentioned for the first time that he had placed his house on the market in Australia. A little later he told the Commercial Court that he intended to use £50,000 from the sale proceeds (supplemented by a £300,000 loan) for the purpose of acquiring a property in England. In November 2001 he represented to UK immigration officials that he was a resident of Australia. He failed to comply with an order made by the Commercial Court in July 2001 that he should produce his passport and the passports of the other members of his family, averring that he had left his own Lebanese passport in Greece and that five of his family's Australian passports had been destroyed on an aeroplane following an incident when baby's milk had been spilt over them. In July 2001 he also asserted that he had applied to the UK authorities for status as a long-term resident. He later admitted that this was untrue and that he made such an application for the first time the day before the hearing on 15th November 2001 when he was to be cross-examined.
7. The judge concluded that there were solid grounds for thinking that if Mr Aoun was unsuccessful in the litigation it would be difficult to enforce any order for costs that was made against him. He also said he was unable to find that an order for security would have the effect of stifling Mr Aoun's claim. In the exercise of his discretion he decided that it would be just to make an order for security in favour of both defendants.
8. Factors he took into account in the exercise of his discretion included Mr Aoun's lack of significant or permanent assets located within the jurisdiction or within the territories covered by the Brussels and Lugano Conventions, his conclusion that the London house represented inadequate and uncertain security, Mr Aoun's propensity to move countries, and the size of the defendants' costs. The defendants will argue on the appeal that there were other matters which would have justified the judge in making the order he did, namely Mr Aoun's lack of probity and the misleading evidence he gave, the fact that he had no substantial connection with this jurisdiction, and the size of his own legal costs. As to the first of these matters the judge concluded that Mr Aoun was not a witness whose evidence could be relied upon with any great degree of confidence, although he thought that this was due as much to his willingness to make ill-considered statements as to any desire to mislead. A little later he said that many of the inconsistencies and discrepancies with which Mr Aoun's evidence was "shot through" seemed to reflect an exceptionally casual attitude to giving evidence rather than a deliberate intention to mislead. Others, however, were less easily explained.
9. It was in these circumstances that the judge made the order whose main effect we have summarised in paragraph 1 above. Mr Aoun appealed against that order, and Mance LJ has granted permission to appeal. The appeal raises a point of law on the proper construction of CPR 25.13(2)(g) and also a challenge to the exercise of the judge's discretion on the facts.
10. The defendants make their present application under CPR 52.9 which provides that:

"(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 to do so."

11. The strong wording of this rule reflects the strict tests the Court of Appeal used to apply under the old procedural regime in order to discourage applications of this type (see note 59/14/27 to RSC O59 R14 in the 1999 edition of the White Book).
12. The defendants argue that because Mr Aoun did not furnish the requisite security or pay the costs ordered by the judge to be paid on account within the time prescribed by the judge's order, and because he has not applied to any court for what is described as a stay of execution of that order, the court should set aside this appeal unless he now complies with the judge's requirements in full within a short period. They speak of a wholesale disregard for the judge's order on Mr Aoun's part, and of their concern that the policy behind CPR 52.7 will be frustrated if Mr Aoun is now permitted to continue with his appeal without applying for and being granted a stay of the judge's order.
13. Mr Aoun for his part has now filed a witness statement in which he has explained the problems he faced in raising the money ordered by the judge. It is not necessary to go into this matter in any detail. It is sufficient to say that he has now raised sufficient funds to pay, albeit late, the defendants the costs the judge ordered him to pay on account and also to provide an agreed sum by way of security for their costs of the appeal.
14. The effect of the defendants' application was to require Mr Aoun to pay the sums which the judge had ordered to be paid by way of security for the costs of the action before the appeal could be allowed to proceed. This seemed on the face of it odd, because Mr Aoun has been given permission to appeal against that order, and if he succeeds in his appeal the order is likely to be set aside or reduced in amount.
15. The defendants argued that the action was now stayed, with effect from 12th March 2002, because Mr Aoun did not furnish the ordered security by that date. They said there was no dispute about the fact that:

(i) he had not complied with the order;

(ii) he had made no application for any variation of, or any time extension for compliance with, the order;

(iii) he had made no application for any stay of execution of the order;

(iv) he had offered no explanation for his conduct except in the witness statement filed just before the start of the hearing in this court;

(v) he had offered no apology for his conduct; and

(vi) as a result of his conduct, the action was now stayed.

16. Mr Graham Dunning QC, who appeared for Mr Bahri, submitted that if Mr Aoun's appeal was allowed to proceed even though he had not complied with the judge's order for security of the costs of the action, his wholesale disregard for the judge's order would remain unmarked. Furthermore, he said that the policy behind CPR 52.7 (whereby an appeal does not automatically operate as a stay of any order of the lower court) would be completely frustrated, because Mr Aoun would achieve the same result without complying with the requirements made by the judge or applying to this court or to the judge for a stay of the judge's order pending the appeal. Mr Dunning submitted that Mr Aoun had thus far evaded his liabilities and flouted the authority of the court, and that his conduct should be checked immediately. He said that the order sought by his client clearly represented a fair and proportionate response to Mr Aoun's behaviour. He added that his client had already incurred significant costs, which were covered by the order for security in the High Court, and that he should be protected from having to incur any further costs until the money ordered by the judge to be paid by way of security for his costs was forthcoming.
17. Mr Huw Davies, for Mr Angelou, made submissions to similar effect. He observed that the judge had decided that Mr Aoun's claim would not be stifled by having to put up substantial security (and pay the interim costs orders) and that Mr Aoun had not appealed against this finding of fact.
18. It appears to us that the defendants' submissions were based on a fundamental misunderstanding of the nature of the order made by the judge. The judge did not order Mr Aoun to do anything in relation to the order for security for costs (other than to pay the costs of the defendants' application, including the sums ordered to be paid on account). His order, rather, had the negative effect that if Mr Aoun did not provide the ordered security by 12th March 2002, all further proceedings in his action in the High Court would be stayed. That order remains in effect, and it will remain in effect unless and until it is altered or discharged by an appeal court or varied or discharged by the judge himself. In due course, after the action remained stayed for an appropriate period of time, it would be open to the defendants to apply to have it dismissed. Incidentally, the judge's order was not drawn up on this occasion in the way suggested by paragraph 6 of Appendix 16 to the Commercial Court Guide.
19. It follows that Mr Aoun should not be regarded as showing a wholesale disregard for the judge's order simply because he chose not to provide the ordered security within the time set by the judge. He was entitled to seek permission to appeal against it. He filed his appellant's notice on 4th March 2002, and by granting permission to appeal Mance LJ has indicated that he considered that the appeal would have a real prospect of success.
20. Although there appears to be no authority directly in point, we are satisfied that the stay of the action in the High Court which took effect from 12th March 2002 had no effect on the proceedings in this court. It is certainly the case that with effect from 13th March 2002 the High Court was in effect declining to exercise its jurisdiction over the action. In Ministry of Foreign Affairs, Trade and Industry v Vehicles and Supplies Ltd [1991] 1 WLR 550 Lord Oliver said at p 556:

"A stay of proceedings is an order which puts a stop to the further conduct of proceedings in court before a tribunal at the stage which they have reached, the object being to avoid the hearing or trial taking place …

It simply means that the relevant court or tribunal cannot, whilst the stay endures, effectively entertain any further proceedings except for the purpose of lifting the stay." (Emphasis added).

21. The fact that the Court of Appeal and the High Court are two different courts, each possessing their own inherent power to take steps to prevent the process in their court from being abused is evident, if further confirmation was needed, from the language of section 49(3) of the Supreme Court Act 1981:

"Nothing in this Act shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so."

22. Taylor v Lawrence [2002] EWCA Civ 90, [2002] 2 All ER 353 and Seray-Wurie v Hackney London Borough [2002] EWCA Civ 909, [2002] 3 All ER 448 provide two recent examples of the way in which the jurisdiction of the Court of Appeal and the jurisdiction of the High Court, being two separate courts, are separately regulated.
23. There are plenty of examples in the books of this court entertaining appeals against orders staying proceedings in the lower courts without any hint of a suggestion that the order in the court below had the effect of staying proceedings in the Court of Appeal as well. Section 16(1) of the Supreme Court Act 1981 gives this court jurisdiction to hear and determine appeals from any judgment or order of the High Court, and once this court is seized of an appeal it has both jurisdiction and a duty to entertain it (at any rate until the permission stage is reached) unless and until a stay is placed on proceedings in the Court of Appeal.
24. It follows that unless there were any special features of this case which would constitute a compelling reason (see CPR 52.9(2)) for placing onerous conditions on permitting the future progress of an appeal for which a lord justice has granted permission we should decline to give the defendants the relief they sought. Although the defendants made strong submissions about Mr Aoun's lack of credibility and untrustworthiness, Mance LJ did not see fit to place any conditions under CPR 52.3(7)(b) on Mr Aoun being granted permission to appeal, and we saw no reason why we should impose any such conditions so long as he provided the agreed security for the costs of the appeal itself and paid the defendants the sums by way of costs which the judge ordered him to pay on account.
25. It was for these reasons that we dismissed the defendants' application.