Goldsmith v O'Brien

Very briefly, the judgment arose out of dealings between the parties in relation to what may loosely be described as 2 linked joint ventures between Mr Goldsmith and Mr O'Brien, the claimant, and between Mr O'Brien and a Mr Chittle. The result was that Mr Goldsmith and Mr O'Brien invested £325,000 each in the project which ended up under the control of a company owned by Mr Chittle of which he was the director. The development took place but there apparently has been no return to either Mr Goldsmith or Mr O'Brien. Various partnership accounts, or accounts akin to partnership accounts, were sought by Mr O'Brien with an alternative claim for recovery from each of Mr Goldsmith and Mr Chittle of the £325,000 that he paid. Mr Chittle put in a defence. Mr O'Brien did not. Judgment in default was entered on the alternative claim, the partnership-type claims having first been abandoned.

I am going to assume that the appeal from Master Bragge from the September order has some prospects of success and will obtain permission. I am not ruling upon that. The permission application is to be dealt with firstly on paper. It is, I think, now ready to be dealt with and the parties have invited me, as I have now read into parts of the case, to determine that application in the normal way, which I hope to do before too long following the conclusion of this hearing. The Chancery listing department has also asked me if I would be willing to do that. So everyone is agreed that I am an appropriate judge to deal with that, but I am not dealing with it today.

I say I am assuming without deciding that permission may be given. I have heard one or two minor submissions in relation to the merits of the appeal. It has been said, in particular in Leicester Circuits Limited v Coates Brothers Plc [2002] EWCA Civ 474 by Potter LJ at paragraph 13, that where the justice of refusing a stay is in doubt the answer may well depend on the perceived strength of the appeal. That apart, I do not consider that the merits are strictly relevant to the stay application.

This is not a case where it is, in my judgment, appropriate to grant a stay and I decline to do so.

CPR 52.7 provides:

The Chancery Division of the High Court is, of course, the appropriate appeal route from Master Bragge’s decision. It is evident from that rule that it is for the appellant to persuade the court that a stay should be granted.

It has been said in many cases that the usual order is to decline a stay, but there is no absolute rule. The principles applicable under the CPR were set out in Hammond Suddard Solicitors v Agrichem as long ago as December 2001, [2002] CP Rep 21. Two matters of importance emerge from that decision. The first is in paragraph 12 where Clarke LJ said thisamongst other things:

Subsequently, in paragraph 21, he said this:

In my judgment, the “full, frank and clear” evidence referred to must go to the extent of the risks of injustice which the withholding of a stay would engage. That raises the same issues as are sometimes encapsulated in the requirement recorded in the text of the White Book that "solid grounds" have to be shown for a stay. I do not consider that the addition of the words "solid grounds" adds anything to or (as was submitted by Mr Power in argument) is inconsistent with the test set out by the Court of Appeal in the Hammond Suddard case. The phrase “solid grounds” is often used, and was recently endorsed by. Aikens LJ in Mahtani v Sippy [2013] EWCA Civ 1820 at paragraph 13. He there cited the earlier decision of Sullivan LJ in DEFRA v Downs [2009] EWCA Civ 257 at paragraphs 8 to 9, to the effect that a stay is the exception rather than the rule and that the "solid grounds" which an applicant must put forward are normally:

That, it seems to me, is entirely in line with what I have read from the Hammond Suddard case in paragraph 21.

In my judgment, there is inadequate evidence in this case in support of the suggestion that the appeal will be stifled. It is said that the stifling will result from the bankruptcy that will now follow, it is assumed by Mr Goldsmith, though not explicitly threatened by Mr O’Brien, who has a charging order nisi on Mr Goldsmith’s home, and may prefer to proceed further down that route. Mr Goldsmith says he could only pay the judgment sum and accrued interest to date if he sold his property in Truro. He does not, however, give anything by way of detail of what his current income, business activities or assets are apart from his house. It may be said to be implicit in his statement that there is no other source of paying the judgment sum, but the statement needs to be explicit, or, in the words of the Court of Appeal, full, frank and clear.

Without knowing Mr Goldsmith's full means and assets I am unable to reach the conclusion that the appeal would be stifled. He has in the past come up with £325,000 to make this investment and has therefore had access to assets of substance. He does not say what attempts he has made, or might now make, in order to raise the monies from a third party. He is simply silent on the point. I am not going to assume that his silence means that he has no way of meeting the judgment sum. In any event, bankruptcy would not necessarily be an end of the litigation. It would then be for the trustee in bankruptcy, acting in the interests of the creditors, to decide whether to proceed and whether the appeal was worthwhile.

In my judgment, it is wrong to approach cases of this sort upon the basis that insolvency will necessarily stifle the litigation, though it would, of course, have to be funded. As it happens, Mr Goldsmith, who, as I have said, says very little about his assets, is funding these proceedings in sums which, judged by costs statements, are not insubstantial. The court simply does not know how he is doing that, given the impecuniosity that it is asked to infer preventing payment of the judgment sums.

In those circumstances it seems to me that Mr Goldsmith’s application does not really get off the ground and that there is no serious balancing exercise for me to carry out. Nonetheless, I should say in addition that no evidence has been put forward, other than a speculative plea, that if a stay is refused and the appeal succeeds, the risks of the appellant being unable to recover the judgment sum (if paid) will be significant. Of course there is always some risk that a substantial sum of money, such as the judgment sum with interest in this case, may prove difficult to recover, but if that were enough then there would be a stay in every case, which is clearly not the position.

I also have to consider whether or not Mr O'Brien’s ability to enforce the judgment at the end of the day would be made more difficult if a stay is granted. I am not satisfied that that is the case. There is no evidence that Mr Goldsmith has been dissipating assets or is likely to do so hereafter. Moreover, on what I know, a charging order nisi has been granted over Mr Goldsmith's home. Whether that has been made final or not, I am not sure. However it does not seem to me likely that serious prejudice to Mr O'Brien would result from the grant of a stay, but that is not a reason for departing from the default position. The onus is upon Mr Goldsmith to provide full, frank and clear evidence of the risk that he faces. He has not done so. Mr O'Brien, on the other hand, has had a default judgment for over two years and I do not consider that it would be right to prevent him from enforcing that pending the outstanding appeal. Accordingly, the application for a stay of that judgment is dismissed.

There is also the £25,000 costs order where a stay is sought. My refusal of the stay extends to that order also. Despite Mr Power’s withering comments upon Master Bragge's decision to award indemnity costs in relation to two of the hearings, one of which consisted of Mr O'Brien seeking specific discovery, I see no reason at this stage for departing from the reasoning of Rose J in paragraphs 6 and 7 of her written reasons for refusing a stay.