MCA RECORDS INC v (A Company Incorporated Under the Laws of [2001] EWCA Civ 1923

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR STAY OF COSTS
PENDING APPEAL TO THE HOUSE OF LORDS
[2001] EWCA Civ 1923Case No A3/2000/2110Venue Royal Courts of Justice, Strand, London WC2, Thursday, 29th November 2001
Between
MCA RECORDS INC(A Company Incorporated Under the Laws ofthe State of California USA)MCA RECORDS LIMITED(now known as Universal Music (UK) Limited)CHARLY RECORDS LIMITED(now known as Night and Day Distribution Limited)CHARLY INTERNATIONAL, APSCHARLY HOLDINGS INCJEAN LUC YOUNGCHARLY RECORDS (UK) LIMITED
Before
Lord Justice ChadwickMR N MERRIMAN QC (instructed by Fox Williams) appeared on behalf of the 4th Defendant/Applicant.MR H CARR QC (instructed by Messrs Russells) appeared on behalf of the Claimants/Respondents.Date 29 November 2001

LORD JUSTICE CHADWICK:

This

[1]is an application for an extension of time to comply with an order made on 5th October 2001 by this court (Simon Brown LJ, Tuckey LJ and myself) that the applicant do pay within 56 days of that order the sum of £350,000. That was a sum which he was required to pay on account of costs, under an order made on 22nd March 2000 by Rimer J following a trial of the action.[2]The proceedings were commenced in February 1994. The only defendant named in the writ was Charly Records Limited. The claim was for damages and injunctions in relation to breach of copyright in certain sound recordings known as "the Chess recordings". Charly Records Limited went into receivership on 17th April 1996. The applicant, Mr Jean-Luc Young, was joined as a defendant to the proceedings on 22nd April 1996. The claim against him was as a joint tortfeasor. It was said that he had personally authorised, procured and directed the acts of copying which had been alleged against Charly Records Limited.[3]When the matter came to trial early last year, Mr Young was the only effective defendant. After a trial lasting several days, Rimer J found against Mr Young. He was held to be jointly liable with Charly Records for the acts of copying by Charly Records Limited. The judge granted injunctions and ordered an inquiry as to damages including damages pursuant to section 97 of the Copyright, Designs and Patents Act 1988. By paragraph 7 of his order of 22nd March 2000, the judge directed that Mr Young should pay the claimants' costs of the action on an indemnity basis. By paragraph 8 the judge ordered Mr Young to pay the sum of £350,000 on account of costs within 56 days, pursuant to CPR 44.3(8). He refused permission to appeal. The reason why the judge ordered costs on an indemnity basis appears from the following passage in the transcript of proceedings following delivery of his main judgment (internal transcript page 41, between D and G):
"It appears to me that the main feature of this case which might be said to justify a taxation on the indemnity basis rather than the standard basis is the finding which I made in paragraph 181 of my judgment where I recorded that I did not find Mr Young to be a truthful, reliable or convincing witness and that at the end of his evidence I was left in no doubt that his account of his role at CRL was a thoroughly untruthful one and one by which he sought to paint a wholly misleading picture. It follows from that finding that I have found that Mr Young was presenting what was effectively a dishonest case."
[4]The judge determined that £350,000 was the appropriate amount in which to order payment on account on the basis of material which persuaded him that the claimant's total costs were in the region of £700,000. He considered whether he should make an interim order, thereby accelerating the time at which costs would be paid. He said this at page 55, between B and D:
"Mr Merriman [who was counsel for Mr Young at trial, as he is now] asks me not to do so since he says that his client tells him he cannot pay anything like £400,000 which is the sum to which the claimants are asking for on an account payment and he tells me that Mr Young will in effect need time to raise the money to make whatever payment is ordered. I do not feel all that sympathetic to those statements made on instructions since the evidence at the trial appeared to demonstrate that Mr Young has the ability to raise large sums of money from various quarters whenever he needs to raise it. In any event, it seems to me that if I were assessing costs here and now finally I would simply make an order for their payment and I do not see in principle why any different rules should apply because I am ordering an on account payment."
[5]It was those factors which led the judge to make the order which he did make on 22nd March 2000. Mr Young applied for permission to appeal to this Court. But, before that application could be heard, he reapplied to Rimer J for an extension of time under, or a stay of, the order requiring payment of £350,000 on account of costs. That application came before Rimer J on 24th May 2000. It was supported by witness statements made by Mr Young, setting out what he then said were his current means and information as to his assets. As the judge said, at page 3 of the transcript of that judgment, the thrust of the evidence was that Mr Young simply did not have the money with which to pay £350,000 and had no reasonable prospect of obtaining it. The judge went on to say this, at F:
"I do not believe that on the evidence at present before the court I can conclude that that assertion advanced in these witness statements is untrue, although I have earlier already expressed a degree of scepticism about what Mr Young says as to the availability to him of large sums of money. He appears to be able to raise large sums from clients of his whenever he needs money to pay the very substantial fees he has had to pay to his own solicitors. I am by no means convinced that the picture which is painted in the witness statements is necessarily a comprehensive picture as to Mr Young's potential sources of assets. Mr Carr emphasises that I should indeed be sceptical about this evidence. However, on this application I consider that I cannot and should not make any finding or arrive at any conclusion that Mr Young has not disclosed the full picture. He has not been cross-examined on these particular statements and I think I should at least give him the benefit of the doubt on this application, namely, that he is not in a position to, and cannot at the moment, raise the £350,000."
[6]I read those passages because they provide the basis for Mr Merriman's application to this Court: namely, that the Court should not make the assumption that Mr Young is not to be believed when he says in his witness statements that he cannot raise the £350,000 required to be paid under the order of 22nd March 2000; whatever degree of scepticism the Court may feel. I accept that that is the correct approach on this application.[7]Rimer J extended the time for payment for a short period to give Mr Young the opportunity to appear before a single judge of this Court to pursue his application for permission to appeal. That application came before Morritt LJ, who made an order on paper on 13th June 2000. Morritt LJ gave permission to appeal to this court against the whole of the order of Rimer J and, having given permission to appeal, granted a stay of the payment obligation under paragraph 8 of the order of Rimer J, as amended on 24th May 2000. He gave liberty to apply on notice for the discharge of that stay. The stay granted by Morritt LJ was granted in the context of a pending appeal in this Court (for which he had given permission) and it came to an end when the appeal was determined.[8]The appeal came before this court in July and judgment was given on 5th October 2001. The order made by this court on 5th October contains two paragraphs material to the present application: first, that the application for a further stay of paragraph 8 of Rimer J's order of 22nd March 2000 be refused; and second (in paragraph 5) that Mr Young should pay the sum of £350,000 within 56 days of the date of the making of that order. That period expires tomorrow, 30th November 2001. This Court also refused application for permission to present a petition of appeal to the House of Lords.[9]Mr Merriman accepts that it is not open to this Court to revisit its order of 5th October 2001 unless he can show that there has been a change of circumstances since that order was made. The change of circumstances upon which he relies is that a petition for leave to appeal to the House of Lords was presented on 5th November. The petition for leave has not yet been determined but I am told that their Lordships are likely to consider it early next year. So, Mr Merriman submits, the position is now very similar to that which was before Rimer J on 24th May 2000; namely that there is a pending application before the superior court for permission to appeal, and this Court (as the lower court) should ensure that no injustice is caused by allowing an enforcement of the costs order until that application for permission to appeal has been determined.[10]There is, as it seems to me, difference between the position of a lower court on an appeal to this Court and the position of this Court on an appeal to the House of Lords. In the case of an appeal to this Court, it would be for this Court to consider, on the hearing of the application for permission to appeal, whether or not to grant a stay pending appeal. That is what happened when Morritt LJ made his order on 13th June 2000. But in the case of a pending application to the House of Lords for leave to appeal from this Court to the House of Lords, the application for a stay has to be made to this Court. That remains the position, as it seems to me, after the House of Lords has granted leave to appeal - see standing order 43 of the House of Lords' Standing Orders. It does not appear to be open to an appellant to apply to the House of Lords for a stay of the execution of this court's order; either before or after the House of Lords has given leave to appeal.[11]In those circumstances, if I were persuaded that a refusal of an extension of time for the payment of the £350,000 payable under paragraph 8 of Rimer J's order would give rise to a risk of serious injustice to Mr Young, I would be minded to take the same course as Rimer J took. It would be wrong to permit enforcement of an order for payment of £350,000 if the effect of that was going to be to stifle an arguable appeal to the House of Lords. I must assume, and I do, that the appeal for which leave is sought is an arguable appeal. I make no assumption either that the House of Lords will, or will not, grant the leave that is sought.[12]But the position seems to me to be this. The refusal of an extension of time to pay will have no effect on Mr Young's ability to seek leave from the House of Lords to present a petition of appeal. The reason is that the petition has already been prepared and lodged. There is nothing to suggest that any further expenditure needs to be incurred in relation to the petition for leave in the House of Lords. If it does, then that is a matter which can be addressed in due course. If the House of Lords refuse leave, then the basis for any further stay will no longer exist.[13]If the House of Lords grant leave, then a stay would be required if there were a real risk that enforcement of paragraph 8 of Rimer J's order would lead to an inability by Mr Young to prosecute an appeal for which (on that hypothesis) the Lords had granted leave. But, in the circumstances that Mr Young says that he has no capital assets at all - or no assets of any amount significant in this context - the refusal of a stay or an extension will not have that effect. It will not have that effect because, in practice, there are no assets which Mr Young would use to fund his appeal to the House of Lords against which (absent a stay) the claimants will be able to levy execution. On the material before the Court, if Mr Young is to fund his appeal to the House of Lords, he will have to do that out of income derived from foreign sources which he brings into this country for the purposes of paying his solicitors' bills. That future income is already the subject of Mareva restraints. It cannot be used for that purpose without either the consent of the claimants or an order of the court. If Mr Young seeks to use future income which he has brought into this country to pay his solicitors' bills in connection with a pending appeal for which the House of Lords has given leave, then unless the claimants consent, he will (in practice) have to seek directions from the court under the Mareva for liberty to do that. It will be for the court to which that application is made to consider whether or not to allow such funds as have become available to Mr Young to be used to fund the appeal rather than to pay the existing costs order. The court will consider that application in the light of the circumstances which then exist.[14]The other matter to which I have given consideration is whether Mr Young's ability to pursue an appeal to the Lords might be affected by bankruptcy proceedings in this country. There are two factors which lead me to take the view that it is very unlikely that bankruptcy is a likely outcome at this stage. First, Mr Young appears to be non-resident; and therefore, prima facie at least, he is not subject to the bankruptcy jurisdiction. Second, any court faced with an application for a bankruptcy order founded on that costs order would have to take into account - if it were then the case - that there was a pending appeal to the House of Lords against the order upon which the bankruptcy debt was founded. Again, that is a matter which can be considered in the future if and when this question arises. There is no need now to attempt to prejudge it by staying the order.[15]In those circumstances, therefore, there is no basis for an extension of the time limited by the order made by this Court on 5th October 2001, which expires tomorrow. The application is dismissed.

Order

Application dismissed with costs.

Cited in 1 later judgment