BTI 2014 LLC v (1) Sequana SA (2) Antoine Courteault (3) Pierre Martinet (4) Clive Mountford (5) Martin Newell: Bat Industries Plc v (1) Sequana SA (2) Windward Prospects Ltd (2017)
It was appropriate to exercise jurisdiction under CPR r.3.1(7) to revoke part of an order imposing a stay of execution of a remedy. Maintaining the stay would be otiose in circumstances where the original reason for its grant, namely to avoid stifling an appeal, was no longer relevant.
The claimant company applied under CPR r.3.1(7) to revoke part of an order imposing a stay of execution.
The company had been partially successful in its claim against the defendants. After a remedies hearing, an order was made that the defendant should pay the claimant a lump sum of US$138.4 million. However, that part of the order was stayed pending determination of the defendant's appeal against the substantive judgment. The next working day, the defendant applied in France for a "sauvegarde proceedings" to be opened for it, namely a form of pre-insolvency process.
The issues were whether the court had jurisdiction under r.3.1(7), and if so whether it was appropriate to exercise such jurisdiction.
The claimant submitted that the stay was otiose given the automatic moratorium imposed by the sauvegarde proceedings, that the defendant's liabilities had been given inadequate recognition in either the sauvegarde proceedings or in a proposed distribution of shares in one of the defendant's companies, and that the defendant had failed to make material disclosure when seeking the stay with regard to its intentions in relation to the sauvegarde proceedings and/or the proposed distribution of shares.
Did the court have jurisdiction under r.3.1(7)? - There were two paradigm cases where r.3.1(7) could be exercised: where there had been a material change of circumstances since the order was made, or where the facts on which the original decision was made were innocently or otherwise misstated, or perhaps undisclosed, Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies)  EWCA Civ 518 followed. It was troubling that the application for the sauvegarde proceedings to be opened had been made so shortly after the order granting the stay. The decision to apply to open the sauvegarde proceedings must have been under contemplation some time before the date it was made, and it was unlikely that the defendant could have failed to understand or appreciate the significance of the automatic moratorium triggered by the sauvegarde proceedings in the context of an application for a stay of execution, which was expressly predicated on the basis that absent a stay, the defendant's appeal might be stifled. In that context, the application to open the sauvegarde proceedings and the success of that application constituted subsequent changes of circumstance of the utmost materiality. It followed that the court had jurisdiction under r.3.1(7) to vary or revoke the part of the order imposing the stay (see paras 19, 24-26, 30 of judgment).
Appropriate exercise of court's jurisdiction - There was no risk of an appeal being stifled if a stay was refused: the effect of the sauvegarde proceedings was to impose an automatic moratorium. Further, an English stay was entirely irrelevant to the French insolvency process. Applying the English law balancing exercise, the stay achieved nothing. However, if its existence might distort the French insolvency processes, that strengthened the reason why the stay should be lifted. It was not appropriate to continue the stay because, given the sauvegarde proceedings, it was otiose: the purpose of the stay had been to enable an appeal to be brought and not to be stifled, but in the light of the sauvegarde proceedings and the automatic moratorium, that purpose had vanished. Liberty to apply to seek a stay in the future was to be expressed in the court's order (paras 33-34, 37, 40, 42-43).