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The appellant (Onur), a Turkish corporation, appeals against orders made by Patten LJ in the Court of Appeal on 21 January 2016.
An understanding of the nature of his orders requires reference to the following summary of the background.
(a) On 22 May 2014 Rose J, [2015] 1 BCLC 89, gave judgment against Onur in favour of the respondent (Goldtrail), a UK company in liquidation, in the sum of 3.64m plus interest.
(b) On 15 December 2014 Floyd LJ granted permission to Onur to appeal to the Court of Appeal against the order of Rose J on the basis that the appeal had a real prospect of success.
(c) On 11 June 2015 Floyd LJ, by way of variation of an earlier order for the imposition of conditions upon the continuation of Onurs appeal, made it conditional, among other things, upon Onurs payment into court (or provision of other security for it) of 3.64m by 9 July 2015.
(d) On 29 October 2015, in the absence of any payment into court (or provision of other security), Goldtrail applied for an order dismissing Onurs appeal and on 7 December 2015 Onur cross-applied for an order that the condition for payment into court be discharged on the ground that it could not comply with it and that the effect of dismissing the appeal by reference to it would be to stifle the appeal.
(e) At the hearing before Patten LJ on 14 January 2016 of the application and cross-application referred to at (d), Goldtrail, in disputing that the condition for payment was such as to stifle Onurs appeal, relied in particular on the financial relationship between Onur and its wealthy owner, Mr Bagana.
As explained by Patten LJ in his reserved judgment dated 21 January 2016, his orders were first to dismiss Onurs cross-application and thereupon to grant Goldtrails application for an order that, by reason of Onurs failure to comply with the condition imposed on 11 June 2015, its appeal should be dismissed.
In the above circumstances this court is asked to address the principles by reference to which the Court of Appeal should determine an application by a respondent/claimant that, as a condition of any appeal to it, the appellant/defendant should pay into court (or otherwise secure payment of) part or all of the judgment sum awarded against it in the court below; and in particular to identify the principles by reference to which it should appraise a respondents contention that an appellants financial relationship with a wealthy third party is such as to defeat its complaint that such a condition would stifle its appeal.
In the event there has been little dispute between the parties as to the principles which the Court of Appeal should apply.
The more lively issue has been whether Patten LJ can be seen to have applied those principles in reaching his conclusions first that Onurs relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal; second that the condition should therefore remain in being; and third that, in the absence of compliance (or proposed compliance) with it, Onurs appeal should therefore be dismissed.
THE SUBSTANTIVE DISPUTE
Prior to its liquidation, Goldtrail was a holiday tour company which had been wholly owned by Mr Aydin.
Onur is a Turkish airline, largely owned by Mr Bagana.
In the proceedings before Rose J Goldtrail, by its liquidator, sued Onur in relation to two agreements and, irrelevantly for present purposes, sued other defendants in relation to other agreements.
The claim against Onur arose out of the latters aspiration to cause Goldtrail to buy seats for its tourists on Onurs flights between the UK and Turkey.
Such was the context of agreements that Mr Bagana would buy 50% of Mr Aydins shares in Goldtrail for 1m (which he paid) and that Onur would pay 3.64m (which it paid) to another company owned by Mr Aydin for its purported brokerage of an agreement by Goldtrail with Onur to buy a specified number of seats on its flights.
Rose J found that, properly analysed, the payment of 3.64m represented consideration for Goldtrails agreement to buy the seats; that, in breach of his fiduciary duty to Goldtrail, Mr Aydin had diverted receipt of Onurs payment away from Goldtrail to his other company; that Onur had dishonestly assisted Mr Aydin in thus defrauding Goldtrail; and that it should pay damages to it in that sum.
ONURS APPEAL
In January 2015, following the grant on paper of permission to Onur to appeal against the order of Rose J, Goldtrail applied for the imposition of conditions.
It was too late for it to apply under Rule 52.3(7)(b) (now Rule 52.6(2)(b)) of the Civil Procedure Rules for the actual permission to be made subject to conditions.
It therefore applied under Rule 52.9(1)(c) (now Rule 52.18(1)(c)) for the court to exercise its discretion to impose conditions upon which an appeal may be brought.
Paragraph (2) of Rule 52.9 (now Rule 52.18(2)) provided that the court should exercise its powers under para (1) only where there was a compelling reason for doing so.
By its application, Goldtrail requested conditions that Onur should pay or secure 600k under interim orders for costs made by Rose J; should provide security for Goldtrails costs of the appeal in the sum of 150k; and in particular should pay into court the sum of 3.64m which Rose J had awarded to it by way of damages.
In response Onur entered no substantive challenge to the request for the first two conditions.
The dispute related to the requested payment into court of the judgment sum.
Goldtrail relied on the agreed fact that in October 2014, after 22 years of flying its aircraft to the UK, Onur had ceased to do so; and Goldtrail submitted that, since Onur was likely to have no other assets even temporarily in England and Wales, there was a compelling reason for the judgment sum to be secured.
Onurs response was that its decision to cease flights to the UK had been taken for operational reasons and that there was no evidence that it had taken steps or would take steps to obstruct enforcement of the judgment in the event of the dismissal of its appeal.
What at that time Onur did not allege was that the disputed condition would stifle its appeal.
By an order on paper dated 7 April 2015 Floyd LJ imposed the disputed condition.
Onur exercised its right to cause him to reconsider his decision at the hearing which took place on 11 June 2015.
Although in his judgment Floyd LJ expressed a willingness to assume that there was a respectable commercial explanation for the cessation of Onurs flights to the UK, he maintained his earlier conclusion that there was a compelling reason for imposing the condition.
Upon Onurs continuation of the appeal, he therefore imposed the condition that it should pay into court (or otherwise secure payment of) 3.64m by 9 July 2015.
On 14 July 2015, by then in breach of the condition, Onur applied for variation of it so as to permit it to make the payment into court by seven monthly instalments.
On 27 July 2015 Floyd LJ on paper refused the application but shortly before 21 October 2015, when pursuant to Onurs request he was due to reconsider it at a hearing, Onur changed its stance.
Its new contention was that the condition for payment of the judgment sum into court was a breach of its rights under the European Convention on Human Rights and was unlawful and that therefore the payment would not be made.
So Floyd LJ dismissed the application for variation and directed that Goldtrails oral request for the consequential dismissal of Onurs appeal be made by formal application.
Thus it was that on 14 January 2016 Patten LJ heard not only the anticipated application by Goldtrail for dismissal of the appeal but also a cross-application by Onur dated 7 December 2015 for discharge of the condition for payment into court of the judgment sum on the ground - asserted for the first time - that its continuation in force would stifle the appeal.
The relevant findings, observations and conclusions of Patten LJ in his judgment dated 21 January 2016 were as follows: In 2013 he lent US $28m to Onur.
(a) Mr Bagana was extremely wealthy and had, for example, given evidence to Rose J that 5m was not a significant outlay for himself personally.
(b) He directly held 3.67% of the shares in Onur and held 81.19% of the shares in a company which held a further 92% of the shares in Onur.
(c) Between 2008 and 2011 Onur had paid substantial dividends to him, which he had lent back to it, secured against its assets.
(d) (e) By 2014 his loan account with Onur had increased to $68m.
(f) For some reason Onur had guaranteed debts owed to him by another shareholder.
(g) As Onurs largest secured creditor, Mr Bagana was in a position to decide which of Onurs unsecured debts should be paid and at what time.
(h) He had a more than usually close relationship with Onur and effectively controlled its financial affairs.
(i) According to Onurs Chief Financial Officer, Mr Bagana had said that he would contemplate making further loans to Onur only in exceptional circumstances to enable it to make commercial payments necessary to keep it in business.
(j) With Mr Baganas support Onur was able to continue to trade.
(k) Even had it been difficult for Onur to make the payment into court out of cash generated from its trading activities, it could have done so with his support.
(l) Mr Bagana had decided not to fund the payment by Onur.
(m) Were the court able to take his financial position into account in assessing Onurs ability to make the payment into court, its application to discharge the condition could not succeed.
(n) In exceptional circumstances the ability of a company to have access to funds from a third party could be taken into account in assessing the likelihood that it could make a payment into court.
(o) To take it into account would not be the same as to oblige that third party to comply with a condition imposed on a company.
(p) exceptional.
(q) Onur had failed to establish that the condition for payment into court would stifle its appeal.
(r) So Onurs cross-application failed and, in that it had resolved not to satisfy the condition, its appeal should be dismissed.
In the light of all the above features the circumstances were
PRINCIPLES
To stifle an appeal is to prevent an appellant from bringing it or continuing it.
If an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it.
It is as if, on an application of summary judgment, the court were to grant leave to the defendant to defend the claim and then to attach a condition for payment which he could not satisfy.
In the words of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449B: that would be a wrongful exercise of discretion, because it would be tantamount to giving judgment for the plaintiff notwithstanding the courts opinion that there was an issue or question in dispute which ought to be tried.
Application of article 6 of the European Convention on Human Rights (being an article which confers its rights on companies as well as on human beings) yields the same conclusion.
The article does not require a member state to institute a court of appeal but, if it does so, it must ensure that litigants in that court enjoy its fundamental guarantees: Delcourt v Belgium (1970) 1 EHRR 355.
There will seldom be a fair hearing within article 6 if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it.
There is a variety of situations in which a party submits that the effect of granting or refusing an application would be to stifle his continued participation in the proceedings.
He may do so, for example, as a claimant of a specified character, in response to an application by (a) a defendant for him to provide security for costs; or (b) as a defendant, in response to an application by the claimant for summary judgment in which the latter contends, as a fall-back, that, were leave to be given to defend the claim, it should be subject to a condition that the sum claimed be paid into court; or (c) as a party who has without good reason failed to comply with an order, in response to an application by the other for an order for him to make a payment into court; or (d) as an appellant, in response to an application by the respondent (as in the present case) that, as a condition of the appeal, he should provide security for the costs of it; or (e) as a former defendant now an appellant, in support of his application (as in the present case) that orders against him for payment of the judgment debt or costs be stayed pending his appeal; or (f) as a former defendant now an appellant, in response to an application by the respondent (as in the present case) that he should, as a condition of the appeal, pay the judgment debt into court.
There is a qualitative difference between imposing a condition which requires a defendant/appellant to provide security for the future costs of the claimant/respondent and one which requires him to pay into court the sum awarded against him.
The effect of the former is that, were his appeal to be dismissed, the burden of expenditure to be incurred by the claimant/respondent in resisting the appeal would not be borne by him.
The effect of the latter is, by contrast, even more beneficial for the claimant/respondent.
It is that, in the event (again) of the dismissal of the defendants appeal, the judgment sum would be there, as it were upon a tray, for the claimant to sweep into his pocket without his needing to undertake any attempt to enforce the courts order for payment of it.
No doubt a court asked to impose a condition for the payment into court of the sum awarded will have well in mind that extra advantage for the claimant and corresponding disadvantage for the defendant.
But a partys participation in proceedings can be as much stifled by an order for security for costs as by an order for payment into court of the sum claimed or awarded.
So it is without further reference to that distinction that one may proceed to address the circumstances in which an order can be said to stifle the continuation by an appellant of an appeal.
There is no doubt - indeed it is agreed - that, if the proposed condition is otherwise appropriate, the objection that it would stifle the continuation of the appeal represents a contention which needs to be established by the appellant and indeed, although it is hypothetical, to be established on the balance of probabilities: for the respondent to the appeal can hardly be expected to establish matters relating to the reality of the appellants financial situation of which he probably knows little.
But, for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed.
It is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum.
As Brandon LJ said in the Court of Appeal in the Yorke Motors case, cited with approval by Lord Diplock at 449H: The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need.
It seems that, in particular and as exemplified by the present case, difficult issues have surrounded the ability of a corporate appellant, without apparent assets of its own, to raise money from its controlling shareholder (or some other person closely associated with it); and this is the context of what follows.
When, in response to the claim of a corporate appellant that a condition would stifle its appeal, the respondent suggests that the appellant can raise money from its controlling shareholder, the court needs to be cautious.
The shareholders distinct legal personality (which has always to be respected save where he has sought to abuse the distinction: Prest v Prest [2013] UKSC 34, [2013] 2 AC 415, 487, para 34) must remain in the forefront of its analysis.
The question should never be: can the shareholder raise the money? The question should always be: can the company raise the money?
So one turns to the leading authority of the Court of Appeal in this area, namely Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, [2002] CP Rep 21, which Onur contends to be, in part, erroneous in principle.
In the Hammond Suddard case the respondent solicitors sued the appellant company for unpaid fees and it counterclaimed for damages for negligence.
The claim succeeded and in effect the counterclaim failed.
The appellant obtained permission to appeal.
It unsuccessfully sought a stay of execution of the orders made by the judge on the basis that, were they to be enforced, its appeal would be stifled.
The respondents sought the imposition of conditions upon the permission to appeal.
They sought a condition for provision of security for the costs of the appeal, which the appellant conceded to be appropriate.
But they also sought a condition of payment into court of the judgment debt and of the sums awarded under interim orders for costs, to which, analogously, the appellant objected that its consequence would be to stifle its appeal.
The appellant had been incorporated in the British Virgin Islands and was owned by trustees on discretionary trusts for an unidentified but apparently wealthy family.
The appellant had, so it said, no assets.
But could it raise from its beneficial owners a sum equal to the judgment debt and costs in order to enable it to make the payment into court? If so, there was a compelling reason within the meaning of Rule 52.9(2) for imposing the condition sought by the respondents.
In the Hammond Suddard case the judgment of the court was delivered by my Lord, Lord Clarke (Clarke LJ, as he then was), on behalf of himself and Wall J (as he then was).
Having observed, at (1) of para 41, that it would be difficult for the respondents to exercise the normal mechanisms of enforcement against the appellant and, at (2), that the appellant had had access to resources which had enabled it to secure representation of the highest quality in the proceedings to date, the court concluded, at (3): There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered.
No criticism has been directed at the above conclusion.
It was an impeccable summary of the courts reason for acceding to the respondents application.
The court proceeded, at para 41(4), to find that the appellants disclosure of its financial affairs had been inadequate.
But then, at the end of the subparagraph, it added an observation in relation to the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt including the outstanding orders for costs.
Indeed, in para 43, the court added a second observation to the same effect: Thus we see nothing unjust in providing the trust which owns the appellant with a choice.
If it is in the interests of the appellant for the appeal to continue, the trust must procure payment of the current orders.
I am driven to the view that Onur is right to criticise the phraseology of the courts two additional observations.
Their intended meaning may well have been, as Goldtrail suggests, that the appellant had failed to establish that funds with which the company could make the payment into court would not be made available to it by its beneficial owners.
But, strictly speaking, it was wrong for the court to express its reasoning in terms of whether they could themselves make that payment.
In Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695 the Court of Appeal was required to determine applications by Socit Gnrale SA (the bank), which was the respondent to appeals which the two appellants had been permitted to bring against orders made against each of them for payment to the bank of US$49m.
The first appellant (Saad) was a limited Saudi Arabian partnership and the second appellant (Mr Al- Sanea) was a general partner of Saad and owned 90% of its share capital.
One of the banks applications was for a condition to be imposed upon the continuation of each of the appeals that the appellants should pay the award of US$49m into court; to which the appellants each responded that any order for payment into court would stifle their appeals.
The courts conclusion, explained in the judgment of Aikens LJ with which Rimer LJ agreed, was that a condition, which it proceeded to impose, for their joint and several payment into court of (only) $5m would not stifle their appeals.
In reaching this conclusion Aikens LJ punctiliously addressed the factors identified by the court as relevant in the Hammond Suddard case.
Nothing turns on his analysis of why Mr Al-Sanea had failed to make good his contention that his appeal would be stifled.
In relation, however, to the analogous contention of Saad, Aikens LJ addressed the additional observation which that court had made in para 41(4).
At paras 54 and 55 of his judgment Aikens LJ said that it was difficult to judge the legitimacy of imposing upon a company a the question was whether Saad had a wealthy owner who could not, if i) minded to do so, make the payment into court on its behalf; ii) condition which would effectively require an owner to fund it; iii) but the courts additional observation in the Hammond Suddard case had been clear; iv) exceptional circumstances; and v) the answer had to be that such a condition should be imposed only in the circumstances of the present case were exceptional.
Possibly ham-strung by the doctrine of precedent, the court in the Socit Gnrale case evidently considered it best to treat the first additional observation in the Hammond Suddard case by consigning it to that over-used store-room in the mansion of the law which is designated as exceptional circumstances.
Such a criterion is on any view dangerous because it is not, on the face of it, linked to its context: see Norris v Government of United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487, para 56.
It sets a snare for it may lead to the wrongful downgrading of the significance of circumstances just because they happen not to be exceptional or to their wrongful upgrading just because they happen to be exceptional: H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening) [2012] UKSC 25, [2013] 1 AC 338, para 161.
Having, however, an unconstrained ability to reject the phraseology of the additional observations, we in this court have no need to approve the superimposition upon the relevant criterion of a test of exceptional circumstances which neither party before the court seeks to defend.
In this context the criterion is: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition?
The criterion is simple.
Its application is likely to be far from simple.
The considerable forensic disadvantage suffered by an appellant which is required, as a condition of the appeal, to pay the judgment sum (or even just part of it) into court is likely to lead the company to dispute its imposition tooth and nail.
The company may even have resolved that, were the condition to be imposed, it would, even if able to satisfy it, prefer to breach it and to suffer the dismissal of the appeal than to satisfy it and to continue the appeal.
In cases, therefore, in which the respondent to the appeal suggests that the necessary funds would be made available to the company by, say, its owner, the court can expect to receive an emphatic refutation of the suggestion both by the company and, perhaps in particular, by the owner.
The court should therefore not take the refutation at face value.
It should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) its affairs and is supporting (and has supported) it in financial terms.
APPLICATION TO THE PRESENT CASE
There has been lively argument before the court as to whether, in making the orders under appeal, Patten LJ must be taken to have concluded, in accordance with the correct criterion, that Onur had failed to establish that Mr Bagana would not make 3.64m available to it in order to enable it to comply with any order for its payment into court.
There are grounds for thinking that such a conclusion might have been open to him.
Mr Bagana signed a statement admitted by Rose J into evidence, in which, so Onur tells this court, he admitted that he was responsible for its overall operation and made the ultimate decisions referable to it; and Patten LJ made findings accordingly.
Moreover Mr Baganas massive recent loans to Onur to enable it to continue to trade were on any view of substantial relevance to the probability of a further, modest advance.
Oddly no statement was filed on behalf of Onur by Mr Bagana himself but the Chief Financial Officers evidence was that he would contemplate making further advances only to enable Onur to make commercial payments necessary in order to keep itself in business.
This second- hand assertion called for careful scrutiny.
But, in circumstances in which Patten LJ concluded that it seems clear to me that Mr Bagana has decided not to fund the payment by the company, I am driven to the view that this court cannot proceed on the basis that Onurs application for discharge of the condition was refused by reference to the correct criterion.
Goldtrail submits with force that Patten LJ meant to conclude only that, up until that point, Mr Bagana had declined to fund the payment and that the evidence in support of any wider conclusion was far too thin.
It further submits that for Patten LJ to have found that Mr Bagana had made a final decision never to fund it would be inconsistent with his refusal of Onurs application.
Unfortunately, however, I cannot accept the further submission.
The key to the proper construction of his judgment is that, following a lengthy quotation from the judgment of Aikens LJ in the Socit Gnrale case, Patten LJ concluded that the circumstances of the present case were exceptional.
In other words he was proceeding by reference to the Court of Appeals misconception, born of the additional observations in the Hammond Suddard case and developed in the Socit Gnrale case, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so.
So I would allow Onurs appeal and remit both applications to Patten LJ for him to determine Onurs application for discharge of the condition by reference to the correct criterion.
I should record that Goldtrail put forward to him an alternative argument against discharge; of course he had no need to address it but he may now need to do so.
I have reached a different conclusion from that arrived at by Lord Wilson.
I am not persuaded that Patten LJ materially misstated the relevant principles or arrived at the wrong conclusion.
It is important to put his decision in context.
The issue throughout has been whether there was a compelling reason for imposing a condition upon which an appeal may be brought under what were then CPR 52.9(1)(c) and (2).
Before the case came before Patten LJ it had a long history, largely before Floyd LJ.
As Lord Wilson explains, at no stage when the issues were before Floyd LJ did Onur contend that payment of the judgment sum of 3.4m (or the provision of security in lieu) would or might stifle the appeal.
Instead it advanced a whole series of mutually inconsistent explanations, in response to which Floyd LJ made a series of orders and gave a number of judgments, notably on 11 June, 27 July and 21 October 2015.
Onurs applications included an application for permission to pay the judgment sum in monthly instalments of 500,000.
Floyd LJ rejected that application on the papers, giving clear reasons, on 27 July 2015.
His reasons included this passage, quoted in para 14 of his judgment given on 21 October 2015: There is no explanation of how these sums will be funded.
If [the appellants] are now contending that the imposition of the order would stifle the appeal, the evidence falls far short of showing that to be the case.
It is well settled that a party who wishes so to contend must show that he has explored all means of providing the necessary security.
Floyd LJ added that the appellants had a right to renew the application orally and that he would consider any further evidence that became available.
Floyd LJ added in para 15 of his judgment on 21 October that he had hoped to make it clear by that set of reasons that the appellants appeared to be what he called shuffling around to a position where they were saying that the payment of the sums of money placed unacceptable strains on their ability to conduct business, so much so that it was an interference with their right to appeal that the order should be enforced in its full amount.
They did not however take that step.
In para 17 Floyd LJ said that on 19 October, which was two days earlier, the appellants did not deal with the previous history but served a witness statement with only one paragraph as follows: Board of Onur Air is of the opinion that this decision, [which Floyd LJ assumed was a reference to his order that the judgment sum be paid into court] is unlawful and against the principles laid down by the European Court of Human Rights.
Therefore, the foresaid sum will not be paid.
The striking feature of that statement is that Onur was not even then saying that payment of 3.4m (or the provision of security in lieu) would or might stifle the appeal.
Reliance upon Onurs human rights was a wholly new point on the part of Onur.
For various reasons which are not material to this appeal Floyd LJ said in para 20 that the whole history of the appeal was very unsatisfactory but that he was very reluctant to strike out an appeal for which permission has been given without giving the appellants one final chance of explaining the position.
He added: If it is now their position that they are so inhibited by the order for payment of the judgment sum that it is stifling their ability to appeal, then they should say so.
I appreciate that is not something which they have so far said.
They have had ample opportunity, it might be said, to put forward every argument, but stifling of the appeal is one matter which they have thus far declined to put forward.
It may be that they are embarrassed by what was apparently said to Rose J about the fact, as Mr Gurbuz said in evidence, that the company was of such a size that 5m was not a large sum of money.
Whatever the reason for their silence, it seems to me that they ought to come forward with their evidence now.
In order to give Onur one last chance Floyd LJ directed that any application for a final order on the appeal should be made on notice to the appellants and that appropriate opportunity should be given to both sides to file evidence in relation to it.
He added that it may be that not much further evidence was required from the respondents but that he was very anxious that the appeal should not be disposed of without a proper application on notice for the precise order which Goldtrail now sought.
The matter then came before Patten LJ, who gave judgment on 21 January 2016.
There were before Patten LJ an application on the part of Goldtrail for an order dismissing the appeal and for orders for payment of the judgment sum and interest.
That would of course involve a removal of the stay.
Onur opposed those applications and issued a new application under CPR 3.1(7) for the variation of the 11 June order by removal of the condition requiring payment into court of the judgment sum.
It did so, as Patten LJ put it in para 15, for the first time on the ground that the payment of that sum was now beyond the means of the company and its payment would stifle the appeal.
Patten LJ considered first the application under CPR 3.1(7).
I will do the same.
Patten LJ considered the position in some detail between paras 16 et seq and concludes in para 21 that Onurs Chief Financial Officer said in a statement dated 8 January 2016 that there had been a net increase in current liabilities of US$10m and that the net forecast for 2015 was between US$15 and US$16.5 m, that Onurs shortfall remained serious and that this was being managed by postponing current debt.
Patten LJ summarised the position thus in para 22: Ms Erguven says that Onur has been unable to negotiate extended finance from banks and that existing lenders have either frozen or closed existing facilities.
In these circumstances, the company has no means to pay the judgment debt.
One would expect that, in these circumstances, Onur would have been forced to cease trading but this is obviously not the case and the evidence indicates that the airline continues to operate in Europe and has entered into new contracts, for example, with Bulgarian Air.
An analysis of the financial information carried out by the liquidators of Goldtrail and set out in the witness statement of Mr Oakley-Smith recognises the difficulties faced by Onurs business in the present climate but identifies a continuing source of funding from Mr Hamit Cankut Bagana who is the Chairman of Onur and its controlling shareholder.
According to Ms Erguvens most recent witness statement, Mr Bagana has a direct shareholding of 3.67% of Onur but owns 81.19% of a company called Ten Tour Turizm Endustri ve Ticaret Anonim Sirket which in turn owns 92% of the shares in Onur.
Patten LJ continued as follows: 23.
The analysis carried out by Mr Oakley-Smith of the 2013 and 2014 accounts suggests that Mr Bagana is the primary source of funding for the company.
His evidence at the trial before Rose J was that he paid 1m to Mr Aydin as part of the agreement with Onur.
He lent the company $28m in 2013.
In the 2014 accounts this is shown as having increased to $68m.
As part of these arrangements, it appears that Onur has given guarantees to Mr Bagana in respect of debts due to him from one of the other shareholders although the reasons for this are not explained.
Of more significance is that in the period from 2008 to 2011 substantial dividends were paid by Onur to Mr Bagana and then loaned back to the company and secured against its assets in subsequent years.
Mr Bagana therefore appears to have removed equity from the company and to have used the money to establish himself as a secured creditor.
His position as the companys largest single (and secured) creditor has put him into the position where he can effectively decide which of the unsecured debts should be paid and when.
This is confirmed by Ms Erguven in her second witness statement where she says that: I can confirm that Mr Bagana is fully aware of the position that Onur Air finds itself in in relation to the payment of the Judgment Sum into court as a condition of the continuation of the Appeal.
He has made it clear that he would only contemplate considering the possibility of advancing further amounts to Onur Air in the most exceptional circumstances if they were commercial payments strictly and immediately necessary in order to keep Onur Air in business due to the already significant indebtedness of the company to him and the deteriorating financial condition of the company.
Mr Bagana has made it clear to the management of Onur Air that he believes that if the court were to strike out the appeal on the grounds that he, as a shareholder, had failed to lend money to Onur Air to enable it to pay the Judgment Sum into court, that would be a breach of his and Onur Airs rights under the European Convention of Human Rights.
24.
The liquidators evidence is that Mr Bagana is an extremely wealthy man who said to Rose J in his evidence that he did not regard 5m as a significant outlay for himself personally.
Ms Erguvens response to this is that she is unable to comment on his alleged wealth and business activities.
25.
Some of the argument has centred on whether the financial information produced by Onur justifies its alleged belief that it is unable to pay the 3.64m and that, to be made to do so, would lead to the stifling of the appeal.
Mr Gibbon cautioned me against attempting to second guess the assessment of the financial state and prospects of the company made by its own directors and officers and I am obviously alive to those difficulties.
But even taking Ms Erguvens assessment at face value, it is apparent that a decision has been taken that Onur is able to continue to trade with the support of Mr Bagana and that it could, with that financial support, have made the 3.64m payment even if it would have been in difficulties in generating sufficient cash for that purpose from its trading activities.
It seems clear to me that Mr Bagana has decided not to fund the payment by the company and if I can take his financial position into account in assessing Onurs ability to satisfy the condition either prior to 9 July 2015 or thereafter then the CPR 3.1 (7) application to vary cannot succeed.
There is no evidential basis for concluding that the condition could not have been complied with or that, if complied with, it would stifle the appeal.
26.
Mr Gibbon submitted that it could only be in exceptional circumstances that the court would take into account on this kind of application the financial position of a third party such as Mr Bagana.
To do so risks blurring the distinction between a company and its shareholders or other funders which the law habitually respects.
But it is clear as a matter of authority that the ability of third parties to fund the company may be relevant in appropriate cases and that there is no jurisdictional bar to the court taking their position into account in determining whether an allegation of stifling has been made out.
There is, I think, an obvious distinction between whether such a third party can be said to be under any sort of obligation as a result of an order made against the company and whether, in considering the likelihood of the company being able to make a potential payment, its access to third party funding should be taken into account.
Patten LJ then referred to Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2011] EWCA Civ 695 and to a decision of the Court of Appeal in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065; [2002] CP Rep 21, where I gave the judgment of the court, which comprised myself and Wall J.
In the light of the submissions in this case, I recognise that my formulation of the principles is not entirely accurate.
The basic principle is that stated by Brandon LJ with the approval of Lord Diplock in M V Yorke Motors v Edwards [1982] 1 WLR 444 at 449H (as quoted by Lord Wilson): The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need.
The cases show that in a case such as this the burden is on the person (or entity concerned) to show that he cannot find relevant capital to support him.
Wilson in his para 21: In Hammond Suddard I tried to make that clear in para 41(3) quoted by Lord There is no convincing evidence that the appellant does not either have the resources or have access to resources which would enable it to pay the judgment debt and costs as ordered.
I adhere to that principle.
So the question here is whether Onur either has the resources or access to resources to pay the sum of 3.64m.
The statements of principle which I recognise went too far are those referred to in my paras 41(4) and 43 as identified by Lord Wilson in his para 22 above.
In para 41(4) I added, of the appellant: It has wealthy owners and there is no evidence that, if they were minded to do so, they could not pay the judgment debt, including the outstanding orders for costs.
In similar vein I said this in para 43: Thus we see nothing unjust in providing the trust which owns the appellant with a choice.
If it is in the interests of the appellant for the appeal to continue, the trust must procure the payment of the current orders.
I am also of the view that, in so far as the Court of Appeal went further in Socit Gnrale SA v Saad Trading, Contracting and Financial Services Co [2012] EWCA Civ 695, it went too far.
In short, where the relevant company does not have appropriate resources of its own and the question is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources.
The onus that it would not is on the company concerned.
On the facts of this case, the question is whether Onur has shown on the balance of probabilities that it did not have access to the relevant resources.
On the basis that the only resources available to Onur were through Mr Bagana, the question is whether, on the balance of probabilities he would have provided the funds.
As I see it, the strength of Goldtrails case is this.
Onur at no stage focused on this precise point.
As Lord Carnwath puts it in para 48, there was no direct evidence from Mr Bagana on the point.
In short, he does not address the question whether he would have declined to provide funds to Onur.
Again, as Lord Carnwath puts it, the only relevant evidence on the point was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business.
I agree with Lord Carnwath that the evidence falls far short of establishing that the condition would in fact stifle the appeal.
I would only add that there has been no suggestion until very recently that the condition would stifle the appeal and that the new aspect of Onurs case is not so I would dismiss the appeal.
much that the appeal would be stifled as reliance on its human rights, which is not explained and is far-fetched in the extreme.
I gratefully adopt Lord Wilsons exposition of the facts and of the law, which was in effect common ground by the end of the hearing.
Although Patten LJ (faithfully applying the authorities binding on him) may have misstated the law in some respects, I agree with Lord Clarke that these were not ultimately material to his determination.
In any event, where an error such as this may have occurred, particularly one resulting from previous case law binding on the lower courts, the interests of justice require us in my view to avoid adding unnecessarily to the delay and expense borne by the parties.
Our rules do not require us to remit the case to the lower court if we are in as good a position to decide it ourselves.
This in my view is such a case.
All the evidence is before us.
I strongly agree with Lord Wilson that the court should not take even an emphatic refutation by the company or the owner at face value.
As he says: it should judge the probable availability of the funds by reference to the underlying realities of the companys financial position; and by reference to all aspects of its relationship with its owner.
Applying that approach to the present case, particularly against the background described by Lord Clarke, I have no doubt that Patten LJ would have arrived at the same conclusion, and I would do the same.
There was no direct evidence from Mr Bagana himself.
Although Patten LJ accepted that he had decided not to fund the payment by Onur, I take that to be no more than his inference from its opposition to the order.
There is no direct evidence of such a decision.
The only relevant evidence was that of Onurs Chief Financial Officer that Mr Bagana would contemplate making further loans to Onur, but only in exceptional circumstances [to enable it to make] commercial payments necessary to keep [it] in business, and that he regarded the courts requirement of such support as infringing his human rights.
The latter suggestion is of course nonsense, since there is no doubt as to his ability to fund the company if he wishes.
As to why he does not regard the present case as sufficiently exceptional, there is no explanation.
This in my view falls far short of proving, on the balance of probabilities, that the condition would in fact stifle the appeal.
Lord Wilson does not suggest otherwise.
In these circumstances, no other reason having been given for remitting the case, I would uphold Patten LJs order and dismiss the appeal.

Output:
The appellant is a Turkish airline, largely owned by Mr Bagana.
Prior to its liquidation, the respondent was a holiday tour company which had been wholly owned by Mr Aydin.
The respondent, by its liquidator, sued the appellant in relation to two agreements between the parties.
Rose J held that the appellant had dishonestly assisted Mr Aydin in defrauding the respondent and that it should pay damages to it in the sum of 3.64 million.
The appellant was granted permission to appeal to the Court of Appeal against the order of Rose J.
By an application made under then Rule 52.9(1)(c) of the Civil Procedure Rules, the respondent requested that the court should impose on the appellant a number of conditions for the continuation of its appeal.
One requested condition was that the appellant should pay into court the sum of 3.64 million which Rose J had awarded to the respondent, on the basis that the appellant was likely to have no other assets even temporarily in England and Wales.
The appellant disputed the imposition of this condition, but it did not allege that the disputed condition would stifle its appeal.
By order dated 11 June 2015, Floyd LJ concluded that there was a compelling reason for imposing a condition and required that the appellant, as a condition for the continuation of its appeal, pay into the court (or otherwise secure payment of) 3.64 million by 9 July 2015.
The appellant did not pay the sum into court.
On 14 January 2016 Patten LJ heard the anticipated application by the respondent for dismissal of the appeal, together with a cross application by the appellant for discharge of the condition on the ground that payment of that sum was now beyond its means and its continuation would stifle the appellants appeal.
Patten LJ held that the appellants appeal should be dismissed on the grounds that in exceptional circumstances the ability of a third party to provide funds, in this case Mr Bagana, could be taken into account in assessing the likelihood that a company could make a payment into court.
Patten LJ stated that Mr Bagana has decided not to fund the payment by the company and concluded that the appellant had not established that the condition for payment would stifle its appeal.
The appellant alleges that Patten LJ erred in his application of the relevant principles and in concluding that its relationship with Mr Bagana was such as to defeat its complaint that the condition for payment would stifle the appeal.
The Supreme Court by a majority of 3 to 2 allows Onur Air Taimacilik As appeal.
It remits both applications to Patten LJ to determine the appellants application for discharge of the condition by reference to the correct criterion [26].
Lord Wilson gives the lead majority judgment, with which Lord Neuberger and Lord Hodge agree.
Lord Clarke and Lord Carnwath give dissenting judgments.
Principles To stifle an appeal is to impose a condition which prevents an appellant from bringing it or continuing it.
If an appellant has permission to bring an appeal, it is wrong to impose a condition which has the effect of preventing him from bringing it or continuing it.
For the purposes of Article 6 of the European Convention on Human Rights, there will seldom be a fair hearing if a court which has permitted a litigant to bring an appeal then, by indirect means, does not permit him to bring it [12].
The appellant must establish on the balance of probabilities that a proposed condition would stifle the continuation of its appeal [15].
The courts can proceed on the basis that, were it to be established that the condition would probably stifle the appeal, the condition should not be imposed [16].
Even if an appellant appears to have no realisable assets, a condition for payment will not stifle its appeal if it can raise the sum [17].
However, the court must be cautious in respect of a suggestion that a corporate appellant can raise money from its controlling shareholder.
The shareholders distinct legal personality must remain in the forefront of its analysis.
The question should always be whether the company can raise the money and never whether the shareholder can raise the money [18].
The criterion which should be applied is as follows: Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition? [23].
Where a company and/or its owner denies that the necessary funds would be made available to the company, the court should not take that assertion at face value.
It should judge the probable availability of the funds by reference to the underlying realities of the companys financial position and to its relationship with its owner, including the extent to which he is directing its affairs and is supporting it in financial terms [24].
Application of principles to the present case The appellants application for discharge of the condition was refused by reference to the incorrect criterion.
Patten LJ proceeded by reference to the Court of Appeals misconception in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2011] EWCA Civ 2065 and Societe Generale SA v Saad Trading, Contracting and Financial Services Co and Al Sanea [2012] EWCA Civ 695, that in exceptional circumstances an order for a party, without apparent assets of its own, to make a payment into court could be justified by whether another person probably could advance the necessary funds to it irrespective of whether he probably would do so [25].
Dissenting Judgments Lord Clarke and Lord Carnwath would have dismissed the appeal.
Patten LJ did not materially misstate the relevant principles or arrive at the wrong conclusion [27, 46].
Where a company does not have resources of its own and the issue is whether it has access to the resources of others, the question is whether the company would (not could) have had access to the resources [42].
There was no direct evidence from Mr Bagana on the question of whether he would have declined to provide funds.
The evidence falls far short of establishing that the condition would stifle the appeal [44, 48].


Input:
This is the judgment of the court.
This case is about the proper approach to deciding who has been responsible for harming a child in proceedings taken to protect that child, and others in the family, from harm.
It raises profound issues: on the one hand, children need to be protected from harm; but on the other hand, both they and their families need to be protected from the injustice and potential damage to their whole futures done by removing children from a parent who is not, in fact, responsible for causing them any harm at all.
The facts of this case present us with that dilemma in an unusually stark form.
The facts
Because we have decided to allow this appeal and send the case back to be decided afresh, we should say only enough about the facts to explain how the dilemma arises.
We shall use pseudonyms for the two children concerned, one who has been harmed and one who has not.
Jason was born on 19 May 2007.
On 15 June 2007, when he was just four weeks old, he was found to have bruising on his arms and face, which the doctors immediately thought was caused non accidentally and not, as the mother suggested, by the baby pinching himself or sleeping on his dummy.
Jason has not lived with his family since then, although he has had frequent and good quality contact with his mother.
Jason was living with his mother and father at the time and described by the doctors as thriving.
Both parents said that it was the father who had got up to attend to the baby when he woke up on the morning when the bruises were noticed.
The mother took the baby to the clinic that morning and pointed them out to the health visitor.
It was not possible to give precise timing for the bruises but it was not suggested that they were old or of different ages.
They could have been inflicted by both parents, but the judge found it more likely that only one of them had inflicted them.
The bruises had not been there for so long, nor would they have caused the baby such pain and distress, that the other parent must have known that he was being harmed.
This was not, therefore, a case where one parent had failed to protect the child from harm caused by the other.
It was, colloquially, a pure whodunit.
The other child is William, born on 12 July 2008, while the proceedings to protect Jason were in train.
By then the parents had separated, although they were still in touch with one another.
The father had stopped visiting Jason, had withdrawn from co operation with the social workers and with his solicitors, and played no further part in the proceedings.
He has parental responsibility for Jason but not for William.
William was removed from his mother shortly after birth and placed with the same foster carer as his brother.
He has never been harmed.
The case for removing him from his mother rests on the likelihood of his being harmed in the future if he is returned to her.
The law
In this country we take the removal of children from their families extremely seriously.
The Children Act 1989 was passed almost a decade before the Human Rights Act 1998, but its provisions were informed by the United Kingdoms obligations under article 8 and article 6 of the European Convention on Human Rights.
These affect both the test and the process for intervening in the family lives of children and their parents.
As to the test, it is not enough that the social workers, the experts or the court think that a child would be better off living with another family.
That would be social engineering of a kind which is not permitted in a democratic society.
The jurisprudence of the European Court of Human Rights requires that there be a pressing social need for intervention and that the intervention be proportionate to that need.
Before the court can consider what would be best for the child, therefore, section 31(2) of the 1989 Act requires that it be satisfied of the so called threshold conditions: (a) that the child concerned is suffering, or is likely to suffer, significant harm; and (b) that the harm, or likelihood of harm, is attributable to (i) the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him; or (ii) the childs being beyond parental control.
The leading case on the interpretation of these conditions is the decision of the House of Lords in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563.
Three propositions were established which have not been questioned since.
First, it is not enough that the court suspects that a child may have suffered significant harm or that there was a real possibility that he did.
If the case is based on actual harm, the court must be satisfied on the balance of probabilities that the child was actually harmed.
Second, if the case is based on the likelihood of future harm, the court must be satisfied on the balance of probabilities that the facts upon which that prediction was based did actually happen.
It is not enough that they may have done so or that there was a real possibility that they did.
Third, however, if the case is based on the likelihood of future harm, the court does not have to be satisfied that such harm is more likely than not to happen.
It is enough that there is a real possibility, a possibility that cannot sensibly be ignored having regard to the nature and gravity of the feared harm in the particular case (per Lord Nicholls of Birkenhead, at p 585F).
Thus the law has drawn a clear distinction between probability as it applies to past facts and probability as it applies to future predictions.
Past facts must be proved to have happened on the balance of probabilities, that is, that it is more likely than not that they did happen.
Predictions about future facts need only be based upon a degree of likelihood that they will happen which is sufficient to justify preventive action.
This will depend upon the nature and gravity of the harm: a lesser degree of likelihood that the child will be killed will justify immediate preventive action than the degree of likelihood that the child will not be sent to school.
The House of Lords was invited to revisit the standard of proof of past facts in Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2009] AC 11, where the judge had been unable to decide whether the alleged abuse had taken place.
The suggestion that it would be sufficient if there were a real possibility that the child had been abused was unanimously rejected.
The House also reaffirmed that the standard of proof of past facts was the simple balance of probabilities, no more and no less.
The problem had arisen, as Lord Hoffmann explained, because of dicta which suggested that the standard of proof might vary with the gravity of the misconduct alleged or even the seriousness of the consequences for the person concerned (para 5).
He pointed out that the cases in which such statements were made fell into three categories.
In the first were cases which the law classed as civil but in which the criminal standard was appropriate.
Into this category came sex offender orders and anti social behaviour orders: see B v Chief Constable of Avon and Somerset Constabulary [2001] 1 WLR 340 and R (McCann) v Crown Court at Manchester [2002] UKHL 39, [2003] 1 AC 787.
In the second were cases which were not about the standard of proof at all, but about the quality of evidence.
If an event is inherently improbable, it may take better evidence to persuade the judge that it has happened than would be required if the event were a commonplace.
This was what Lord Nicholls was discussing in Re H (Minors), above, at p 586.
Yet, despite the care that Lord Nicholls had taken to explain that having regard to the inherent probabilities did not mean that the standard of proof was higher, others had referred to a heightened standard of proof where the allegations were serious.
In the third category, therefore, were cases in which the judges were simply confused about whether they were talking about the standard of proof or the role of inherent probabilities in deciding whether it had been discharged.
Apart from cases in the first category, therefore, the time has come to say, once and for all, that there is only one civil standard of proof and that is proof that that the fact in issue more probably occurred than not (para 13).
This did, of course, leave a role for inherent probabilities in considering whether it was more likely than not that an event had taken place.
But, as Lord Hoffmann went on to point out at para 15, there was no necessary connection between seriousness and inherent probability: It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred.
In many cases, the other evidence will show that it was all too likely.
If, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start ones reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so.
The fact is that one of them did and the question for the tribunal is simply whether it is more probable that one rather than the other was the perpetrator.
Lady Hale made the same point, at para 73: It may be unlikely that any person looking after a baby would take him by the wrist and swing him against the wall, causing multiple fractures and other injuries.
But once the evidence is clear that that is indeed what has happened to the child, it ceases to be improbable.
Someone looking after the child at the relevant time must have done it.
The inherent improbability of the event has no relevance to deciding who that was.
The simple balance of probabilities test should be applied.
None of the parties in this case has invited the Supreme Court to depart from those observations, nor have they supported the comment made in the Court of Appeal that Re B was a sweeping departure from the earlier authorities in the House of Lords in relation to child abuse, most obviously the case of Re H ([2009] EWCA Civ 1048, para 14).
All are agreed that Re B reaffirmed the principles adopted in Re H while rejecting the nostrum, the more serious the allegation, the more cogent the evidence needed to prove it, which had become a commonplace but was a misinterpretation of what Lord Nicholls had in fact said.
Re B was not a new departure in any context.
Lord Hoffmann was merely repeating with emphasis what he had said in Secretary of State for the Home Department v Rehman [2001] UKHL 47, [2003] 1 AC 153, at para 55.
A differently constituted House of Lords applied the same approach in Re D (Secretary of State for Northern Ireland intervening) [2008] UKHL 33, [2008] 1 WLR 1499.
In Re B, the House also declined an invitation to overrule the decision of the Court of Appeal in Re M and R (Minors) (Sexual Abuse: Expert Evidence) [1996] 4 All ER 239.
This was concerned with the stage after the court is satisfied that the threshold has been crossed.
The court has then to decide what order, if any, to make.
The welfare of the child is the paramount consideration: 1989 Act, s 1(1).
In deciding whether or not to make a care or supervision order, the court must have regard in particular to the so called checklist of factors: 1989 Act, s 1(3), (4).
These include (e) any harm which he has suffered or is at risk of suffering.
In Re M and R, the Court of Appeal determined that section 1(3)(e) should be interpreted in the same way as section 31(2)(a).
The court must reach a decision based on facts, not on suspicion or doubts.
Butler Sloss LJ said this: [Counsels] point was that if there is a real possibility of harm in the past, then it must follow (if nothing is done) that there is a risk of harm in the future.
To our minds, however, this proposition contains a non sequitur.
The fact that there might have been harm in the past does not establish the risk of harm in the future.
The very highest it can be put is that what might possibly have happened in the past means that there may possibly be a risk of the same thing happening in the future.
Section 1(3)(e), however, does not deal with what might possibly have happened or what future risk there may possibly be.
It speaks in terms of what has happened or what is at risk of happening.
Thus, what the court must do (when the matter is in issue) is to decide whether the evidence establishes harm or the risk of harm.
In agreeing with this approach in Re B, at para 56, Lady Hale commented that in such a case, as indicated by Butler Sloss LJ , the risk is not an actual risk to the child but a risk that the judge has got it wrong.
We are all fallible human beings, very capable of getting things wrong.
But until it has been shown that we have, it has not been shown that the child is in fact at any risk at all.
Re M and R was also approved by Lord Nicholls in Re O and another (Minors) (Care: Preliminary Hearing) [2003] UKHL 18, [2004] 1 AC 523, a case to which we shall return.
The House in Re B also recognised that courts and local authorities have different roles to play in protecting children from harm.
It is worth re emphasising this, given the understandable concerns in the wake of the Baby P case that social workers and other professionals were not being sufficiently active in their protective role, and the resulting increase in the numbers of care proceedings.
Social workers are the detectives.
They amass a great deal of information about a child and his family.
They assess risk factors.
They devise plans.
They put the evidence which they have assembled before a court and ask for an order.
Article 6 of the European Convention on Human Rights requires that In the determination of his civil rights and obligations, . everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
The court subjects the evidence of the local authority to critical scrutiny, finds what the facts are, makes predictions based upon the facts, and balances a range of considerations in deciding what will be best for the child.
We should no more expect every case which a local authority brings to court to result in an order than we should expect every prosecution brought by the CPS to result in a conviction.
The standard of proof may be different, but the roles of the social workers and the prosecutors are similar.
They bring to court those cases where there is a good case to answer.
It is for the court to decide whether the case is made out.
If every child protection case were to result in an order, it would mean either that local authorities were not bringing enough cases to court or that the courts were not subjecting those cases to a sufficiently rigorous scrutiny.
The whodunit problem
So far the position is plain.
But the threshold criteria do not in terms require that the person whose parental responsibility for the child is to be interfered with or even taken away by the order be responsible for the harm which the child has suffered or is likely to suffer in the future.
It requires simply that the harm, or likelihood of harm, is attributable to the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him.
Clearly, the object is to limit intervention to certain kinds of harm harm which should not happen if a child is being looked after properly.
But is it also intended to limit intervention to cases where the person whose rights are to be interfered with bears some responsibility for the harm?
It cannot have been intended that a parent whose child has been harmed as a result of a lack of proper care in a hospital or at school should be at risk of losing her child.
The problem could be approached through the welfare test, because removal from home would not be in the best interests of such a child.
However, because of the risk of social engineering, the threshold criteria were meant to screen out those cases where the family should not be put at any risk of intervention.
Hence attention has focussed on the attributability criterion.
In the case confusingly reported in the Law Reports as Lancashire County Council v B [2000] 2 AC 147, but in the All England Law Reports as Lancashire County Council v A [2000] 2 All ER 97, the House of Lords considered what is meant by the care given to the child.
Does it mean only the care given by the parents or primary carers or does it mean the care given by anyone who plays a part in the childs care? Lord Nicholls, with whom Lord Slynn, Lord Nolan and Lord Hoffmann agreed, found that it referred primarily to the former.
But if, as in that case, the care of the child was shared between two households and the judge could not decide which was responsible for the harm suffered by the child, the phrase is apt to embrace not merely the care given by the parents or other primary carers; it is apt to embrace the care given by any of the carers (p 166).
Thus the criteria were satisfied in respect of a child, A, who had been injured, even though this might have been attributable to the care she had received from her childminder rather than from her parents.
Lord Clyde put the test in this helpful way, at p 169C, with the same result: That the harm must be attributable to the care given to the child requires that the harm must be attributable to the acts or omissions of someone who has the care of the child and the acts or omissions must occur in the course of the exercise of that care.
To have the care of a child comprises more than being in a position where a duty of care towards the child may exist.
It involves the undertaking of the task of looking after the child.
However, it is worth noting that the Court of Appeal had confirmed that the criteria were not satisfied in respect of the childminders child, B, because he had not been harmed at all.
The only basis for suggesting that there was any likelihood of harm to him was the possibility that his mother had harmed the other child and that had not been proved: Re H applied.
The local authority did not appeal against this.
Re O and another (Minors)(Care: Preliminary Hearing) [2003] UKHL 18, [2004] 1 AC 523 was concerned with the more common problem, where the child has been harmed at the hands of one of his parents but the court cannot decide which.
The attributability condition was satisfied.
Furthermore, when considering the welfare test, the court had to proceed on the basis that the child was at risk.
Lord Nicholls, with whom all other members of the Committee agreed, said this, at para 27: Quite simply, it would be grotesque if such a case had to proceed at the welfare stage on the footing that, because neither parent, considered individually, has been proved to be the perpetrator, therefore the child is not at risk from either of them.
This would be grotesque because it would mean the court would proceed on the footing that neither parent represents a risk even though one or other of them was the perpetrator of the harm in question.
Lord Nicholls went on, at para 32, to give the following guidance, on the assumption that the hearing would be split into a fact finding and a disposal stage and that each might be heard by a different judge: the . the judge at the disposal hearing will take into account any views expressed by the judge at the preliminary hearing on the likelihood that one carer was or was not the perpetrator, or a perpetrator, of injuries.
Depending on the inflicted circumstances, these views may be of considerable value in deciding the outcome of the application: for instance, whether the child should be rehabilitated with his mother.
In Re B, Lady Hale commented as follows at para 61: The decisions in In re H, Lancashire County Council v B [2000] 2 AC 147, and In re O [2004] 1 AC 523 fit together as a coherent whole.
The court must first be satisfied that the harm or likelihood of harm exists.
Once that is established, . ,the court has to decide what outcome will be best for the child.
It is very much easier to decide upon a solution if the relative responsibility of the childs carers for the harm which she or another child has suffered can also be established.
But the court cannot shut its eyes to the undoubted harm which has been suffered simply because it does not know who was responsible.
The real answers to the dilemma posed by those
cases lie elsewhere first, in a proper approach to the standard of
proof, and second, in ensuring that the same judge hears the whole case.
Split hearings are one thing; split judging is quite another.
We are told that practice has now changed and that, barring accidents, the same judge does conduct both parts of a split hearing.
Nevertheless, the main object of splitting the hearing is to enable facts to be found.
If the threshold is not crossed, the case can be dismissed at that stage.
If it is crossed, the professionals can base both their assessments and their further work with the family upon the facts found.
It is not at all uncommon for parents to become much more open with the professionals when faced with the judges clear findings based upon what the evidence shows.
Hence there should always be a judgment to explain his findings at that stage.
These proceedings
It was necessary to give the above account of the development of the law in order to understand what happened in these proceedings.
The case was originally identified as suitable for a split hearing; then it was decided to hold a composite hearing; but for regrettable practical reasons, the hearing was split once more.
By that stage, the father was playing no part, but for some unknown reason the local authority decided not to issue a witness summons to require his attendance.
That is regrettable because the judge might well have found it easier to make clear findings had he given evidence.
The mother played a full part in the proceedings and in the assessments, but only accepted that the bruises were non accidentally caused after the possibility of a blood disorder had effectively been ruled out.
The judge heard evidence over three days in January 2008 and three further days in March.
She handed down a detailed judgment in note form on 3 April.
This was before the House of Lords decision in Re B.
At the outset, under the heading Test, she directed herself as follows: The test I have applied in relation to these findings is that set out in the House of Lords case of [Re H] of 1996.
The standard of proof I apply is on the balance of probability.
The allegations in this case are very serious indeed and in many respects are also very unusual.
When I apply the appropriate standard of proof, it has to be based on evidence of reliability and cogency equivalent to the gravity of the allegations.
She then listed five questions, three of which are relevant to the issue before this Court: first, whether the child had suffered non accidental injury; second whether the perpetrator could be identified; and third even if the perpetrator cannot be identified, can either of the parents be excluded as a perpetrator? However, having concluded that the injuries were non accidental, she did not in terms ask herself whether she could identify the perpetrator.
She simply listed the various factors which she took into account in relation to each parent.
She indicated at the outset of her list relating to the father that there is a high index of suspicion in relation to the father and concluded that he could not be ruled out.
There was no such index in relation to the mother but for a variety of reasons the judge also concluded that the mother could not be ruled out.
The final hearing was listed for 5 June but could not proceed.
As suggested in Re O, the judge was invited to give an indication of the relative likelihood of father or mother being responsible for the injuries, in order to assist with the assessment process.
In oral exchanges she indicated that it was more likely that the father was the perpetrator than the mother.
In a written Adjunct to Judgment she explained that Invidious though it is to be too specific, but to help further assessments, I am prepared to say that I feel it 60% likely that the father injured the child and 40% likely that it was the mother.
The final hearing eventually took place before the same judge in December 2008 with judgment in January 2009.
Part of the reason for the delay was that the mother had been unwell following the birth of her second child, William, in July.
At the final hearing, the judge was invited to revisit her findings in the light of Re B, in which judgment was given on 11 June 2008.
She declined to say that her finding meant that the father was the perpetrator of the injuries.
She observed that: When one is deciding these issues, a judge frequently reluctantly comes to the conclusion that he cannot decide who is to blame between two parents or among more than two people who have had care of the child over the relevant period.
However, although unable to form a definitive decision to the requisite standard, a judge can still have an impression, falling short of a finding, that the propensity of the parties and the surrounding circumstances make it more likely that it was one party than another.
Hence the mother was not absolved as a really possible or likely perpetrator.
This meant that the threshold was crossed, not only in relation to the child who had suffered harm, but also in relation to the child who had not.
The fact that there was a real possibility that she had caused the injuries to Jason meant that there was a real possibility that she would injure William.
After considering the welfare factors she concluded that the mothers vulnerable personality was such that she would need therapy in order to make the necessary changes so that she could provide a safe and stable upbringing for the children.
Their lives could not be put on hold in the meantime.
Hence the judge approved the care plan to place them both for adoption and made care and placement orders in respect of both children.
She did, however, give the mother permission to appeal but this was not included in the original order drawn up by the court.
Lord Justice Wall also gave permission to appeal, observing that the case provides a useful opportunity for the Court of Appeal to resolve a point which has arisen following the decision of the House of Lords in Re B, namely (1) if only parents are in the frame for having injured a child but (2) the judge cannot as between parents identify the perpetrator of the injuries, can that judge (3) apportion likely responsibility between them? Before the Court of Appeal, however, this was not the main issue.
It was argued that, following Re B, the test for identifying the perpetrator was the balance of probabilities and that the effect of the Adjunct to judgment was that this judge had in fact identified the father.
The appeal was dismissed: [2009] EWCA Civ 1048.
Identifying the perpetrator: the standard of proof
The first question listed in the statement of facts and issues is whether it is now settled law that the test to be applied to the identification of perpetrators is the balance of probabilities.
The parties are agreed that it is and they are right.
It is correct, as the Court of Appeal observed, that Re B was not directly concerned with the identification of perpetrators but with whether the child had been harmed.
However, the observations of Lord Hoffmann and Lady Hale, quoted at paragraph 12 above, make it clear that the same approach is to be applied to the identification of perpetrators as to any other factual issue in the case.
This issue shows quite clearly that there is no necessary connection between the seriousness of an allegation and the improbability that it has taken place.
The test is the balance of probabilities, nothing more and nothing less.
Of course, it may be difficult for the judge to decide, even on the balance of probabilities, who has caused the harm to the child.
There is no obligation to do so.
As we have already seen, unlike a finding of harm, it is not a necessary ingredient of the threshold criteria.
As Lord Justice Wall put it in Re D (Care Proceedings: Preliminary Hearings) [2009] EWCA Civ 472, [2009] 2 FLR 668, at para 12, judges should not strain to identify the perpetrator as a result of the decision in Re B: If an individual perpetrator can be properly identified on the balance of probabilities, then . it is the judges duty to identify him or her.
But the judge should not start from the premise that it will only be in an exceptional case that it will not be possible to make such an identification.
There are particular benefits in making such a finding in this context, especially where there is a split hearing.
Miss Frances Judd QC, on behalf of the childrens guardian in this case, has stressed that the guardian would rather have a finding on the balance of probabilities than no finding at all.
There are many reasons for this.
The main reason is that it will promote clarity in identifying the future risks to the child and the strategies necessary to protect him from them.
For example, a different care plan may be indicated if there is a risk that the parent in question will ill treat or abuse the child from the plan that may be indicated if there is a risk that she will be vulnerable to relationships with men who may ill treat or abuse the child.
Another important reason is that it will enable the professionals to work with the parent and other members of the family on the basis of the judges findings.
As the Court of Appeal said in Re K (Non Accidental Injuries: Perpetrator: New Evidence) [2004] EWCA Civ 1181, [2005] 1 FLR 285, at para 55: It is paradigmatic of such cases that the perpetrator denies responsibility and that those close to or emotionally engaged with the perpetrator likewise deny any knowledge of how the injuries occurred.
Any process, which encourages or facilitates frankness, is, accordingly, in our view, to be welcomed in principle.
Often, it is not only the parents, but the grandparents and other members of the family, who may be the best resource to protect the child in the future but who are understandably reluctant to accept that someone close to them could be responsible for injuring a child.
Once that fact is brought home to them by a clear finding based upon the evidence, they may be able to work with the professionals to keep the child within the family.
Re K also suggested, at para 56, that there would be long term benefits for the child, whatever the outcome of the proceedings: . we are also of the view that it is in the public interest that children have the right, as they grow into adulthood, to know the truth about who injured them when they were children, and why.
Children who are removed from their parents as a result of non accidental injuries have in due course to come to terms with the fact that one or both of their parents injured them.
This is a heavy burden for any child to bear.
In principle, children need to know the truth if the truth can be ascertained.
If the judge cannot identify a perpetrator?
The second and third questions in the statement of facts and issues ask whether judges should refrain from seeking to identify perpetrators at all if they are unable to do so on the civil standard and whether they should now be discouraged from expressing a view on the comparative likelihood as between possible perpetrators.
These appear to be linked but they are distinct.
As to the second, if the judge cannot identify a perpetrator or perpetrators, it is still important to identify the pool of possible perpetrators.
Sometimes this will be necessary in order to fulfil the attributability criterion.
If the harm has been caused by someone outside the home or family, for example at school or in hospital or by a stranger, then it is not attributable to the parental care unless it would have been reasonable to expect a parent to have prevented it.
Sometimes it will desirable for the same reasons as those given above.
It will help to identify the real risks to the child and the steps needed to protect him.
It will help the professionals in working with the family.
And it will be of value to the child in the long run.
In North Yorkshire County Council v SA [2003] EWCA Civ 839, [2003] 2 FLR 849, the child had suffered non accidental injury on two occasions.
Four people had looked after the child during the relevant time for the more recent injury and a large number of people might have been responsible for the older injury.
The Court of Appeal held that the judge had been wrong to apply a no possibility test when identifying the pool of possible perpetrators.
This was far too wide.
Dame Elizabeth Butler Sloss P, at para 26, preferred a test of a likelihood or real possibility.
Miss Susan Grocott QC, for the local authority, has suggested that this is where confusion has crept in, because in Re H this test was adopted in relation to the prediction of the likelihood of future harm for the purpose of the threshold criteria.
It was not intended as a test for identification of possible perpetrators.
That may be so, but there are real advantages in adopting this approach.
The cases are littered with references to a finding of exculpation or to ruling out a particular person as responsible for the harm suffered.
This is, as the President indicated, to set the bar far too high.
It suggests that parents and other carers are expected to prove their innocence beyond reasonable doubt.
If the evidence is not such as to establish responsibility on the balance of probabilities it should nevertheless be such as to establish whether there is a real possibility that a particular person was involved.
When looking at how best to protect the child and provide for his future, the judge will have to consider the strength of that possibility as part of the overall circumstances of the case.
As to the third question, times have changed since Re O.
Barring unforeseen accidents, the same judge will preside over both parts of the hearing.
While it is helpful to have a finding as to who caused the injuries if such a finding can be made, the guardians view is that it is positively unhelpful to have the sort of indication of percentages that the judge was invited to give in this case.
Lord Justice Thorpe suggested, [2009] EWCA Civ 1048, para 17, that judges should be cautious about amplifying a judgment in which they have been unable to identify a perpetrator: better to leave it thus.
We agree.
The unasked question
If the judge can identify a perpetrator on the balance of probabilities, what is to be done about the risk that he may be wrong and that some one else was in fact responsible? We are indeed all fallible human beings.
We can make mistakes, however hard we try to pay careful attention to the quality of the evidence before us and reach findings which are rationally based upon it.
However, once the court has identified a perpetrator, the risk is not a proven risk to the child but a risk that the judge has got it wrong.
Logically and sensibly, although the judge cannot discount that risk while continuing to hear the case, he cannot use it to conclude that there is a proven risk to the child.
But all the evidence (if accepted by the judge) relating to all the risk factors that the judge has identified remains relevant in deciding what will be best for the child.
And he must remain alive to the possibility of mistake and be prepared to think again if evidence emerges which casts new light on the evidence which led to the earlier findings.
It is now well settled that a judge in care proceedings is entitled to revisit an earlier identification of the perpetrator if fresh evidence warrants this (and this Court saw an example of this in the recent case of Re I (A Child) [2009] UKSC 10).
The guardian also submits that the professionals will find it easier to work with this approach.
It is important not to exaggerate the extent of the problem.
It only really arises in split hearings, which were not originally envisaged when the Children Act was passed.
In a single hearing the judge will know what findings of fact have to be made to support his conclusions both as to the threshold and as to the future welfare of the child.
Moreover, cases rarely come as neatly packaged as this one does.
In most cases, the injuries are such that, even if one parent was not responsible for causing them, she was undoubtedly responsible for failing to protect the child from the person who did cause them.
In many cases, there are other risks to the child besides the risk of physical injury.
The evidence which is relevant to identifying the perpetrator will also be relevant to identifying the other risks to the child and to assessing what will be best for him in the future.
But clearly the steps needed to protect against some risks will be different from the steps needed to protect against others.
And the overall calculus of what will be best for the child in the future will be affected by the nature and extent of the identified risks.
There are many, many factors bearing upon the childs best interests and the identification of risks is only one of them.
The conclusion in this case
We have every sympathy for the judge, who was only repeating the mantra which many other judges at every level had repeated in the past.
But it is clear that she did misdirect herself on the standard of proof at the fact finding hearing.
Because she later said that she had simply been unable to decide, we do not think that we can accept the invitation of Mr Anthony Hayden QC, on behalf of the mother, to treat her Adjunct to judgment as a finding that the father was the perpetrator.
That was not what she thought she was doing.
However, that was an ex post facto rationalisation on her part.
We cannot know what finding she would have made had she directed herself correctly in the first place.
It is only right, for the sake of these children and their mother, that they should have the whole case put before a different judge who can decide the matter on the right basis.
There is a further reason to remit the case.
The judge found the threshold crossed in relation to William on the basis that there was a real possibility that the mother had injured Jason.
That, as already explained, is not a permissible approach to a finding of likelihood of future harm.
It was established in Re H and confirmed in Re O, that a prediction of future harm has to be based upon findings of actual fact made on the balance of probabilities.
It is only once those facts have been found that the degree of likelihood of future events becomes the real possibility test adopted in Re H. It might have been open to the judge to find the threshold crossed in relation to William on a different basis, but she did not do so.
The case may look very different now that the mothers life has moved on and in the mean time, thankfully, the children have been well protected from harm.
The appeal is therefore allowed and the case remitted for a complete rehearing before a different judge.

Output:
The case concerns the proper approach to deciding who has been responsible for harming a child in proceedings taken to protect that child, and others in the family, from harm and the consequences of such a decision.
At a fact finding hearing, the judge decided that either the mother or the father had injured their baby boy.
He had therefore suffered significant harm attributable to a lack of reasonable parental care, as required by section 31(2) of the Children Act 1989.
The judge did not ask herself which parent was responsible, although she expressed the view that it was 60% likely that the father had injured the child and 40% likely that the mother had.
The mother and father were separated and the father played no part in the proceedings.
At the later welfare hearing, the judge approved the placement of the child for adoption, together with his younger brother, who had been born during the proceedings and placed with foster parents soon after birth.
The mother, who had maintained contact and developed a good relationship with the children, appealed.
The Supreme Court unanimously allows the appeal and remits the case for a complete rehearing before a different judge.
The judgment of the Court was given by Lady Hale. [48] [50]
It is now settled law that the standard of proof in care proceedings is the balance of probabilities, as set out in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 and confirmed in Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2009] AC 11. [8] [13] It is clear from the observations of Lord Hoffman and Lady Hale in Re B that the same approach is to be applied to the identification of perpetrators as to any other factual issue in the case.
It was incorrect to apply a heightened standard consistent with the gravity of the allegations. [34] There is no obligation for a judge to decide who has caused the harm to the child, as long as that harm is attributable to someone having care of the child, although he should do so if the evidence warrants this.
In a split hearing, there may be particular benefits of making such a finding, mainly because it will promote clarity in identifying the future risks to the child and the strategies necessary to protect him from them. [35] [38] Where a specific perpetrator cannot be identified, a judge should still, where possible, identify a pool of possible perpetrators.
The test for doing so is the likelihood or real possibility that a particular person was involved.
A person does not have to prove their innocence to be left out of account[40] [43] Where a judge has been unable to identify a perpetrator, it is positively unhelpful to have the sort of indication of percentages that the judge gave in this case. [44] If the judge is able to identify a perpetrator on the balance of probabilities, all the evidence accepted by the judge which is relevant to identifying the risks to the child remains relevant to deciding where his
best interests will lie.
The court must also be alive to the possibility that the finding who the perpetrator was is wrong and be prepared to revise it in the light of later evidence. [46] [47] In the circumstances of this case the judge had misdirected herself on the standard of proof in the fact finding hearing.
In those circumstances the case ought to be remitted in whole to a different judge who can decide the matter on the right basis. [48] The decision to remove the second child, who had never been harmed, must also be remitted for rehearing.
The judge had held that there was a risk of future harm to him because there was a real possibility that the mother had injured the older child.
It was held in Re H that this is not the correct approach: predictions of future harm must be based on proven findings of fact. [49]