Appeal against own undertaking

Secretary of State for Trade and Industry v Bell Davies Trading Ltd and another CA TLR 21 September

Two companies were established to exploit import licences granted for imports of footwear and ceramics from China. The Secretary of State for Trade and Industry presented winding-up petitions against the companies alleging the operation of and participation in an unlawful scheme that should be stopped in the public interest. The judge held that the scheme was unlawful but that the companies should not be wound up provided that they gave certain undertakings. Although the companies strongly contended that there was nothing unlawful in the conduct of their business, they gave the undertakings in order to avoid the making of winding-up orders. They contended that the winding-up proceedings should never have been brought and that the judge was wrong to require them to give the undertakings. In general if a party gave an undertaking to the court, he was not entitled to appeal against it. If a party wished to be released from an undertaking or have it varied, the normal procedure would be for him to apply to the court to which he had given the undertaking on a specific ground, usually change of circumstances making its continuation unnecessary, oppressive or unjust. The present case was not typical. It was different from the undertaking volunteered by a defendant on an application for an interim injunction. Although in form the companies were appealing against the undertakings, in substance the appeals were against the decision of the judge that the dismissal of the winding-up petitions should be conditional upon the undertakings. The Court of Appeal, after considerable hesitation, was satisfied that the present case was one in which the Court should entertain an appeal by a party against its own undertaking. It was true that the companies were legally entitled to decline to give the undertakings and that if the judge had then made winding-up orders, the companies could have appealed on much the same grounds as those on which they had appealed against the undertakings. It was however unrealistic to expect solvent companies, who were strongly contending that there was nothing unlawful in the conduct of their businesses, to have done anything other than give the undertakings required in order to avoid the making of the winding up orders. They were given under the threat of orders, which, on their case, the judge would have been wrong to make. Although the Court did therefore entertain the appeals, it in fact dismissed them on the merits.