AP (UK) Ltd v West Midlands Fire & Civil Defence Authority
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LONGMORE,LORD JUSTICE WARD,Lord Justice Longmore |
| Judgment Date | 16 November 2001 |
| Neutral Citation | [2001] EWCA Civ 1917 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No A3/2000/0640 A3/2001/0970 |
| Date | 16 November 2001 |
[2001] EWCA Civ 1917
Lord Justice Ward
Lord Justice Jonathan Parker
Lord Justice Longmore
No A3/2000/0640
A3/2001/0785
A3/2001/0970
IN THE SUPREME COURT OF JUDICATURE IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF HER HONOUR JUDGE CAROLINE ALTON
Royal Courts of Justice
Strand
London WC2
MR HAROLD BURNETT QC (Instructed by Bracher Rawlins of London) appeared on behalf of the Appellant
MR ROGER TER HAAR QC and MR STUART CATCHPOLE (Instructed by Davies Arnold Cooper of London) appeared on behalf of the Respondent
We have three appeals before us this afternoon. The first raises a question of principle, namely whether, if it is right to require a claimant to put up security for the costs of an action, it may be appropriate that the security given should be by way of a charge on the claimants' own property in favour of the defendant and, if so, in what circumstances. In the present case Her Honour Judge Alton, sitting in the Mercantile Court in Birmingham, on 1st March 2001, refused to make such an order not as a matter of principle but because she considered the value of the properties put forward for the purpose of the charge to be insufficient. Having reached that conclusion, she made an order that the claim should stand dismissed unless security in the traditional form of payment into court or a bank guarantee was put up by 16th March 2001. On 15th March Judge Alton refused an application for a 40-day extension of time requested by the claimant for the purposes of putting up security in a traditional form so that the claim did stand dismissed on 16th March.
The second appeal is from that order.
The third appeal relates to the costs of a hearing of an earlier application under Part 24 of the Civil Procedure Rules by Judge Alton on 3rd and 4th October 2000. It was an application for summary judgment brought by the defendants which, in the event, failed. Judge Alton reserved the costs of the application. On 5th April 2001, after the claim had been dismissed for failure to provide security for costs as ordered, Judge Alton decided that the right order was that the costs of the Part 24 application should be the claimants' costs in the case. The claimants now appeal against that order, submitting that the right order was that they, the claimants, should have the costs in any event.
I must say something about the facts of the case and the chronology. The claim is brought by a company, AP (UK) Ltd, who are the manufacturers of paper tissue products at a factory at Fourth Avenue, Bushbury, Wolverhampton. On 7th February 1999 there was a fire at those premises. That fire was attended by the fire brigade who are the responsibility of the defendants in this case, the West Midland and Civil Defence Authority.
On 17th May 1999 the claimants' solicitors wrote to the West Midland Fire Authority to ask if they could interview Mr Powner, one of the fire officers who had attended at the scene. The following month they did interview Mr Powner while he was on sick leave in the company of a specialist adviser to the claimants. Mr Powner was alleged to have indicated that the fire was confined to tissues in a single bay of the premises when there were no dancing flames or smoke.
On 24th December the claimants then issued a claim form claiming, first, under the insurance policy with their fire insurers or, alternatively, in damages against their brokers in case the insurers were right (as they had apparently done) to have avoided or determined the policy; thirdly, against these defendants, the West Midland Fire Authority, alleging that the fire had died down before the brigade arrived but that their use of hoses led to the fire being stirred up and causing a major conflagration to break out. Those proceedings were brought in the Commercial Court.
At a case management conference chaired, as it happens, by myself I made an order that the claim against the West Midlands Fire Authority should be severed from the rest of the case and that it should be transferred to the Mercantile Court in Birmingham.
On 11th April the defendants served a defence, which was a full document which condescended to considerable particularity. The defendants invited the claimants to set out their answer to the defence fully in their reply. That did not happen, at any rate, to the satisfaction of the defendants so the defendants took out the Part 24 application which I have mentioned. That was argued on 3rd and 4th October and was refused by Her Honour Judge Alton who reserved the costs. The case was in due course fixed for trial for 10 to 15 days to begin on 25th June 2001.
There followed correspondence in which the defendants' solicitors pointed out to the claimants that they had not filed their latest accounts for the year ending 30th September 1999 which should have been filed by 30th July 2000. The claimants' solicitors asked for copies of those accounts. No satisfactory response was forthcoming and no accounts were filed.
On 5th January 2001 the defendants issued an application for security for costs. There was a hard fought application in relation to security for costs which took place on 26th January 2001 in which the claimants said that in outline there was no need to order any security because they were good for any sum which would be ordered against them. That was not, in the event, accepted by the judge who made an order for costs in the sum of £135,000 to be paid into court by 9th February 2001 or to be given by way of guarantee or other security with a stay of the action meanwhile. The judge made it clear that that was security for costs up to the pre-trial review but that she would entertain an application for further security, if thought appropriate, not before that date.
On 9th February, the day on which the security had to be provided, a letter from the claimants' solicitors was delivered by hand to the defendants' solicitors offering, by way of compliance with the order, a second charge on the property at Bushbury which was said to be valued in the sum of £925,000. There was immediately a question as to whether that could be compliance with the order. An application was fixed to determine that question on 19th February. On that date which in the event the judge was unable to manage because, unfortunately, she was ill a statement from Mr Patel was served which revealed the existence of a further charge on the Bushbury property and also that there was a charge on his own matrimonial home in respect of his own solicitors' fees. The statement went on to offer, in addition to the Bushbury offer, that there could be a shared charge on Mr Patel's share of the free equity of the matrimonial home shared with the claimants' own solicitors and reference was also made to another property in which he and his wife had lived and was still owned by his wife at Nevis Court worth £70,000.
The application, which was effectively an application for an extension of time in which to provide the security and for a declaration that it could be provided by way of charges on the property, was heard by the judge on the telephone on 26th February. On 28th February she refused that application that security could be provided by way of charge on the various properties. Further argument was on that day abandoned because in her court building there was a fire alarm and she had to leave, but was resumed on the following day when she made the final order for dismissal unless security was provided by 4.30 on 16th March. On 15th March, the day before the final order was to take effect, there arrived from the claimants an application for an extension of time for 40 days to provide the security until 25th April. Again, the judge had to hear the application on the telephone. The application was based on the fact that goods which had been or were to be shortly sold in El Salvador were to be paid for by a confirmed letter of credit that had recently arrived. The judge dismissed that application. Accordingly, on 16th March the entire claim was dismissed. On 5th April she made the order in respect of the costs of the summary judgment application that the costs be the claimants' costs in the case.
I turn to the first appeal and deal, first, with the question of principle, namely whether it is appropriate for the claimants to be committed to give security for costs by granting a charge or charges on its real property. The suggestion comes as something of a surprise since, for myself, I have never come across such a suggestion in a commercial or mercantile action. The reason for that must be that in a normal case if real property is sufficiently valuable to stand as security there will be no difficulty in the claimants procuring a bank guarantee for the purpose of security for costs by, if appropriate, granting a charge to the bank. So, one asks, is there any explanation why the bank will not provide a guarantee against one or more charges on the claimants' property in this case? The answer to that question is no, there is not. Paragraph 26 of Mr Patel's affidavit states merely that banks were not prepared to lend the sum of £135,000 to the claimant company unless the claimant company got money from its insurers or otherwise strengthened its balance sheet.
Mr Burnett QC, who appeared for the claimants below and the appellant here, asserted the existence of a principle that if security is adequate it is not for the court or for the defendants to say that it should be in any particular form. For that purpose he relies on Rosengrens Ltd v...
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