AP (UK) Ltd v West Midlands Fire and Civil Defence Authority

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeWard,Jonathan Parker,Longmore L JJ
Judgment Date16 Nov 2001

Court of Appeal (Civil Division).

Ward, Jonathan Parker and Longmore L JJ.

AP (UK) Ltd
and
West Midlands Fire and Civil Defence Authority.

Harold Burnett QC (instructed by Bracher Rawlins) for the claimant.

Roger Ter Haar QC and Stuart Catchpole (instructed by Davies Arnold Cooper) for the defendant.

The following cases were referred to in the judgment of Longmore LJ:

I, Re (unreported, CA).

Rosengrens Ltd v Safe Deposit Centres LtdWLR[1984] 1 WLR 1334.

Security for costs Defendant obtained order for security for costs Claimant offered defendant charge on property as security Whether security offered by way of charge on property adequate.

These were appeals from a judge's orders that the claim should stand dismissed unless security in the traditional form of payment into court or bank guarantee was put up by 16 March 2001 and refusing an application on 15 March for an extension of time to enable the security to be put up.

The claimant manufactured paper tissue products at a factory in Wolverhampton. In February 1999 there was a fire at the premises. In December 1999 the claimant issued a claim form against its insurers who had avoided the policy and alternatively against its insurance brokers, and against the defendant alleging negligence. The claim against the defendant was severed from the rest of the case. The defendant issued an application for security for costs. The claimant argued that there was no need to order security because it was good for any sum ordered against it. That was not accepted by the judge who made an order for security for costs up to the pre-trial review in the sum of 135,000. The claimant offered security by way of charges on various properties. The judge refused an application for the security to be provided in that way and made a final order for dismissal unless security was provided by 16 March 2001. On 15 March the judge refused an extension of time for security to be given in the usual way and the claim was accordingly dismissed. The claimant appealed.

Held, dismissing the appeals:

1. In a commercial or mercantile action security should be given by payment into court, bank guarantee or solicitors' undertaking. The judge in the present case used the fact that no bank would apparently lend money on the security proposed to support her eventual finding that the property was inadequate to provide security. As a matter of principle if no bank would lend on the security of proposed real property that would mean the proposed security was inadequate unless there was a reason to explain why the defendant should be required to accept security by way of charge on property when no bank was prepared to do just that. Here, there was no such reason offered and there was none. Therefore the appeal should be dismissed on the basis that without an explanation why money or a guarantee could not be raised by the claimant from its bank by charging the property to the bank, it was impossible to conclude that the security offered by the claimants was adequate security for costs.

2. In any event the judge was right that on the evidence there was insufficient equity in the properties to provide the necessary security. The evidence was inaccurate and incomplete and the valuation difficulties showed how problematic the idea of putting up security for costs by way of charge was likely to be and confirmed the view that it was unnecessary for the judge to embark on the exercise at all. To the extent that she did so her conclusions were correct.

3. The Court of Appeal would not interfere with the judge's exercise of discretion to refuse an extension of time for putting up security.

JUDGMENT

Longmore LJ:

1. 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 HHJ Alton, sitting in the Mercantile Court in Birmingham, on 1 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 16 March 2001. On 15 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 16 March.

2. The second appeal is from that order.

3. 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 3 and 4 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 5 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 Pt. 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.

4. 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 7 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 Midlands Fire and Civil Defence Authority.

5. On 17 May 1999 the claimants' solicitors wrote to the West Midlands 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.

6. On 24 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 Midlands 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.

7. 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.

8. On 11 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 Pt. 24 application which I have mentioned. That was argued on 3 and 4 October and was refused by HHJ Alton who reserved the costs. The case was in due course fixed for trial for 1015 days to begin on 25 June 2001.

9. 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 30 September 1999 which should have been filed by 30 July 2000. The claimants' solicitors asked for copies of those accounts. No satisfactory response was forthcoming and no accounts were filed.

10. On 5 January 2001 the defendants issued an application for security for costs. There was a...

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    ...Ltd to procure security in favour of the Bank (see AP (UK) Ltd v West Midlands Fire and Civil Defence Authority [2001] EWCA Civ 1917; [2002] CLC 766, para. 13). 28 Fourth, the Bank argues, and I accept, that as the Claimant is not a trading company, but instead an investment company, with n......
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