Berkeley Administration Inc. v McClelland

JurisdictionEngland & Wales
Judgment Date13 February 1990
Judgment citation (vLex)[1990] EWCA Civ J0213-4
Docket Number90/0116
CourtCourt of Appeal (Civil Division)
Date13 February 1990
(1) Berkeley Administration Incorporated
(2) Chequepoint International Limited
(3) Chequepoint France Sarl
Respondents (Plaintiffs)
(1) Arden C. McClelland
(2) Mark Sumpter
(3) Paul Caplan
(4) Maccorp Finance Limited
Appellants (Defendants)

[1990] EWCA Civ J0213-4


Lord Justice Parker

Lord Justice Russell


Lord Justice Staughton






(Mr. Piers Ashworth Q.C. sitting as a deputy Judge of the High Court)

Royal Courts of Justice

MR. S. GEE and MR. J. LOWE (instructed by Messrs Beynon & Co.) appeared on behalf of the Respondents/Plaintiffs.

MR. G. HOBBS (instructed by Messrs Herbert Smith) appeared on behalf of the Appellants/Defendants.


The defendants appeal against the dismissal by Mr. Piers Ashworth Q.C., sitting as a deputy High Court Judge, of their application for security for the costs of an action commenced by the plaintiffs by writ dated 28th February 1989.


The first, second and third plaintiffs are companies incorporated respectively in Panama, the British Virgin Islands and France. It is common ground that all three are ordinarily resident outside the jurisdiction, although there is a dispute whether the first and second plaintiffs are ordinarily resident in their countries of incorporation or in Belgium.


The defendants' application was made under Order 23 rule 1(1) (a) of the Rules of the Supreme Court which, so far as immediately material, is in the following terms:

"1. Where on the application of a defendant to an action or other proceeding in the High Court, it appears to the Court—

  • (a) that the plaintiff is ordinarily resident out of the jurisdiction…..

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as it thinks just."


Before the deputy judge the plaintiffs contended, first, that he had no jurisdiction to make any order on the ground that Section 23, rule 1(1) (a) offended against Article 7 of the Treaty of Rome and, secondly, that if there was jurisdiction no order should, as a matter of discretion, be made.


The deputy judge concluded that as a matter of discretion he would in all the circumstances of the case have made an order for security in the sum of £150,000, but he accepted the plaintiff's contention that he was precluded from making such an order by Article 7.


That Article provides:

"Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

The Council may, on a proposal from the Commerce and in cooperation with the European Parliament adopt by a qualified majority, rules designed to prohibit such discrimination."


On the face of it there is no conflict whatever between Order 23, rule 1(1) (a) and Article 7 of the Treaty. Order 23 rule 1(1) (a) is based on residence outside the jurisdiction and applies in respect of all persons resident outside the jurisdiction irrespective of their nationality. Anyone so resident, be his nationality British, German, Argentinian, Indian, Thai or anything else, is exposed to the possibility of an order for security if, but only if, the court, having regard to all the circumstances of the case, thinks it just to make such an order. The rule has on its face nothing whatever to do with nationality, with which alone Article 7 is, on its face, concerned. Moreover, residence outside the jurisdiction is not itself a ground for making an order. It is merely a pre-condition to the existence of jurisdiction to make an order.


It is however contended, and the deputy judge has accepted, that the rule nevertheless offends against the article on the basis that it provides for "covert" discrimination on the grounds of nationality because it will expose more foreign nationals than British nationals to the jurisdiction to make an order for security.


I accept that this is probably the case but it must be remembered that, if a German ordinarily resident in England and an Englishman ordinarily resident in Germany are both libelled by the same article in an English newspaper and both sue here in respect of the libel, the Englishman will be exposed to the possibility of an order for security but the German will not, because all persons ordinarily resident within the jurisdiction, whatever their nationality, are not exposed to the possibility of an order, whereas all persons ordinarily resident outside the jurisdiction, whatever their nationality, are so exposed.


It is important to keep this in mind when considering, as I shall shortly do, the cases in the European Court of Justice to which we were referred. It is however convenient first to consider such English authorities as there are.


In Landi Den Hartog BV v. Benjamin Stopps [1976] 2 CMLR 393, it was specifically held by His Honour Judge Rubin, sitting as a deputy judge of the Chancery Division, that Order 23, rule 1(1) (a) did not conflict with Article 7 of the Treaty. At page 403 of the report he said:

"Order 23 does not in terms make any reference to the nationality of a plaintiff but is only concerned with a plaintiff, whatever his nationality, resident outside the jurisdiction of the High Court. It would apply equally to an English national resident in Holland as it would to the present plaintiff, and accordingly I am not persuaded that the rule as now drawn is in any way in conflict with Article 7 of the Treaty. However, it seems to me that in exercising its discretion the court ought to have regard to the fact that the plaintiff is resident within the Community as well as all the other relevant factors when exercising its discretion."


He held, however, that although there was jurisdiction to make an order, he would not as a matter of discretion do so.


In Compagnie Francaise de Television v. Thorn Consumer Electronics Ltd. [1981] F.S.R. 306, an order for security was made against the plaintiff, who was ordinarily resident in France. In that case Whitford J. said, at page 307:

"….. everything depends upon the circumstances of each case, and it does not necessarily follow that because one is faced with a foreign based plaintiff, an order for security will be made; no such order was made in the last of the cases to which I have referred where Judge Rubin, who was sitting in the High Court, decided that it would be inappropriate to make an order for security bearing in mind such questions as the Foreign Judgments (Reciprocal Enforcement) Act 1933, the fact of Holland, which was the country of residence of the plaintiff, being a member of the Community, and the fact that the plaintiff was in a substantial way of business."


He dealt with the point on Article 7 of the Treaty at page 308 where he said:

"I should say one word about a special point made by counsel for the plaintiffs. The point, referred to in the Landi den Hartog case, arises out of the fact that France and this country are members of the Community. I was taken to certain articles in the Treaty which it was said were relevant. Article 7 is a general provision prohibiting discrimination on the grounds of nationality, and the other article to which I was referred was an article concerned with the entering into by Member-States of negotiations with a view to securing the simplification of formalities governing the recognition and enforcement of judgments of the courts. That has not so far gone through, though it is hoped it will in the near future, and when it happens the position may be different; but I do not think, in spite of the eloquence of Mr. Jeffs, that the order with regard to security for costs is discriminatory on grounds of nationality. It was said that although it may not on its face be discriminatory, and it has been said in other cases that it is not discriminatory, there is some hidden discrimination, because in only a very small number of cases are you going to find nationals who are not resident within their own jurisdiction, but the whole basis of it is to cope with those cases where you are dealing with persons of any nationality who are not resident within the jurisdiction."


Both the cases are specific decisions in the appellants' favour.


In Porzelack K.G. v. Porzelack (U.K.) Ltd. [1987] 1 WLR 420, the plaintiffs were a German company ordinarily resident in Germany. The defendants' application for security was dismissed as a matter of discretion but the Vice-Chancellor was of the view that he had a complete discretion (see page 423 at B). In the course of reviewing the history of applications under Order 23, rule 1(1) (a) he said:

"After the United Kingdom joined the European Economic Community, a further point was put forward in resisting security for costs by urging that the award of security against a plaintiff resident in the E.E.C. would contravene the E.E.C. Treaty on the ground that it would discriminate against a national of a country within the E.E.C. That argument was rejected in two cases, Meijer v. John H. Taylor Ltd. [1981] F.S.R. 279 and Compagnie Francaise de Television v. Thorn Consumer Electronics Ltd. [1981] F.S.R. 306. On the other hand, it was treated as being a relevant factor in Landi Den Hartog B.V. v. Stopps [1976] F.S.R. 497."


It is not clear from the report to what extent the Article 7 point was argued before him, but it is clear that he proceeded on the basis that the decisions already mentioned were correct.


Finally I come to De Bry v. Fitzgerald & Another, an...

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