De Bry v Fitzgerald
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE DILLON,LORD JUSTICE STAUGHTON |
| Judgment Date | 01 November 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J1101-2 |
| Docket Number | 88/0882 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 November 1988 |
[1988] EWCA Civ J1101-2
The Master of the Rolls
(Lord Donaldson)
Lord Justice Dillon
Lord Justice Staughton
88/0882
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE TIBBER)
Royal Courts of Justice
MR. CHARLES SPARROW Q.C. and MR. ALASTAIR MACGREGOR (instructed by Messrs. Smyth & Co.) appeared for the Appellant (Plaintiff).
MR. GEORGE NEWMAN Q.C. and MR. JEFFERY ONIONS (instructed by Messrs. Schilling & Lom) appeared for the Respondents (Defendants).
This is an appeal from an order of His Honour Judge Tibber requiring the plaintiff to provide £270,000 by way of security for the defendants' costs of the action.
The plaintiff's claim is for damages for breach of contract. The subject matter of the contract is a stucco figure or "modello" which a sculptor makes as a model for the work which he intends to execute. The magic, and the potential value, of this particular "modello" lies in the fact that it is said to be the work of Michelangelo. If, indeed, it is such a work, it is worth a very considerable sum. For present purposes it is sufficient to record that under an earlier contract the defendants had agreed to buy it for U.S. $27 million plus one half share in the proceeds of re-sale in excess of U.S. $50 million.
The contract sued upon was not for all the rights in the "modello", but only for a half share, the initial payment being U.S. $3 million with an obligation to pay the plaintiff one half of the difference between that figure and the price realised upon any re-sale. The U.S.$3 million was never paid. The plaintiff claims that this was a repudiation of the contract. No defence has yet been delivered, but it appears that the defendants claim that there were conditions precedent to their obligation to pay that sum which were not fulfilled. These, it is said, related to the authenticity and provenance of the "modello". At the present stage of the proceedings the defendants have not made clear whether they are treating the contract as repudiated by the plaintiff or whether they are treating it as still subsisting. Nor is it clear whether, if they say that the contract has been repudiated, they are claiming damages for loss of profit.
The contract was in fact performed to the extent that the plaintiff brought the "modello" to London, where it is now lodged in a bank to the order of the parties jointly.
R.S.C. Order 23 Rule 1, which regulates orders for security for costs, 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, or
(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, or
(c) subject to paragraph (2) that the plaintiff's address is not stated in the writ or other originating process or is incorrectly stated therein, or
(d) that the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation,
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."
The defendants' claim is based upon paragraph (a) of that sub-rule in that the plaintiff is resident in France. It is to be noted that residence outside the jurisdiction enables, but does not require, the court to order security for the costs of the action. As Sir Nicolas Browne-Wilkinson V.-C. put it in Porzelack K.G. v. Porzelack (U.K.) Ltd. (1987) 1 W.L.R. 420 at page 422:
"The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds. The risk of defending a case brought by a penurious plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiffs resident within the jurisdiction. There is only one exception to that, so far as I know, namely, in the case of limited companies, where there are provisions under the Companies Acts for security for costs. Where the plaintiff resident outside the jurisdiction is a foreign limited company, different factors may apply: see D.S.Q. Property Co. Ltd. v. Lotus Cars Ltd. (1987) 1 W.L.R. 127.
Under R.S.C., Ord. 23, r. 1(1)(a), it seems to me that I have an entirely general discretion either to award or refuse security, having regard to all the circumstances of the case. However, it is clear on the authorities that, if other matters are equal, it is normally just to exercise that discretion by ordering security against a non-resident plaintiff. The question is what, in all the circumstances of the case, is the just answer."
Since the purpose of such an order is to have a fund within the jurisdiction which will guarantee that any order for costs in favour of the defendant will be met, it is a complete answer to an application for such an order that a fund already exists, at least if the court can ensure that the fund will not be dissipated.
The plaintiff's first answer to this application for security is, not unnaturally, that the "modello" itself is such a fund, that it is within the jurisdiction and that the defendants can prevent its being exported. The defendants reply that its authenticity has not been established, that it may be valueless and that in any event it is not clear that the plaintiff is entitled to sell it. However, they do not positively assert that it is other than what it is claimed to be.
The authenticity of the "modello" is vouched by a Professor Hart, an expert on the works of Michelangelo, and by Mr. Camber of Sotheby's. In addition, Dr. Avery of Christie's has expressed the view that it is of 16th century origin but reserved judgment on whether it was the work of Michelangelo.
The learned judge dismissed the plaintiff's reliance upon the "modello" as constituting an available fund within the jurisdiction, saying that Professor Hart's bona fides was in issue and that it was not clear to what extent Mr. Camber and Dr. Avery had considered the matter.
The second argument put forward by the plaintiff is based upon the fact that the defendants are also resident outside the jurisdiction. It is submitted on his behalf that the defendants are likely to put forward a counterclaim for damages, that such a counterclaim will be inextricably bound up with the claim and that it is largely a matter of chance that he, rather than the defendants, is the plaintiff. In such circumstances, in his submission, neither party should be ordered to provide security for costs. The defendants' reply to that is that, if they decide to counterclaim, they will expect to be ordered to provide security for the costs of that counterclaim.
The learned judge said only that he did not think that he should adjourn the application until it was clear whether or not there would be a counterclaim, but should deal with it on the basis of the existing situation.
The plaintiff's third submission is that, under the Civil Jurisdiction and Judgments Act 1982, an order of the English court for the payment of costs can be enforced without difficulty in France. This point was considered by the learned Vice-Chancellor in Porzelack when at page 425, having reviewed the background to the statute, he continued:
"Those, in outline, are the provisions of the 1968 Convention which now forms part of the law of England. To my mind, they are not the same as the provisions of the Judgments Extension Act 1868. Under the Act of 1868 mere registration of the decision of the English court renders it as enforceable in the courts of, for example, Scotland as if the order had been made in Scotland. From the passages that I have read, that is plainly not the position under the 1968 Convention. There has to be an application to the foreign court for recognition before the order becomes enforceable and there are grounds on which it can be challenged in the other member state's court.
On the other hand, I do not think that the provisions of the 1968 Convention can be treated as being exactly on the same footing as the Foreign Judgments (Reciprocal Enforcement) Act 1933 cases. First, the Convention lays down a common system for the whole group of E.E.C. countries as to their respective jurisdictions within the E.E.C. Questions of jurisdiction are regulated by the Convention itself. Secondly, although the Convention provides for challenge to the order when it is sought to be enforced, those are very limited rights of challenge, circumscribed in the way that I have sought to illustrate. Thirdly, the whole purpose of the 1968 Convention, as I understand it, was to produce a common system of enforcement within the European Community. It was designed to produce 'free movement of judgments within the E.E.C.'.
As the Act of 1982 has so recently come into force, there is of course no experience as to how it works in practice. But, at the present stage, I think that...
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