Jirehouse Capital and another v Stanley Sherwin Beller and another
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Moore-Bick,Lord Justice Mummery |
| Judgment Date | 30 July 2008 |
| Neutral Citation | [2008] EWCA Civ 908 |
| Docket Number | Case No: A3/2008/0201 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 July 2008 |
[2008] EWCA Civ 908
Lord Justice Mummery
Lady Justice Arden and
Lord Justice Moore-Bick
Case No: A3/2008/0201
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
BRIGGS J
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Stephen Auld QC & Mr David Caplan (instructed by Messrs Mishcon de Reya) for the Appellant
Mr Michael Driscoll QC (instructed by Messrs Byrne & Partners) for the Respondent
Hearing date : 29 July 2008
This is an appeal with the permission of the judge against the orders of Mr Justice Briggs dated 16 January 2008 ordering the claimants in this action (“the appellants”. to provide security for the defendants' costs. We are not concerned with the amounts he ordered or the terms he imposed. This appeal concerns two questions of interpretation which arise from CPR 25.13(2)(c). In the appendix to this judgment, I set out CPR 25.12 and 13. It will be seen that CPR 25.13(2)(c) has two parts or limbs. The two questions in issue on this appeal are as follows:
i) Are unlimited companies, registered in Great Britain, alternatively unlimited companies registered in Great Britain having only an individual or individuals as member(s), excluded from the expression “a company or other body (whether incorporated inside or outside Great Britain)” within the first limb of CPR 25.13(2)(c)? (Issue 1)
Background
3. The judge summarised the background as follows:
The judge's judgment
5. On issue 1, the appellants submitted to the judge (among other submissions) that the defendants' application under CPR 25.13(2)(c) could not succeed as the court had no jurisdiction to order security for costs against an unlimited company incorporated within the jurisdiction. The judge held that CPR 25.13(2)(c) enabled the court to make an order for security for costs even as against an unlimited company:
Grounds of appeal
8. The first ground of appeal is that the judge was wrong to hold that CPR 25.13(2) (c) gave the court jurisdiction to order security for costs against an unlimited company. The second ground of appeal is that the judge was wrong to hold that he had jurisdiction to award security for costs against the appellants despite the fact that it had not been established on the balance of probabilities that the appellants would be unable to pay the respondents' costs if ordered to do so.
Issue one – submissions
10. Mr Stephen Auld QC, for the appellants, submits that the judge should have interpreted CPR 25.13(2)(c) consistently with section 726 of the Companies Act 1985 and held that the jurisdiction extends only to limited companies. The policy underlying the rule is to order security against impecunious companies. The policy does not apply to unlimited companies. Alternatively the judge was wrong to hold that CPR 25.13(2)(c) gave the court jurisdiction to award security for costs against an unlimited company with a sole shareholder. The shareholder is jointly and severally liable for payment of the company's debts (section 24 of the Companies Act 1985). A costs order against an unlimited company is akin to a costs order made against a sole shareholder and accordingly there is no difference in principle between a security for costs order made against such a company and a security for costs order made against the sole shareholder. It was contrary to the policy of CPR 25.13(2)(c) to allow the court to order security for costs where the claimant is an unlimited company with an individual as sole shareholder, but not where he is an individual.
Issue 1—conclusions.
16. In my judgment, the DCA consultation paper does not assist. As Mummery LJ pointed out in the course of argument, it was only a consultation document. It did not purport to set out the final policy behind the new security for costs regime to be inserted into the CPR. Accordingly, it provides no assistance and is not admissible as an aid to the interpretation of CPR 25.13(2)(c).
Issue 2 – submissions
21. This issue has arisen because the judge applied a test of significant danger that the company would be unable to pay costs ordered against it, rather than a “probability test”. which the judge took to have been established by Unisoft. Mr Auld therefore seeks to persuade the court that the judge made the wrong choice. Mr Auld submits that CPR 25.13(2)(c) is unambiguous and does not leave room to introduce a lower standard of proof such as that applied by the “significant danger” test. The equivalent wording in section 726 has been held to mean that the court must accept that the company will be...
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