Meretz Investments NV v ACP Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE CHADWICK,Lord Justice Pill,Lady Justice Arden,Lord Justice Toulson,LADY JUSTICE ARDEN
Judgment Date11 December 2007
Neutral Citation[2007] EWCA Civ 1303,[2007] EWCA Civ 832,[2006] EWCA Civ 1193
Docket NumberCase No: A3/2006/0393(D),Case No: A3/2006/0393 & 0393(C),B6/2006/0393(A), B6/2006/0393(B)
CourtCourt of Appeal (Civil Division)
Date11 December 2007
Meretz Investments Nv
First Claimant/Appellant
and
Britel Corporation Nv
Second Claimant/Appellant
and
Acp Limited
First Defendant/Respondent
and
First Penthouse Limited
Second Defendant/Respondent
and
Hakan Olov Olsson
Third Defendant
and
Annika Silja Olsson
Fourth Defendant
and
Fahad Al Tamimi
Fifth Defendant/third Respondent

[2006] EWCA Civ 1193

Before:

Lord Justice Chadwick

B6/2006/0393(A), B6/2006/0393(B)

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(MR JUSTICE LEWISON)

Royal Courts of Justice

Strand

London, WC2

MR M PRYOR, MR T DUTTON and MR C KELLER (instructed by Messrs Bircham Dyson Bell, LONDON SW1H 0BL) appeared on behalf of the Appellants.

MR G GOLDKORN (SOLICITOR ADVOCATE) (instructed by Messrs Goldkorn Methias Gentle, LONDON WC1A 1NW) appeared on behalf of the Respondents.

LORD JUSTICE CHADWICK
1

These two applications are for security for the costs of, respectively, the second and third respondents in resisting appeals by Meretz Investments NV and Britel Investments NV from an order made by Lewison J on 30 January 2006 in proceedings in which those appellants were claimants. The judge, after a hearing over 18 days, gave judgment against the first defendant, a company now in liquidation, for damages to be assessed. He gave judgment against the second defendant – now the second respondent, First Penthouse Ltd – in a nominal sum of £5; and he dismissed the claims against the other defendants, of whom only the fifth, Mr Fahad Al Tamimi, has been made a respondent, the third respondent, to these appeals. The judge made orders against the claimants for costs to be assessed, and for payment of interim amounts on account of costs. The interim payments due from the appellants have, I am told, been made. The judge ordered payment of costs to the appellants from the first defendant, ACP Ltd. That payment has not been made; that company being in liquidation. He gave the claimants permission to appeal.

2

The appellants' notice was filed on 27 February 2006. The third respondent, Mr Tamimi, filed his respondent's notice on 20 March 2006. That notice, at section 9, seeks an order that the appellant provides security for costs within 14 days, pursuant to CPR 25.15 – with a stay of the appeal until the security is provided – and an order that the appeal be struck out if the appellants fail to comply with that order. The grounds for that application were set out in the witness statement of Mr Nitej Davda, an associate solicitor employed by the third respondent's solicitors, dated 20 March 2006. The amount sought by way of security on behalf of the third respondent is £87,902 excluding VAT. But that sum breaks down into three distinct items: first, some £9,000, which is primarily attributable to work done in considering of the appellant's notice and in filing the respondent's notice and which pre-dates the application for security; secondly, an amount of £11,745 which is attributable to the costs of this application; and, third, a balance of some £67,150 attributable to the work which is said to be needed hereafter – including, of course, the hearing of an appeal which is estimated to take four days.

3

The second respondent, First Penthouse Ltd, also filed a respondent's notice in or about March 2006; but that respondent's notice did not include an application for security for costs. The second respondent's application for security for costs was made by notice filed on 21 July 2006. That notice sought an order in terms which are indistinguishable from the terms in which the third respondent had sought its order: that is to say, security within 14 days pursuant to CPR 25.15, with the same provision for a stay and strike out if security was not provided. The amount which the second respondent sought as security was the substantially larger sum of £138,860. That, again, was made up of three elements: the sum of £6,270 in respect of work already done; the sum of £11,255 in respect of the costs of the application; and the balance of £120,000 or thereabouts, in respect of the work up to and including the hearing of the appeal. That application is supported by a witness statement dated 21 July 2006 made by Mr Rashpal Soomal, an associate solicitor employed by the second respondent's solicitors. In substance, Mr Soomal relies on the same grounds as Mr Davda.

4

CPR 25.15 is in these terms:

"(1) The court may order security for costs of an appeal against -

(a) an appellant;

(b) a respondent who also appeals,

on the same grounds as it may order security for costs against a claimant under this Part.

(2) The court may also make an order under paragraph (1) where the appellant, or the respondent who also appeals, is a limited company and there is reason to believe it will be unable to pay the costs of the other parties to the appeal should its appeal be unsuccessful."

The reference in paragraph (1) to "the same grounds as [the court] may order security for costs against a claimant under this Part" is to the grounds under CPR 25.13. Subrule (1) enables a court to make an order for security if:

"(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(b) one or more of the conditions in paragraph (2) applies…"

Ground (c) paragraph (2) is in these terms:

"the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so …"

5

There is plainly an overlap between condition 2(c) in CPR 25.13 and paragraph (2) in CPR 25.15; and a further overlap between those provisions and section 726 of the Companies Act 1985. In short, a corporate appellant may be required to provide security in circumstances where there is reason to believe that it will not be able to pay for costs of the other parties to the appeal if its appeal is unsuccessful. But the overriding consideration is whether it is just to make such an order; and it is well established that it would not be just if the effect of the order would be to stifle the appeal or the access to the courts.

6

In his witness statement, of 20 March 2006, Mr Davda refers to two earlier applications for security made in the course of proceedings in the High Court. Orders were made on those applications under CPR 25.13 2(c), first by Lewison J in April 2005 and second by Master Teverson on 10 October 2005. Understandably, perhaps, reliance is placed on the evidence filed in support of those applications. On that evidence the court was satisfied both that the grounds under CPR 25.13 2(c) had been made out and that it was just to make an order requiring security. It said that there has been no change in circumstances such as to persuade the court either that the appellant companies would now be able to meet an order for costs or that it was no longer just to require them to provide security. Mr Soomal, in a witness statement of 21 July 2006, relies on the same matters.

7

The response to the applications is set out in a witness statement of Mr Maurice Perera, signed on 25 July 2006. Mr Perera does not advance any reason why security for the costs of the third respondent, Mr Tamimi, should not be ordered in principle; but he does advance a number of criticisms of the amount which is sought. First, he says that the proper estimate of the appeal is that it should not be more than three days; and that, indeed, it well might well not be more than two days. He says that, in part at least, on the basis that the appeal should not include the hearing of arguments advanced in the second respondent's notice because the skeleton argument supporting those arguments was filed well out of time and no extension of time has yet been given. The hurdle in the way of that submission is that the appellants' leading counsel gave a time estimate on 12 March 2006 – estimating the time of the hearing of the appeal at three to four days – and he gave that estimate before he knew of the second respondent's notice. So that three to four days is the appellants' own estimate of the time the hearing of the appeal is likely to take. Mr Perera then, by reference really to the length of time, suggests first that a discount should be made in the amount provided for counsel's fees claimed on behalf of the third respondent and secondly, that the amount estimated for the solicitor's involvement is over-generous.

8

I remind myself that this is essentially an interim application for security. There can be further applications if the amount of the security turns out to be an underestimate. In my view, the amount sought by the third respondent is too high. In the first place, it does not seem to me that the third respondent is entitled to include in its application for security costs incurred before making that application. Nor is it entitled to include the costs of this application, which can be dealt with as a separate matter. The costs for which the court can be asked to order security are the costs incurred hereafter. Those are put at the figure of £67,150, to which I have referred. That figure includes some £20,000 in respect of counsel's participation at the hearing of the appeal, and some £16,350 in respect of 30 hours to be spent by two solicitors during the hearing. That seems to me to be over-generous in relation to the amount to which security should be provided. I would propose to award security in an amount which discounts those two items by about 50%, leaving a base figure of £50,000 to be provided as security for the costs of the third respondent.

9

Mr Perera does take issue with the principle...

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