Morris v The Highland Group International
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe |
| Judgment Date | 01 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1361 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 November 2016 |
| Docket Number | A3/2015/1936 A, B and A3/2015/1938 A, B |
[2016] EWCA Civ 1361
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION,
NEWCASTLE-UPON-TYNE DISTRICT REGISTRY
(HIS HONOUR JUDGE ROGER KAYE QC)
Royal Courts of Justice
Strand
London, WC2A 2LL
Lord Justice McCombe
A3/2015/1936 A, B and A3/2015/1938 A, B
Mr Jonathan Rodger (instructed by Clyde & Co) appeared on behalf of the Appellant
Mr Jonathan Cohen QC (instructed by Collyer Bristow LLP) appeared on behalf of the Respondent
I have before me a number of applications by the respondent to a pending appeal, Mr Donald Morris, whom I will call "Mr Morris". He is the claimant in proceedings in the High Court against a company to which he is said at one time to have been a contractor. The defendant to the action is Highland Group International GmbH, which I will call "HGI".
HGI is a corporation incorporated in the Canton of Zug in Switzerland. It seems from the evidence that apart from incorporation there is little material to show what its connection with Switzerland is. The controlling shareholding and the individual behind HGI appears to be of United States origin and presence. Its business is, I understand, management consulting.
At material times HGI seems to have had what it considered to be a branch office in England, and there does not seem to be much dispute about that. From about 2007 that office existed and in 2009 HGI registered with the Registrar of Companies the name of a person (with an address) who was said to be authorised to accept service of relevant documents. This it did in compliance, perhaps a bit late, with the provisions relating to overseas companies in the Companies Act 2006 and accompanying regulations. Mr Morris' connection with HGI was brief. It ran, it seems, from September to December 2013. He says that in January 2014 his retainer with HGI was terminated without notice. There is no need to go into the underlying background of that, but he claimed when he parted company with HGI that he was owed money. By a claim form issued in June 2014 he claimed unpaid contractual arrears of a sum slightly in excess of US$159,000, and he also claims damages for breach of contract which he values at US$210,000.
Mr Morris procured service of the claim form at the address registered pursuant to the Companies Act. No acknowledgement of service or defence appears to have been forthcoming and the result was a default judgment for the liquidated sum claimed in the claim form and for damages to be assessed, that being entered on 25 July 2014. HGI applied to set aside the judgment obtained on two grounds: first, that the service was irregular (on the basis that the named individual registered as being authorised to accept service was not in fact so authorised and was not resident within this country and therefore did not qualify as a proper service party for the purposes of the 2006 Act); secondly, it also argued that, in any event, it had a good arguable defence even if the service had been effected.
Both these arguments were rejected by his HHJ Kaye QC, sitting as a judge of the High Court, in separate judgments of 24 February and 29 May 2015. The judge ordered HGI to pay Mr Morris' costs and refused a stay of execution. He also refused permission to appeal.
HGI applied for permission to appeal to this court by appellant's notices both, I think, dated 19 June 2015. Shortly thereafter by letter of 8 July 2015 Mr Morris' solicitors lodged an application for security for costs. They were informed by the court that the application was premature as being presented prior to permission for an appeal having been granted, but that the application might be refiled if and when permission was granted. On 29 October 2015 permission to appeal to this court was refused on consideration of the papers by Gloster LJ who also refused a stay, even pending renewal of the application for permission.
In that state of affairs, on 17 May 2016 the permission application came back before Lindblom LJ in court, who granted permission on all grounds, but again refused a stay of execution. On that occasion, Mr Cohen QC appeared for HGI as he has throughout the proceedings, and Mr Rodger for Mr Morris appeared in circumstances which I will mention shortly. Both of them have appeared before me today and have presented helpful and cogent submissions.
Mr Rodger for his part said that he attended the permission hearing in a watching capacity and only made submissions on the invitation of the judge. Mr Rodger states that on those short submissions he did not argue any further in substance on the permission point and indeed his submissions are shortly recorded in paragraph 16 of Lindblom LJ's judgment.
Immediately following the grant of permission on 1 June 2016 Mr Morris filed a respondent's notice, and in part 9 of that document he made three applications: firstly, an application that the security for costs application, that he had initially intimated in July of the previous year, should be listed for hearing; secondly, he made an application that the appellant's notice be struck out, alternatively stayed, in the event that HGI did not pay either to him or into court the sums owing pursuant to the default judgment; thirdly, there was an application for an order for payment into court of a sum of £210,000 as security for the unliquidated damages claim; and fourthly, an application for disclosure of certain statutory materials relevant to the compliance by HGI with the Companies Act registration requirements. Those latter two applications have not been ventilated live before me and as far as the disclosure of the documents is concerned, Mr Rodger was content to say that that application should be "put on the back burner". I certainly do not intend to make any orders under the third or fourth of those applications.
Items 1 and 2 on "the shopping list", if I may put it that way, are however live. First, the security for costs application and orders for either a stay or striking out unless HGI pays to one place or another the judgment sums and costs pursuant to the orders below. I have already mentioned that since the entry of the judgment three judges have refused any stay of execution. HGI has not paid into any court or offered to pay or secure any of the sums in issue. Security for costs is sought pursuant to the conditions which apply in the same way as they do below to an appeal pursuant to CPR 25.15:
"(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."
To that should be added the relevant provisions to be satisfied for the making of an order for security for costs, 25.13 of the Civil Procedure Rules:
"(1) The court may make an order for security for costs under rule 25.12 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)
(i) one or more of the conditions in paragraph (2) applies, or
(ii) an enactment permits the court to require security for costs."
The paragraph (2) conditions relied upon are sub-paragraphs (c) and (g), which are to this effect:
"(c) 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;
[…]
(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him."
The strike-out applications are intimated in the respondent's notice pursuant to a number of provisions: first, pursuant to CPR 59.1(a), and under CPR 3.1(2)(f) and (m), and 3.1(3). Perhaps most importantly for present purposes, I should read CPR 52.9, which reads as follows:
"52.9(1) The appeal court may—
(a) strike out the whole or part of an appeal notice;
(b) set aside permission to appeal in whole or in part;
(c) impose or vary conditions upon which an appeal may be brought.
(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so.
(3) Where a party was present at the hearing at which permission was given, that party may not subsequently apply for an order that the court exercise its powers under sub-paragraphs (1)(b) or (1)(c)."
It will immediately be apparent that that last provision in subparagraph (3) is material to the present applications, because Mr Rodger and, as I understand it, his client Mr Morris were present before Lindblom LJ when permission was granted and did make through Mr Rodger short submissions. Mr Cohen for the appellant submits that it is now not open to the court to make the strike-out or stay order that is sought by reason of paragraph 52.9(3).
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Spicejet Ltd v De Havilland Aircraft of Canada Ltd
...relevant to take into consideration.” 18 Those decisions were considered by McCombe LJ in Morris v The Highland Group International [2016] EWCA Civ 1361, a case in which permission to appeal had been granted by the Court of Appeal (Lindblom LJ) at an oral hearing attended by the respondent......