Parkinson (Sir Lindsay) & Company Ltd v Triplan Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER of THE ROLLS,LORD JUSTICE CAIRNS,LORD JUSTICE LAWTON
Judgment Date19 Jan 1973
Judgment citation (vLex)[1973] EWCA Civ J0119-1

[1973] EWCA Civ J0119-1

In The Supreme Court of Judicature

Court of Appeal

Appeal by plaintiff (by leave of Mr. Justice Mars-Jones) from order of Mr. Justice Mars-Jones on 27th October, 1972.

Before

The Master of The Rolls (Lord Denning),

Lord Justice Cairns and

Lord Justice Lawton.

In the Mater of the Areitration Act 1950

Between
Sir Lindsay Parkinson & Company Limited
Plaintiff
Appellant
and
Triplan Limited
Defendant
Respondent

Mr. J. A. TACKABERRY (instructed by Mr. R. Button) appeared on behalf of the Appellant Plaintiff.

Mr. G. LEVY (instructed by Messrs. Pritchard, Englefield & Tobin, agents for Messrs. William H. Lill & Co. of Altrincham, Cheshire) appeared on behalf of the Respondent Defendant.

THE MASTER of THE ROLLS
1

Triplan Ltd. is a small limited company. In 1968 and 1969 it did Joinery work as a sub-contractor for main contractors, Sir Lindsay Parkinson & Co., Ltd. The original contract price for the work was £8,219; but during the course of the contract, some of the work was omitted and a great deal of extra or new work was done. In the result Triplan Ltd. claimed that they were entitled to £41,761.26 and had only been paid £15,845, leaving £25,916.26 owing to Triplan Ltd. In the first instance Triplan Ltd. sought to have the matter put to arbitration; but Parkinson did not return the form and did not reply to letters. So on 17th June 1971 Triplan Ltd. issued a writ against Parkinson claiming £25,916.26. Faced with a writ, Parkinson demanded arbitration. They applied to stay the action. It was stayed. The dispute went to arbitration. On 15th December 1971 points of claim were delivered by Triplan Ltd. Before delivering their points of defence, Parkinson wrote an open letter on 21st January 1972 to Triplan saying:

"My clients have considered this matter and are prepared to offer your clients the sum of" - I will not state the figure openly because the arbitration is still pending, -"and their reasonable costs in full satisfaction of their claim in this matter. It is intended that this offer shall be the equivalent to a payment into Court in High Court proceedings with a corresponding effect on your clients' liability for costs should an award be made in your clients' favour below the figure mentioned. This offer will remain open for ten days."

2

Such an offer is, of course, equivalent to a payment into Court, see Demolition & Construction Co. Limited. v. Kent River Board 1963 2 Lloyd 7, at page 16.

3

Afterwards the points of defence were delivered. In April 1972 the arbitrator heard an application to fix a date for the Arbitration. He fixed Monday, 3rd July 1972 and allowed 8 days for it.

4

In June 1972 Parkinson looked into the financial position of Triplan Ltd. In consequence they determined to apply to the Court for security for costs. An arbitrator cannot award security for costs of an arbitration; but the High Court can do so. That is shown by section 12(6) of the Arbitration Act 1950. So Parkinson applied to the Master for security for costs of the arbitration.

5

The application came before the Master late on Thursday, 29th June 1972. Parkinson made affidavits to the effect that the financial position of Triplan was precarious, and that there was reason to believe that Triplan Limited. would be unable to pay the costs of Parkinson if Parkinson were successful. On that evidence Mr. Tackaberry for Parkinson argued that the Court had no discretion, but must order security for costs to be given. Master Lubbock accepted that argument. He ordered security for costs to be given by Triplan Limited. in the sum of £1500. They had not got the money to pay it. That was the Thursday evening. Triplan Limited. wanted to appeal to the Judge in chambers. But there was no time to appeal. The arbitrator had fixed the hearing for Monday. 3rd July. So that date had to be vacated. As the arbitrator had allowed 8 days for it, he had to be compensated for his lost days. On 4th September 1972 Triplan paid the arbitrator £300 as security for his fees and expenses.

6

On 27th October 1972 the appeal by Triplan Limited. came before the Judge. Mr. Tackaberry for Parkinson submitted again that once it was shown that there was reason to believe that Triplan Limited. wouldbe unable to pay the costs if Parkinson were successful, the Court had no discretion but had to order security.

7

This point is so important that I must deal with it. Section 447 of the Companies Act 1948 provides that:-

"Where a limited company is plaintiff or pursuer in any action or other legal proceedings, any judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given."

8

Does that section mean that the Court must order security, or is it only that the Court may in its discretion? There are some observations to the effect that it is mandatory. Thus in Northampton Coal Iron & Wagon Co. v. Midland Wagon Co. L. R. 1878 7 Ch. D. 500, at page 503, Lord Justice James said: "I consider security for costs to be ex debito justitiae, and it is a very important matter whether a suitor is likely, if successful, to be able to obtain payment of his costs." In 1890, in Pure Spirit Co. v. Fowler (1890) 25 Q. B. D. 235, at page 237, Mr. Justice Denman said "the Court is bound to order security for costs where the company is in liquidation, and there is no evidence to rebut the inference that the assets will be insufficient to pay the defendant's costs if he succeeds." Those observations seem to have been the basis of a note which was contained in the Annual Practice until 1966. The note said that the wide discretion conferred upon the Court in other cases "does not apply to security ordered under section 447."

9

I do not think those observations are correct. I prefer to follow a case in 1933 which is to be found in the notes in 76 LawJournal Newspaper 204 and 77 Law Journal 123. Lord Justice Scrutton said that there were too many applications against companies for security for costs. In his view "the powers under the section should be carefully used". Lord Justice Maugbam said "The section only confers discretion on the Court. There may be many cases where a company is insolvent and yet the Court would not order security to be lodged." I would add a case in 1962 in the Supreme Court of Eire. It is Peppard & Co. v. Bogoff 1962 The Irish Reports 180. Mr. Justice Kingsmill Moore said at page 188: "The section does not make it mandatory to order security for costs in every case where the plaintiff company appears to be unable to pay the costs of a successful defendant, but that there still remains a discretion in the Court which may be exercised in special circumstances."

10

Turning now to the words of the statute, the important word is "may". That...

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