Physiotherapy Network v Health & Case Management Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 16 March 2017 |
| Neutral Citation | [2017] EWHC 1238 (QB) |
| Court | Queen's Bench Division |
| Date | 16 March 2017 |
| Docket Number | Case No: QB/2016/0248 |
[2017] EWHC 1238 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
Mr Justice Fraser
Case No: QB/2016/0248
This is an application for permission to appeal, and an appeal in relation to an order of Master Yoxall in respect of security for costs. That order is dated 3 November 2016. This is a rather curious case and it is a rather curious order. I should say I gave permission to appeal at the beginning of this morning's hearing and both parties then argued the substantive appeal.
The reason that it is a curious case and a curious order is perhaps explained by the fact that it was a somewhat curious application for security for costs. Out of deference to Master Yoxall, I should explain at the beginning of this judgment how this situation has come about. The claimant, Health and Case Management Limited ("HCM"), issued proceedings against Physiotherapy Network. The claimant, HCM, also issued an application for security for costs. It did, however, seek security for costs of the action – in other words for the proceedings. That application was then argued before Master Yoxall and led to the order which I am going to identify now in which Master Yoxall in paragraph 1 ordered the defendant, Physiotherapy Network, to give security for the claimant's costs of the counterclaim by paying the sum of £150,000 into the Court Funds Office, or provide an alternative security by a particular date.
Paragraph 2 of the order stated "save for disclosure all further proceedings be stayed until security has been paid;" and in paragraph 3 of the order, the first word "unless" is in bold and underlined in the order. This therefore states " unless security is given as ordered on the production by the claimant of evidence of default, there be judgment for the claimant on the claim and the counterclaim without further order, with the costs of the claimant and counterclaim subject to a detailed assessment if not agreed".
It can therefore be seen that the Master ordered security for costs against the defendant on the counterclaim, but the effect of failing to provide that security meant not only that the counterclaim would not proceed, but that the claimant be given judgment both on its own claim and also the counterclaim without further order. This would therefore mean that there would not be any trial of the merits on the claim, and without Physiotherapy Network being permitted to defend the claim brought against it by the HCM. That paragraph of the order of itself, in my judgment, justified the grant of permission to appeal. I am now going to come onto the way in which the application itself to appeal has been argued before me; but in order to do that properly it is necessary to set out the circumstances in which HCM came to issue proceedings and what the subject matter of both the claim and the counterclaim are, as they are very closely related to one another.
In the Particulars of Claim, which is in the bundle under tab 10, HCM recite that they are an independent provider of case management vocational treatment services and were providing healthcare services to Aviva Health UK Ltd ("Aviva"). The defendant is a provider of physiotherapy services, and on 11 January 2011 the claimant and the defendant, following the successful completion of a pilot arrangement, entered into a services agreement under which the defendant agreed to supply physiotherapy services to the claimant ("the services agreement").
During the course of 2011 the claimant was interested in the possibility of acquiring the defendant and in the particulars of claim at paragraph 6 it explains that to this end the claimant and the defendant entered into a confidentiality and a non-disclosure agreement ("the confidentiality agreement"). There are therefore two agreements between the parties, the services agreement and the confidentiality agreement.
In January 2013 the claimant had its agreement with Aviva terminated and in January 2013 HCM notified Physiotherapy Network that HCM's provision of treatment to Aviva's customers had been terminated. In March 2013 the defendant, Physiotherapy Network, threatened to issue proceedings against Aviva. That plain fact is that the threat was not pursued, or as far as HCM is concerned it is not pursued, but the defendant, Physiotherapy Network, sent a letter of claim alleging various breaches of both the services agreement and the confidentiality agreement by HCM, and that letter of claim of 28 August 2014 made general allegations that the claimant had misused the defendant's confidential information which was secured for the period of 2011.
HCM took the view that the claim which had been threatened against it, and simply had not been issued at all, was responsible for an unsatisfactory state of uncertainty. So HCM issued these proceedings of its own volition, and in its pleadings seeking relief it states at paragraph 20:
"In light of the dispute raised by the defendant in its letter of claim it is in the interests of both parties, but particularly the claimant, to resolve the matter swiftly. The claimant has been placed in the unjust and invidious position of being threatened with a claim of nearly £5,000,000 in addition to costs which the defendant shows no intention of issuing and / or prosecuting. Equally, the defendant has given no, or no clear, indication that it will not be pursuing the claim. The practical effect of the defendant's conduct is that the claimant is unable to make immediate and long-term decisions regarding its commercial future whilst operating under the threat of a multi-million pound claim. In the premises the claimant asks the court for a declaration that, in relation to the allegations contained in the defendant's letter of claim, the defendant's has breached neither the contract nor the confidentiality agreement as alleged or at all."
It is therefore the case that it in the claim HCM was seeking declarations that it was not in breach of either of the two agreements, the services agreement or the confidentiality agreement. It is therefore a very wide-ranging claim."
In the defence and counterclaim Physiotherapy Network denied the case advanced by the claimant in general terms so far as breach was concerned, but in paragraph 16, which is an important part of the pleading, it says:
"For the reasons set out in the counterclaim the claimant is in breach of contract and it is denied that the claimant is entitled to a declaration from the court that it is not in breach of contract, whether in the form claimed in paragraph 20 and / or the prayer for relief or at all"
The defence and counterclaim continues, and both the services agreement and the confidentiality agreement are identified and various breaches are pleaded by the defendant on the part of HCM. Those breaches are extensive. However, having pleaded them, and in also including allegations of use by HCM of the defendant's intellectual property, in less than a page, under paragraph 56 of Loss and Damage, Physiotherapy Network identifies what it claims are particulars of loss reaching to the rather sizable total of £3.375 million together with loss of goodwill, in respect of which it is said Physiotherapy Network is unable to quantify this head of loss until the receipt of expert evidence. Further, a sum is also claimed equivalent to the gains made by the claimant, the expense of the defendant based upon the breaches of the contract on the part of the claimant and the misuse of confidential information of the defendant by the claimant. The defendant states that it will seek an account of profits made by the claimant at the expense of the defendant.
It is fair to say that the freestanding nature of the counterclaim or otherwise was not ventilated before the learned Master either in detail, or at all. I have the same evidence before me as Master Yoxall in the witness statements from the parties, and the appeal was substantially argued before me on the same basis as in fact it was argued before the Master, and that essentially relates to the presence and reliance that can be placed on an insurance policy underwritten by DAS Legal Expenses and Insurance Limited, and the extent to which such a policy can constitute or be seen to being equivalent to security for costs.
However, neither party, save when this was explored in submissions this morning following questions from the bench, necessarily concentrated on any analysis between the claim and the counterclaim, whether or not was a freestanding creature, and the extent to which issues raised in the counterclaim would arise in any event on the claim. I am now going to explain the approach of the court on an appeal from the Master which is set down in CPR Part 52.11, because there was no agreement before me about whether or not this was a full rehearing or a review.
CPR part 52 .22 says:
"(1) Every appeal will be limited to a review of the decision of the lower court unless—
…
(b) the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.
…
(3) The appeal court will allow an appeal where the decision of the lower court was—
(a) wrong; or
(b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court."
Security for costs involves assuming a jurisdictional threshold is passed, which I will come onto in a minute, the exercise of discretion by the...
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Security For Costs Recent Developments
...to pay security for costs for the claimant to defend the counterclaim (Physiotherapy Network v Health & Case Management Ltd [2017] EWHC 1238 (QB)). However, in Dawnus Sierra Leone Ltd v Timis Mining Corporation Ltd and another [2016] EWHC B19 (TCC), the court held that, when a claim and......