Shared Network Services Ltd (Appellant/Claimant) v Nextiraone UK Ltd (Respondent/1st Defendant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison |
| Judgment Date | 13 July 2012 |
| Neutral Citation | [2012] EWCA Civ 1171 |
| Docket Number | Case No: A3/2012/0208A |
| Court | Court of Appeal (Civil Division) |
| Date | 13 July 2012 |
[2012] EWCA Civ 1171
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
(MR JUSTICE FLAUX)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Lewison
Case No: A3/2012/0208A
Mr Mark Vinall (instructed by the Bar Pro Bono Unit) appeared on behalf of the Appellant.
Mr Richard Ascroft (instructed by Shakespeares) appeared on behalf of the Respondent.
In an appeal from a decision of Flaux J, sitting in the Commercial Court, giving summary judgment for the defendant against the claimant. The nub of the decision was that the claimant's claim was barred by an exclusion clause in the contract between them. The claimant applied for permission to appeal and the application came before me on the papers. I granted permission to appeal because there was a conflict of authority at High Court level between the decision of Mr Gabriel Moss QC in Internet Broadcasting Corporation & Anr v Marr LLC [2009] EWHC 844 (CH) and the decision of Flaux J not only in this case but also in AstraZeneca UK Ltd v Albemarle International Corp & Anr [2011] EWHC 1574 (Comm),
In paragraph 3 of the reasons which I gave for giving permission to appeal, I said this :
"While I consider that Flaux J was right, and that the appeal does not have a real prospect of success, the point is an important one and the conflict of authority should be resolved by the Court of Appeal. I therefore grant permission on that ground on the footing that there is a compelling reason for the Court of Appeal to hear the appeal."
The principles applicable to an application for security for costs, which this is, are set out by Gibson LJ in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534. He summarised the principles in six propositions between pages 539 and 540. It is conceded in this case that I have jurisdiction to make an order for the provision of security for costs, because it is common ground that the claimant company is not in the position to meet any costs order made against it. In the third of the propositions set out by Gibson LJ he said this:
"The court must carry out a balancing exercise. On the one hand it must weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order for security. Against that, it must weigh the injustice to the defendant if no security is ordered and at the trial the plaintiff's claim fails and the defendant finds himself unable to recover from the plaintiff the costs which have been incurred by him in his defence of the claim. The court will probably be concerned not to allow the power to order security to be used as an instrument of oppression, such as by stifling a genuine claim by an indigent company against a more prosperous company, particularly when the failure to meet that claim might in itself have been a material cause of a plaintiff's impecuniosity…"
In the sixth of the propositions he said:
"Before the court refuses to order security on the ground that it would unfairly stifle a valid claim, the court must be satisfied that, in all the circumstances, it is probable that the claim would be stifled."
He went on to say that the court should consider not only whether the company can provide security out of its own resources but whether it can raise the amount needed from its directors, shareholders or other backers or...
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...that conundrum as best it may." 13 Other authorities were also cited to me, including the more recent decision of Shared Network Services Limited v Nextiraone UK Limited [2012] EWCA Civ 1171, in which Lord Justice Lewison again referred with approval to the Keary Developments case, specific......
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