Somerset-Leeke and another v Kay Trustees and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE JACOB |
| Judgment Date | 01 May 2003 |
| Neutral Citation | [2003] EWHC 1243 (Ch) |
| Court | Chancery Division |
| Docket Number | No: CH/2003/PTA/75 |
| Date | 01 May 2003 |
[2003] EWHC 1243 (Ch)
Mr Justice Jacob
No: CH/2003/PTA/75
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice
The Strand
London WC2A 2LL
MISS C NEWMAN QC with MR E ASHFIELD (instructed by Messrs Evans Dodd, London W1K 2AU) appeared on behalf of the Claimants
MR J FENWICK QC with MR DAVID LORD (instructed by Messrs Tarlo Lyons, London EC1) appeared on behalf of the Defendants
Thursday, 1st May 2003
This is an appeal from a decision of Master Bowman whereby he refused to order security for costs. There are two claimants, an individual, Mr Somerset-Leeke, and a company, Brunel Trustees Ltd. Mr Somerset-Leeke is resident in Monaco. He took up residence there in 1994, well before any of the matters with which this case is concerned. He moved there for tax purposes. That is accepted. The company is a trustee of a pension fund of which Mr Somerset-Leeke is the sole beneficiary.
The matter came before the Master in what I think was a muddled and confusing state. CPR 25.1.3(1) provides:
"The court may make an order for security for costs under rule 25.1.2 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."
Paragraph 2 sets out under heads (a) to (g) the conditions. Condition (a) is that the claimant is (1) resident out of the jurisdiction, but (2) not resident in a Brussels or Lugano State (putting it shortly).
Ground (g) is that the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him. Ground (c) is, in effect, a repeat of section 726 of the Companies Act. It applies where the claimant is a company and there is reason to believe that it would be unable to pay the defendant's costs if ordered to do so. Ground (d) is worth noting in passing, that the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation. Grounds (g) and (d) (which are clearly linked) are new to the CPR.
The application was unsatisfactory because it did not identify which ground or grounds were being relied upon; it simply said security was being sought. If one went to the witness statement in support, that again did not refer especially to any of these grounds. From that unpromising beginning, it is not surprising quite what evidence was being relied upon by each side, and what points were being run by each side. To some extent this uncertainty has remained in the course of the appeal before me.
In applications for security, the relevant ground should always be identified and the relevant evidence aimed at that ground. In fact in this case it seems to me that the defendants are running something of a melange of the grounds. To some extent that is understandable because factors which can affect one ground may affect another ground too. But nonetheless is it essential to be clear which ground is being talked about and what factors are being used in support of that ground, both as a matter of law to establish that the ground exists, and secondly as a matter of fact to be taken into account in exercising a discretion.
I turn first to the position of Mr Somerset-Leeke and ground (a) that he is resident out of the jurisdiction and in Monaco which is not a Convention country. That plainly brings in condition (a). But it is well settled that it is not enough simply to show that the condition is satisfied in order to get an order for security. There must be factors shown which justify the grant of security. Mance LJ put it this way in Nasser v. United Bank of Kuwait [2002] 1 All ER 401 at paragraph 58:
"The exercise of discretion conferred by rule 25.13.1(2)(a)(i) raises, in my judgment, different considerations. That discretion must itself be exercised by the courts in a manner which is not discriminatory. In this context at least I consider that all personal claimants or appellants before the English courts must be regarded as the relevant class. It would be both discriminatory and unjustifiable if the mere fact of residence outside any Brussels/Lugano Member State could justify the exercise of discretion to make orders for security for costs. But the purpose of protecting defendants or respondents to appeals against risk to which they would be equally subject in relation to which they would have no protection if the claim or appeal were being brought by a resident of a Brussels or Lugano State. Potential difficulties or burdens of enforcement in States not parties to the Brussels or Lugano Conventions are the rationale for the existence of any discretion. The discretion should be exercised in a manner reflecting its rationale, not so as to put residents outside the Brussels and Lugano sphere at a disadvantaged compared with residents within. The distinction in the rules based on considerations of enforcement cannot be used to discriminate against those whose national origin is...
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