Second appeal against order requiring sum for security for costs to be paid into court and in default for the claim to be struck out.
Held: The Court considered its jurisdiction to make an order for security for costs under rule 3.1 and, importantly, the relationship of that jurisdiction to the jurisdiction conferred by Part 25. After referring Olatawura v Abiloye, Moore-Bick LJ (with whom Elias LJ and Sedley LJ) agreed, emphasised that litigants should not regard rule 3.1 as providing a way of circumventing the requirements of Part 25: ‘It is clear from paragraph 26 of the judgment in Olatawura v Abiloye that the court was viewing the matter though the prism of an unsuccessful application for summary judgment, but the warning against making exorbitant applications in misguided attempts to obtaining a conditional order for security for costs is of more general application. It would be wrong, in my view, to encourage litigants to regard rule 3.1(3) as providing a convenient means of circumventing the requirements of Part 25 and thereby of providing a less demanding route to obtaining security for costs. In my view, when the court is asked to consider making an order under rule 3.1(3) or 3.1(5) which is, or amounts to, an order for security for costs, or when it considers doing so of its own motion, it should bear in mind the principles underlying rules 25.12 and 25.13. These include the principle that a personal claimant who is resident within the jurisdiction or in one of the other member states of the European Union cannot be required to provide security for costs just because he is impecunious, even though his conduct of the proceedings may be open to criticism. Although it might be argued that the defendant in such a case should be entitled to obtain protection against the risk of being unable to enforce a judgment for costs, a policy decision has been taken to the contrary. This suggests that an order of that kind should not be made in the exercise of the power under rule 3.1(3) unless one or more additional factors are present which make it appropriate to impose a burden of that kind on one party and a corresponding benefit on the other.’ and
‘In both Olatawura v Abiloye and Ali v Hudson the court appears to have been concentrating primarily on the court’s power to order a payment into court under rule 3.1(5), although it may be fair to say that in neither case was it at pains to draw a clear distinction between the two rules. However, they are distinct and directed to different situations. In particular, rule 3.1(3) is deliberately drafted in quite general terms and I think that this court should be reluctant to lay down any hard and fast rules about the circumstances or manner in which the power can be exercised. Experience shows that cases are infinitely variable and the rule does not place any limit on the nature of the conditions that may be imposed or the circumstances in which the power may be invoked, other than providing that a condition may be imposed as an adjunct to an order. However, two matters seem to me to provide support for the view that the power to attach conditions to an order is intended, as Mr. Myerson submitted, to enable the court to exercise a degree of control over the future conduct of the litigation. The first is the existence of rule 3.1(5), which is clearly intended to give the court power to punish a party who without good reason fails to comply with the established procedural code, including the pre-action protocols. Although such an order may well have a beneficial influence on the future conduct of the litigation, it is directed more to what has gone on in the past than what will go on in the future. To that extent it is quite different in nature from a condition of the kind contemplated by rule 3.1(3) which, combined with a sanction for failure to comply, usually of a stringent nature, is designed to control the future conduct of the party on whom it is imposed. The second is the language of the rule itself. The very fact that it allows the court to make an order subject to conditions is sufficient to show that the rule is concerned with the basis on which the proceedings will be conducted in the future, and that remains the case even when the condition is imposed in order to make good the consequences of some kind of previous misconduct.
Having said that, I think it is also necessary to recognise that rule 3.1(3) does not give the court a general power to impose conditions on one or other party whenever it happens to be making an order and if District Judge Babbington thought that it did, he was in my view wrong. When the rule speaks about the court’s making an order it is referring to a direction that a party act in a certain way or that a certain state of affairs should exist, not to the instrument used to give effect to one or more such directions. The court has ample powers under rules 3.1(2)(m) and 3.3 to make whatever orders are needed for the proper management of the proceedings. The purpose of rule 3.1(3) is to enable the court to grant relief on terms and when the power is exercised the condition ought properly to be expressed as part of the order granting the specific relief to which it relates. The order in the present case did not do that. Paragraph 1 was framed as a free-standing order that Mr. Huscroft pay money into court as security for costs; it was not expressed as a condition of obtaining any relief that he was seeking. Paragraph 2 imposed the sanction of striking out his claim in default of compliance. Those were orders of a kind that one might expect to see following an application for security for costs under Part 25 or even an unsuccessful application by one or other party for judgment under Part 24, but not as conditions attaching to a wide-ranging group of relatively routine procedural directions given at a case management conference. I accept that, as Rimer LJ pointed out when refusing permission to appeal on this point, it would be wrong to elevate form over substance, but it seems to me that expressing the relevant order as subject to the condition in question is the right way to exercise the power. It also has the advantage of requiring the court to focus attention on whether the condition (and any supporting sanction) is a proper price for the party to pay for the relief being granted . .’
Judges:
Sedley, Moore-Bick, Elias LLJ
Citations:
[2010] EWCA Civ 1483, [2011] 2 All ER 762, [2011] 1 WLR 939, [2011] CP Rep 16
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Application for leave – Huscroft v P and O Ferries Ltd CA 16-Jun-2010
Renewed application for permission to appeal. . .
Cited – Olakunle O Olatawura v Alexander O Abiloye CA 17-Jul-2002
The claimant challenged an order requiring him to give security for costs before proceeding. The judge had felt he was unreasonable in the way he was pursuing his claim. He appealed saying the order was made outside the scope of Part 25.
Held: . .
Cited by:
Cited – Allen v Bloomsbury Publishing Plc and Another ChD 18-Mar-2011
Further applications in defendant’s application for summary judgment and or security for costs in the claimant’s claim alleging copyright infringement.
Held: The claimant was ordered to pay a sum of andpound;50,000 as security for costs.
Cited – Allen v Bloomsbury Publishing Ltd and Another CA 14-Jul-2011
The claimant appealed against an order requiring him to deposit a substantial sum as security for costs for the bringing of his action for copyright infringement in respect of the Harry Potter series of books.
Held: The appeal failed. The . .
Cited – Carlton Advisors v Dorchester Holdings Ltd ComC 29-Aug-2014
The court considered a request to order the defendants to pay a sum of money into court having defaulted in compliance with directions.
Held: The court does have the power under 3.1(5) to order a party to pay a sum of money into court if that . .
Cited – IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation SC 1-Mar-2017
The court was asked whether the appellant NNPC, should have to put up a further USD 100m security (in addition to USD 80m already provided) in respect of a Nigerian arbitration award which the respondent, had been seeking since November 2004 to . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice
Updated: 21 July 2022; Ref: scu.427366