Factual and Procedural Background
This case originates from a claim initiated in early 1993 by the Plaintiff, who alleged that jewellery and other items worth approximately 900,000 were stolen from her deposit box held by the Defendants. The Plaintiff, who was then resident in the United States, commenced proceedings by issuing a writ in April 1993. Early in the proceedings, the Plaintiff was ordered to provide security for costs, which she complied with. After returning to the jurisdiction in 1996, obtaining legal aid, and a trial date being set, progress was stalled when a further security for costs order was made. The Plaintiff’s appeal against this order was eventually successful in 1998, with the court recognizing that a substantial security order would stifle the claim.
Subsequently, the Plaintiff’s legal aid was withdrawn and re-granted multiple times. In 1999, the Defendants applied to strike out the claim for want of prosecution, and the application was granted. Permission to appeal that decision was later granted along with permission to rely on new evidence. The Plaintiff’s current solicitors are acting on a contingency fee basis without uplift, and counsel was instructed on a brief fee funded by a loan from a friend.
The Defendants sought security for costs of the appeal, initially requesting 15,000 and later 19,000, supported by a detailed costs estimate. The hearing of this application was originally scheduled for 17th October 2000 but was brought forward to 10th October 2000. Due to administrative and communication failures involving the Plaintiff’s solicitors and counsel, the Plaintiff did not attend the hearing, resulting in an order for security for costs of 17,500 and dismissal of the appeal if security was not provided by 24th October 2000.
The Plaintiff’s solicitors subsequently sought to have the order discharged or varied, but the application was made after the deadline for compliance. The court considered the procedural powers under the Civil Procedure Rules to vary or revoke orders and examined the substantive merits of the security order in light of new evidence and submissions.
Legal Issues Presented
- Whether the order for security for costs of the appeal was properly made under the Civil Procedure Rules, particularly CPR Part 25.15 and Part 25.13, considering changes in the law since May 2000 and the incorporation of the European Convention on Human Rights.
- Whether the Plaintiff’s residence outside the jurisdiction and outside Brussels or Lugano Convention states justifies an order for security for costs.
- Whether the order for security for costs infringes the Plaintiff’s rights under Article 6 (right to a fair trial) and Article 14 (prohibition of discrimination) of the European Convention on Human Rights.
- The appropriate amount of security for costs, considering the Plaintiff’s financial position and the burden of enforcing costs orders abroad.
- Whether the procedural failings of the Plaintiff’s solicitors justify dismissal of the appeal or the imposition of security for costs to the extent ordered.
Arguments of the Parties
Defendants' Arguments
- The Plaintiff, being ordinarily resident outside the jurisdiction and outside the Brussels and Lugano Convention states, falls within the grounds permitting an order for security for costs under CPR Part 25.13(2)(a).
- The Plaintiff has no assets in the jurisdiction, and if the appeal fails, the Defendants would face considerable difficulty recovering their costs.
- The costs estimate submitted by the Defendants’ solicitors justified the amount sought for security.
- The Plaintiff’s solicitors failed to respond adequately to requests for security, justifying the refusal of adjournment and the making of the order.
- The discretion to order security for costs must be exercised in a manner consistent with the European Convention on Human Rights and the principle of non-discrimination under Article 14.
Plaintiff's Arguments
- The Plaintiff contended that the order for security for costs would stifle a genuine appeal, citing earlier judicial recognition that a substantial security order would effectively end her action.
- The Plaintiff’s financial position was such that she lacked the means to provide the full security ordered, though she might raise modest sums.
- The Plaintiff’s solicitors’ failure to attend the hearing was due to administrative oversight and illness, and the Plaintiff herself was not at fault.
- The amount of security sought was excessive and disproportionate to the likely costs of the appeal.
- The Plaintiff argued that the new CPR provisions and the incorporation of the European Convention on Human Rights require a more cautious and less discriminatory approach to ordering security for costs, especially for appellants with a real prospect of success.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Yorke Motors Ltd. v. Edwards [1982] 1 WLR 444 |
Onus on appellant to prove inability to raise security from own resources or others. |
Referenced as part of the prior law on security for costs before CPR changes. |
| Thune v. London Properties Ltd. [1990] 1 WLR 562 (CA) |
Foreign residence as pre-condition for ordering security for costs; impecuniosity relevant to enforcement difficulties. |
Used to explain the rationale behind CPR Part 25.13(2)(a) and (b) concerning foreign residents. |
| Tolstoy Miloslavsky v. United Kingdom (1995) 20 EHRR 442 |
Compatibility of security for costs orders with Article 6 ECHR; fair trial and access to court considerations. |
Guided the court’s assessment of proportionality and fairness in ordering security for costs. |
| M. Pordea v. Times Newpapers (Cour de Cassation, 16 March 1999) |
Security for costs order conflicting with public policy and Article 6 ECHR. |
Illustrated risks of enforcement and public policy concerns related to security for costs. |
| Federal Bank v. Hadkinson (EC3 1999/7560/A2; 5 Nov 1999) |
Security for costs and Article 6 ECHR considerations before incorporation of the Convention. |
Confirmed no breach of Article 6 where appeal not stifled by security order. |
| Fitzgerald v. Williams [1996] QB 657 |
Prohibition of discrimination against plaintiffs resident in other EU member states regarding security for costs. |
Supported the distinction between residents inside and outside Brussels/Lugano Convention states. |
| Mund & Fester v. Hatrex International Transport (Case C.398/92) [1994] ECR I-467 |
Discrimination on grounds of nationality in security for costs provisions. |
Influenced the modification of English law to avoid discrimination against EU nationals. |
| Belgian Linguistics Case (No. 2) (1979-80) 1 EHRR 252 |
Scope of Article 14 ECHR and discrimination linked to Convention rights. |
Used to explain ambit of Article 14 in relation to security for costs and access to justice. |
| Golder v UK (1975) 1 EHRR 524 |
Effective access to courts as a right inherent in Article 6 ECHR. |
Supported recognition of security for costs orders as falling within Article 6 ambit. |
| Stubbings v UK (1996) 23 EHRR 213 |
Less favourable treatment of persons in analogous or relevantly similar situations under Article 14. |
Applied in assessing discrimination claims regarding security for costs. |
| Sporrong and Lonnroth v Sweden (1982) 5 EHRR 35 |
Proportionality test under the Convention balancing community interests and individual rights. |
Informed the court’s approach to proportionality in security for costs orders. |
| Rasmussen v Denmark (1985) 7 EHRR 371 |
Margin of appreciation for Contracting States in justifying differential treatment. |
Referenced regarding discretion in domestic courts in applying Article 14. |
Court's Reasoning and Analysis
The court began by examining the procedural history, highlighting the Plaintiff’s difficulties and the failures of her solicitors in managing communications and attendance at the security for costs hearing. It acknowledged that while the solicitors’ failings were significant, the Plaintiff herself was not at fault.
The court then analyzed the relevant Civil Procedure Rules, particularly CPR Part 25.15 and Part 25.13, noting the significant change from previous rules. Since May 2000, impecuniosity alone is no longer a ground for ordering security for costs on appeal; instead, the court may only order security on the same grounds as for a claimant at first instance, notably foreign residence outside Brussels or Lugano Convention states.
The court considered the European Convention on Human Rights, especially Articles 6 and 14, and the impact of the Human Rights Act 1998. It reviewed the European Court of Human Rights’ decision in Tolstoy Miloslavsky v. United Kingdom, emphasizing the importance of ensuring that security for costs orders do not stifle genuine appeals and must be proportionate.
The court addressed whether the distinction in CPR between claimants resident inside and outside Brussels/Lugano states amounts to unlawful discrimination under Article 14. It concluded that this distinction is objectively justified, reflecting the practical realities of enforcing judgments abroad, and that the discretion to order security must be exercised without discrimination unrelated to enforcement considerations.
Applying these principles to the Plaintiff, a US resident outside the Brussels and Lugano Conventions, the court found that the Defendants were entitled to some security to protect against the greater burden and delay in enforcing costs orders in the United States. However, the amount ordered by Judge LJ was excessive and failed to consider the Plaintiff’s updated financial position and the need to avoid stifling a genuine appeal.
The court recognized that the Plaintiff likely could raise modest sums and that the order should be tailored to the probable extra burden of enforcement abroad rather than the full estimated costs. It also noted that the Plaintiff’s appeal had a real prospect of success and that the procedural failings of her solicitors should not prejudice her unduly.
Accordingly, the court set aside the previous order and proposed a reduced security amount, with an opportunity for further submissions on terms and timing, and ordered the appeal to be restored for hearing.
Holding and Implications
The court SET ASIDE the order made by Judge LJ requiring security for costs in the sum of 17,500 and instead ordered that the Plaintiff provide security for the costs of the appeal in the reduced sum of 5,000. The court directed that the terms and timing of this security be subject to further consideration with counsel.
The appeal against the decision striking out the Plaintiff’s claim for want of prosecution was restored to the list for hearing as soon as practicable.
The decision reflects a careful balancing of the interests of access to justice for appellants with a real prospect of success and the protection of respondents against the risk and burden of enforcing costs orders abroad. It underscores the impact of the Civil Procedure Rules reforms and the incorporation of the European Convention on Human Rights on security for costs applications, particularly emphasizing non-discrimination and proportionality.
No new precedent was set beyond clarifying the application of existing rules and human rights principles in this context.