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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Nasser v United Bank Of Kuwait [2001] EWCA Civ 556 (11 April 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/556.html
Cite as: [2001] EWCA Civ 556, [2002] 1 All ER 401, [2001] CP Rep 105, [2002] 1 WLR 1868, [2002] WLR 1868

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Neutral Citation Number: [2001] EWCA Civ 556
Case No: A2/2000/6479 FC2

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM IAN KENNEDY J.


Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 11th April 2001

B e f o r e :

LORD JUSTICE SIMON BROWN
and
LORD JUSTICE MANCE
AMY NASSER
- and -
UNITED BANK OF KUWAIT

____________________

AMY NASSER
Appellant
- and -

UNITED BANK OF KUWAIT
Respondent

____________________

Simon Edwards (instructed by Messrs Charles Khan for the Appellant)
Peter Irvin (instructed by Messrs Wedlake Bell for the Respondent)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LORD JUSTICE MANCE:

    Introduction

  1. This application arises from an immediate factual background of some intricacy and difficulty for the claimant. But, assuming that the claimant can overcome her difficulties in this respect, it raises a point of general interest as to the Court of Appeal's approach to applications for security for the costs of an appeal under the Civil Procedure Rules ("CPR"), bearing in mind the restriction since 2nd May 2000 of the jurisdiction to make such orders, effected by CPR Part 25.15, read with Part 25.13(2)(a) and articles 6(1) and 14 of the European Convention on Human Rights as incorporated into English law since 2nd October 2000 by the Human Rights Act 1998.
  2. History of the proceedings

  3. These proceedings go back to early 1993 when the claimant asserted that jewellery and other items worth some 900,000 had been stolen from her deposit box with the defendants, and on 15th April 1993 issued a writ. I do not need to go into the long procedural history, save to note that on 18th February 1994 the claimant (by then resident in the United States) was ordered to pay into court within 14 days 10,000 as security for the defendants' costs, which was done.
  4. In January 1996 the claimant returned from the United States and obtained legal aid. A trial date was fixed for April 1996. Progress towards it was then effectively halted on 26th February 1996 following a decision of Master Foster ordering the claimant give further security for costs in the sum of 25,000. The Master was, unfortunately, not reminded, by the junior counsel who attended, of the principle that orders for security for costs should not generally be made if they would stifle genuine proceedings. Much later Mr Ross Munro QC, the claimant's leading counsel, learnt of the position, and advised an application to appeal out of time. Leave to appeal was granted on 14th November 1997, and the appeal was successfully pursued before Curtis J. on 22nd June 1998. Curtis J. held that the mere fact that the claimant was on legal aid did not necessarily exclude any order for security for costs, but that in the particular circumstances there should be no order, because, as he put it:
  5. "I consider that if I made any order of any substance, i.e. anything more than a nominal order, the plaintiff's action would be snuffed out and consequently it would not be right to make the order".

  6. However, as Mr Irvin for the defendants points out, Curtis J expressed concern about aspects of the claimant's evidence regarding lack of means and appears to have placed some weight on the Legal Aid Board's investigation and satisfaction as to her eligibility.
  7. After the hearing before Curtis J, the claimant's legal aid was withdrawn and re-granted on numerous occasions, some further pleadings were exchanged and a case management conference was fixed for the end of October 1999, at which it was intended to seek directions leading to a trial date estimated to last 5-7 days. But on 20th October 1999 the defendants applied to strike the action out for want of prosecution under CPR Part 3.4. The application was granted by Ian Kennedy J. on 26th October 1999. Permission to appeal against his decision was granted by Latham LJ on 4th May 2000, together with permission to rely on the appeal on new evidence identifying the alleged address of a witness, Lena Sabbagh, who the defendants had said was untraceable. In the meantime in or about December 1999 the claimant's legal aid certificate was discharged. Her present solicitors are acting on a contingency fee basis, without uplift, which extends, we are told, to any hearing of the appeal against Ian Kennedy J's decision. In contrast, counsel, Mr Simon Edwards, who appeared before us for the claimant, was, he told us, instructed for a brief fee of 1500 funded by a loan from a taxi-driver friend of the claimant, who attended the hearing before us with the claimant.
  8. The appeal against Ian Kennedy J's decision was due for a three hour hearing on 2nd or 3rd November 2000. On 27th June 2000 the defendants wrote seeking 15,000 security for their costs of the appeal. Chasers of 4th and 14th July led only to holding responses, the second of which said that instructions were anticipated by 24th July; a further chaser of 28th July went unanswered. On 1st September 2000 the defendants issued an application for 19,000 security, supported by witness statement of Mr Hewitt, a partner in their solicitors, Wedlake Bell, producing a costs draughtsman's skeleton bill said to show likely costs of 19,694.93.
  9. The Civil Appeals Office wrote on 2nd October 2000 giving notice that the hearing of the application would take place on 17th October 2000. From the statements and documents (not all of them available to Judge LJ) it is possible to piece together a complicated jigsaw as follows. On 4th October 2000, Wedlake Bell faxed a copy of this notice to the claimant's solicitors, Charles Khan of Slough, Berkshire, together with a copy of a reply from Wedlake Bell to the Office asking whether the hearing of the application could be advanced. Mr Shah produced through counsel before us attendance notes and telephone messages for the period 5th to 9th October 2000. They show that he saw the Office's letter on his return to his office on 5th October, and that at or after 4.15 p.m. he spoke to Mr Ross Munro's clerk, Paul Dennison, to request him to make to the listing department of the Office the (unrealistic) suggestion that the application for security be listed with the appeal to which it related, in order that both might be argued by Mr Ross Munro QC who had appeared before Ian Kennedy J but was in Australia on holiday until 31st October.
  10. A second attendance note dated 6th October at 4.30 p.m. records Mr Ross Munro's clerk as ringing back to say that he had spoken to Julie Whittam (i.e. Julie Witham, a listing assistant in the Court of Appeals Office):
  11. "to have matter listed with substantive hearing and she has asked for our reasons in writing told Paul I will fax a letter to that effect to Julie Whittam (fax no. 0207 947 6621) I will also send him a copy.

    Told him I will try to see if Mr Rashid [junior counsel in another set of chambers] available for 17.10.00 otherwise get back to him for replacement Counsel"

  12. It seems that Miss Witham also mentioned to the clerk "that she had been requested to see if [the matter] could be listed before the 17th October by Wedlake Bell" an obvious reference to Wedlake Bell's letter dated 4th October, of which Mr Shah anyway had a copy. At 5.15 p.m. a third attendance note records that Mr Shah had a 17 minute conversation with Mr Rashid discussing the matter with him, reserving him for 17th October if the application was not re-listed, and booking a conference with him for 5.00 p.m. on Wednesday 11th October.
  13. Wedlake Bell's request for an earlier listing date was, according to the Office's records, referred to Judge LJ on 5th October. His judgment dated 10th October 2000 records that he asked the Office to see "whether arrangements could be made for the hearing of these applications to take place" on 10th October 2000. On Friday, 6th October 2000, Miss Avis Jones, deputy listing officer of the Court of Appeal Office, telephoned Charles Khan, and, as she has recorded, was told that there was no-one there with whom a message could be left. She then spoke to Mr Colin Ross-Munro's clerk, Paul Dennison, to inform him, as she puts it, "of the date of the re-arranged hearing". Inferentially, this call must have been after the clerk's two conversations with Mr Shah at 4.15 p.m. and 4.30 p.m. which I have already recounted, since otherwise the clerk would have told Mr Shah during one of these conversations about Miss Jones' call. The clerk, according to his fax dated 9th October 2000, tried to speak again to Mr Shah, but was told that he was no longer available, having, it may well be, left for the weekend.
  14. Before leaving for the weekend, Mr Shah dictated a letter to the Office seeking to have the application re-listed for 2nd/3rd November, as he had told Mr Ross Munro's clerk that he would. But he failed to ensure that it was despatched and it remained in draft until eventually sent, still unsigned, by his assistant, Mr Khan junior, on the morning of 10th October. He also started to prepare but left in draft a further witness statement updating the position in relation to the claimant's lack of assets. I cannot infer that he did this because of any awareness that the hearing date was being brought forward from 17th October. This witness statement (with some additions to reflect the fact of the hearing and order by Judge LJ on 10th October) was eventually signed on 15th October. It records that Mr Shah was away from his office on both Monday, 9th and Tuesday, 10th October, and, in another letter dated 10th October, Mr Khan says that this was due to illness.
  15. On Friday, 6th October, the clerk to Mr Irvin for the defendants was informed (probably direct by the Office) that the application was being brought forward to 10th October 2000. The two clerks spoke, and Mr Ross Munro's clerk said that his side were objecting to the new hearing date, in view of Mr Ross Munro's unavailability, and would be applying to defer the date from 17th.
  16. On Monday, 9th October, Mr Ross Munro's clerk made repeated attempts to contact Charles Khan, to no avail, until, finally at 6.08 p.m., he addressed to Mr Shah at Charles Khan a fax as follows:
  17. "I write further to our conversation on Friday afternoon concerning the Security for Costs Application by the other side.

    When we spoke on Friday it was your intention to write to the Court of Appeal requesting that the application be heard when the main substantive hearing is listed, and furthermore you were going to forward me copy correspondence. Since speaking to you on Friday I have left numerous messages informing you that the Court of Appeal have brought the other side's application from the 17th October to Tuesday 10th October (tomorrow).

    Given that my calls remain unanswered I will not pursue this matter any further and treat it that we are without instructions in respect of the above hearing.

    I am obliged for your assistance."

  18. By that time, according to Mr Shah's statement, Charles Khan's office had closed. The only record within Charles Khan of the earlier calls appears to consist of two telephone pad messages for Mr Shah asking him to call Mr Ross Munro's clerk in relation to this case, without any indication of the reason. But it seems to me inconceivable that the clerk would not have left (as he says in his fax that he left) an indication as to the reason. Mr Shah has not in any evidence addressed this aspect, though Mr Khan junior's long letter of 10th October asserts the efficiency of Charles Khan's systems for receiving and responding to messages. I cannot accept this assertion. It is evident that, at the least, Charles Khan lacked any proper system for handling outstanding court matters in Mr Shah's absence and for responding promptly to any development. I add that, even on the next day, 10th October, Miss Avis Jones' note of events records her inability to obtain any prompt reaction on the matter despite urgent calls.
  19. An attendance note made by Wedlake Bell records the following as occurring on the morning of 10th October:
  20. "Subsequently ringing Charles Khan. Having introduced myself and asked for Mr Shah, there was a pause and the switchboard operator came back to say that Mr Shah had stepped out of the office. I said that the matter was urgent and Mr Shah must be told immediately that we were going ahead with our application to the Court of Appeal which was listed not before 12 this morning. I was then put through to a Mr Khan who told me that he was Mr Shah's assistant. I gave him the same message."

  21. The switchboard operator's statement to Wedlake Bell that "Mr Shah had stepped out of the office" contrasts with Mr Khan's letter of the same morning, saying that Mr Shah was ill and Mr Shah's statement dated 7th November 2000, saying that he was away from the office. Here, as at some other points, there may be room for suspicion, but we must, I think, proceed on the basis that this was a mere gloss. It would be disproportionate to attempt to investigate such a point further. There is on any view nothing to justify any suspicion in this regard affecting the applicant herself, as distinct from the firm of solicitors instructed by her.
  22. Also on the morning of 10th October an unidentified member of the staff of Charles Khan, probably Mr Khan junior, saw the fax sent by Mr Ross Munro's clerk the previous evening. By letter faxed to the Office he said that the clerk's fax had been received after office hours and had just come to his attention, and that Mr Shah was away ill, Mr Ross Munro away in Australia and junior counsel engaged on another trial. He enclosed the letter that Mr Shah had dictated on Friday, 6th October and repeated the request for an adjournment of the application.
  23. Judge LJ ordered the matter to be put back to 3.00 p.m., so that the Office could contact Charles Khan and give them the opportunity to make further representations on the claimant's behalf. Mr Trott of the Office spoke to Charles Khan. All that was then forthcoming was Mr Khan's long letter faxed at 2.42 p.m. After saying that Charles Khan had no prior knowledge of any hearing date on 10th October, Mr Khan indicated that he had now spoken to Blackstone Chambers, who had no counsel available who could attend that afternoon, and said that:
  24. "It obviously appears that there has been some administrative oversight or confusion at the Court of Appeal in listing the matter and not informing us, as we were in the procedure [sic] of making representations and having this matter listed together with the Substantive Hearing of the 2nd and 3rd November 2000."

  25. After referring once again to the suggested relevance of Curtis J's decision, the letter concluded:
  26. "We would respectfully submit that the matter be adjourned to be heard with the Substantive Hearing. We assure the Court that no disrespect is intended for our non-appearance today, which is purely due to not having been informed of today's hearing."

  27. I have set out the full position as it now emerges from close examination of all the available material. The material produced after Judge LJ's decision on 10th October, particularly Mr Shah's statement of 7th November 2000 and its enclosures and now the attendance notes and telephone message notes demonstrates (a) that Mr Shah did not on 6th October know that there had been a definite change of hearing date, as opposed to a proposal or request concerning a possible change, (b) the likelihood, however unsatisfactory from an office management viewpoint, that Mr Shah was away on 9th and 10th October, and that no-one within Charles Khan appreciated until the morning of 10th October that the hearing date had been advanced to 10th October and (c) the likelihood that, once this was appreciated, Mr Shah's assistant did at least seek, in open correspondence with Wedlake Bell and the court, and by making enquiries of counsel's chambers, to address the problem.
  28. It follows from (a) that I see no fault on the part of Mr Shah or Charles Khan before the weekend, save in so far as (i) the whole handling of the security application appears to have been dilatory any witness statement from Mr Shah in response to an application made in early September should have been prepared long before October, (ii) there was no-one in Charles Khan's office who could take a message from Miss Jones but, at a relatively late hour on a Friday afternoon, this failure seems to me venial and (iii) Mr Shah failed to fax the Office and send Mr Ross Munro's clerk a copy as he had told the clerk that he would but this failure is unrelated to any attempt by the Office to bring forward the previously announced hearing date of 17th October.
  29. As to (b), Charles Khan are in my judgment open to justifiable criticism for not having proper procedures for receiving and responding to messages and developments on outstanding court matters in Mr Shah's absence. However, it is right to add that, even if there had been a due response to Mr Ross Munro's clerk's messages on Monday, 9th October, and counsel had been instructed to attend on 10th October, there is room for some doubt whether the matter could have proceeded then in Mr Shah's absence and without his witness statement having yet been signed or served.
  30. As to (c), once Tuesday, 10th October had come, I find it understandable that Mr Khan junior did not attend himself from Slough. But it is less easy to accept that he could not have arranged counsel's attendance from some chambers. However, at that stage this would almost certainly have been pointless, save as a matter of politeness to the court, since counsel could not have familiarised himself with the matter in any way that would have assisted either the claimant or the court. The letters Mr Khan junior wrote were inaccurate regarding the efficiency of the firm's systems for receiving and acting on messages, but they do indicate genuine attempts to deal with an urgent and unexpected matter that had only just come to the attention of an assistant in the absence of his partner.
  31. With hindsight, at least, it is also clear that it would have been better, if the Office - having sent out an original written notice giving 17th October as the hearing date - had, during Friday 6th or (at very latest) Monday, 9th October given, by fax, a further written notice bringing forward that date to 10th October. Even in Mr Shah's absence, I do not think that one can exclude the possibility that such a notice would have reached Mr Khan junior's attention and led him to act on Monday, 9th October. However, as Mr Shah's own attendance notes acknowledge, such matters are commonly dealt with by contact between counsel's clerk and Listing. It was incumbent on Charles Khan to have an efficient internal system for handling outstanding matters in Mr Shah's absence.
  32. Judge LJ's decision of 10th October 2000

  33. On the material before Judge LJ, it is not difficult to understand why Judge LJ refused the suggestion of an adjournment. Nor, in the light of all the material now available, can Charles Khan be excused from blame in the respects that I have identified. On the other hand, any failings undoubtedly look more limited and much less blatant now than they would have done before Judge LJ; and the claimant, whose appeal has been dismissed, was clearly not involved and not to blame in any way, at least during the critical period of 5th October onwards. In the circumstances, I consider it appropriate to look at the wider position and address (a) the question whether there is any procedural basis for revisiting Judge LJ's decision on security, (b) if there is, whether there is any substantive basis for the claimant's submission that no or only much less security should be ordered.
  34. Judge LJ dealt in his judgment to deal with the substantive application for security, quite shortly, as follows:
  35. "10. I have read all the relevant papers. The applicants, the United Bank, are respondents to this appeal which is brought by Amy Nasser against the decision of Ian Kennedy J. striking out her claim against the Bank on grounds of delay. That word sufficiently encompasses the basis on which the judge made his order. Leave has been granted for this appeal to be brought, hence the present application for security.

    11. The appellant as she now is, is a citizen of the United States of America. She resides there. There were previous orders for security, the last only discharged when the claimant was granted legal aid in this country. She no longer enjoys the benefit of a legal aid certificate. Those orders were, however, made a long time ago and I have decided that I should examine this application on the basis of more recent events and the facts known to me as they now stand. The evidence suggests that she has no assets at all in this jurisdiction. If her appeal is unsuccessful the respondents will have, putting it neutrally, considerable difficulty in recovering the costs of successfully contesting the appeal. Efforts have been made, and I have seen the correspondence both in June and again in July, to persuade the solicitors for the claimant to provide some security so as to avoid an application. Apart from what could be described as standard courtesies, effectively, there never was any response to those letters. I understood from Mr Irvin this morning, but I am open to correction, that his solicitors have continued to write to the solicitors for the other side trying to encourage rather more activity than the negative responses that were received to the June and July letters.

    12. Be that as it may, having stood back from the facts of this case, I am satisfied that the application is justified. I have looked at the figures, there is no one to contend that they are unreasonable, the figures are now approaching something just under 20,000. It seems to me that the appropriate order should be less than that I shall make it in the sum of 17,500."

  36. The Order drawn up after Judge LJ's decision read as follows:
  37. "IT IS ORDERED

    1. that the Claimant's application contained in letters dated the 10th of October 2000 to adjourn the hearing of this application be refused

    2. that the Claimant provide security for the Defendant's costs of the appeal herein by paying the sum of 17,500.00 into Court by 4pm on Tuesday the 24th of October 2000 and in default of such security being furnished as directed and on the solicitor for the Defendant notifying the Civil Appeals Office of such default the said appeal shall stand dismissed with costs without further order.

    .

    6. there be permission to both parties to apply."

    It was stamped 11th October and faxed to Charles Khan on the same date.

    The present application

  38. Charles Khan have, in a letter dated 24th October 2000, referred to a copy of a letter dated 11th October 2000 supposedly sent to the Listings Department of the Court of Appeal, under the permission to apply contained in paragraph 6 of the Order, seeking to have the order discharged and/or varied. The Office has not located any original, and Mr Shah's statement does not deal with the matter at all. Suffice it to say, that, even assuming such an original to have been sent and even assuming that the permission to apply could properly be invoked by letter, it cannot assist. Permission to apply is appropriate to enable an order to be worked out, or varied so as to be worked out differently, e.g. by extending the time for compliance. Here, what is intended is quite different. It is revocation of the whole order for security, or variation of the amount ordered.
  39. The present application was not made until 25th October 2000, after the date for putting up security had passed. Nevertheless, CPR Parts 3.1(7) and 23.11 confer a discretion wide enough to cover it. They read:
  40. "3.1(7) A power of the court under these Rules to make an order includes a power to vary or revoke the order."

    "23.11 - (1) Where the applicant or any respondent fails to attend the hearing of an application, the court may proceed in his absence.

    (2) Where

    (a) the applicant or any respondent fails to attend the hearing of an application; and

    (b) the court makes an order at the hearing, the court may, on application or of its own initiative, relist the application. ."

  41. These are new and wider powers than previously available (cf the note to Part 23.11). They need to be exercised cautiously in relation to hearings of which a party has received appropriate notice. But that procedural power exists to set aside Judge LJ's order regarding security is clear and was in the event accepted before us.
  42. The merits of the issue whether an order for security should have been made

  43. I turn therefore to the merits of the issue whether the order for security should have been made and whether it should, in the light of the further evidence and submissions now before the court, stand. We have invited and heard submissions on aspects of the matter that neither side had, it appears, previously considered. This case highlights an important change in the practice of this Court as regards security for the costs of appeals. The change appears from a comparison of the new CPR Part 25.15, read with Part 25.13(2)(a) with the old RSC O.59 r. 10(5). It is discussed in the notes at CPR 25.15.1.
  44. Formerly, the Court had a discretion to order security "in special circumstances", and it was "settled practice" that impecuniosity constituted, of itself, such a circumstance: see notes at 59/10/20 in the 1999 and prior White Books. That was, however, counterbalanced in an extreme case, by the consideration mentioned earlier in this judgment, that a genuine claim, at least one with apparent prospects, should not be stifled by a requirement to put up security that an appellant could not provide. In this connection, it was well-established that it was for an appellant to show not only that he could not raise the money from his own resources, but also (and the onus was him on this issue too) that he could not raise the money from other sources, e.g. friends or supporters: see the note at 59/10/25, referring to Yorke Motors Ltd. v. Edwards [1982] 1 WLR 444.
  45. In contrast, since 2nd May 2000, CPR Part 25.15 provides:
  46. "Security for costs of an appeal

    25.15-(1) The court may order security for costs of an appeal against -

    (a)an appellant;

    (b)a respondent who also appeals,

    on the same grounds as it may order security for costs against a claimant under this Part.

    (2) The court may also make an order under paragraph (1) where the appellant, or the respondent who also appeals, is a limited company and there is reason to believe it will be unable to pay the costs of the other parties to the appeal should its appeal be unsuccessful."

  47. The Court may now, therefore, only order security for the costs of an appeal "against an appellant . on the same grounds as it may order security for costs against a claimant under this Part". Impecuniosity is no longer of itself a ground. The only potentially applicable ground in the present case is found in Part 25.13(1) and (2)(a). I set this out in context:
  48. 25.13-(1) The court may make an order for security for costs under rule 25.12 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) (i) one or more of the conditions in paragraph (2) applies, or

    (ii)an enactment permits the court to require security for costs.

    25.13(2) The conditions are -

    (a) the claimant is an individual -

    (i)who is ordinarily resident out of the jurisdiction; and

    (ii) is not a person against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention, as defined by section 1(1) of the Civil Jurisdiction and Judgments Act 1982.

    (b) the claimant is a company or other incorporated body

    (i) which is ordinarily resident out of the jurisdiction; and

    (ii) is not a body against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention;

    (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so; "

  49. Part 25.13(2)(a)(i) and (b)(i) mirror a ground for ordering a plaintiff to give security for costs at first instance under the previous rules. In that connection there was clear authority, indicating that, although foreign residence was a pre-condition to the making of such an order, once that pre-condition was satisfied, the court could have regard not merely to matters related directly to the foreign residence, but also to matters intrinsic to the plaintiff wherever he or she might be, such as impecuniosity: see Thune v. London Properties Ltd. [1990] 1 WLR 562 (CA).
  50. One aspect of the rationale of the change now made to the rules relating to security for costs of an appeal is found in the pre-condition under CPR to any appeal, that permission to appeal should have been obtained. Once it has been obtained, then in the normal case, it follows that there must be a "real prospect" of the appeal succeeding. But that cannot represent the only aspect to the change, since the existence of a "real prospect" of a successful appeal was not an automatic bar to an order for security for the costs of an appeal under the old rules.
  51. The other aspect must in my judgment lie in recognition that, for those with a real prospect of success, ease of access to appellate justice should be given greater priority than hitherto. That is consistent both with one important aim of the new Civil Procedure Rules generally and with article 6 of the European Convention on Human Rights, which provides:
  52. "Article 6 Right to a fair trial

    (1) In the determination of his civil rights and obligations ., everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law "

  53. Since 2nd October 2000, English courts are obliged to act compatibly with the Convention and, when determining any question which has arisen in connection with a Convention right, to take into account decisions of the European Court of Human Rights: Human Rights Act 1998 ss. 2(1) an 6(1) and (3).
  54. I start by noting the approach of the European Court of Human Rights to orders for security for costs of an appeal made under the old rules. In Tolstoy Miloslavsky v. United Kingdom (1995) 20 EHRR 442, the ECHR had to consider an order that security for costs of an appeal be provided in the sum of 124,900 within 14 days. The Court's starting point was that
  55. " a Contracting State which sets up an appeal system is required to ensure that persons within its jurisdiction enjoy before appellate courts the fundamental protections in Article 6."

  56. "However", it went on:
  57. "2. Compliance of Article 6(1)

    59. The Court reiterates that the right of access to the courts secured by Article 6(1) may be subject to limitations in the form of regulation by the State. In this respect the State enjoys a certain margin of appreciation. However, the Court must be satisfied, firstly, that the limitations applied do not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Secondly, a restriction must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved.

    It follows from established case law that Article 6(1) does not guarantee a right of appeal. Nevertheless, a Contracting State which sets up an appeal system is required to ensure that persons within its jurisdiction enjoy before appellate courts the fundamental guarantees in Article 6. However, the manner of application of Article 6 to proceedings before such courts depends on the special features of the proceedings involved; account must be taken of the entirety of the proceedings in the domestic legal order and of the role of the appellate court therein.

    The Court's task is not to substitute itself for the competent British authorities in determining the most appropriate policy for regulating access to the Court of Appeal in libel cases, nor to assess the facts which led that court to adopt one decision rather than another. The Court's role is to review under the Convention the decisions that those authorities have taken in the exercise of their power of appreciation."

  58. After a careful examination of the course of the proceedings between Lord Aldington and Count Tolstoy, the Court rejected Count Tolstoy's submission that the order impaired the "very essence of the right of access to court and was disproportionate for the purposes of Article 6" (para. 62). But it is its reasons for doing so that are most relevant here. They appear from paras. 63-67:
  59. "63. In the first place, the case had been heard for some 40 days at first instance before the High Court, in the course of which Lord Aldington gave evidence for more than six days and was cross-examined, the applicant gave evidence for more than five days and a number of witnesses were called. It is undisputed that the applicant enjoyed full access to the court in those proceedings. It is true that he initially complained about their lack of fairness. However, that complaint was declared in admissible by the Commission as being manifestly ill-founded.

    The Court attaches great weight to the above considerations in its assessment of the compatibility with Article 6 of the restrictions on the applicant's access to the Court of Appeal. Indeed, as indicated earlier, the entirety of the proceedings must be taken into account.

    64. Admittedly, the sum required - 124,900 - was very substantial and the time-limit - 14 days - for providing the money was relatively short. However, there is nothing to suggest that the figure was an unreasonable estimate of Lord Aldington's costs before the Court of Appeal or that the applicant would have been able to raise the money had he been given more time.

    65. According to the relevant practice in the Court of Appeal, impecuniosity was a ground for awarding security for costs of an appeal to that court, but only on certain conditions. In exercising its discretion as to whether to grant an application for such an order, the Court of Appeal would consider whether the measure would amount to a denial of justice to the defendant, in particular having regard to the merits of the appeal. If it had reasonable prospects of success, the Court of Appeal would be reluctant to order security for costs.

    The disagreement between the applicant and Lord Aldington in the security for costs proceedings concerned the merits or lack of merits of the appeal. The Registrar of the Court of Appeal, with hesitation, decided that the appeal had just enough strength to allow the applicant to proceed without furnishing security for costs. This decision was subsequently reversed by the Court of Appeal because the applicant had failed to show real and substantial grounds for his appeal, both on liability and on damages. On the point of damages, the Court of Appeal observed, inter alia, that the applicant was not so interested in that issue as in the question of liability and that he had declined to accept Lord Aldington's offer to settle for 300,000. Therefore, an appeal on damages only would have been no more than an academic exercise.

    The Court does not find that the justification given by the Court of Appeal for ordering security for costs disclosed any arbitrariness.

    66. Moreover, the security for costs issue was first examined by the Registrar of the Court of Appeal and then heard by the court for six days. The Court of Appeal's decision was thus based on a full and thorough evaluation of the relevant factors.

    67. In the light of the foregoing, the Court does not find that the national authorities overstepped their margin of appreciation in setting the conditions which they did for the applicant to pursue his appeal in the Court of Appeal. It cannot be said that those conditions impaired the essence of the applicant's right of access to court or were disproportionate for the purposes of Article 6(1)."

  60. It is evident that the European Court attached great weight to (a) the fact that there had been a full hearing on the merits of the libel case, (b) the fact that there had been full hearings of the security for costs application, (c) the Court of Appeal's conclusion on the hearing for security that the appellant had no real or substantial grounds for his appeal on liability or damages (that appeal being brought as of right under the then procedure), (d) the reasonableness of the estimate of costs, (e) Count Tolstoy's ability to raise the money required, at least if given an extension of time and (f) on the evidence before the European Court, the Court of Appeal's reluctance to order security for costs, against an appellant with reasonable prospects of success (para. 65, last sentence) and its readiness to consider in the context of any application for an extension of time, whether refusal "would amount to a denial of justice to the defendant, in particular having regard to the merits of the appeal".
  61. A cautionary warning that there may be unexpected implications in orders for security for costs that have the effect that no hearing occurs is also found in the Cour de Cassation decision in the case of M. Pordea v. Times Newpapers (1re Chambre Civile 16 March 1999). M. Pordea had had his claim for libel in the English High Court dismissed in 1988, following his non-compliance with an order to put up security for costs in the sum of 25,000. Judgment was entered against him for The Times' costs of the action in a sum taxed, later in 1988, at 20,078. The Cour de Cassation refused to enforce this judgment against Mr Pordea, taking the view under article 27(1) of the Brussels Convention that it was contrary to public policy, in that the security for costs order made against M. Pordea had infringed article 6(1) of the European Convention on Human Rights. The order for security in the Pordea case was made long before the Court of Appeal's decision in Fitzgerald v. Williams [1996] QB 657 precluded the making of such orders against persons domiciled and resident in another member state of the European Union (and so party to the Brussels Convention), because so to order would be covertly discrimatory. This has been overlooked by French commentators writing, somewhat caustically, about English practice in the light of the Pordea case: see e.g. Variations Pordea, Georges A. L. Droz (Rev. crit. D. I. P. 2000, 181) But the incorporation of article 6(1) into English domestic law means that the decision retains some general interest.
  62. Following the introduction of the general requirement of permission to appeal, but before the introduction of the new rule relating to security, Part 25.15, and the incorporation of the Convention, this court considered the impact of the Tolstoy case on an order for security for the costs of an appeal in Federal Bank v. Hadkinson (EC3 1999/7560/A2; 5th November 1999). Morritt LJ as the single judge pointed out that the Convention was not then in force and that the effects of the order he proposed would expire before it came into force. The full court upholding his order said that it did not breach article 6 because it had "not been demonstrated that the appeal would be stifled by making the order".
  63. With the introduction of Part 25.15, the grant of permission to appeal achieves a wider significance. A personal litigant with permission to appeal is equated with a personal claimant. Impecuniosity has been abandoned as a ground for ordering security for the costs of an appeal. The grant of permission denotes at the least a real prospect of success or some other compelling reason for an appeal. In this context, the policy adopted has been to restrict the grounds on which security may be ordered, and so to ease access to an appellate court for those with a real prospect of success or some other compelling reason for an appeal.
  64. What remains as one ground on which security may be ordered is foreign residence except in cases involving the "single legal market" to which the Brussels and Lugano Conventions aspire in matters of enforcement and recognition. The rationale of the discretion to order security on that ground is that enforcement of an order for security for costs abroad may be more difficult or costly than elsewhere: cf Sir Jeffery Bowman's Review, paragraphs 33-37. The single legal market of the Brussels and Lugano Conventions means that "abroad" in this context now means not merely outside England or the United Kingdom, but outside the jurisdictions of the states party to those Conventions. It is however important that Part 25.15(1) and Part 25.13(1) involve a discretion.
  65. I turn now to consider whether and to what extent these Parts raise any issue of discrimination. It is at this point that article 14 of the European Convention on Human Rights, now incorporated, has potential significance. It reads:
  66. "Article 14 Prohibition of discrimination

    The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."

  67. The ambit of article 14 in the light of its express terms has been considered by the EctHR. The following principles are put forward by Mr Irvin for the defendants and not challenged by Mr Edwards for the claimant:
  68. "a. Article 14 applies to the "enjoyment" of Convention rights. This means that even if there is no actual breach of a Convention right there can still be an Article 14 claim if the conduct complained of comes within the ambit of the right, i.e. its subject matter is linked to the exercise of the right concerned (Belgian Linguistics Case (No. 2) (1979-80) 1 EHRR 252) .;

    b. Therefore, as long as it is established that orders for security for costs fall within the ambit of the right to a fair trial in Article 6, the UK is obliged to exercise its discretion in granting orders in a way which does not discriminate under Article 14;

    c. A claim falls within the ambit of Article 6 if the conduct is linked to one of the rights "inherent in Article 6, which includes effective access to the courts in the determination of a civil right or obligation (or a criminal charge) (Golder v UK (1975) 1 EHRR 524);

    d. An applicant next has to show that he or she is treated less favourably than other people who are in a relevantly similar or analogous situation; Stubbings v UK (1996) 23 EHRR 213;

    e. Article 14 then prohibits discrimination between those people on a "prohibited ground", which includes those listed in Article 14 and others;

    f. Conduct which would otherwise be unlawful will not breach Article 14 if it is objectively justified, i.e. it pursues a legitimate aim (Belgian Linguistics);

    g. The conduct must also be a proportionate means of achieving the legitimate aim. Proportionality under the Convention involves striking a fair balance between the protection of the interest of the community and a respect for the rights and freedoms safeguarded by the Convention (Sporrong and Lonnroth v Sweden (1982) 5 EHRR 35) ..

    h. Finally, Contracting states enjoy a margin of appreciation (i.e. a discretion) in relation to the question of justification, which depends on all the circumstances, subject matter and background of the case (Rasmussen v Denmark (1985) 7 EHRR 371 .."

  69. The last principle is, however, applicable rather at the level of the European Court in Strasbourg than before us. We have to make up our own minds what, in the English domestic context, is a justifiable and proportionate exercise of discretion.
  70. Mr Irvin accepts, realistically, that the rules relating to the provision of security for costs fall within the ambit of the right of access to courts under article 6. The reasoning in the Tolstoy case indicates this, likewise that in Federal Bank v. Hadkinson. I took the same view, after the incorporation of the Convention, sitting as a single judge of this court in Gulf Azov Shipping Co. Ltd. v. Chief Idisi (unrep'd; 19/12/00). My reasoning there (in the context of applications made under both the old and the new rules, though the application under the new rules failed for the special reason that the appeal related to a finding of contempt) depended on clear evidence that there would, in the light of the defendant's conduct in the action so far and influence and conduct in Nigeria, be very substantial difficulty in enforcing any judgment for costs against him in Nigeria. That made it appropriate to order security on the first application by reference to the full amount of the costs likely to be incurred in the Court of Appeal.
  71. Whilst, in Tolstoy, the European Court has considered and accepted an application for security for costs made on the ground of impecuniosity in the context of the old rules, the new rules, with their distinction between residents inside and outside Brussels and Lugano Convention states, raise a potential issue of discrimination that could not have arisen under the old rules. The European Court pointed out in the Belgian Linguistics case, giving the example of a right of appeal, that a state may not be obliged to have a particular procedure, but that, if it does have it, then the procedure must not involve undue discrimination (page 283, para. 9). The question can therefore arise whether the limitation of the right to order security for costs to those resident outside Brussels/Lugano states is or may be discriminatory.
  72. It is instructive to look more closely at Fitzgerald v. Williams to which I have already made passing reference. The argument there turned on article 6 of the E.C. Treaty, which provided:
  73. "Within the scope of application of the Treaty, and without prejudice to any special provision contained therein, any discrimination on grounds of nationality shall be prohibited."

  74. The Court of Appeal in Fitzgerald v. Williams referred to the E.Ct's decision in Mund & Fester v. Hatrex International Transport (Case C.398/92) [1994] ECR I-467) as establishing that any automatic provision for security for costs against a person resident in another member state of the EU would be covertly discriminatory on grounds of nationality. The Mund case concerned such a provision (under German law). The former English rule, which Fitzgerald v. Williams concerned, was different. It contained no explicit presumption that a judgment would be more difficult to enforce abroad, and it conferred a discretionary power. The Court of Appeal concluded however that a modification of English law or practice was required in the light of the Mund decision:
  75. "The answer compelled by the Mund case in my view is: the English court should never exercise its discretion to order security to be given by an individual plaintiff who is a national of and resident in another member state party to the Convention [i.e. the Brussels Convention], at any rate in the absence of very cogent evidence of substantial difficulty in enforcing a judgment in that other member state."

  76. There was no suggestion in Fitzgerald v. Williams that the traditional practice of the English court required any modification where a plaintiff was ordinarily resident in a country not a member of the European Union. But the introduction of Part 25.15, the incorporation into English law of the European Convention on Human Rights and the provisions of ss.6(1) and (3)(a) of the Human Rights Act 1998 making it unlawful for the court as a public authority to act in a way which is incompatible with a Convention right, require us to address the possibility that it now is.
  77. Although the precise phraseology of article 14 is different to that of article 6 of the EU Treaty (which speaks simply of "nationality"), I do not think that the two articles can sensibly be distinguished as regards the protection that they may afford in respect of orders against foreign residents for security for costs. And the national origin of the great majority of foreign residents affected by orders for security for costs under (now) CPR Part 25.15(1) read with Part 25.13(2)(a) is likely to be in states not party to the Brussels or Lugano Convention: compare Mund and Fitzgerald v. Williams, where the fact that the great majority of persons resident abroad against whom enforcement abroad would take place would be foreign nationals led to the conclusion that there was illegitimate discrimination. However, there is the distinction that in Fitzgerald v. Williams the discrimination was between those resident in the United Kingdom and those resident in other European Union states party to the Brussels Convention. The existence of the Brussels Convention was a central element in the reasoning in both Mund and Fitzgerald v. Williams.
  78. Mr Irvin submits on this basis that Part 23.13(2)(a)(i) and (b)(i) do not treat the claimant differently from anyone "in an analogous or relevantly similar situation", a phrase taken from Stubbings. The European Court there upheld the distinction drawn by the English Limitation Act 1980 between cases of intentionally and negligently inflicted harm (the former subject to a strict six year time limit running from the age of majority, which could operate more restrictively than the latter, based on a time limit of three years running from the date of knowledge with provisions for discretionary extension under s.33 of the 1980 Act). The European Court accepted that English law could legitimately regard these cases as falling within different categories (pointing out that it may be more readily apparent to the victims of deliberate wrongdoing that they have a cause of action) (para.71). It went on that, even if a comparison could properly be drawn between the two groups, "the difference in treatment may be reasonably and objectively justified, again by reference to their distinctive characteristics" (para.72). It is, thus, evident that there is a close relationship between the questions whether two groups are to be regarded as falling within different categories and whether, if so, any difference in their treatment is reasonable and objectively justified; the two questions tend to merge into each other.
  79. Mr Irvin's submission here is that the claimant is in an analogous or relevantly similar position to all other foreign residents in states not party to the Brussels or Lugano Conventions, and that she is treated alike with them. That submission depends upon the level at which the class is identified, and this may, in my view, also depend upon the context in which the analogy is drawn or the similarity is said to be "relevant". At one most obvious level, all personal claimants (or appellants) before the English courts fall into one category. But the rules draw a distinction at another level, between claimants resident within and outside Brussels and Lugano states. This distinction serves simply to identify when a discretion exists to order security for a defendant's or respondent's costs. In that context, the distinction between residents within and outside Brussels and Lugano states cannot be regarded as unduly discriminatory, since, first, it can be said that the recognition of separate categories makes sense as a broad rule of thumb, defining when any question of discretion can arise (rather than how it will be exercised); and, secondly and in any event, the distinction drawn is in that context reasonable and objectively justifiable. The single legal market of the Brussels and Lugano Conventions is a significant achievement on the road to easy and automatic recognition and enforcement of judgments, as recognised by the decision in Mund.
  80. The exercise of the discretion conferred by Part 23.13(1) and (2)(a)(i) and (b)(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 with the purpose or effect of protecting defendants or respondents to appeals against risks, to which they would equally be subject and 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 party to the Brussels or Lugano Convention 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/Lugano sphere at a disadvantage 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 outside any Brussels and Lugano state on grounds unrelated to enforcement.
  81. In this connection, I do not consider that one can start with any inflexible assumption that any person not resident in a Brussels or Lugano state should provide security for costs. Merely because a person is not resident in England or another Brussels or Lugano state does not necessarily mean that enforcement will be more difficult. The modern European equivalent of the Queen's writ may not run. But the entire rest of the world cannot be regarded as beyond the legal pale. For example, the United Kingdom has reciprocal arrangements for recognition and enforcement with many Commonwealth and common law countries which have introduced legislation equivalent to Part I of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act 1920), and which have highly sophisticated and respected legal systems. Many other countries have well-established procedures for recognising English judgments. The exercise of the discretion on grounds of foreign residence should not be either automatic or inflexible.
  82. I would interpose at this point that, even where a claimant or appellant is resident abroad, there may of course be special factors indicating that any order for costs will be satisfied in some other fashion. The interesting possibility was raised before us that a claimant or appellant who has insured against liability for the defendants' costs in the event of the action or appeal failing might be able to rely on the existence of such insurance as sufficient security in itself. I comment on this possibility only to the extent of saying that I would think that defendants would, at the least, be entitled to some assurance as to the scope of the cover, that it was not liable to be avoided for misrepresentation or non-disclosure (it may be that such policies have anti-avoidance provisions) and that its proceeds could not be diverted elsewhere. The new arrangements for the funding of litigation certainly appear capable of throwing up possible imbalance, in so far as they permit contingency fee arrangements with uplifts potentially recoverable from losing defendants, but enable claimants to pursue litigation without insuring or securing the defendants' fees. The claimant's contingency fee arrangement in the present case is, however, without uplift.
  83. Returning to Part 25.15(1) and 25.13(1) and (2)(a) and (b), if the discretion to order security is to be exercised, it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. The former principle was that, once the power to order security arose because of foreign residence, impecuniosity became one along with other material factors: see the case of Thune cited above. This principle cannot in my judgment survive, in an era which no longer permits discrimination in access to justice on grounds of national origin. Impecuniosity of an individual claimant resident within the jurisdiction or in a Brussels or Lugano state is not a basis for seeking security. Insolvent or impecunious companies present a different situation, since the power under CPR Part 25.13(2)(c) applies to companies wherever incorporated and resident, and is not discriminatory.
  84. The justification for the discretion under Part 25.13(2)(a) and (b) and 25.15(1) in relation to individuals and companies ordinarily resident abroad is that in some, it may well be many, cases there are likely to be substantial obstacles to or a substantial extra burden (e.g. of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or in a Brussels or Lugano state. In so far as impecuniosity may have a continuing relevance, it is not on the ground that the claimant lacks apparent means to satisfy any judgment, but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad, or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad.
  85. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under Part 25.13(2)(a) or (b) or 25.15(1) is to be exercised, there must be a proper basis for considering that such obstacles may exist, or that enforcement may be encumbered by some extra burden (such as costs or the burden of an irrecoverable contingency fee or simply delay).
  86. The courts may and should, however, take notice of obvious realities without formal evidence. There are some parts of the world where the natural assumption would be without more that there would not just be substantial obstacles but complete impossibility of enforcement; and there are many cases where the natural assumption would be that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. But in other cases - particularly other common law countries which introduced in relation to English judgments legislation equivalent to Part I of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act 1920) - it may be incumbent on an applicant to show some basis for concluding that enforcement would face any substantial obstacle or extra burden, meriting the protection of an order for security for costs. Even then, it seems to me that the court should consider tailoring the order for security to the particular circumstances. If, for example, there is likely at the end of the day to be no obstacle to or difficulty about enforcement, but simply an extra burden in the form of costs (or an irrecoverable contingency fee) or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden.
  87. I also consider that the mere absence of reciprocal arrangements or legislation providing for enforcement of foreign judgments cannot of itself justify an inference that enforcement will not be possible. The present case illustrates this. It is a remarkable fact that no country has ever entered into any treaty providing for recognition and enforcement of judgments with the United States of America. But the reason is concern about the breadth of American jurisdiction, the corollary of which has been a willingness on the United States part to recognise and enforce foreign judgments by action on a similarly liberal and flexible basis: see e.g. Jurisdictional Salvation and the Hague Treaty, Kevin M. Clermont (1999) 85 Cornell Law Review 89, 97-98. I am not aware that anyone has ever suggested that access to justice or to the means of executing justice is an American problem. Certainly no evidence has been put before us to suggest that the defendants would, or even could, face any real obstacle or difficulty of legal principle in enforcing in the United States any English judgment for costs against this claimant.
  88. There is also no express suggestion in any evidence in this case that the defendants would face any extra burden in taking any such enforcement action against the claimant for costs. But we can, I think, infer without more that it would in the case of this particular claimant resident in Milwaukee. First, the respondents would have to bring an action on any English judgment for costs, before proceeding to any enforcement steps that United States law or the law of Wisconsin permits. Second, the claimant's impecuniosity has collateral relevance, in so far as it is likely that the respondents would have to investigate whether it is as real and great as she asserts, and this is likely to be more expensive to undertake abroad than it would be if she was resident in the United Kingdom or a Brussels/Lugano state. Third, the course of the present litigation to date suggests that the claimant is a determined litigant who can be relied upon by one means or another to take every conceivable step she can to defend what she asserts to be her rights, but whose very lack of means to fund the appropriate conduct of litigation appears prone to add to the difficulty faced by the defendants. Fourth, there would be likely to be delay in enforcement, by reason of each of the first three points. Viewing the matter both in the light of these factors and as a matter of general common-sense, I consider that it is open to us to infer that steps taken to enforce any English judgment for costs in the United States would thus be likely to involve a significantly greater burden in terms of costs and delay than enforcement of a costs order made against an unsuccessful domestic or Brussels/Lugano claimant or appellant. It is possible that an irrecoverable costs burden (or an irrecoverable contingency fee) would also be involved, even if the claimant proved to have sufficient assets to satisfy any judgment, but I do not think that this can be assumed without evidence.
  89. The risk against which the present defendants are entitled to protection is, thus, not that the claimant will not have the assets to pay the costs, and not that the law of her state of residence will not recognise and enforce any judgment against her for costs. It is that the steps taken to enforce any such judgment in the United States will involve an extra burden in terms of costs and delay, compared with any equivalent steps that could be taken here or in any other Brussels/Lugano state. Any order for security for costs in this case should be tailored in amount to reflect the nature and size of the risk against which it is designed to protect.
  90. When the matter came before Judge LJ, in the absence of the claimant, these matters were not considered. They had not been raised in any skeleton or submission put before him on either side. Further, they arise from the need to interpret a new rule, and in doing so to take into account the principles of the newly incorporated Convention on Human Rights. Now that they have been considered, the position looks very different. But, before attempting to quantify the level of any security, it is appropriate to deal with two other objections to the order made by Judge LJ.
  91. Other objections to the order for security

    "Stifling" the claim

  92. Even under the old principles, although impecuniosity was a ground for an order for security, impecuniosity so severe that an order for security would stifle a genuine appeal provided a basis for resisting an order, although the force of the objection was commonly related to the strength of the prospects of the appeal. In the present case, the claimant must be taken to have a real prospect of success. No conditions were imposed on the permission granted. Latham LJ did not give reasons for the grant of permission. But the skeletons before him indicate that the challenge to Ian Kennedy's order striking out the whole proceedings for want of prosecution is based very substantially on submissions (born out by his judgment) that Ian Kennedy J nowhere referred to the principles of CPR (as distinct from those applicable under the old rules) and that the result he reached was disproportionate in depriving the claimant of any trial at all on the basis of no more than about two years inexcusable delay; it was also said that a witness who Ian Kennedy J thought could not be traced was in fact readily traceable and has been traced (although that is in issue).
  93. Here, furthermore, the claimant has not only not had any trial of her original action, but the order for security has now meant that she has not had heard any appeal against the decision that there should be no such trial. In both these respects the present case contrasts starkly with factors on which the European Court of Human Rights placed emphasis in Tolstoy. Further, the European Court in Tolstoy underlined that there was no suggestion there that Count Tolstoy could not have provided the security ordered, or that his access to justice was thereby denied, and also recorded its understanding that the English court of appeal would be reluctant to order security for the costs of any appeal with reasonable prospects of success.
  94. We have not been invited to re-visit the material put before Curtis J concerning the claimant's assets and her relatives' and friends' unwillingness to lend her further financial support. The claimant relies on Curtis J's conclusion in 1998 that anything more than a nominal order would "snuff out" the claimant's action and that consequently it would not be right to make an order. That conclusion is, as I have pointed out, weakened by its reliance on the Legal Aid Board's investigations leading to the grant of legal aid that was later withdrawn. The withdrawal appears not to have related to the sum of 40,000 transferred from an account in the claimant's name said to belong to her sister, which troubled Curtis J, but to another withdrawal in December 1997 of further monies (c.US $9000) from a "Firstar" account in the claimant's name said to belong to her husband.
  95. Mr Shah's witness statement prepared in draft on 6th October and signed on 15th October 2000 is aimed at updating the claimant's financial position and reinforcing a conclusion that she continues to lack both funds and the means to raise any funds. The claimant has separated from her husband (it is said due to disagreement over her obsession with this litigation). The unusual separation agreement made through lawyers with her husband on 13th November 1995 provided, it seems, originally for her to receive a roof over her head, $100 a week and one return airfare to England each year. But she later moved out to live with her sister, who does not charge her rent or for food or other bills. Her husband still gives her $100 a week and one return airfare to England each year. Curtis J was not prepared to accept that this agreement was some sort of device, and this suggestion was not repeated before us. The claimant is said to have no other income or assets and to have debts of 18,000.
  96. Before us, however, it emerged that (unlike her solicitors) counsel was not operating on a contingency fee basis, so that the claimant has been able to raise a further loan for !500. In addition, we were told of (unsuccessful) attempts to take out insurance to cover her exposure to the defendants' costs of this action. They too suggest some ability to raise funds to pay a premium. It was not suggested that the solicitors were proposing to lend her the premium. So I for my part remained unconvinced that the claimant is absolutely without funds or the ability to raise them. The history of two accounts in her name, said on each occasion to belong to someone else, generates concern, but I do not feel able to reject out of hand and without cross-examination her explanations. Accepting her separation as genuine, I am prepared also to accept that she is short of money and indeed owes substantial sums. But, on the material available at this point in time, I conclude that she is still able to raise, at the least, modest sums.
  97. (b) The amount of security sought

  98. The second objection relates to the amount of security sought and ordered. This, it is submitted, was and is excessive. I need not go into the matter in great detail. I agree with the submission, though not to its full extent which was that the security claimed could on no account exceed 2500. It is the fact, however, that the application to strike out was fully prepared and was argued by counsel below, and that its course will be largely repeated on appeal. The draft bill of costs submitted by Wedlake Bell's costs draughtsman includes figures that I cannot accept as justifiable or proportionate on an appeal of this nature. The partner in charge (costed at 270 per hour) is recorded as having spent two hours on the matter in conference with counsel and, since the hearing below, a further nine and a half hours on "Perusal, consideration and preparation of documents, reviewing Notice of Appeal, Application Notices and Witness Statements, perusing transcript of judgment, [and] drafting Instructions to Counsel", in addition to five and a half hours spent under the same heading by a trainee solicitor, costed at 80 per hour. The reference to application notices no doubt embraces the successful application to adduce fresh evidence, but that was very limited in scope and, even assuming that the work described should be read as covering some approach to check whether the right Lena Sabbagh had been identified, this can hardly have involved much partner time. Yet, it is said that the partner would before the hearing of the appeal (fixed at that date for early November 2000) have needed to have a further one hour conference and spend a further 19 hours with the trainee spending a further 8 hours on "Preparation for Hearing of Appeal, considering draft Index, preparation of bundle for Counsel's use, perusing Counsel's skeleton Arguments, preparation for Conference, reviewing in detail Judgment and relevant documentation, briefing Counsel, attendance upon Defendant, Claimant, Court and Counsel to include time for routine telephone attendances and letters written". Assuming that a partner could spend so much time on such activities at the rate suggested, I cannot accept that it would be proportionate or reasonable to do so (cf CPR Part 44.5(1)). The brief fee for junior counsel (1972 call) of 7500 on a three hour appeal in a matter that he had argued below also seems to me disproportionate. Even if it were appropriate to measure any order for security by reference to the full amount of the costs likely to be ordered against the claimant if her appeal failed, I would not for my part contemplate a figure of more than half that claimed by the defendants' bill of costs, say 9000 to 10,000.
  99. Conclusions

  100. For all these reasons, I consider that we should now accede to the claimant's application to relist the application for security under CPR 23.11 and reconsider the order made by Judge LJ. The points of principle relating to the circumstances in which and extent to which security for an appeal should be ordered under CPR Part 25.15(1) were not before him. The extent of the change worked by the change in rules and the incorporation of the European Convention on Human Rights was not identified before him. The claimant's updated financial position was not before him, and the consideration that an appeal with a real prospect of success should not be stifled was not argued before him. The conduct of the claimant's solicitors, which led directly to the application going unopposed, was inefficient, but nothing like as blatant as it must have seemed to Judge LJ. Further, Charles Khan have accepted personal responsibility for costs thrown away by the abortive hearing on 10th October 2000, subject to assessment, if the court considers, as I for my part do, that their fault was a cause of its being abortive. In any event, it is clear that the claimant was in no way involved in her solicitors' failures or aware of what was going on at all in early October 2000. Yet it is on her that the consequences would fall, subject only to the prospect of yet further litigation against Charles Khan; and this would occur, in circumstances where the claimant has never had (a) a trial on the merits of her action against the present defendants or (b) a hearing of her appeal against the dismissal of her action without a trial on the merits or (c) a hearing at which her interests were represented of the application for an order for security for the costs of that appeal, which led to her appeal being dismissed. I do not think that it would be proportionate to allow the undoubted failures of her solicitors to lead to these consequences. The case is on any view an advertisement for the wisdom of the recent reforms, that should ensure that orders striking out for want of prosecution become of merely historical interest. Now that these matters have all been considered, the position looks very different to the position as it appeared before Judge LJ.
  101. I consider however that this is an appeal in respect of which an order for limited security is in principle justified by the claimant's residence in the United States, where any assets (if any) that she has are likely to be and where any steps towards enforcement of an order against her for costs would be likely to be taken. I have concluded that (a) any costs would on assessment not exceed 10,000, (2) any order should be related to the probable extra burden (in terms of costs and delay) of taking enforcement steps in the United States against the claimant, compared with enforcement steps in the United Kingdom or another Brussels/Lugano state and (3) the claimant is likely to be able to raise, at the least, modest further sums to secure any order. I consider that a fair assessment of a figure likely to cover the burden identified in (2) would be 5000, and that this would be within the claimant's ability under (3). For completeness, I add that we are of course only concerned with the amount of security appropriate in respect of the costs of appeal against Ian Kennedy J's order striking out the claim. We have not been concerned on this application with what might be the position in any respect with regard to the trial that would take place if that appeal succeeds.
  102. I would therefore set aside Judge LJ's order, order that the claimant should put up security for the costs of the appeal in the sum of 5000 within a time and on terms on which I consider that we should hear counsel, and order the claimant's appeal against the decision of Ian Kennedy J made on 26th October 1999 to be restored to the list, for hearing as soon as can be.
  103. LORD JUSTICE SIMON BROWN: I agree.
  104. ORDER: Appeal allowed. The terms of Judge LJ's order relating to the amount of security for costs and the date by which it is to be paid to be set aside. The claimant's appeal to be reinstated upon security for costs in the appeal of 5,000, payable within five weeks. The appellant's solicitors to pay 3,000, plus any eligible VAT, to the respondent within five weeks within the terms of their undertaking. The appellant to pay 4,000 in costs plus any eligible VAT, but with payment postponed until the outcome of the substantive appeal is known.
    (Order does not form part of approved Judgment)


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