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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 >> Northern & Shell Plc v Champion Children Ltd [2001] EWCA Civ 1103 (3 July 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1103.html Cite as: [2001] EWCA Civ 1103

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London WC2 Tuesday, 3rd July 2001

1. LORD JUSTICE POTTER: This is an application by the successful claimants in the court below (the respondents) to a proposed appeal by the defendants to strike out the defendants' appeal because the defendants have failed to pay or otherwise provide by way of security for the claimants' costs (as the respondents in the appeal) the sum of £10,000 agreed to be provided by 2nd May 2000 in correspondence between the parties' solicitors.
2. The argument is essentially, indeed wholly, one about costs now that the matter is before me. The matter is unusual because it does not come before the court following the issue of a summons for security, on which, given that agreement has been reached on the sum to be paid by way of security, the court can then adjudicate on the matter of costs. Instead, there is an application to strike out for failure to provide security even though an offer has been made and accepted as to the appropriate amount, and all the appellants have failed to do is to agree to pay the costs of the issue of the strike out summons.
3. The milestones in the correspondence are as follows. In November 2000, in the light of the defendants' financial difficulties, the claimants asked if they were prepared to provide any security in respect of their appeal, and the defendants riposted, without prejudice to any argument as to their liability to supply security, by asking how much the claimants had in mind. On 19th February 2001 the claimants supplied an estimate of costs of £15,000 and said that, unless they received proposals to provide security within seven days, they would apply to the court for security. That deadline became extended because of the defendants' failure to make proposals, which the defendants' solicitors attributed largely to difficulties in obtaining instructions.
4. On 17th April 2001, as a result of a telephone conversation, the claimants' solicitors recorded the defendants' offer of £10,000 and indicated that, unless it was confirmed and the monies made available in seven days, the claimants would proceed with an application for security. On 18th April the defendants' solicitors wrote:

"[The defendant] is prepared to give security for the costs in the sum of £10,000 within 14 days of receipt from [the claimants] of confirmation that their client is prepared to accept this sum by way of security."

5. The method of giving such security was not specified. On the same day the claimants immediately replied:

"Our client is prepared to accept £10,000 as security for its costs of this appeal provided £10,000 is received into our client account on or before the 2 May. We enclose our client account details in case you wish to make a bank to bank transfer.

We undertake to hold the same pending determination of this appeal."

6. This in fact left open the method by which the security would be provided, and on 18th April, the same day, the defendants wrote proposing that the money be paid into court in the light of the fact that the defendants' solicitors now had £10,000 available. They said that they would serve the claimants with notice of payment in. On 3rd May the claimants wrote that they had not received any notice of a payment in as promised and that the agreed 14-day period had elapsed:

"Unless we receive confirmation that the agreed security has been provided by close of business tomorrow we will make an application to the court that your client's appeal be struck out, it having failed to provide security as agreed."

7. That was of course the first time that they had indicated that a strike out summons was contemplated rather than simply a summons for an order for security. They received no reply to that letter of 3rd May. Again, on the 9th they wrote, referring to a telephone conversation earlier that day in which the defendants' solicitors had asked the claimants' solicitors to wait until close of business, by which time they expected to furnish the security for costs as agreed. The letter finished:

"Our client is not prepared to indulge your client any further – we remind you that your client agreed to provide £10,000 security by 2 May."

8. Again there was no reply to that fax. On 18th May, having referred to an earlier telephone conversation on 11th May when the defendants' solicitors' assurance as to receipt of the cheque was repeated, the claimants said that they had now prepared an application notice to have the defendants' appeal struck out for failure to provide security as agreed and that the application would be issued first thing on Monday morning. On 21st May the respondents' solicitors wrote saying that they regarded such an application as misconceived and that they would be paying the sum of £10,000 into court that day, the claimants being able to receive a notice of payment in later that day. It appears that, at or about the time that that fax was received, or at any rate before it came to the attention of the partner in charge of the claimants' solicitors, an outside clerk had been sent out on his rounds by the claimant's solicitors, in the course of which he had instructions to issue the application to strike out. A further fax was sent by the respondent's solicitors, who had by this time attempted to pay the sum of £10,000 into court. They informed the claimants that they had been prevented from doing so because it appeared that mere agreement between the parties would not suffice, and a court order was necessary. The letter finished:

"We shall be obliged if you will provide us with a draft consent order for our approval."

9. The claimants' solicitors wrote back, taking the point that the agreement had been for security to be provided by a deadline; it was therefore incumbent on the defendants to achieve the date by themselves drafting the consent order for the claimants' approval. On 24th May the defendants' solicitors forwarded a draft consent order suggesting the withdrawal of the application to strike out but that, in order to avoid the necessity for a further fee, the application should be used as the vehicle upon, or under, which the consent order would be made. That was plainly a sensible course. The defendants' solicitors offered also to split the fee incurred in issuing the claimants' application to strike out. Hence paragraph 2 of the draft consent order provided for no order as to costs. Finally, they reserved the right to show their letter to the court should the application proceed.
10. By letter of 24th May the claimants' solicitors were prepared to agree the procedure provided that the defendants agreed to pay all their costs of the application on the basis that the defendants had failed to adhere to the agreement to provide security within the time agreed. By a later letter of 15th June, following other correspondence, they upped the ante by requiring the defendants to pay into court £10,000 plus the interest which would have accrued if the money had been paid into court on 2nd May, the date originally agreed for payment. The letter finished:

"If your client does make the payment in in the sum of £10,000 plus interest then the only issue at the court hearing on 3rd July is costs."

11. The letter also referred to a breakdown of costs which had been supplied on a "without prejudice" basis, and proposed that the arrangement which the claimants were putting forward should be reflected in the consent order. The claimant maintained that stance until appearing before the court today, when the suggestion was made that the sum of £10,000 should be increased in order to cover the claimant's costs of the application, as an alternative to the order for which they primarily ask, namely that the costs of the application should be paid by the defendants in any case.
12. This dispute is an expensive and unproductive waste of court time. I consider that the claimants were in error in seeking to make an application to strike out rather than simply to issue an application for security in the sum agreed. There was no breach of any previous order of the court and there could have been no reasonable prospect of obtaining a strike-out order in my view. If it was intended that the application should simply be a vehicle for obtaining the costs which had reasonably been incurred to that date in chasing recalcitrant defendants, there was nothing to prevent them issuing a summons for security and indicating that the issue would be limited to the question of costs.
13. That said, however, it does not seem to me that the application made has significantly added to the costs of the proceedings on the basis now sensibly agreed, that the application should remain in being as the means by which the order for security can be made, subject only to argument as to costs. On that basis it seems to me appropriate to treat the question of the provision of security on its merits.
14. As to that I have considerable sympathy with the position of the claimants who, having reached agreement on the sum to be provided by a particular time and the considerable delays following their first request for security, were up against repeated and broken assurances rather than seeing the colour of the appellants' money. Further, I am quite unable to see why, in pursuit of the overriding objective of saving expense, dealing with the matter proportionately and ensuring that the matter is dealt with expeditiously and fairly, the defendants could not have agreed to lodge the sum secured with the claimants' solicitors against their undertaking to hold it as security pending the determination of the appeal. The defendants' counsel on this application has mentioned that the relations between the solicitors has not been good. That is no excuse for being obstructive or seeking to do other than pursue the litigation in the cheapest and most sensible way. It has not been suggested that the claimants' solicitors' undertaking would not have been observed. It is clear to me that at the time that the offer to hold the moneys subject to an undertaking was made, the defendants were concerned to play for time, no doubt because their client was short of money, and it was this feature which precipitated the claimants' application, even if technically it was not an application in appropriate form.
15. Now the matter is before me together with a draft order, which is the subject of agreement save only as to the provision as to costs, I propose to make a costs order which broadly reflects my view of the overall merits of the history leading up to the hearing. I shall make an order in the terms of the draft at page 29 of the bundle, namely that the appellant within 7 days do give security for the respondents' costs in the sum of £10,000 by payment into court, that in the meantime all proceedings be stayed and that in default of such security being given within the time set by the court the appeal to stand dismissed without further order, with the costs of the appeal to be assessed and paid by the appellants; but I shall delete paragraph 2 of the draft which currently provides for no order as to costs, and order that the appellants pay half the costs of the application.
Orders: Application to strike out dismissed; defendants to lodge security for costs in the sum of £10,000 within seven days; summary assessment of costs in the sum of £950.00 to be paid forthwith. (Order not part of the judgment of the court)