Tamarind Consolidated Inc. v Leonard & Yates Construction Company Ltd
| Jurisdiction | British Virgin Islands |
| Judge | MOORE, J. |
| Judgment Date | 18 June 1997 |
| Neutral Citation | VG 1997 HC 13 |
| Court | High Court (British Virgin Islands) |
| Docket Number | SUIT NO. 212 OF 1996 |
| Date | 18 June 1997 |
IN THE HIGH COURT OF JUSTICE VIRGIN ISLANDS (CIVIL)
SUIT NO. 212 OF 1996
APPEARANCES: Mr Farara Q.C. for the Plaintiff
Mr Carrington for the Defendant
(In Chambers)
This is an application by way of summons in which the defendant/Applicant sought an Order that the Plaintiff give security for the defendant's costs to the satisfaction of the Judge on the ground that the Plaintiff is not resident within the jurisdiction and that, in the meantime, all further proceedings in the Action be stayed.
The application was supported by the Affidavit of Christina Yates, a director of the defendant/Applicant in which she avers that the plaintiff is resident in Florida, USA; has no assets within the jurisdiction; the defendant is fearful that he (sic) would be unable to recover his costs if successful in the defence of this suit; a draft bill of costs was ‘attached’ to her said affidavit; the defendant's Solicitors' written request for security for costs was refused; the defendant has a good defence to the action as disclosed in the defence which was filed after the filing of the summons seeking security.
The Defendant therefore relies upon the following principal grounds as the bases for this application:
- The residence of the plaintiff abroad. 2. The plaintiff's lack of assets within the jurisdiction. 3. Its fear that if successful in its defence, it would not be able to recover its costs. 4. The Plaintiff's refusal to give security upon being requested to do so by letter. 5. That it has a good defence to the action.
All of the above grounds are of importance and merit consideration by the Court in the exercise of its discretion which must be exercised judiciously and judicially. It must not be exercised whimsically or capriciously.
The defendant's application is undoubtedly based upon Order 23 1(i)(a) of the Rules by the Supreme Court 1970. This rule is in identical terms to the English rule and reads as follows:
(i) ‘Where, on the application of a defendant to an action or other proceeding in the High Court it appears to the Court—
(a) that the plaintiff is ordinarily resident out of the jurisdiction
then, if having regard to all the circumstances of the case, the court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the motion or other proceeding as it thinks just.’
The Power to grant security for costs is derived from the inherent jurisdiction of the Court. The instant case falls under the rubric of “action or other proceeding”. According to the 1997 White Book Volume 1 23/1–3/2 at page 407, the Court is bound, by virtue of the words of Order 23 r(1) to consider the circumstances of each case, and in the light thereof to determine whether and to what extent or for what amount a plaintiff…may be ordered to provide security for costs. It is no longer an inflexible or rigid rule that a plaintiff resident abroad should provide security for costs. Security will only be ordered if the Court thinks it just to order such security in the circumstances of the case.
In Sir Lindsay Parkinson Co. Ltd v Triplan Ltd [1973] 2 All ER 273 at pp 285 to 286, Lord Denning MR was considering the question of security for costs under s 477 of the Companies Act 1948. He said that the Court had a discretion whether to order security which it would exercise “considering all the circumstances of the particular case”. But the principles which he enunciated are relevant and applicable with the necessary modifications to the instant case. These may be stated as follows:
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(i) The judge has a discretion whether to order security or not. There is no burden one way or the other.
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(ii) If there is reason to believe that a company cannot pay the costs, then security may be ordered, but not must be ordered.
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(iii) The court has a discretion which it will exercise considering all the circumstances of the particular case.
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(iv) The circumstances of the case may include such matters as:
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(a) whether the Plaintiff's claims is bona fide and not a sham and whether he has a reasonably good prospect of success.
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(b) whether there have been admissions by the defendant on the pleadings or elsewhere that money was due
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(c) whether there was a substantial payment into court
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(d) whether the application for security was being used oppressively so as to stifle a genuine claim.
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(e) whether the plaintiff's lack of means has been brought about by any conduct of the defendants.
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Lord Denning MR then continued at p 286:
‘I am quite clear that a payment into court, or an open offer, is a matter which the court can take into account. It goes to show that there is substance in the claim: and that it would not be right to deprive the company of it by insisting on security for costs.’ Cairns L J agreed with Lord Denning MR.
The first thing to notice is that the authorities make it clear that the power of the Court to order security for costs is discretionary and must be exercised having regard to all the circumstances of the case and to its duty to do justice to both sides. Thus, it must take into account and deliberate upon every relevant consideration and eschew all irrelevant and/or extraneous matters. It would be well to bear in mind however the dictum of Russell LJ a most experienced Lord Justice of the English Court of Appeal, in Berkeley Administration Inc. v McClelland [1990] 1 All ER 958 at p 967:
‘Foreign nationals, moreover, are no less likely to pay the costs of litigation in the English courts on which they embark than English nationals.’
Staughton LJ at p 971 supposed:
‘that the proportion of litigants ordinarily resident outside England and Wales, who are not United Kingdom nationals, is very high.’
The same thing, relatively speaking, may be said about the proportion of litigants ordinarily resident outside the B.V.I., and about the likelihood of foreign nationals to pay costs awarded against them in these Courts.
Counsel for the defendant placed much reliance upon the case of Prozelack KG v Prozelack (UK) Ltd. [1987] 1 All ER 1074 at 1077b where Sir Nicolas Browne Wilkinson V–C said:
‘Under Ord 23, r 1(i) (a) it seems to me that I have an entirely general discretion either to award or refuse security, having regard to all the circumstances of the case. However, it is clear on the authorities that, if other matters are equal, it is normally just to exercise that discretion by ordering security against a non-resident plaintiff. The question is what, in all the circumstances of the case, is the just answer.’
Counsel cited the above passage in support of his contention that single the plaintiff was resident outside of the jurisdiction and a fortiori had no assets within it, the court should exercise its discretion in favour of making the order for security. Counsel also drew attention to the purpose of an application for security as it was set out by the learned Vice Chancellor in the Porzelack case at pp 1076–1077.
‘The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs.’
However, the present and true position is as articulated by Parker LJ in Berkeley Administration Inc. v McClelland [1990] 1 All ER 958 at p 963h–964b:
‘As I have already stressed, residence abroad merely confers jurisdiction. Having acquired jurisdiction the court must then consider whether in all the circumstances it would be just to make an order. The English authorities make it plain that residence abroad is not per se a ground for making an order. As to current practice, it is, I accept, common for orders to be made on little, if anything, more than fact of residence outside the jurisdiction, but this is because it is also commonly the case that it is obvious from the pleadings that enforcement of any judgment for costs in the event of the plaintiff's action being dismissed would be difficult and costly to enforce. The Porzelack, and De Bry cases show clearly that, if such a judgment would be simple to enforce, that it is a powerful factor to be taken into account against the making of an order. Furthermore, it must be remembered that the basis on which such orders may be resisted, e.g. the existence of assets within the jurisdiction, are now so well known that a “one-ship” plaintiff resident in, say, Panama or Liberia and with no such assets will not contest the making of an order but will dispute only the amount to be provided. It is also to be noted that, under present practice, orders for security against foreign residents are frequently refused on the basis of residence within the EEC and the 1982 Act.’
Italic mine.
The essence of the case was distilled in the Head Note which reads as follows:
‘Furthermore, residence abroad was not per se a ground for making an order for security, but merely conferred jurisdiction to do so, and once the Court had jurisdiction it then had to consider whether in all the circumstances it would be just to make the order because there was reason to believe that, in the event of the defendant succeeding and being awarded the costs of the action he would have real difficulty in enforcing the Court's order (see p 960j to p 961b, p 963nj and p 966i to 967bj to p 968b, post); Porzelack KG v Porzelack (UK) Ltd. [1987] 1 All ER 1074 and De Bry v Fitzgerald (1988) [1990] 1 All ER 560 applied.’
At p 960j to p 961b, Parker LJ elaborated:
‘Order 23, r 1(i)(a) is based on residence outside the jurisdiction and applies in respect of all persons resident outside the...
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