Jersey: Security For Costs – Moving The Goal Posts

Last Updated: 7 January 2010
Article by Appleby  

The mere mention of Leeds United Football Club brings memories flooding back of Saturday afternoons at the ground watching Brian Flynn and Ray Hankin weave their magic. The recent foray of the Club into litigation in Jersey not only stirred those memories but has also resulted in a significant shift in the security for costs position in Jersey. The judgment of the Court of Appeal in an appeal brought by the Club has potentially far reaching effects and may make it easier for litigants not resident in this jurisdiction to pursue claims against Jersey companies.

The appeal was from a decision of the Deputy Bailiff who had ordered Leeds United Football Club to put up security for the defendant's costs in the sum of £263,000. The defendant to the proceedings was AdMatch Ltd, a Jersey company that had acted as the Club's agent for the sale of match and season tickets by credit card. The Club paid the security into court as it was ordered to do and then appealed the Deputy Bailiff's decision to the Court of Appeal (presided over by Jonathan Sumption QC).

The starting point for any application for security for costs in Jersey is Rule 4/1(4) of the Royal Court Rules. This states that "any plaintiff may be ordered to give security for costs".

Whilst the court's discretion to order security for costs is unlimited, the Court of Appeal was careful to point out that in practice the principles applied in this jurisdiction have developed by analogy with those applied in England. Indeed this case raised serious questions of the circumstances in which security should be given and ultimately resulted in the removal of the "blanket presumption" that such protection is appropriate purely on the basis that the plaintiff is resident out of the jurisdiction. In a reasoned judgment, the Court of Appeal considered the legal principles to be applied in applications of this nature and also the extent to which the Human Rights (Jersey) Law 2000 would apply in cases such as these.

Human Rights

The Court of Appeal looked first of all at the decision of the English Court in Sir Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] QB 609 which started from the premise that a defendant ought not to have to pursue a foreign resident plaintiff abroad for his costs. In that case, the court stated that "The mere fact of his non residence was enough to make it just to order security, unless (i) the plaintiff could be seen, even at an interlocutory stage, to have a high probability of success, or (ii) the plaintiff's financial situation was such that an order for security would be likely to stifle a claim that was at least arguable". The Court of Appeal acknowledged that these principles had been followed in the Jersey case of A.E Smith & Sons Ltd v. L'Eau des Iles (Jersey) Ltd [1999] JLR 319.

Spared the Need to Enforce

The question of whether a defendant should be spared the need to enforce a judgment for costs abroad, however, was explored further and in considering the position of AdMatch, the Court of Appeal highlighted two key objections to this principle; objections that no doubt should be considered in any future applications of this kind:-

  1. that there is no "logical relationship between residence outside of the jurisdiction and inability or unwillingness to pay a successful defendant's costs". Moreover, any procedural difficulties in recovering costs from solvent plaintiffs are much diminished by the reciprocal enforcement of judgments which has become "a normal feature of modern international litigation"; and
  2. that an order requiring a non resident plaintiff to put up security for the defendant's costs in advance of the matter proceeding to a trial of the merits of the proceedings is an "impediment to the plaintiff's access to justice". "The fact that such an order is only available where the plaintiff resides out of the jurisdiction is discriminatory as well".

Discrimination

Taking the discriminatory point one step further, the Court of Appeal considered the English Court of Appeal case of Nasser v. United Bank of Kuwait [2002] 1 WLR 1868. In that case the Court of Appeal held that an order for security for costs was not in itself contrary to the provisions of the European Convention on Human Rights (which has the force of law in Jersey by virtue of the Human Rights (Jersey) Law 2000). However, to treat the foreign residence of a plaintiff as prima facae justifying such an order discriminated against him contrary to the Convention.

The Court of Appeal concluded that the Deputy Bailiff had been mistaken to conclude that even assuming that discrimination on the ground of mere residence would be contrary to the Convention, an order for security pursued a "legitimate objective and was proportionate to that objective". In reaching this conclusion, the Deputy Bailiff was effectively disagreeing with the English Court of Appeal in the Nasser case. In reaching his decision, the Deputy Bailiff had reasoned that the jurisdiction to order security against a non resident plaintiff was proportionate as (i) a non resident plaintiff is unlikely to have assets in this jurisdiction to which any ultimate award of costs could attach; (ii) in such circumstances, the defendant would have to institute proceedings in a foreign country to enforce this costs order; and (iii) the defendant may be deterred from pursuing his costs in a foreign jurisdiction due to the plaintiff's ability to hide assets and to take procedural points in any subsequent proceedings. The Deputy Bailiff concluded that once it was accepted that security would not be ordered where its effect was not to stifle the claim, there was no prejudice to the plaintiff.

Stifle the Claim

The Court of Appeal held that the Deputy Bailiff's approach to the Convention was mistaken and that it was unable to accept that "a blanket presumption that such protection [to a defendant] is appropriate where the plaintiff is resident outside Jersey is a proportionate way of achieving that objective". The Court of Appeal did not agree that a plaintiff is not stifled by an order for security when the plaintiff is forced to provide funds in addition to meeting its own costs of the proceedings. Additionally, whilst the Court of Appeal appreciated that enforcement of a costs order may be difficult in some jurisdictions, the present proceedings concerned a British plaintiff which necessarily meant a judgment would be relatively easy to enforce. There was also no evidence put forward to support the proposition that the plaintiff would be unable to meet any cost order ultimately made.

This judgment would appear to have moved the goal posts for Jersey defendants when being faced by a claim from a British plaintiff. It now seems that a Jersey defendant may no longer be able to claim this protection as of right but will need to consider carefully, based on the facts of a particular case in issue, whether an application for security would be successful. Time will tell whether there will now be an influx of claims as a result of this ruling.

This article first appeared in the summer 2009 issue of the Appleby Jersey's Resolution newsletter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions