England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Peter Leaver QC)

		Royal Courts of Justice The Strand London Thursday 3 October 2002

Thursday 3 October 2002

1. LORD JUSTICE BROOKE: This is an application for permission to appeal against an order of Mr Peter Leaver QC sitting as a Deputy High Court Judge in the Chancery Division on 22 May 2002, when he reversed an order made by Chief Master Winegarten on 14 January 2002. Master Winegarten had declined to order the present appellant to pay security for costs, but Mr Leaver reversed that decision and made an order not in the sum asked for, but in a very substantial sum.
2. This is a proposed second appeal. Parliament has made it clear in the Access to Justice Act 1999 that the resources of the Court of Appeal should be used sparingly in relation to second appeals. The policy of the Civil Procedure Rules is that matters should be dealt with at first instance and then in an appeal court, so that in effect there are two bites of the cherry, and that this court should only come in if there is an important point of principle or practice, or if there is some other compelling reason why the Court of Appeal should entertain a second appeal. Another important consideration is that this court is precluded from entertaining further evidence which was not before the court below, except in the exceptional circumstances set out in the authorities.
3. This action was began by Mr John Popely against his brother in August 2001. His brother applied that the action should be struck out or stayed on the grounds that he had not been properly served and/or that England was not the proper forum for this dispute. There was a substantive issue on jurisdictional grounds.
4. Mr John Popely feels extremely strongly that his brother is telling lies and that it is not true that he has made himself a tax exile. He wishes to be able to challenge this action and to continue with the proceedings in his jurisdiction.
5. The immediate occasion for the application for security was this preliminary application which was estimated to last two to three days for which the brother's solicitors were seeking security in not less than £100,000.
6. However, that may be, the Chief Master found that the condition set out in CPR 25.13(2)(g) was satisfied, in that the claimant had taken steps in relation to his assets that would make it difficult to enforce an order for costs against him. In those circumstances the matter that he had to decide was whether it was just in all the circumstances to exercise his discretion to make an order for security for costs under rule 25.13(1)(a).
7. The Chief Master made five points which were then considered on appeal in the same order. First, he said that at the end of 1999 the claimant knew that his brother had removed all the funds from the accounts of a company about which the complaint in this case was based, and that he sold his house and reinvested the money in a new house owned by discretionary trustees in October 2000. It was therefore not unfair to infer that when he took these steps he had in mind that he might well be commencing these legal proceedings against his brother. He said that he weighed this matter against the claimant. The Deputy Judge said that although it was certainly not a decisive point, he would weigh it even more against the claimant because it was obviously an intentional act to move the ownership of his house from his own name into the hands of discretionary trustees.
8. Mr Popely has made the point on this application that the Deputy Judge should not have referred to the matter that the Chief Master referred to, but merely to the fact that a letter had been sent in relation to these potential proceedings a month before the house was sold. In my judgment, that does not affect the validity of the point that was being made. That was the first matter which swayed the Deputy Judge rather more against the claimant and could correctly sway him, if it was an intentional act, than the Chief Master was swayed by it.
9. I need not refer to the second matter which was neutral and on which the Deputy Judge did not comment.
10. Of rather more substance was the difference of opinion on the three remaining matters. The Chief Master said that it was common ground that the claimant had no assets against which an order for costs could be enforced, that he had funded this litigation on a conditional fee basis, except for counsel, and that he was paying counsel by loans from his sons. The Chief Master said that he was applying through his solicitors for legal aid and that he had complied with a County Court order to pay £50,000 security. This money paid had been paid in part by him and in part by loans from family or friends or both. The Chief Master said that this weighed against giving security, since the present applicant would be prevented from obtaining justice if he was required to pay over £100,000 in ten days.
11. The Deputy Judge took a different view. He was satisfied that the onus lay on the present appellant to show that he could not fund the litigation, that he had not provided any explanation of his sources of income, or how he could finance proceedings in the High Court, in the Bromley County Court and in a court in France, and could instruct leading and junior counsel. Mr John Popely says that there is a mistake about that; he has never instructed leading counsel. The other side's solicitors said on one occasion that he instructed senior junior counsel, and Mr Popely had not explained how he could provide £40,000 security for costs at Bromley. What was more, Mr Popely had not dealt with the possibility of arranging for a charge on his property, which was one of the ways in which security might have been provided. Mr Leaver quoted a recent decision in the Court of Appeal relating to companies, to the effect that in all but the most unusual cases the burden would be on the person from whom security was sought to show that there was no prospect of funds being available from any outside source. He said, in my judgment quite correctly, that that principle applies equally to individuals. He said that the respondent's sons had recently sold a property their father had given them in 1993 for just under £250,000, that he had power to unravel the trust arrangements, that he was able to nominate beneficiaries, and that he could procure that a charge could be given on the house if indeed he had a power over the house, as at one stage he was claiming, and that the Master failed to take all these matters into account.
12. The appellant has sought to adduce further evidence in the Court of Appeal which, in my judgment, could quite easily have been provided before the Chief Master and the Deputy Judge. He seeks to give reasons for why things happened in the way they did and of his sons' present unwillingness to provide any more funding.
13. In my judgment, there is nothing incorrect in the way that the Deputy Judge dealt with that matter. It was an important matter. Mr Popely is now saying that his sons were entitled to benefit from the windfall of a successful planning application after the property was given to him.
14. However that may be, the Deputy Judge was faced with a situation with which judges are often faced in a case of this kind in that there was an element of mystery about the way in which Mr John Popely succeeded in funding litigation in three different jurisdictions and was able to provide security. He was short on explanations as to how this state of affairs had come about and why it was likely that it would not continue.
15. The fourth matter which the Chief Master took into account was the fact that the defendant had decided that a very good form of defence was attack, and was seeking to disarm the claimant from resisting that attack by the present application. He referred to a different case in which another Chancery Master had not been persuaded by this type of argument, but he said in the context of the facts and circumstances of the present case that this argument did weigh with him, namely that the occasion for the present application for security for costs was the counter-attack by Mr Popely's brother.
16. The Deputy Judge took a different view. He said that the application was quite properly made in the light of an issue which clearly had to be determined, and could not be predetermined, as to whether the court did have jurisdiction to entertain this litigation. The Civil Procedure Rules encouraged a swift and economic disposal of litigation.
17. Mr John Popely is adamant that his brother is a liar, that other judges have found that he is dishonest and devious, and that this is just an oppressive ploy to stifle his claim.
18. However that may be, it appears to me that on the material before him the Deputy Judge was entitled in the exercise of his discretion to adopt the approach that he did adopt.
19. Finally the Chief Master said that this was a fight between two brothers, neither of whom had assets in the jurisdiction. The Chief Master said that the defendant had become a tax exile without assets here, a matter which Mr John Popely strongly disputes. He went on to say that the claimant had divested himself of his far fewer assets into a trust shortly before the litigation. Their motives might be different, but it would not be easy for the victor either way to enforce an order for costs, and he considered that it was inherently unfair to order security when the claimant could not easily enforce an order if he won.
20. The Deputy Judge took a different view. He said that the situation of the claimant and the situation of the defendant are inevitably different. A claimant takes a positive decision to start litigation and if the defendant is not going to be able to get the costs of that litigation out of him and is going to have to defend the action without any prospect of ever getting a successful order for costs, that is a matter which the court is entitled to take into account in deciding whether to order security, particularly if the claimant had taken steps in relation to his assets that would make it difficult to enforce an order for costs against him. In my judgment, again that was a matter which the Chief Master was entitled to take into account.
21. Standing back from the issues, I am quite satisfied that it would be inappropriate on an appeal to admit any further evidence than was before the Deputy Judge and the Chief Master. I cannot see that this is a case which raises any important point of principle or practice. It is a case in which Mr John Popely wishes to go on arguing points of detail and indeed seeks to adduce yet further evidence, but this is not what Parliament has prescribed in the procedures for appeals which are now in being in this country. If what he says about his brother is correct, one cannot help having sympathy for him. But sympathy should not compel me to grant permission for a second appeal in a case which clearly does not satisfy the appropriate criteria. For those reasons this application is refused.