Court Of Appeal: Important Security For Costs Decision

About Jennifer HaworthJennifer Haworth

Jennifer Haworth is a senior associate in the firm’s Litigation & Dispute Resolution team. Jennifer has a wide practice in all aspects of civil and commercial litigation both in Bermuda’s courts as well as in mediation and arbitration.

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In The Allied Trust and Allied Development Partners Ltd v Attorney General and Minister for Home Affairs [2015] SC Civ (Bda) 61, dated 24 August 2015, the Chief Justice of the Supreme Court of Bermuda ruled in favour of our client, the Minister of Home Affairs, and struck out a constitutional claim made by the Allied Trust and Allied Development Partners Limited (the “Applicants”) in relation to the voiding of the Waterfront agreements. Following a Notice of Motion for Leave to Appeal filed in September 2015, the Applicants were granted leave to appeal by the Chief Justice on 20 November 2015.

In preparation for the appeal, which was due to take place in the upcoming summer session before the Court of Appeal, the parties attended before Acting Registrar Peter Miller on 4 February 2016 to settle the record and obtain various directions leading to the appeal. At that hearing, we made an application on behalf of our client for security for costs for the appeal. The application was contested with the (by then) Appellants’ attorney arguing that his client accepted our cost estimate for the appeal, but nevertheless arguing that ordering security in the six figure range went against his clients’ right to a fair trial and that in any event, his clients were impecunious. We were, however, successful with the Acting Registrar ordering that they pay the sum of $150,000.00 by 4 March 2016. The Appellants appealed that decision during the March session of the Court of Appeal.
The Court of Appeal reviewed the decision of the Acting Registrar, considered a transcript of those proceedings and heard oral arguments from Counsel on 4 March 2016. They noted that no evidence was filed before the Acting Registrar by the Appellants and that their case before him had been that security should be modest rather than the argument they were now seeking to advance in the Court of Appeal that there should be no security ordered whatsoever because the matter is a constitutional one.

In rejecting the Appellants’ application, the President of the Court of Appeal Sir Scott Baker in Reasons dated 18 March 2016 said:

    “In my judgment the crucial flaw in Mr. Johnston’s argument is that there was no evidence before the Acting Registrar and little, if any, evidence before us of the Appellants’ inability to find security. I accept Ms. Haworth’s submission that it is insufficient simply to state impecuniosity, it is necessary to provide the court with full and complete disclosure of evidence of this.”

Also of note was the Court’s finding that although this was a constitutional case it was not one “such as to take the case outside the ordinary principles of deciding whether to order security for costs and if so in what amount”.

The Court of Appeal held that fault could not be found with the Acting Registrar’s order that security in the sum of $150,000.00 be paid. As such, the Court of Appeal ordered that the security be paid by 31 March 2016, failing which the appeal would stand dismissed. The security was not paid in accordance with the deadline and as such the appeal has been dismissed.

This decision makes clear that it is not enough to allege that your client is impecunious and evidence of this condition must be provided to the Court. In addition, it illustrates the importance of bringing such evidence to the Court at the earliest opportunity given that in reviewing the decision reached by the Acting Registrar, the Court of Appeal had to consider the arguments that were advanced therein and the evidence provided. The case also highlights the balance which must be struck by the Court when considering security for costs. The President made clear that the Court has to “balance the interest of not depriving a litigant of access to the court on the one hand with that of leaving a winning litigant with an irrecoverable Bill of Costs on the other”.

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