15 October 2005

Tender Loving Care?

Although not an intellectual property case, we have had an early opportunity to glimpse something of the mettle of the newly appointed assigned judge, and very promising it is too. In Love & Care Ltd v Kiernan and others [2005] EWHC 2180 (Ch) (13 Oct 2005) his lordship has a security for costs application under s.726 (1) of the Companies Act 1985.

The dispute arose from proceedings in the Land Registry. Each party claimed to have agreed a lease with the former owner of a property just before he died. One of those parties protected his claim with a caution while the other applied to register its lease. The Chief Land Registrar felt unable to resolve this dispute and directed the party that had registered the caution to issue proceedings in the High Court or lose his caution in default. He failed to do so within the allotted time and the caution was vacated. The party against which the caution had been registered brought proceedings joining not only the party that had registered the caution but also the personal representatives of the owner.

As the judge observed, they could have played a very passive role but they chose to fight both of the other parties instead. As against the claimant they counterclaimed for a declaration that the agreement for a lease was of no effect and not binding on the estate. Because one of those parties was a company and its financial position was not good, the personal representatives sought security for costs under CPR 25.13 (1) and (2) (c).

The judge had no hesitation in finding that the claimant company would be unable to pay the personal representatives' costs. It thus became a question of discretion and it is in this that the judge showed the encouraging signs that I mentioned above. He refused the application for security on the ground that the application was tantamount to to an application for security against the defendant to the counterclaim. That was in effect the conclusion to be drawn from the order that the personal representatives sought. The draft minute actually provided for judgment on the counterclaim if the claimant could not provide the security sought. He noted that the claimant had sought no relief against the estate at all. The personal representatives had not need to wade into the action. If they incurred costs of £50,000 by doing so they only had themselves to blame. Moreover, since the proceedings against the other parties would survive as would the counterclaim there was very little scope for saving costs overall.

Situations like this happen very often. I myself have argued that security for costs against a claimant is tantamount of favouring the counterclaim on more than one occasion and I have to say before tribunals with far less perception that Mr Justice Kitchin. Sir High Laddie worked like that too which is why I was very sorry when he left. I am a lot happier than I was.

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