27 July 2009
The Jersey Court of Appeal ruling in Leeds United v AdMatch dismantles the protectionism evidenced by security for costs payments on the island. By Philip Sinel
The recent decision of the Jersey Court of Appeal in Leeds United Association Football Club Limited and Another v AdMatch (2009) has enhanced both the quantity and quality of justice in Jersey.
Litigants from abroad often complain that justice in Jersey is expensive. It is doubly so if, as a matter of course, the foreign plaintiff is made to pay monies into court in respect of the defendant’s costs well before trial. Until now the criteria adopted was simply that if the plaintiff was not resident it had to pay security for costs. Over the years this unfair approach has operated to deter plaintiffs with perfectly proper claims from prosecuting them in Jersey.
On the face of it the rules in relation to security of costs in Jersey are discretionary. Royal Court Rule 4(1) provides that “…any plaintiff may be required to provide security for costs”. However, in practice this has been interpreted by the Royal Courts as automatic, not simply in the case of impecunious corporate plaintiffs, but also as far as any non-resident plaintiffs are concerned.
The position in England in relation to personal plaintiffs had long been settled - namely, that security would not be required. In relation to plaintiffs resident abroad, a number of changes have recently occurred, and in Fitzgerald v Williams (1996) the English Court of Appeal held that automatically ordering security against non-resident plaintiffs discriminated against them on the grounds of nationality. Accordingly, the rules were changed in order to provide that such orders would not be made against residents of states party to the Brussels or Lugano Conventions.
This was then followed by the Human Rights Act 1998, which incorporated the European Convention on Human Rights into English law. Article 16 of the convention - the right to a fair hearing before an impartial tribunal - was interpreted as guaranteeing access to the court in order to vindicate those legal rights, while Article 14 provides for the enjoyment of convention rights without discrimination on any grounds.
The changes were followed by the English case of Nasser v United Bank of Kuwait (2002), which determined that, while an order of security for costs that was not in itself contrary to Article 6, treating non-residency as automatically justifying such an order was discriminatory and contrary to Article 14.
The facts in the Leeds Utd case were quite startling. The plaintiff with carriage of this action was Leeds Utd, a company with considerable turnover and publicly available accounts. Leeds Utd had brought an action against the defendant, AdMatch, a dormant Jersey-resident company, in respect of monies that AdMatch owed, and admitted owing, to the plaintiff.
The defendant company had no lawyers – rather it appeared through its director and shareholder Robert Weston.
Jersey’s lower court declined to follow the Nasser case. Accordingly, the matter came before the Court of Appeal, which held that, although Jersey does not belong to the European Union, the prohibition against discrimination on the grounds of national origin is unlawful (Article 7 (1) of the Human Rights (Jersey) Law 2000 makes it unlawful for a public authority to act in a way that is incompatible with the European Convention). Thus it was held that it was unlawful for the island’s courts to continue to make awards for security for costs based solely on the non-residence of the plaintiff.
It is difficult to see how in relation to a defendant of AdMatch’s nature, given the straightforward claim that it faced and its absence of lawyers, it was suffering a pecuniary loss in relation to the litigation.
By the time this matter reached the Court of Appeal, the lower court had ordered that the plaintiff pay £263,500 in respect of security for costs. Not an insubstantial sum for any plaintiff. The Court of Appeal was critical of this approach to the calculation of the security for costs, irrespective of the principle as to whether or not security for costs should be paid.
This is a very helpful decision from the Court of Appeal, reiterating as it does the application of both Articles 6 and 14 of the European Convention, notwithstanding the fact that Jersey is not within the European Union.
It also contains the helpful rationalisation of rules in relation to security for costs that will bring down the barriers to justice in Jersey for those from abroad.
There will still be many cases where security for costs applications are made, but they will no longer be available as an automatic deterrent to those from abroad who are bringing good claims within the island.
Philip Sinel is principal of Jersey law firm Sinels Advocates