Mark Lewis on extending the availability of security

Mark Lewis is a partner at Allison & Humphreys.>

Imagine you run a foreign company, resident outside the EU, which is owed money by a company resident in the UK or, in this case, outside the EU.

You apply in the English courts for an order to garnishee the debtor's bank account or, again in this case, a debt owed to your debtor. The garnishee resists this and asks you to provide security for costs.

It may seem cheeky that you should be asked to provide security when you are the one trying to recover what is owed to you – which probably explains why no record has been found of such an application ever being made, until Soinco SACI & anor v Novokuznetsk Aluminium Plant & ors.

That case came before Mr Justice Colman on 2 May 1997. As James Wilders explained in The Lawyer on 27 May 1997, applications for security for costs are brought under RSC Order 23 Rule 1(1) by "… a defendant to an action or other proceeding".

The plaintiffs argued that the court had no jurisdiction because garnishee proceedings are not "an action or other proceeding".

They relied upon the decision of Mr Justice Morritt in Re Unisoft Group (No 1) 1993 BCLC 528, in which the judge held that "other proceeding" covered any matter in which the court's jurisdiction is invoked by originating process, other than by writ.

In garnishee proceedings, the court's jurisdiction is invoked by a Garnishee Order Nisi, obtained ex parte, which is not an originating process.

Justice Colman held that it was inappropriate to limit the meaning of "or other proceeding" to proceedings in which an inter partes process is issued out of the court, analogous to a writ.

He thought that those words "should be broadly construed so as to encompass any proceedings in the High Court which involved any party being brought into conflict with the applicant in which there may be issues to be determined".

The facts of the case are unusual and the judgment is unlikely to release a flood of similar applications. It is not often that a hearing of garnishee proceedings is estimated to last three to four days and affidavits on Russian law are served by both parties, as was the case in Soinco.

However, it does effect a modest enlargement of the availability of security – an important weapon in the litigator's armoury.