Ultramarine (Antigua) Ltd v Sunsail (Antigua) Ltd

• Jurisdiction: Antigua and Barbuda
• Judge: Gonsalves JA
• Judgment Date: 07 April 2017
• Neutral Citation: AG 2017 CA 6
• Docket Number: ANUHCVAP 2016/0004
• Court: Court of Appeal (Antigua and Barbuda)
• Date: 07 April 2017

Court of Appeal

Blenman, J.A.; Webster, J.A. (Ag.); Gonsalves, J.A. (Ag.)

ANUHCVAP 2016/0004

Ultramarine (Antigua) Ltd

and

Sunsail (Antigua) Ltd

Appearances:

Dr. David Dorsett with him, Mr. Javed Hewlett for the appellant

Mr. Septimus Rhudd for the respondent

Civil practice and procedure - Appeal against orders on a security for costs application filed by the respondent — Whether an order for security stifled a genuine claim in this case — Whether the impecuniosity of the appellant was caused by the actions of the respondent — Whether the judge erred in ordering security for costs in the amount that she did when there had been no determination that the value of the claim was such that the prescribed costs would amount to that sum — Whether the respondent's delay in making the application for security for costs should have led the court to deny the application — Whether the judge erred in determining that the appellant was ordinarily resident outside of the jurisdiction — Costs on the application for security for costs.

Held: dismissing the appeal in part, setting aside the award of $350,000.00 as security for costs; replacing it with the sum of $73,125.00 and awarding costs to Sunsail in the amount of EC $1,000.00, that:

• 1. It is necessary for the party resisting an application for security for costs to show that an order for security for costs would, not merely create a difficulty but would probably stifle its claim. This burden remained on Ultramarine and it was required to discharge this burden by providing clear and unequivocal evidence of its means, so as to satisfy the court, not to a standard of certainty, but at least to a standard of probability, that the claim would be stifled if security was ordered. It was not sufficient for Ultramarine to show that it did not have sufficient or any assets in its own resources. It also needed to show that there did not exist third parties who could reasonably be expected to put up the security for Sunsail's costs. Ultramarine had not discharged its burden of placing before the learned judge any material on which she could reasonably conclude that ordering security for costs against it would probably stifle its claim. Thus, there was no error in the approach adopted by the learned judge.

  Keary Developments Ltd. v. Tarmac Construction Ltd and another [1964] 3 All ER 933 applied; Al-Koronky and another v. Time- Life Entertainment Group and another [2006] EWCA Civ 1123 applied; Brimko Holdings Ltd v. Eastman Kodak Company [2004] EWHC 1343 (Ch) applied.

• 2. As a general principle, the amount of security ordered on an application for security for costs is fixed by reference to the probable costs of the action, which calculation is dependent on the applicable costs regime. The applicable costs regime is the specific regime that applies to the case at the date of the application and not any of the alternative regimes that might have otherwise applied had an application been made to apply any one of them. In awarding security for costs, a judge must exercise his or her discretion within the parameters of the applicable costs regime. In this case, at the time of the security for costs application, the applicable costs regime (at least for the substantive claim) was undoubtedly the prescribed costs regime as stipulated by CPR 65.5(1) and the learned judge was so bound by that costs regime. There was no basis for the learned judge to have awarded an amount of EC$350,000.00 as security for costs and in so doing the learned judge committed an error of principle. In order to justify an award of EC$350,000.00 under prescribed costs the claim required a valuation of EC$44,750,000.00. There was no material before the court that could have justified such a valuation.

  Next Level Engineering Services Ltd. v. The Attorney General et al ANUHCVAP2007/0017 (delivered 24th July 2007, unreported ) applied.

• 3. Applications for security for costs should be made promptly. The requirement for promptness does not exist in a vacuum. The reason for requiring applications to be brought in a timely manner is to prevent a claimant from being lulled into a belief that it would be permitted to proceed to trial without being asked to give security. This is to prevent a claimant from proceeding at possibly considerable expense to himself down to trial and then find himself faced with an order for security with which he is unable to comply. However, mere delay in and of itself should not be the determining factor. Consideration should also be given to whether there exists any evidence from the claimant demonstrating that the delay in making the application has somehow caused prejudice to the claimant. The materiality of the delay comes into play where the delay has led the claimant to act to his detriment. In the case at bar, the reasons advanced for the delay of almost three years were unconvincing but the effect of the delay should not be for the application to be denied. Additionally, Ultramarine advanced no evidence of any actual prejudice that it suffered, of any costs that it incurred during the period of delay that might be thrown away (if security was ordered and Ultramarine could not raise it), which could be pinned specifically to the lateness of Sunsail's application. There was no evidence that any such costs were incurred by Ultramarine due to it being deceptively lulled into a false sense of security.

  Wall v. Wells [1926] 4 D.L.R. 799 applied; Ontario Ltd. et al v. Bank of Montreal (H.C.J.), 1988 CanLII 4678 (ON SC) applied; Stepps Investments Ltd et al v. Security Capital Corporation Ltd. 1973 Can LII 631 (ON SC) applied.

• 4. The application for security for costs was premised on section 548 of the Companies Act, 1995 and CPR 24.2(1) and 24.3(g). Under section 548 of the Companies Act, the sole test is the impecuniosity of Ultramarine. The non-residency of the company is not an issue. Accordingly, the court below had jurisdiction to entertain the application relying solely on section 548 of the Companies Act.

  Surfside Trading v. Landsome Group Inc et al AXAHCV2005/0016 ( delivered 20th January 2006, unreported) cited.

1 Gonsalves JA [AG.]: This is an appeal against the judgment of Henry J dated 5th February 2016 where the appellant (the respondent below, and hereinafter “Ultramarine”) was ordered to give security for the respondent's (the applicant below, and hereinafter “Sunsail”) costs of the proceedings in the amount of EC$350,000.00 within 30 days, all further proceedings were stayed until security for costs was provided, and costs of the application were awarded to the respondent in the sum of EC$2,000.00.

2 The orders were made pursuant to an application for security for costs filed by Sunsail against Ultramarine premised on section 548 [Section 548 reads as follows: “Where a company is a plaintiff in any action or other legal proceeding any judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given.” ] of the Companies Act, 1995 [Act No. 18 of 1995, Laws of Antigua and Barbuda. ] and rules 24.2(1) and 24.3 (g) of the Civil Procedure Rules 2000 (“CPR”), in such amounts as the Court thinks fit, that all further proceedings be stayed until security for costs have been provided, and that the costs of the application be awarded to Sunsail. The notice of application did not specify the amount being sought for security for costs, but the draft order and affidavit in support both referred to the sum of EC$1,000,000.00. The grounds of the application were:

• (i) The sole beneficial owner and director of Ultramarine is ordinarily resident out of the jurisdiction.

• (ii) The provisions of section 548 of the Companies Act, 1995 allows for sufficient security to be given by a company which is a claimant in an action and it appears that that company will be unable to pay the costs of a defendant if the defendant is successful in its defence.

• (iii) Ultramarine is not known to be operating or otherwise involved in any business venture or activity within the State of Antigua and Barbuda.

• (iv) Ultramarine has no assets or real estate within the State of Antigua and Barbuda against which Sunsail could move for recovery of costs if successful.

• (v) Sunsail has a good prospect of realistically defending the claim and believes that should it succeed at trial Ultramarine will be unable to satisfy Sunsail's costs if ordered so to do by the court.

3 The application was supported by an affidavit of Mr. Peter Cochran dated 11th December 2014. Paragraph 3 thereof stated that the application was primarily made under section 548 of the Companies Act, 1995. The application was opposed by Ultramarine by way of an affidavit of Mr. Andrew Moleta dated 17th February 2015. On 5th February 2016, Henry J delivered her judgment and granted the orders referred to in paragraph 1 above.

4 Ultramarine appealed all of the orders made by Henry J, including the award of costs of EC$2,000.00 on the application, and relied on the following 9 grounds of appeal:

• (i) The learned judge erred in her finding of fact and law that in accordance with CPR 24.3(g) Ultramarine is ordinarily resident outside of the jurisdiction.

• (ii) The learned judge misguided herself in her finding of fact that Ultramarine has no current nexus with Antigua.

• (iii) The learned judge misguided herself that it was just and fair and in keeping with the overriding objective to make an award for security for costs when such an order could amount to an instrument of oppression, particularly in light of the unchallenged evidence on behalf of Ultramarine that actions of Sunsail had destroyed...