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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> De Beer v Kanaar & Co (A Firm) [2001] EWCA Civ 1318 (9 August 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1318.html Cite as: [2003] 1 WLR 38, [2002] 3 All ER 1020, [2002] CLC 114, [2001] EWCA Civ 1318, [2001] CP Rep 118, [2002] ILPr 24, [2003] WLR 38

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Miss Elizabeth Gloster QC
Sitting as a Deputy Judge of the High Court

		The Royal Courts of Justice The Strand, London, WC2A 2LL Thursday 9th August 2001

LORD JUSTICE JONATHAN PARKER:

This is the judgment of the court.

Introduction

1. This is an appeal by Kanaar & Co ("Kanaar"), the first defendant in the action, against an order made by Miss Elizabeth Gloster QC, sitting as a Deputy High Court Judge in the Chancery Division, on 19 February 2001. By her order, the judge dismissed Kanaar's application that the claimant in the action, Mr Hans David de Beer, give security for its costs of the action. The judge concluded that on the true construction of the relevant provisions of the Civil Procedure Rules ("the CPR") the court had no jurisdiction to make the order sought. In the light of that conclusion further questions as to whether the discretion to order security for costs should be exercised, and if so on what terms, did not arise.
2. Notwithstanding that Mr de Beer is ordinarily resident in the United States, the judge concluded that there was no jurisdiction to order security for costs against him since he currently had assets in Holland and in Switzerland, which states are respectively parties to the Brussels Conventions and the Lugano Convention (as defined in section 1(1) of the Civil Jurisdiction and Judgments Act 1982). There is no material difference for present purposes between the provisions of the Brussels Conventions and those of the Lugano Convention. For convenience we will refer hereafter to the Brussels Conventions and the Lugano Convention as "the Conventions", and to states parties to the Conventions or either of them as "Convention states". The judge held that the fact that Mr de Beer had assets in a Convention state meant that the court had no jurisdiction to order him to give security for costs.
3. The judge gave permission to appeal against her dismissal of the application for security for costs, but refused permission to appeal against her dismissal of two further applications made by Kanaar. Kanaar applied for permission to appeal against the dismissal of the other applications, but permission was refused by Jonathan Parker LJ on the papers on 23 May 2001 and the application for permission has not been renewed.
4. Kanaar appears on this appeal by Mr Philip Marshall of counsel; Mr de Beer by Mr Pushpinder Saini of counsel. Both counsel appeared before the judge.

The background to the dispute

5. Kanaar is a firm of solicitors. The principal of the firm is Mr Nicholas Kanaar. The second defendant in the action, Mr Richard Kendall-Bush, is a former solicitor who acted at the material time (1991) as consultant to Kanaar. On 9 December 1998 Mr Kendall-Bush was ordered to be struck off the roll of solicitors for serious misconduct arising out of the transactions which have given rise to the present dispute. Mr de Beer is a Dutch national who lives in Florida. He is a real estate dealer and managing director of a company which carries on business in real estate.
6. In her judgment, the judge summarised the background to, and nature of, the dispute as follows:

"In July 1991, Mr de Beer and several other individuals, described in the Statement of Claim as 'the Associates', agreed to act together as brokers in seeking to introduce a buyer for letters of credit to the value of US$300 million which were purportedly being issued [by] a self-styled Polish bank, Banque pour le Developement du Commerce ('Decobank'). However, the genuineness of the letters of credit is in issue, and [Kanaar] allege that the whole transaction was a prime bank instrument fraud. Indeed, the Law Society Disciplinary Tribunal concluded that, on the face of it, the purported transaction bore every hallmark of a prime bank instrument fraud. I would agree with this view. As now accepted by [Mr de Beer] in his Reply, Decobank was not registered with the Polish authorities as a banking institution and there is no reference to any such bank in leading bank directories.

Mr de Beer's case is that, in about September 1991 it was agreed between the Associates and [Kanaar] that [Kanaar] would act for the Associates in the sale of letters of credit and would share any commission to be paid as a result of brokering the transaction. [Kanaar] sought various buyers of the letters of credit on behalf of the Associates and found a so-called 'Tunisian Group' whose representative was a Mr Victor Cruz who was based in Tunis. Mr Kendall-Bush went with a Mr Henriod (both of whom, together with [Kanaar], were to share in the commission) to Tunis in September 1991 with the aim of executing the sale of the letters of credit to the Tunisian Group.

Mr de Beer alleges that Mr Kendall-Bush and [Kanaar] have misappropriated $250,000 belonging to him in the following circumstances. Mr de Beer claims that on 31 October 1991 he transferred the sum of 374,210 Swiss francs (equivalent to US$250,000) to the credit of an account of Mr Kendall-Bush .... in Tunis. This transfer was made in response to a letter dated 18th October 1991 in which Mr Kendall-Bush requested the Associates to remit to him in Tunisia the sum of $250,000. Mr de Beer alleges that in this letter and orally Mr Kendall-Bush and Mr Kanaar assured him that the money was in effect to indicate bona fides on the part of the seller and that it would be returned without use within a matter of days. Mr de Beer claims that, on the same day that he transferred his money to Mr Kendall-Bush, the latter transferred the sum of 291,600 Swiss francs (equivalent to US$200,000) to Mr Cruz. Mr de Beer claims this transfer was pursuant to a declaration by Mr Kendall-Bush on 19th October 1991 to remit to Mr Cruz US$200,000 by way of penalty for non-performance by Decobank. Mr de Beer claims that the remaining US$50,000 was at a later date transferred to Mr Kendall-Bush and that none of the money has been returned to him; in other words, that Mr Kendall-Bush has misappropriated Mr de Beer's money.

Mr de Beer further alleges that at all material times Mr Kendall-Bush acted with the authority of [Kanaar] and that [Kanaar] expressly authorised Mr Kendall-Bush to act on their behalf in relation to the letters of credit. Mr de Beer therefore claims to be entitled in restitution to the return of $250,000 by [Kanaar] and/or Mr Kendall-Bush as money had and received.

[Kanaar] claims by way of defence that, in relation to the transaction involving $250,000, Mr Kendall-Bush acted on his own behalf and not on behalf of the firm. [Kanaar] maintains that the whole nature of the transaction had changed, and that a letter dated 18th October 1991, which was faxed to the Associates, indicated that any ostensible authority which Mr Kendall-Bush had had from [Kanaar] was terminated.

[Kanaar] further claim that Mr de Beer was involved in a fraudulent and unlawful design in that Mr de Beer and the Associates sought to obtain substantial funds by selling the letters of credit, when he knew that Decobank was not bona fide and that the letters of credit were bogus and worthless. [Kanaar] further contends that Mr de Beer pressed on with what he must have appreciated was a fraudulent transaction in order to obtain very substantial funds on the basis of false instruments. ...... In short, [Kanaar] contends that [Mr de Beer] was an active participant in the fraudulent scheme to obtain funds by means of discounting false bank instruments and that the deposit of the sum for which he now makes a claim formed a step in an attempt to implement the fraud.

The exact nature of Mr Kendall-Bush's defence is unclear from his pleaded defence. It appears that he also alleges that Mr de Beer was involved in a fraudulent scheme."

7. The writ was issued on 28 October 1997, shortly before the expiry of the limitation period. On 28 March 2000, following close of pleadings, Master Bowles gave directions for a case management conference. By an application notice dated 30 June 2000 Kanaar applied for an order that Mr de Beer give security for its costs. The sum sought by way of security was £130,000, representing Kanaar's estimated costs to the end of the trial. On 2 November 2000 Master Bowles directed that Kanaar's application be listed with the case management conference. The case management conference was held before the judge, and led to the order dismissing the application against which Kanaar now appeals.
8. In his evidence in opposition to the application Mr de Beer disclosed that he had a right to an interest in the estate of a deceased person which was in course of being administered in Holland by executors appointed there, and that he currently owned cash and equities held by UBS Bank in Switzerland. The situs of Mr de Beer's interest in the unadministered estate in Holland may have been open to question, but the judge regarded this as immaterial in the light of evidence that his assets in Switzerland were worth about £177,000. The judge was accordingly content to proceed on the footing that the Swiss assets were of sufficient value to meet any order for costs which might be made in favour of Kanaar.
9. In the course of the hearing of this appeal Mr Saini told us that the current net value of Mr de Beer's assets in Switzerland was only some US$28,753. He based this assertion on a statement provided by UBS. However, in a Note which he has sent to us since the hearing he informs us that the current value of the Swiss assets is of the order of £162,000. In his Note Mr Saini explains the reason for the error, as follows:

"It has been revealed that the UBS statement failed to include a substantial asset valued at US$195,000, namely 13,000 shares in Apogee Technology Inc at US$15 per share .... and that the true value of his assets held by UBS in Switzerland is, therefore, in fact of the order of US$223,753, which at the current rate of exchange .... is equivalent to £162,022.45."

10. Annexed to Mr Saini's Note is a copy of a fax dated 31 July 2001 from UBS to Mr Michael Cohn, Mr de Beer's solicitor. The fax reads as follows (so far as material):

"Enclosed you will find a copy of the delivery receipt .... referring to 13,000 shares [in] Apogee Technology Inc. and we confirm that we hold the certificate for these shares on behalf of Mr Hans David de Beer.

We need the form called 'Irrevocable Stock or Bond Power' signed by Mr Hans David de Beer to book this stock into the UBS Custody Account. Unfortunately this form has not been signed and returned by Mr Hans David de Beer and it is for this reason that the stock was not included in the statement of assets as per July 26, 2001.

Please be informed that we hold the stocks in our file but will not be able to sell or even transfer them unless receipt of the form 'Irrevocable Stock or Bond Power'. Should the form not be signed at the time we will return the share certificate [to] the client's correspondence address.

We are able to confirm that the market value of the above stock on July 27 was USD 15 per share and that the above stock was included in the amount of CHF 446,800.- in our letter to Mr Hans David de Beer dated October 31, 2000."

The provisions of the Civil Procedure Rules relating to security for costs

11. The provisions of the CPR relating to security for costs are to be found in Section II of Part 25 of the CPR, which comprises rules 25.12 to 25.15 inclusive. Rule 25.14 (security for costs other than from the claimant) and rule 25.15 (security for costs of an appeal) are not material for present purposes. Rules 25.12 and 25.13 provide as follows (so far as material):

"25.12 – (1) A defendant to any claim may apply under this Section of this Part for security for his costs of the proceedings.

......

(2) .....

(3) Where the court makes an order for security for costs, it will –

(a) determine the amount of the security; and

(b) direct –

(i) the manner in which; and

(ii) the time in which the security must be given.

25.13 – (1) The court may make an order for security for costs under rule 25.12 if –

(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(b) (i) one of more of the conditions in paragraph (2) applies, or

(ii) .....

(2) The conditions are –

(a) the claimant is an individual –

(i) who is ordinarily resident out of the jurisdiction; and

(ii) is not a person against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention, as defined in section 1(1) of the Civil Jurisdiction and Judgments Act 1982;

.......

(f) the claimant is acting as a nominal claimant .... and there is reason to believe that he will be unable to pay the defendant's costs if ordered to do so;

(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him." (Our italics.)

The issues on this appeal

12. The primary issue on this appeal is as to the true meaning and effect of the words in italics in rule 25.13(2)(a)(ii). More particularly, the primary issue is whether an individual claimant who currently has assets in a Convention state is "a person against whom a claim can be enforced" under the Conventions, with the consequence that there is no jurisdiction under the CPR to make an order that he give security for costs. We refer to this issue hereafter as "the jurisdiction issue".
13. By a Respondent's Notice, Mr de Beer seeks to uphold the judge's order on the footing that, if (contrary to his primary submission) the judge had jurisdiction to order security, she ought as a matter of discretion to have declined to exercise that jurisdiction in the circumstances of the instant case. Thus, if the jurisdiction issue is resolved in favour of Kanaar further issues arise as to whether, as a matter of discretion, security should be ordered, and if so on what terms. We refer hereafter to these issues compendiously as "the discretion issue".

The judgment of Miss Elizabeth Gloster QC

14. Having set out the background to the matter in the passage which I have quoted, the judge considered what approach she should adopt to the merits of the claim against Kanaar and of Kanaar's defence. She expressed her conclusion on that question as follows (in paragraph 17 of her judgment):

"In my judgment, and despite the persuasive attempts of Mr Marshall to persuade me to do so, it is not appropriate for me .... to make any prima facie determination as to the underlying merits or otherwise of the claim or [of Kanaar's] defence. There are clearly real and substantial issues which have to be resolved at trial as to the respective knowledge and roles of both parties. I am not in a position, and it is not appropriate for me, to make any determination in relation to these matters, even on a provisional basis, at this stage, and I do not propose to do so."

15. The judge then turned to the application for security for costs, identifying the first issue for decision as being whether the court had jurisdiction to make the order sought, given that Mr de Beer currently had assets in a Convention state (i.e. the jurisdiction issue). She pointed out that, whether or not Mr de Beer's right to an interest in the estate being administered in the Netherlands was properly to be regarded as located in the Netherlands, the existence of assets in Switzerland sufficed to raise the jurisdiction issue.
16. After summarising each side's arguments on the jurisdiction issue, the judge turned to the authorities as to security for costs as they stood prior to the introduction of the CPR, under the former Rules of the Supreme Court. She referred to a number of authorities, including the Court of Appeal decision in Fitzgerald v. Williams [1996] QB 657. In that case the question arose whether and in what circumstances the court should order security for costs against plaintiffs who were ordinarily resident in Ireland. The relevant provision of the Rules of the Supreme Court was Order 23 rule 1(1)(a), which provided as follows:

"Where, on the application of a defendant to an action or other proceeding in the High Court, it appears to the court – (a) that the plaintiff is ordinarily resident out of the jurisdiction .... then if, having regard to all the circumstances of the case, the court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as it thinks just."

17. For the Irish plaintiffs it was contended that since the Republic of Ireland was a state party to the Brussels Conventions, their right to protection against discrimination on grounds of nationality conferred by articles 6 and 220 of the EC treaty required the court to disapply rule 1(1)(a). The judge at first instance concluded that rule 1(1)(a) did not contravene article 6, and ordered the Irish plaintiffs to give security. The Court of Appeal allowed their appeal, holding that rule 1(1)(a) was covertly discriminatory on the ground of nationality. The leading judgment was given by Sir Thomas Bingham MR, with whom Waite and Otton LJJ agreed. In the course of his judgment Sir Thomas Bingham MR referred to the decision of the European Court in Mund & Fester v. Hatrex Internationaal Transport [1994] ECR 1-467. At p.674d of the report, he said this:

"(iii) Is the rule discriminatory?

The rule plainly empowers the court to make orders against plaintiffs ordinarily resident out of the jurisdiction which it could not make against plaintiffs ordinarily resident within it. ... It therefore involves discrimination in the sense used by the European Court of Justice in the Mund case, in that different plaintiffs are treated differently.

(iv) Is that discrimination based on nationality?

On its face, the discrimination for which the rule provides is based on ordinary residence not nationality. A British national ordinarily resident abroad may be required to give security, a foreign national ordinarily resident within the jurisdiction may not. But there is a close analogy with the Mund case: just as most German judgments to be enforced outside Germany would not be against Germans, so most plaintiffs in England ordinarily resident outside the jurisdiction would not be British. Just as paragraph 917(2) [of the German Code of Civil Procedure] was held to be covertly discriminatory on grounds of nationality, so must the same conclusion follow in relation to the rule."

18. Later in his judgment, at page 675c, Sir Thomas Bingham MR said this:

"The answer compelled by the Mund case in my view is: the English court should never exercise its discretion under the rule to order security to be given by an individual plaintiff who is a national of and resident in another member state party to the [Brussels] Convention, at any rate in the absence of very cogent evidence of substantial difficulty in enforcing a judgment in that other member state."

19. The judge in the instant case went on to observe that by parity of reasoning the same constraint applied to claimants who were ordinarily resident in states parties to the Lugano Convention, which contained a non-discrimination provision in similar terms.
20. The judge then turned to the relevant provisions of the CPR, and in particular to rule 25.13(2)(a)(ii), remarking that, apart from an obiter comment by Mr Ian Hunter QC sitting as a Deputy High Court Judge in Bunzl v. Martin Bunzl International Ltd (2000) 150 New LJ 1076, the instant case appeared to be the first case in which the proper construction of the rule had been considered.
21. The judge continued as follows:

"29. The language of subpara. (a)(ii) requires the court to identify whether the claimant against whom security is sought is a person of a particular type. If he is a person of a particular type, i.e. a person against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention, then the condition in para. (2)(a) is not satisfied and therefore security cannot be awarded on that ground.

30. The first point to make is that the language of the subparagraph does not describe persons by reference to residence in a Convention State, nor by reference to nationality of a Convention State. If the draftsman had so intended, he clearly could have described a person by reference to his residence. Residence, or, rather, ordinary residence, is a concept invoked in subpara. (2)(a)(i). On the contrary, as I have said, the only requirement specified under subparagraph (2)(a)(ii) which has the result that the condition in subpara. (2)(a)(ii) is not satisfied is that a claim can be enforced 'against such a person' under the Brussels Conventions or the Lugano Convention."

22. The judge then turned to the meaning of the word "claim", concluding (in paragraph 32) that:

" .... the natural construction of the words taken in context is that 'claim' is referring to an order for costs in the current proceedings against the claimant, rather than a hypothetical claim for an unascertained amount which can be enforced against a claimant, whether because he is ordinarily resident in a Convention State or because he has assets in such state."

23. The judge acknowledged, however, that the alternative construction was feasible.
24. Then, after recording that it was common ground (a) that, under the Conventions, a judgment obtained in one Convention state could be enforced in another Convention state by means of execution against assets of the judgment debtor situated in the latter state, and (b) that, on the facts of the instant case, a judgment obtained in the United Kingdom could be enforced against assets of Mr de Beer which were situated in Switzerland, the judge identified the critical issue as being whether such enforcement would constitute the enforcement of a claim against Mr de Beer within the meaning of rule 25.13(2)(a)(ii).
25. The judge concluded that it would do so, for five reasons. Her first reason was that in her judgment the language of the Conventions themselves clearly envisages that the enforcement in a Convention state of a judgment obtained in another Convention state is enforcement of a judgment "against" a person, albeit that person is not domiciled or ordinarily resident in the state in which enforcement is effected. Her second reason was that had the intention been to adopt a residence-based exclusion as opposed to an enforceability-based exclusion, the draftsman could easily have achieved that end by express language. Her third reason was that notwithstanding that the effect of her construction of the rule was that whereas jurisdiction to order security for costs would have existed had Mr de Beer's assets been situated in England, the fact that they were situated in another Convention state served to exclude such jurisdiction, that "quirk" did not prevent the court from giving effect to what she considered to be the plain language of the rule. Her fourth reason was that Kanaar's reliance on the fact that, on her construction of the rule, a claimant could always avoid having to give security by the simple expedient of placing an asset (e.g. a cash deposit refundable on demand) in a Convention state, was misplaced in that:

"[t]o suggest that such a person is not a person against whom a claim can be enforced under the Conventions because of the undoubted ability to move assets at short notice would ... be to draw an unwarranted and discriminatory distinction between liquid assets in England and liquid assets in other Convention states."

26. The judge further concluded that rule 25.13(2)(g) provided a sufficient safeguard from the suggested abuse. As to that, she said:

"In my judgment, the other conditions set out in para. (2) and in particular that set out in para. (g), 'the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him', provide a sufficient safeguard from this type of abuse. If, for example, some two months after an unsuccessful security application a claimant were to refuse to confirm, pursuant to a request made by a defendant, that he continued to hold sufficient assets in a Convention state, or refused to identify those assets, a court might well be entitled to infer that the claimant fell within condition [(2)(g)] and that, accordingly, a subsequent application for security would be successful."

27. As her fifth reason for reaching her conclusion as to the true construction of the rule, the judge considered that the obiter dictum of Mr Ian Hunter QC in the Bunzl case, on which Mr Marshall had relied, was of no assistance in the instant case since the effect and ambit of the CPR was not in issue in the Bunzl case.
28. The judge concluded her judgment on the application for security for costs by saying this:

"37. I conclude that, in the light of the acceptance by Mr Marshall that the claimant does indeed have assets in Convention States against which an order for the costs of the action could be enforced, the claimant is indeed a person against whom a claim could be enforced under the Conventions. Accordingly, in my judgment, no security for costs can be awarded against him under CPR 25.13 because the condition set out in para. [(2)(a)] is not satisfied. .....

38. I do not propose, in view of the length of this judgment, to indicate what order I would have made had I not reached the view which I have on the construction of the new rule. I do not consider it is appropriate in all the circumstances for me to do so."

The arguments on the jurisdiction issue

29. Mr Marshall submits that on its true construction rule 25.13(2)(a) precludes an order for security for costs being made against a claimant who is ordinarily resident in a Convention state, and that it does not preclude such an order being made against a claimant who is not so resident but who happens to have assets, or an asset, in a Convention state. He submits, further, that that was the intended meaning of the new rule, in that the purpose of the new rule was to limit the court's discretion to order security so as to make it fully compatible with Community law by providing that no order can be made against a claimant who is ordinarily resident in a Convention state, thereby avoiding the tension which existed under the old rules between the court's discretion and article 6 of the EC treaty (see the judgment of Sir Thomas Bingham MR in Fitzgerald v. Williams (above) and his later judgment in Chequepoint v. McLelland [1997] QB 51).
30. In support of this submission Mr Marshall also relies on a discussion paper circulated by the Lord Chancellor's Department in 1997, prior to the introduction of the CPR, entitled "Civil Procedure Rules – Security for Costs". He also refers to a note to that effect in Civil Procedure Vol 1 (Autumn 2000). However, the corresponding note in the current edition (Spring 2001, note 25.13.3 at p.451) is framed in more circumspect terms, acknowledging that the precise construction of the rule is not free from doubt.
31. Mr Marshall relies on the observation of Mr Ian Hunter QC in the Bunzl case that "the court no longer has any jurisdiction to make an order for security for costs against a person resident in a state party to the Brussels Convention or the Lugano Convention". He submits that that is the correct interpretation of the rule. He submits out that the rule is "person-specific" not "asset-specific". The current location of a claimant's assets is, he submits, irrelevant to the question of jurisdiction.
32. Mr Marshall further submits that the judge's construction leads to absurd results. By way of example, he contrasts the position where a US resident has assets in England (in which case the English courts have jurisdiction to order security) with the position where his assets are in another Convention state (in which case, if the judge is right, there is no such jurisdiction). Further, he points out that if the words "can be enforced" in rule 25.13(2)(a)(ii) envisage enforcement leading to full recovery (that being the basis on which the judge proceeded) then the court would be concerned to satisfy itself as a matter of jurisdiction (a) that, having regard to current values, the asset or assets in question would be of sufficient value to satisfy an order for costs, and (b) that the courts in the Convention state or states in which the asset or assets were situated would enforce any order for costs against such asset or assets.
33. Mr Marshall submits that the reference to "a claim" in rule 25.13(2)(a)(ii) is to be contrasted with the express references to the enforcement of orders for costs in ibid. subparas (f) and (g). He submits further that, in context, the reference to the enforcement of "a claim" includes any hypothetical claim for relief, not necessarily limited to a money claim. He submits that only if a person is ordinarily resident in a Convention state can it be said that any hypothetical claim for relief is capable of being enforced against him in that state. Such a construction would, he submits, be fully workable.
34. Mr Marshall also relies on two authorities decided since the judge delivered her judgment, namely the decision of Brooke LJ in White Sea & Onega Shipping Co v. International Transport Workers Federation [2001] EWCA CIV 377, and the decision of the Court of Appeal in Amy Nasser v. United Bank of Kuwait (unreported, judgment delivered 11 April 2001).
35. In White Sea the defendant/respondent applied for security for its costs of an appeal by the claimant, a shipping company incorporated and based in Russia. The claimant resisted the application for security on the ground (among other things) that there was no jurisdiction to grant security since, as the judge put it, "the odds are that there will be a vessel owned by [the claimant] within the jurisdiction of one or other of the Brussels Convention or Lugano Convention countries". In paragraphs 12 and 13 of his judgment Brooke LJ said this:

"12 Although it would be wrong to interpret the new rules simply as altering some of the inconveniences of the old rules – the Civil Procedure Rules are a brand new code – in my judgment, there is a good deal of force in [counsel for the defendant's] submission that the wording of the new rule [a reference to rule 25.13] was introduced in order to abolish the objection or discriminatory effect of the language of the old rule as set out in the judgments of Lord Bingham CJ in Chequepoint SARL v. McClelland [1997] QB 51 at 59 and 60 following, as they did, his earlier judgment in Fitzgerald v. Williams [above].

13. In my judgment, as a matter of interpretation of the rule, [counsel for the defendant's] approach to interpretation should be preferred. He has reminded me that the old security for costs provision under RSC Ord. 23, although not unlawful, was held to be discriminatory under Article 6 of the European treaty if applied to nationals and residents of other Convention countries. Against this background I would interpret the rule as being confined to persons who are nationals of or residents of other Convention countries. This decision goes to jurisdiction, and there may be, when it comes to the exercise of discretion, formidable reasons for declining to order security if, on the facts before the court in any particular case, it is not just to make an order."

36. Brooke LJ went on to cite a passage from the judgment of Lightman J in Leyvand v. Barasch (unreported, judgment delivered 15 February 2000) in which Lightman J, referring to the exercise of the court's discretion to order security for costs, said this:

"The common sense principle applies that the existence of assets within the jurisdiction, their fixity and permanence, are among a number of potentially relevant factors, their importance depending on the particular facts of the case."

37. In Nasser, the Court of Appeal considered the jurisdiction to order security for costs under the CPR in the light of articles 6 and 14 of the European Convention on Human Rights, with particular reference to applications for security for the costs of an appeal. The leading judgment was given by Mance LJ, with whom Simon Brown LJ agreed. In his judgment Mance LJ drew attention to an important change effected by the CPR in the practice of the Court of Appeal as regards security for the costs of appeals, in that whereas under the old rules the court had a discretion to order security "in special circumstances", and it was settled practice that impecuniosity of itself constituted such a special circumstance, under CPR rule 25.13 the court could only order security if one or more of the conditions in rule 25.13(2) applies.
38. In paragraph 35 of his judgment, Mance LJ commented that the requirement of rule 25.13(2)(a)(i) that the claimant should be ordinarily resident out of the jurisdiction mirrors a ground for ordering security for costs against a plaintiff under the old rules. He continued:

"In that connection there was clear authority indicating that, although foreign residence was a pre-condition to the making of such an order, once that pre-condition was satisfied, the court could have regard not merely to matters related directly to the foreign residence, but also to matters intrinsic to the plaintiff wherever he or she might be, such as impecuniosity..."

39. In paragraph 46 of his judgment Mance LJ said this:

"What remains as one ground on which security may be ordered is foreign residence – except in cases involving the "single legal market" to which the Brussels and Lugano Conventions aspire in matters of enforcement and recognition. The rationale of the discretion to order security on that ground is that enforcement of an order for security for costs abroad may be more difficult or costly than elsewhere: cf. Sir Jeffery Bowman's Review, paragraphs 33-37. The single legal market of the Brussels and Lugano Conventions means that 'abroad' in this context now means not merely outside England or the United Kingdom, but outside the jurisdictions of the states party to those Conventions...."

40. In paragraph 57 of his judgment Mance LJ referred to the distinction drawn in the CPR between claimants resident within and outside Convention states. He continued:

"This distinction serves simply to identify when a discretion exists to order security for a defendant's or respondent's costs. In that context, the distinction between residents within and outside Brussels and Lugano states cannot be regarded as unduly discriminatory, since, first, it can be said that the recognition of separate categories makes sense as a broad rule of thumb, defining when any question of discretion can arise (rather than how it will be exercised); and, secondly and in any event, the distinction drawn is in that context reasonable and objectively justifiable. The single legal market of the Brussels and Lugano Conventions is a significant achievement on the road to the easy and automatic recognition and enforcement of judgments, as recognised by the decision in Mund."

41. Turning to the considerations relevant to the exercise of the discretion itself, Mance LJ observed (in paragraph 58 of his judgment) that:

"[t]he distinction in the rules based on considerations of enforcement cannot be used to discriminate against those whose national origin is outside any Brussels and Lugano state on grounds unrelated to enforcement."

42. In paragraph 61 of his judgment, Mance LJ said this:

"Returning to Part 25.15(1) and 25.13(1) and (2)(a) and (b), if the discretion to order security is to be exercised, it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned.

43. Later, in paragraph 62 of his judgment Mance LJ said this:

"The justification for the discretion under Part 25.13(2)(a) and (b) .... in relation to individuals and companies ordinarily resident abroad is that in some, it may well be many, cases there are likely to be substantial obstacles to or a substantial extra burden (e.g. of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or in a Brussels or Lugano state. In so far as impecuniosity may have a continuing relevance, it is not on the ground that the claimant lacks apparent means to satisfy any judgment, but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad, or (ii) as a practical matter, to make it more likely that the claimant would take advantage or any available opportunity to avoid or hinder such enforcement abroad."

44. In paragraph 65 of his judgment Mance LJ noted that no evidence had been put before the court to suggest that the defendants would face any difficulty in enforcing an order for costs against the claimant in the United States, but he went on to infer (in paragraph 66) that some extra costs would be involved. Accordingly in paragraph 67 of his judgment he said this:

"The risk against which the present defendants are entitled to protection is, thus, not that the claimant will not have the assets to pay the costs, and not that the law of her state of residence will not recognise and enforce any judgment against her for costs. It is that the steps taken to enforce any such judgment in the United States will involve an extra burden in terms of costs and delay, compared with any equivalent steps that could be taken here or in any other Brussels/Lugano state. Any order for security for costs in this case should be tailored in amount to reflect the nature and size of the risk against which it is designed to protect."

45. Mr Marshall relies on both these recent decisions as supporting the view that the purpose and effect of rule 25.13(2)(a)(ii) is to exclude from the scope of the court's discretion claimants who are ordinarily resident in a Convention state, and that the rationale of that rule is the aspirational "single legal market" made up of Convention states and the ease with which judgments obtained in one Convention state may be enforced in another.
46. Mr Marshall accordingly submits that, construing the rule in accordance with its purpose and its natural meaning and so as to avoid absurdity, it must mean that jurisdiction is excluded where the individual claimant is ordinarily resident in another Convention state.
47. In the alternative, if (contrary to his primary submissions) the word "claim" in the new rule is to be treated as a reference to a specific prospective judgment or order for costs in these proceedings, Mr Marshall nevertheless repeats his submissions as to the meaning and effect of the words "can be enforced".
48. Mr Saini supports the reasoning and conclusion of the judge on the jurisdiction issue. He submits that the purpose of the condition in rule 25.13(2)(a)(ii) is to prevent security being awarded against individual claimants who have assets in Convention states which can be used for the purpose of enforcement of costs orders made in this jurisdiction. He submits that the condition is "enforceability-based" as opposed to "residence-based". He further submits that the construction contended for by Kanaar wholly ignores the plain wording of the condition and requires, in effect, that the condition be substantially rewritten. He also relies on subparagraph (g) of the condition as extending the jurisdiction to cover cases in which a claimant seeks to shelter his assets from an application for security for costs.
49. Mr Saini submits that the relevant question for the court is whether the "person" referred to in the rule is a person against whom a claim can be enforced under the Conventions, wherever his residence may be, and that in deciding whether a "claim" can be enforced the court has to consider (a) whether the claim is of a type which can be enforced under the Conventions and (b) whether the claimant has assets in a Convention state against which execution can issue.
50. As to the two recent authorities relied on by Mr Marshall (White Sea and Nasser), Mr Saini points out that in paragraph 13 of his judgment in White Sea Brooke LJ interprets the rule as being confined "to persons who are nationals of or residents of other Convention countries". Mr Saini submits that since Mr de Beer is a Dutch national (albeit resident in the United States), it follows that on Brooke LJ's interpretation of the rule there is no jurisdiction to order for security for costs against him. As to Nasser, Mr Saini points out that the Court of Appeal was not concerned in that case with the question of the true construction of rule 25.13(2)(a)(ii), but rather with general considerations as to the jurisdiction of the court (and in particular of the Court of Appeal) to order security for costs. He submits that whilst it is correct to say that Mance LJ referred on a number of occasions in the course of his judgment to a distinction being drawn between "residence" within and outside Convention states, Mance LJ did not have to focus on, still less decide, the question of construction raised in the instant case.
51. We should record that, although we raised the point in the course of argument, and despite the focus which the Conventions place on domicile, neither side sought to put forward any argument based on domicile.

Conclusions on the jurisdiction issue

52. The drafting of Rule 25.13(2)(a)(ii) is on any footing unsatisfactory, and its meaning is not entirely clear. This has enabled each side to say with force that had the draftsman intended to achieve the result contended for by the other he could easily have done so by the use of clear words.
53. The particular words which give rise to difficulty are the words ".... a person against whom a claim can be enforced ...." The concept of a "claim" being "enforced" is not an altogether happy one, since one would normally speak of a claim being "brought" and of a judgment or order being "enforced". So the question arises which construction takes precedence: that is to say, whether (as the judge concluded) "a claim" is to be construed as meaning a judgment or order (i.e., in the context of security for costs, a judgment or order for costs), or whether "enforced" is to be construed as meaning "brought". Taking the words in isolation and out of context, either construction could be the correct one. For that reason alone, we regard the judge's reference (at paragraph 36(3) of her judgment) to "the plain language of the provision" as somewhat misplaced.
54. That being so, it becomes important to consider the relevant context; that is to say the background against which the new rule came to be introduced. In this connection, we consider that it is legitimate to have regard to the mischief which was perceived to exist under the old rule.
55. As noted earlier, the Mund case established that the jurisdiction under the old rule was incompatible with Community law in so far as it discriminated covertly against nationals of other Convention states. This in turn led to the decision in Fitzgerald v. Williams, to the effect that although the jurisdiction existed it should not be exercised in a manner which was contrary to Community law. In the circumstances it is in our judgment a fair – indeed, we would say inevitable – inference that it was a primary aim of the new rule to remove that anomaly by limiting the jurisdiction to order security for costs so as to ensure that the discretion which it confers is not capable of being exercised in a manner which conflicts with Community law. As Mance LJ put it in Nasser (in a passage in paragraph 46 of his judgment, quoted earlier): "'abroad' .... now means not merely outside England or the United Kingdom, but outside the jurisdictions of the states party to [the] Conventions ....."
56. If, therefore, we are entitled to give a purposive construction to the new rule – and we consider that we are so entitled – we take the purpose of subparagraph (a)(ii) to be to eliminate any covert discrimination against nationals of other Convention States which would or might have existed had subparagraph (a)(ii) not been included as part of the condition – that is to say, had condition (a) read simply "the claimant is an individual who is ordinarily resident out of the jurisdiction".
57. On that footing, we return to the wording of the subparagraph. In the first place, it seems to us entirely legitimate, as well as being consistent with what we have taken to be the purpose of the subparagraph, to construe the words "a claim" in a general sense; that is to say, as including any claim (whether or not a money claim) and not limited to an order for costs. Such a construction is also consistent with the other conditions in rule 25.13(2), all of which are directed at claimants of a particular kind, rather than at execution against assets. Even paragraph (g), which relates to the sheltering of assets, is expressed in terms of a particular category of claimant rather than by reference to the assets themselves.
58. In our judgment, rule 25.13(2) is directed at what we may call the juridical characteristics of the particular individual claimant, irrespective of what assets he may currently own or where those assets may currently be situated. We further conclude that condition (a), on its true construction, confines the jurisdiction to order security for costs to cases where the claimant is an individual who is not ordinarily resident either in this jurisdiction or in that of a Convention state. It follows that, in our judgment, such a claimant cannot deprive the court of jurisdiction merely by placing an asset in a Convention state.
59. We take that to be the construction of the rule adopted by Brooke LJ reached in White Sea. Although Brooke LJ referred, in paragraph 13 of his judgment, to the rule being confined to "nationals of or residents of other Convention countries", that sentence must be read in the light of the immediately preceding sentence of his judgment, where he refers to "nationals and residents of other Convention countries". Moreover, to interpret Brooke LJ's reference to nationals of other Convention countries in the manner contended for by Mr Saini would make little sense, given that Brooke LJ earlier refers to "the ... discriminatory effect of the language of the old rule as set out in judgments of Lord Bingham CJ in Chequepoint SARL v. McLelland .... following, as they did, his earlier judgment in Fitzgerald v. Williams ...". We refer in particular to the passages from the judgment of Sir Thomas Bingham MR in Fitzgerald quoted earlier in this judgment. Further, in our judgment, although it addressed a somewhat different issue, the Nasser case provides further support for our conclusion.
60. We are also fortified in our conclusion by a consideration of the implications of the construction of the rule favoured by the judge.
61. In the first place, it seems to us that a jurisdiction which is based upon such ephemeral considerations as the values and the situs of a claimant's assets current at the date when an application for security is heard would pose very considerable practical difficulties both for litigants and for the court. If the existence of the jurisdiction were to depend upon whether or not there was a reasonable prospect of full recovery of costs from the assets in question (that being the basis on which the judge proceeded) then the existence of the jurisdiction would appear to depend not only upon the values of the assets from time to time, but, one presumes, also the defendant's estimates of the amount of the costs which the claimant might be ordered to pay. Both may be expected to vary from time to time. By way of example, had Mr Saini's initial information as to the current value of Mr de Beer's Swiss assets been correct an extraordinary position would have been reached, in that (on the judge's construction) there would currently be jurisdiction to order security whereas at the date of the hearing before the judge the value of the Swiss assets was sufficient to exclude jurisdiction.
62. We further agree with Mr Marshall that the judge's construction would produce the extraordinary result that whilst jurisdiction would exist to order security for costs against a US resident with assets in this jurisdiction (but in no other Convention state), no such jurisdiction would exist if he moved those assets to another Convention state.
63. We accordingly conclude, in disagreement with the judge, that the court has jurisdiction under rule 25.13(1) to order security for costs to be given by Mr de Beer by reason of the fact that he is an individual claimant who is (a) ordinarily resident out of the jurisdiction and (b) not ordinarily resident in a Convention state. We accordingly allow the appeal.
64. It follows that we must now move on to consider whether the jurisdiction which we have held to exist should be exercised, and if so on what terms: that is to say, to address the discretion issue.

The discretion issue

65. Mr Marshall submits that in considering whether to exercise its discretion to order security it is material for the court to consider whether there is a want of probity on the part of Mr de Beer. In support of this submission Mr Marshall cites a passage from the judgment of Lightman J in the Leyvand case (above) which follows the passage quoted by Brooke LJ in White Sea. In paragraph 6 of his judgment in Leyvand Lightman J said this:

"The Court will not infer the existence of a real risk that assets in this country will be dissipated or shipped abroad to avoid their being available to satisfy a judgment for costs unless there is reason to question the probity of the claimant: there is no such reason in this case. If there is reason to question the claimant's probity, the character of his property within the jurisdiction is relevant in assessing the risk: the risk may be greater if the property is cash or immediately realisable or transportable, and less if fixed and permanent."

66. Mr Marshall goes on to submit that want of probity on the part of Mr de Beer is demonstrated in the instant case (a) by the fact that triable allegations of dishonesty are made against him and (b) by the fact that he has made grossly and demonstrably misleading statements in his witness statement concerning his assets in Florida.
67. He further submits that, on the authority of Lightman J's observations in Leyvand (quoted above), the court should also have regard to the fact that the assets presently held by Mr de Beer in Switzerland are capable of being moved at the push of a button.
68. Mr Marshall also relies on observations made by Bingham LJ in Thune v. London Properties Ltd [1990] 1WLR 562. In that case the claimants were Norwegian trustees in bankruptcy, and although there was no question but that they would act with complete rectitude in relation to the enforcement of an order for costs against the bankrupt's estate, there was nevertheless a risk that the defendants would be unable to achieve full recovery since there might be other competing priority claims of unknown amount. Bingham LJ said (at p.574):

"Thus the defendants are put to the very great cost of defending this expensive litigation with the risk, however small, that if they are ultimately successful they will be unable to recover their taxed costs despite the ease of procedural enforcement in Norway. I consider, in the exercise of my discretion, that this is a risk to which the defendants should not be put and that security should be given ..."

69. Mr Marshall submits that a similar risk exists in the instant case, and that accordingly security should be ordered.
70. As to the enforceability in Florida of an order for costs made in this jurisdiction, Mr Marshall referred us to the witness statement of a Mr Litsky, an American lawyer and Kanaar's expert witness, to the effect that although a costs order made by the English court is a type of judgment which is prima facie capable of recognition in Florida pursuant to a Florida statute, nevertheless Mr de Beer could argue that the statute does not apply on the ground that the order was obtained by fraud, alternatively on grounds of non-reciprocity. Mr Litsky's opinion is that such challenges by Mr de Beer could involve a fully argued hearing, possibly involving disclosure and expert evidence on English law.
71. As to Mr de Beer's Swiss assets, in a Note sent to us after the hearing by way of response to Mr Saini's Note (referred to earlier in this judgment), Mr Marshall submits that on the available documentary material there must be considerable doubt whether enforcement could be effected in Switzerland against the shares in Apogee Technology Inc., since the situs of the shares would appear to be the United States. At all events, he points out, there is no evidence either that the company was incorporated in Switzerland or that it maintains a register of members there. Mr Marshall further submits that the share certificate could easily be moved, or the shares themselves disposed of. Finally in relation to the Swiss assets, Mr Marshall says that the court below was never informed that the Swiss assets included shares in an American company, and that in consequence it was (as he puts it) extremely doubtful that they would be capable of being realised by enforcement in Switzerland.
72. Mr Marshall accordingly submits that security should be ordered in the sum of £130,000, on the footing that that is a reasonable estimate of the amount of Kanaar's costs up to the end of the trial.
73. Mr Saini accepts that £130,000 is a reasonable estimate of Kanaar's costs up to the end of the trial, but he submits that in the circumstances it would not be just to order any security; alternatively he submits that if security is to be ordered at all it should be ordered in a much smaller sum, proportionate to the degree of risk which Kanaar faces. In this connection, Mr Saini relies on Mance LJ's reference in paragraph 67 of his judgment in Nasser (quoted earlier) to any order for security being "tailored in amount to reflect the nature and size of the risk against which it is designed to protect".
74. Mr Saini submits that the mere fact that an allegation of dishonesty is made against Mr de Beer on the pleadings cannot justify the court in proceeding on the footing that there is any want of probity on Mr de Beer's part. As to Mr de Beer's witness statement, Mr Saini accepts that it contains a misleading statement as to his assets in Florida, but he submits that there is no reason to infer that the statement was deliberately misleading; in any event, he submits, the witness statement establishes that Mr de Beer has substantial assets in Florida.
75. As to possible difficulties of enforcement, Mr Saini referred us to the witness statement of Mr Louis Stinson, Mr de Beer's expert witness as to American law. In a short witness statement, Mr Stinson confirms that an order for costs made by an English court would be capable of enforcement in Florida in accordance with the Florida statute. He further states that the costs of enforcement in Florida "assuming no dispute as to recognition or enforceability of the judgment" would be relatively modest.
76. Mr Saini submits that in the light of Mr Stinson's evidence the court should proceed on the footing that there is no significant risk that enforcement of an order for costs may prove more difficult, or materially more expensive, in Florida.
77. As to enforcement of an order for costs against Mr de Beer's Swiss assets, Mr Saini relies on paragraph 32 of the judgment of Mr Ian Hunter QC in the Martin Bunzl case (above), which reads as follows:

"In my judgment the consideration which requires careful attention in the circumstances of the present case is whether, as Sir Thomas Bingham MR put it in Fitzgerald, there is 'any cogent evidence of substantial difficulty in enforcing a judgment' in Switzerland, notwithstanding that Switzerland is a party to the Lugano Convention. It is a matter for consideration whether the Court should ever accede to the contention that there is or may be substantial difficulty in enforcing a judgment in a Member State party to the Brussels or Lugano Conventions. After all, the whole purpose of those two Conventions is to greatly reduce the opportunity for contesting the recognition or enforcement of judgments from other Contracting States and to produce in effect a free market in Community judgments. Member States of the European Union and the EEA are expected to give 'full faith and credit' to the judgments of courts in other Contracting States and judicial comity demands that the courts of one such State should not readily accede to the proposition that in practice the Conventions are not achieving their purpose. On the other hand, there may be cases where cogent evidence to that effect is forthcoming: and where that is the case, the Court should not hesitate to recognise the fact."

78. Mr Saini submits that there is no basis in the instant case for any suggestion that Kanaar would have difficulty in enforcing an order for costs in Switzerland, and he points to the fact that on current values the Swiss assets (including the shares in Apogee Technology Inc) are worth some £162,000.
79. We accept Mr Saini's submission that the mere fact that Kanaar made serious allegations of dishonesty against Mr de Beer does not justify this court in proceeding on the footing that he lacks probity. On the other hand, we take a serious view of the misleading statement in his witness statement to which Mr Marshall has drawn our attention.
80. In paragraph 44 of his witness statement, which is dated 27 October 2000, under the heading "Personal Finances", Mr de Beer says this:

"I am a Dutch citizen but my place of ordinary residence is Miami, Florida, USA. I have lived in the USA since 1987 and I have substantial assets in Florida. These include the following:

(i) I am the owner of a property at 1222 Seabreeze Boulevard, Fort Lauderdale, Florida. The value of this property is about US$1.2 million and it is subject to a mortgage of about US$210,000. This produces for me a monthly income of US$5,000.

.... "

81. In a witness statement dated 4 December 2000 Mr Julian Aylmer, Kanaar's solicitor, states that he caused an investigator to visit the property in question, and that the investigator confirmed that it was up for sale. This drew a response from Mr Cohn (Mr de Beer's solicitor). In paragraph 3.4 of his witness statement dated 8 December 2000 Mr Cohn says this:

"[Mr de Beer] put the house on the market through a real estate agent ... some months ago at a price of US$895,000, and he has received a number of offers. While none has reached US$895,000, [Mr de Beer] tells me that he would not, in fact, accept less than US$1.2 million for the property, as he considers that figure to reflect its true worth."

82. Mr Cohn then exhibits a letter from the agent dated 6 December 2000, addressed to Mr de Beer, in which the agent confirms that the house has been on the market "for some months" at a price of US$895,000. In the final paragraph of his letter, the agent says:

"You have told me that you personally consider the property to be worth $1,200,000. ...... I consider that figure to be somewhat ambitious, but I recognize that you have considerable experience of property values and that your view may be correct."

83. In our judgment, the evidence of Mr Cohn, coupled with the letter from the agent, establishes that Mr de Beer's evidence about the property in Fort Lauderdale is materially misleading in what it does not say. It does not say that the property had been placed on the market for sale. It does not say that it was being marketed at a price substantially less than US$1.2 million. It does not say that although offers have been received, none has matched the asking price. It does not say that the valuation of US$1.2 million represents Mr de Beer's personal opinion of the value of the property (still less that it is an opinion which does not appear to be shared by the market). Moreover, it is difficult to see how Mr de Beer's evidence in this respect could have been other than deliberately misleading. In the circumstances, we take the view that it places a serious question mark over the reliability of the remainder of his evidence.
84. Moreover, it appears from the evidence of Mr Litsky (which is not directly challenged in this respect by Mr Stinson) that there is, to put it at its lowest, a risk that an order for costs in Kanaar's favour may be difficult or even impossible to enforce in Florida.
85. As to enforcement against Mr de Beer's Swiss assets, we are concerned that the court below may not have been told that by far the most valuable of these assets is the shareholding in Apogee Technology Inc. Certainly no mention of this fact is made in Mr de Beer's witness statement dated 27 October 2000, where he merely says:

"I also have cash, securities and Swiss mutual funds [on] deposit at UBS in Zurich amounting to about US$175,000."

86. It seems to us that if the court below was not told that the Swiss assets included the shares in Apogee Technology Inc it plainly should have been, if only because (to put it at its lowest) it is by no means self-evident that an order for costs could be enforced in Switzerland against shares in an American company. However, not having heard oral submissions on the question of possible non-disclosure, it would not be appropriate for us to form any view on that question.
87. The terms of the fax from UBS dated 31 July 2001, a copy of which is annexed to Mr Saini's Note and the material parts of which we have quoted earlier in this judgment, also appear to raise doubts as to whether an order for costs could be enforced against the shares in Switzerland. On the face of it, unless and until Mr de Beer signs the requisite form, UBS cannot part with the share certificate other than to Mr de Beer.
88. Once again, however, we take the view that since we have not heard oral argument on this question it would not be appropriate for us to form any view about it. In the circumstances we propose to proceed on the basis, favourable to Mr de Beer, that so far as enforcement of a costs order in Switzerland is concerned, the shares stand on the same footing as the other assets held by UBS.
89. However, whilst we are content to proceed on the footing that there is in principle no reason to suppose that an order for costs might not be fully enforceable in Switzerland, we must also take into account the ease with which the assets presently held there may be moved. This applies to the Apogee shares as it does to the other assets.
90. In all the circumstances, we conclude that Kanaar is at risk of being unable to enforce an order for costs against Mr de Beer, whether in part or at all, due either to lack of available assets against which such an order could be enforced, or to the unenforceability of such an order in Florida, or both.
91. We further conclude that it is just in all the circumstances that Kanaar should be protected against that risk by the making of an order that Mr de Beer give security for its costs of the action to the end of the trial. Bearing in mind the nature and potential size of the risk, and given that Mr Saini's accepts that the proposed figure of £130,000 represents a reasonable estimate of Kanaar's costs up to the end of the trial, we order that security be given in that sum.
92. We will hear counsel further as to the precise form of the order, in the event that it cannot be agreed.
ORDER: Appeal allowed; costs adjourned; Security of £130,000 to be paid into court within 28 days.
(Order does not form part of approved Judgment)