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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Leeds Utd AFC Ltd and Leeds Utd 2007 Ltd v Admatch [2008] JRC 141 (21 August 2008) URL: http://www.bailii.org/je/cases/UR/2008/2008_141.html Cite as: [2008] JRC 141 |
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[2008]JRC141
royal court
(Samedi Division)
21st August 2008
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Before : |
M. C. St. J. Birt, Esq., Deputy Bailiff (sitting alone). |
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Between |
Leeds United Association Football Club Limited |
First Plaintiff |
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Leeds United 2007 Limited |
Second Plaintiff |
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And |
The Phone - In Trading-Post Limited t/a as Admatch |
Defendant |
Advocate N. F. Journeaux for the Second Plaintiff.
Mr R Weston as Director of the Defendant.
judgment
the deputy bailiff:
1. This is an appeal by the defendant ("Admatch") against a decision of the Master on 14th February 2008 limiting the security for costs to be given by the second plaintiff ("Leeds 2007") to £5,000. It raises certain novel points for consideration; in particular, whether a company acting through its director can be considered as a litigant in person and whether, following the bringing into force of the Human Rights (Jersey) Law 2000, the Court can properly require security for costs simply on the ground that the plaintiff is resident outside the Island. Admatch was a few days late in lodging its appeal but I granted an extension of time to allow the appeal to proceed.
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2. In August 2004 the first plaintiff and Admatch entered into an agreement for Admatch to act as agent of the first plaintiff for the purpose of selling season tickets, other tickets and other goods and services relating to Leeds United Football Club. There is no dispute that Admatch owes the first plaintiff £190,400 under that agreement.
3. Proceedings were issued by the first plaintiff in December 2005 seeking payment of the above sum. Subsequently, the first plaintiff was placed in administration and, by an agreement dated 4th May 2007, the administrators transferred its rights against Admatch to Leeds 2007. On 26th July 2007 Leeds 2007 was joined to the action as second plaintiff.
4. As already mentioned, the debt in the sum of £190,400 is admitted. However, the agreement contained at clause 9(f) a set-off clause which entitled Admatch to set-off against any monies it owed to the first plaintiff any sum owed for whatever reason by the first plaintiff (or by any parent, associate or subsidiary company of the first plaintiff) to Admatch (or to any parent, associate or subsidiary company of Admatch).
5. Admatch alleges in its answer that the sum of £1,439,734 is owed by the first plaintiff and/or Adulant Force Limited and/or Romans Heavies Limited (each of the latter two being said to be a parent or associate of the first plaintiff) to Cope Industrial Holdings Limited ("Cope"), which is said to be an associate of Admatch; and that accordingly this sum may be set-off against that owed by Admatch to the first plaintiff. Admatch has throughout been represented by its director and beneficial owner Mr Robert Weston. He explained that he had not proceeded with a summons for security for costs against the first plaintiff as he was aware that it was insolvent. However, once the second plaintiff was joined and, in effect, took over the litigation from the first plaintiff, he promptly issued a summons for security for costs which first came before the Master on 28th August 2007. At that stage Mr Weston presented an amended schedule of costs and the matter was adjourned. It came back before the Master on 4th December and was finally concluded on 17th January 2008. As already stated, the Master gave his decision in a detailed reasoned judgment on 14th February 2008.
General Principles
6. Rule 4/1(4) of the Royal Court Rules 2004 provides that:-
7. Although the Rule itself does not refer to residence, the Court rarely grants orders for security for costs in the case of a plaintiff resident in the Island but regularly makes such orders where the plaintiff resides outside the Island.
8. The principles upon which orders for security for costs are made were conveniently summarised by Southwell JA on behalf of the Court of Appeal in A E Smith and Sons Limited v L'Eau des Iles (Jersey) Limited [1999] JLR 319 at 322 as follows:-
9. There is no suggestion in this case that Leeds 2007's claim would be stifled by an order for costs at the level sought by Admatch. Accordingly, the normal course would be for this Court to order Leeds 2007 to give security in an amount calculated by reference to the likely costs to be incurred by Admatch in defending the claim. However, Mr Journeaux raises two points of principle which, he says, mean either that no security at all should be awarded or that security should be in a very modest amount. These two points are as follows:-
(i) Admatch is not a litigant in person nor is it represented by an advocate. Accordingly, even if successful in the action, it cannot legally recover any costs. It follows that no security for costs should be awarded.
(ii) If Admatch is in principle entitled to recover costs, this Court should nevertheless follow the decision of the English Court of Appeal in Nasser v United Bank of Kuwait [2002] 1 WLR 1868, the effect of which is that the court should only grant security for costs in an amount which reflects the extra costs which would be incurred by a successful defendant in taking action in England to recover its costs as compared with the cost of doing so in Jersey.
10. I shall consider each of these in turn.
(i) Is Admatch a litigant in person?
11. Mr Journeaux argues that a party to litigation may only recover costs if it is represented by an advocate or is a litigant in person. He submits that a company which appears by one of its directors is neither of these. It cannot therefore recover any costs even if successful and even if it has incurred a 'cost' in the sense that the time of the director has had to be deployed in conducting the litigation rather than managing the company's business, so that its profits are thereby reduced. Any entitlement to security for costs presupposes a right to recover costs in the event of success in the trial and, as an unrepresented company cannot recover costs, no order for security may be made in this case.
12. On the face of it, Mr Journeaux's submission is not an attractive one, in that it seems illogical and unsatisfactory to hold that a company which is not legally represented cannot recover the costs of successfully defending a case whereas an individual who is not legally represented may do so. However, Mr Journeaux says that that is the position; and he relies upon the decision of the English Court of Appeal in Jonathan Alexander Limited v Proctor [1996] 2 All ER 334.
13. In that case, the plaintiff company had been successful at trial before the County Court where, with the leave of that court, it had been represented by one of its directors. An issue arose as to whether an order for costs could be made in its favour against the defendant. Two arguments were raised before the Court of Appeal. The first related to the terms of Section 51(a) of the Supreme Court Act 1981 and turned on whether a director of a company could be treated as an 'other representative' for the purposes of that provision. The Court of Appeal held that he could not. As we have no similar provision in Jersey, I do not need to consider that aspect further.
14. The second argument was that a company appearing by its director could be treated as a litigant in person for the purposes of the Litigant in Person (Costs and Expenses) Act 1975 ("the 1975 Act"). Peter Gibson LJ dealt with this argument as follows at 340:-
15. Hirst LJ agreed with Peter Gibson LJ on this point but the reasoning of the third member of the court, Buxton J was slightly different. Having said that, where, as in that case, the managing director of the company had undertaken a specific task for the company, he did not find difficulty in principle in contemplating that the rules governing the attribution of his acts to the company made his acts those of the company itself, and not merely those of an agent of the company, he went on to say that the particular rules under which the director was permitted to represent the company in court prevented his acts being attributed to the company as its own. He went on to say:-
16. It is clear the Court of Appeal reached its decision with considerable reluctance. Thus Hirst LJ said that the case revealed 'a serious lacuna in the law' and Peter Gibson LJ said that it seemed to him to be unjust that a successful party was prevented from recovering any costs if it was a company choosing to act by its own director, whereas an individual in such circumstances could recover under the 1975 Act. Both judges expressed the hope that the relevant rules would be amended. This suggestion was taken up in 1998 and finds expression in Rule 48.6 of the Civil Procedure Rules, which provides that, for the purposes of the rule, a litigant in person includes a company which is acting without a legal representative.
17. Mr Journeaux submitted that, although the legislation being construed in the Jonathan Alexander case was very different from the Jersey legislation, the reasoning of that case was equally applicable in this jurisdiction. A company could not appear in person; it could only appear by an agent, such as a director. It was not therefore a litigant in person. Furthermore, Rule 12/6 of the Royal Court Rules, which dealt with the recovery of costs by a litigant in person, was not apt to cover a company. Thus Rule 12/6 reads as follows:-
He argued that a company could not have normal working hours and was not itself undertaking the work in any event. He said that Jersey law was currently comparable to the position under English law as considered by the Court of Appeal in the Jonathan Alexander case. The Royal Court Rules made no express reference to a company being a litigant in person and there was no definition of litigant in person nor any judgment on the point. He accepted that the position represented a "serious lacuna" in the law but submitted that such defect could only be remedied by an appropriate amendment to the Rules.
18. In my judgment the Jonathan Alexander case is to be distinguished on at least two grounds;
(i) It is clear from the judgments in the case that in England a director can only represent a company with the leave of the court. In my judgment the position in Jersey is different and I respectfully differ from the Master on this point. It is not uncommon for companies to appear by their directors. At no time in my professional career, whether as a judge or as an advocate, have I seen a case where the Court has been asked to grant leave for the director to represent the company or has purported to do so. It is taken as read that the company has a right to appear by a director if it is not legally represented; and this accords with the reality of the situation. Like any party to litigation, a company does not have to employ an advocate. Unlike an individual, it cannot speak for itself. A company can in law only act through its directors and it has a right to do so. That right extends to appearances in court as it does to any other matter. In my judgment a company has the right to appear by one of its directors in court if it chooses not to instruct an advocate.
(ii) The Court of Appeal specifically relied on the fact that there were a number of previous cases which indicated that it was generally accepted before 1975 that the expression 'litigant in person' was applicable only to an individual. Parliament, when enacting the 1975 Act and using the expression 'litigant in person' without defining had to be taken to have used the expression in the sense which had been given to it by previous judicial decisions. There are no such decisions in Jersey and accordingly the point has no weight in this jurisdiction.
19. It is clear that, but for these two matters, Buxton J would have held that a company appearing by its director was a litigant in person. I respectfully agree with his reasoning. It is true that Peter Gibson LJ (with whom Hirst LJ agreed) had an additional reason, namely that set out at (i) in the passage from his judgment cited at paragraph 14 above. However I would respectfully disagree with that particular reason. In my judgment, the natural meaning of a 'litigant in person' is a litigant who is not represented by an advocate. A company is a person for the purposes of the law and for the purposes of the Interpretation (Jersey) Law 1954. A company can be a party to legal proceedings. Not being a natural person, a company cannot speak or act for itself. As a matter of law it does so through its directors. The acts of a duly authorised director are the acts of the company. The director is the voice of the company which cannot speak for itself. In the Jonathan Alexander case, the fact that a director needed leave to represent a company and the fact that there were previous cases suggesting that a company could not be a litigant in person pointed towards the decision reached in that case. However, given that neither of these factors apply in Jersey, I consider that the more natural interpretation of the expression 'litigant in person' when used in the Royal Court Rules is that it includes any litigant who is not represented by an advocate and who is therefore acting for himself or itself. I see no reason why that expression cannot include a company which is acting in the only way that it can in law, namely by its director.
20. Mr Journeaux submitted that the terms of Rule 12/6 are not apt to cover a company, which cannot have 'normal working hours'. I accept that this is so. However, the Rule is equally inapt in the case of an individual litigant who is self employed. Whilst some self employed persons may have normal working hours, many will not. Take the example of the proprietor of a hotel business. He is the entrepreneurial spirit of the business and has a general roving and supervisory role. His hours of work will almost certainly be highly irregular depending upon the matters to which he considers he should give his attention at any particular time. He may think he should meet the customers on their arrival or he may think that he should spend time marketing the hotel or he may think he should be a convivial presence at dinner in the evening. The matters to which he gives his attention are likely to vary and he will not have 'normal working hours' in the sense, no doubt, anticipated by the draftsman of the Rule. Yet he is clearly a litigant in person and, if awarded costs, would be entitled to recover costs in accordance with the Rule. The taxing officer would simply have to do his best to apply the somewhat unsuitable language of Rule 12/6(2) to a situation which it did not envisage. I do not consider that any difficulties in applying the Rule in the case of a company are sufficient to outweigh the conclusion I have reached as to the proper construction of the expression 'litigant in person'.
21. The Court of Appeal in the Jonathan Alexander case reached its conclusion with great reluctance because it believed the decision revealed 'a serious lacuna in the law' which resulted in considerable injustice to a company which properly incurred very substantial costs in defeating a claim. The court felt driven to do so because of the two particular features which I have mentioned and which are not applicable in this jurisdiction. The position was rectified promptly by an amendment to the rules and a company appearing by its director is now treated as a litigant in person in England. There is accordingly no conceptual difficulty is such a solution. I agree that it would be a 'serious lacuna' in our law too, if a company appearing by its director could not recover costs, although this itself cannot be a reason for finding in Admatch's favour. I have to determine the point as a matter of law. Nevertheless, for the reasons I have already given, I find that, under the law of Jersey, a company acting by its director is to be treated as a 'litigant in person' for the purposes of costs and I am comforted that such a finding also accords with the justice of the situation.
22. Accordingly, I propose to consider the question of security for costs on the footing that, if successful at trial, Admatch may be awarded its costs.
(ii) The European Convention on Human Rights
23. Mr Journeaux submits that I should adopt the principles laid down by the English Court of Appeal in the case of Nasser v United Bank of Kuwait [2002] 1WLR 1868 as being equally applicable under the law of Jersey.
24. Although that case was concerned with security for costs of an appeal, it appears to herald a radical change in the practice of the English courts concerning security for costs generally. Historically the courts have regularly required security for costs where the plaintiff was resident outside the United Kingdom. By the time Nasser came to be heard, the relevant rule of court provided that the court could order security in the case of a non-resident plaintiff provided that he was not a person against whom a claim could be enforced under the Brussels and Lugano Conventions on the Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.
25. The Court of Appeal considered the application of Article 14 of the ECHR which provides that the enjoyment of convention rights - which include the right of access to a court under Article 6 of the Convention - was to be secured "...without discrimination on any grounds such as ... national ...origin". The court held that it would be discriminatory if the mere fact of residence outside any Brussels/Lugano member state could justify the exercise of a discretion to make orders for security for costs with the purpose or effect of protecting defendants against risks to which they would equally be subject, and in relation to which they would have no protection, if the claim were being brought by a resident of a Brussels or Lugano state. The court went on to hold that each case must be considered on its merits. If it was clear that there would be substantial obstacles to or a substantial extra burden in enforcing an order for costs in the plaintiff's country of residence, then full security could still be ordered. However, that was likely to be the exception. If, as would normally be the case, the only difficulty caused by the plaintiff's non-residence would be that the cost of enforcing an award of costs in the plaintiff's country of residence would be more expensive than if the plaintiff had resided in a Lugano/Brussels convention country, then it was only the extra expense which would be so incurred which could be ordered by way of security for costs.
26. Article 6(1) of the ECHR provides as follows:-
27. Article 14 provides as follows:-
Since the enactment of the Human Rights (Jersey) Law 2000 the courts in Jersey are obliged to act compatibly with the Convention.
28. There is no suggestion that a discretion to order security for costs is itself a breach of the right of access to the courts conferred by Article 6(1) of the Convention. As outlined in the judgment of Mance LJ in Nasser and the cases referred to therein, such an argument could not succeed. A discretion to order security in cases where the plaintiff's claim will not be stifled does not impair the very essence of the right of access to the courts and is not disproportionate. However, the question arises as to whether a principle of requiring security for costs from non-resident plaintiffs in circumstances where security would not be required from a resident plaintiff amounts to prohibited discrimination under Article 14. In respect of Article 14 Mance LJ helpfully set out the applicable principles at para 48 of his judgment, which I gratefully adopt:-
29. I respectfully agree with the Court of Appeal in Nasser that the rules relating to security for costs fall within the ambit of the right of access to courts under Article 6. As to (d) of para 48 of the judgment of Mance LJ the court in Nasser held that all personal claimants before the English courts were to be regarded as the relevant class of persons in a similar or analogous situation. I do not dissent from that view. In those circumstances a general practice requiring security for costs from non-resident plaintiffs means that they are treated less favourably than other people in the relevant class.
30. As to whether such difference in treatment is on a prohibited ground as set out in paragraph (e), the position in Jersey is not quite the same as in England. There, the court in Nasser held that, because almost all non Brussels/Lugano convention country plaintiffs would be foreign nationals, this was discrimination on the grounds of national origin. In Jersey, many of our non-resident plaintiffs will be British and questions of nationality will therefore not arise. However, Article 14 of the Convention is in wide terms and I am content for the moment to accept that discrimination on the grounds of residence would be a prohibited ground for the purposes of Article 14.
31. The real issue in my judgment relates to paras (f) and (g) of Mance LJ's list, namely is the difference in treatment 'objectively justified' i.e. does it pursue a legitimate aim; and, if so, is the practice a proportionate means of achieving the legitimate aim?
32. I would answer both of these questions in the affirmative. Where an unsuccessful plaintiff resides in Jersey, it is straight forward for the successful defendant to enforce an award of costs in his favour against the plaintiff. Conversely, where a plaintiff resides outside Jersey, it will often be extremely difficult, expensive and time consuming for a successful defendant to recover his costs from that plaintiff. Such an outcome could well lead to serious injustice with the defendant having won his case but being left out of pocket. In my judgment the ability to order security for costs against a non-resident plaintiff in order to overcome this difficulty pursues an entirely legitimate aim and is therefore objectively justified. The real question is whether the practice is a proportionate means of achieving legitimate aim.
33. It is on that aspect that I respectfully differ from the court in Nasser. In my judgment, a practice of requiring security in an amount which has regard to the likely costs to be incurred by a defendant in defending the claim brought against him in Jersey, rather than an amount calculated by reference to the extra costs of suing a plaintiff for costs in his home jurisdiction, is a proportionate means of achieving the legitimate aim described above.
34. I would summarise my reasons as follows:-
(i) Whilst there is a difference in treatment between a resident plaintiff and a non-resident plaintiff, the difference is not enormous. A resident plaintiff is likely to have assets within the jurisdiction whereas a non-resident plaintiff will not. An order for security requires the non-resident plaintiff to bring assets into the jurisdiction. To that extent, there is no distinction between the two categories of plaintiff. What is extra for the non-resident plaintiff is that he must place the relevant sum in court whereas the resident plaintiff can continue to deal with his assets as he chooses.
(ii) Assuming, as our jurisprudence requires, that security is not ordered where the plaintiff's claim would be stifled because of an inability to provide security, there is little prejudice to a plaintiff as a result of having to provide security for costs. In many cases, it will simply be a matter of moving money on deposit in the plaintiff's home jurisdiction to a deposit with the court in Jersey. The plaintiff will earn the interest on the money whilst in Jersey. If he is successful at trial, the money and accumulated interest will be returned to him in full. If he is unsuccessful, the only consequence will be that he has to pay monies which are lawfully due under a costs order and will lose the ability to make life difficult for the defendant.
(iii) Conversely, there is enormous prejudice to a successful defendant if there is no or only very limited security. He will have to institute a new action in a foreign jurisdiction simply in order to seek re-imbursement of costs which he has had to pay out in defending what the Court has found to be an unjustified claim. This will clearly involve additional delay, expense and stress. This is to be contrasted with the case of a resident plaintiff. In such a case a successful defendant, once his costs have been taxed, simply issues a summons and obtains judgment immediately upon presentation of the matter to the Court. He can then place the matter in the hands of the Viscount for enforcement. He incurs minimal time and expense and the Viscount has an excellent record in obtaining funds from Jersey resident debtors.
(iv) The solution in Nasser is to order security in a sum calculated by reference to the estimated difference between the cost of recovering the sum awarded by way of costs in the Jersey courts and those which would be incurred in the foreign jurisdiction. However, it seems to me that there are a number of serious disadvantages in such a course:-
(a) Unlike the current practice, the successful defendant will have to sue for his costs in the foreign jurisdiction. This is a material prejudice even if the security is sufficient to cover the costs of doing so. Conducting litigation is usually a time consuming, expensive and stressful experience. The main case may well have gone on for some time, possibly several years. Eventually the defendant has been successful and has been awarded his costs. He is then told that his litigation experience is not over as he might have thought; he will have to start again in a foreign country with new lawyers in an attempt to recover what the Court has held he is entitled to by way of costs. I can envisage many cases, particularly where there is an individual as opposed to a corporate defendant, that a defendant will simply not be able to face the stress and strain of beginning new proceedings in a different jurisdiction.
(b) That will particularly be so where the outcome may be uncertain. The defendant will not know whether the plaintiff will make life difficult by seeking to hide his assets or by taking every technical point available to him. Indeed, he may not know whether the plaintiff is good for the money. He will therefore have to take a risk as to whether he will eventually make full recovery when deciding whether to embark on new satellite litigation in a foreign jurisdiction. In many cases the defendant may simply not have the stomach for such a step. It seems to me that in such circumstances there is a real risk that defendant may be driven to compromise the main case for fear of not being able to recover an award of costs from a foreign plaintiff whereas they would not compromise in respect of a resident plaintiff because they would know that they could successfully and cheaply recover any costs order made in their favour.
(c) Although the Court will have made an estimate of the extra costs which would be incurred in the foreign jurisdiction, such a figure will inevitably be a broad estimate of the likely cost, as indeed appears to have been the case in Nasser itself. There is therefore a real possibility of the sum being insufficient, particularly if the plaintiff chooses to make life difficult for the defendant. The result then would be that a defendant would have to inject further funds in respect of foreign litigation in an attempt to recover the expenses of defending what this Court will have found to have been an unfounded claim.
(d) Unlike the United Kingdom, Jersey does not have reciprocal enforcement arrangements with any countries other than those in the British Isles. Before applying for security for costs, defendants would therefore almost invariably face extra complication and expense in establishing the legal position in the plaintiff's country of residence. Let us assume that a case is brought by a Spanish plaintiff. Before presenting an application for security for costs in this jurisdiction, the defendant would, on the Nasser principle, have to obtain advice from a Spanish lawyer on the ease with which a Jersey judgment on costs could be given effect in Spain, the efficiency of the enforcement process in Spain (i.e. the effectiveness of the authorities in actually recovering monies found to be due by Spanish courts), the cost of doing so and the time it might take. This seems an unnecessary and burdensome extra expense for defendants who are already facing the cost of defending a claim in Jersey. The costs will of course not only be those of the Spanish lawyer in giving such advice but of the Jersey lawyer in obtaining it.
(e) The Court of Appeal accepted in Nasser that a court could assume in some cases either that enforcement of a costs order would not be possible or that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. In those cases, the court could continue to order full security for costs as previously. However, it seems to me that it would be quite invidious on some occasions for this Court to have to determine whether a country falls into this category or not and the Court is often likely to be faced with competing submissions and evidence as to the possibility or ease of recovery. All of this will spawn satellite disputes which will take up time and expense rather than the Court simply getting on with bringing the main issue to trial as expeditiously and economically as possible consistent with the interests of justice.
(v) For these reasons I do not consider that the solution in Nasser provides a fair and adequate solution to the problems raised by non-resident plaintiffs. Conversely, I consider that a discretion to award security in the amount of the likely costs to be incurred by the defendant in defending the proceedings is proportionate and holds a fair balance between the need for non-resident plaintiffs to have access to the Jersey courts and the need for defendants to be protected against empty orders for costs in the event of success. In the light of the Island's jurisprudence on this topic to the effect that security should not be ordered if the effect would be to stifle the claim, no non-resident plaintiff will be prevented from having access to the courts and the difference in treatment between resident and non-resident plaintiffs achieves the legitimate objective of ensuring that non-resident plaintiffs are not put in an advantageous position as compared with resident plaintiffs and that successful defendants can secure justice; it is also a proportionate way of achieving the objective.
35. In summary I hold that a practice of ordering security for costs from non-resident plaintiffs by reference to the likely costs of defending the claim, applied in accordance with the principles laid down in A E Smith and Sons, does not amount to a breach of Article 14 of the Convention.
The amount of Security
36. Leeds 2007 is a company resident in England. Furthermore, there is no evidence as to its ownership before me. Mr Weston asserted that it is owned by an entity called the Forward Sports Fund based in the Cayman Islands but no assistance was forthcoming from Leeds 2007 itself. According to the affidavit of Mr Weston, Mr Kenneth Bates was the moving spirit behind the first plaintiff and he is also a director of Leeds 2007. The first plaintiff went into administration owing very large sums of money to creditors. I consider that this is a case where, in the interests of justice, Leeds 2007 should provide security for costs in connection with these proceedings and the amount should be calculated by reference to what I estimate at this stage would be likely to be recovered by Admatch in the event of its being successful at trial.
37. I turn therefore to the question of how much security should be ordered. But, before doing so, I wish to emphasise that I am not carrying out a taxation and I am not making any finding as to the basis upon which costs will in fact be awarded to Admatch should it be successful. That will be a matter for the taxing officer at the time in the light of the evidence then available. He should not feel bound in any way by any views which I may express in this judgment, which are given in the very different context of an application for security. It is inevitable in such cases that the amount ordered by security is an estimate, which may turn out to be too high or too low, possibly by quite a considerable margin.
38. I should also note a preliminary point that, because of the various delays, Admatch is in fact asking for security for costs in respect of work already done rather than in respect of work to be done up to and including trial. Mr Weston has not produced an estimate of future costs as is required in an application for security for future costs but has produced a record of time spent up to 17th January 2008 (i.e. shortly before the adjourned hearing before the Master). He has indicated that, if Admatch's appeal is successful, the company will immediately issue a second summons seeking security up to and including trial. He will at that stage have to produce a proper estimate of the time which he expects to spend. However, it is clear from the authorities (see for example Massey v Allen (1876) 12 Ch D 807) that security can be ordered in respect of costs already incurred and in my judgment it is right to do so in this case.
39. Having ruled that Admatch may be treated as a litigant in person, I must therefore turn to Rule 12/6 (set out at para 17 above), and in particular paragraph (2)(a) of that Rule.
40. Mr Weston is the sole beneficial owner of Admatch. Admatch is now dormant and he and his wife, as directors, spend virtually no time on its affairs, merely doing what is necessary to keep it administratively in good standing. He is also a substantial shareholder of St Helier International Limited ("St Helier"), the remaining shares of which are held by various members of his family. St Helier is the holding company for various other business interests in the hotel and tourism industry. He and his wife are directors of St Helier. They work full time in managing the various businesses operated by the subsidiaries of St Helier and the majority of their time is spent in marketing those businesses. The litigation brought by Admatch has resulted in the amount of time which they have been able to devote to such activities being drastically reduced and Mr Weston contends that St Helier and its subsidiaries will suffer considerable loss as a result of the fact that he and his wife have been unable to devote their time to the affairs of those businesses.
41. St Helier has agreed to make the services of Mr and Mrs Weston available to Admatch in order that Admatch may defend the litigation but, in view of the loss likely to be incurred as a result by St Helier or its subsidiaries, that company has done so only on the basis that Admatch must pay for the time which Mr and Mrs Weston spend on the litigation. According to Mr Weston, the agreed rate is £170 per hour and this takes into account likely disbursements as well. It is a provisional figure which may be varied depending upon the outcome of the proceedings.
42. He argues that Admatch has therefore suffered an 'actual pecuniary loss' for the purposes of Rule 12/6(2)(a)(i), namely the amount which it has agreed to pay St Helier for the necessary services of Mr and Mrs Weston.
43. In my judgment, it is perfectly reasonable for a company in Admatch's position, which wishes to conduct its litigation through a director, to agree to pay that director for his time if the director is not already paid for that time by the company. Let us take a straightforward example where a non-executive director (who is not a shareholder) agrees to represent the company in litigation provided that he is paid for the hours he puts in, being hours that he would not normally work for the company. That would be an actual pecuniary loss to the company. However, this must be subject to an implied requirement that the amount paid for the services of the director is reasonable; otherwise the director (or in this case St Helier) may end up making a substantial profit at the expense of the unsuccessful opposing party who is eventually ordered to pay the costs of the company. In view of the likely loss it will suffer, I consider it reasonable for St Helier to charge Admatch for the provision of Mr and Mrs Weston's services and the cost incurred by Admatch as a result is an 'actual pecuniary loss'.
44. It is very difficult at this stage to assess whether the rate charged by St Helier for the provision of Mr and Mrs Weston is reasonable. I am prepared to assume for the purposes of this hearing that St Helier's other businesses are likely to suffer loss as a result of Mr and Mrs Weston having to spend so much time on the affairs of Admatch but there is no evidence before me as to the quantum of such loss. Provided that the rate charged by St Helier to Admatch is a fair reflection of the loss which St Helier expects to make as a result of their working for Admatch instead of St Helier, I would consider the rate to be reasonable. On the basis of the agreement, Mr Weston has produced invoices which show that, up to 31st March 2008, a total of 671 hours have been provided. When this is multiplied by the agreed rate of £170 per hour, this gives a total amount due from Admatch to St Helier of £114,000.
45. The alternative method of calculation is set out in paragraph 2(a)(ii) of Rule 12/6, namely two- thirds of the amount which would have been allowed if the litigant had been represented by an advocate. In my judgment, calculation of the amount which would have been paid to an advocate encompasses not only the Factor A rate but also the Factor B uplift, because this is what would actually be paid to an advocate. Mr Westons' schedule of work done is calculated at two-thirds of the Factor A rate for an advocate for himself and two-thirds of the Factor A rate for non-qualified assistants such as legal executives for his wife. He has also taken a Factor B uplift of 35%. Again, I emphasise that the question of an uplift is entirely a matter for the Greffier upon taxation in the light of the matters which he normally applies but I am prepared to accept 35% as being a reasonable estimate of the uplift for the purposes of this particular application.
46. I consider that, in the light of the possible loss which may be suffered by St Helier as a result of losing so much of the services of Mr and Mrs Weston, a rate of £170 per hour, inclusive of disbursements, is not unreasonable for St Helier to charge Admatch for the provision of Mr and Mrs Weston. Such an hourly rate is in fact slightly lower than two-thirds of the advocate's rate with a 35% Factor B uplift and accordingly, in accordance with para 2(a) of Rule 12/6, I propose to take £170 per hour as the rate for time spent during normal working hours.
47. The question then arises as to what should be treated as 'normal working hours'. I accept that Mr and Mrs Weston probably have no normal working hours in the same way as in the example of the self-employed individual given at para 20 above. In my judgment the fair way of dealing with this for the purposes of an application for security for costs is to assume that all of the time spent by Mr and Mrs Weston was done during normal working hours provided that, in accordance with Rule 12/6(3), no more than 40 hours in any one week can be treated as being done during normal working hours. Neither side has undertaken a calculation as to whether Mr Weston's schedule includes any weeks where more than 40 hours were spent on the litigation and I do not feel it is for the Court to do so. Accordingly the schedule prepared by Mr Weston and presented to the Master must be analysed. Up to 40 hours in any particular week (whether worked by Mr Weston or Mrs Weston or a combination of both) may be considered as being done during normal working hours and may therefore be charged £170 per hour. Any greater number of hours worked in a particular week must, in accordance with paragraph (3, be treated as being done outside normal working hours.
48. The question then arises as to what rate I should allow for time spent outside normal working hours. According to the Master the Greffier tends to allow £20 per hour for such work but I am not aware that this has been the subject of any authoritative ruling. Again, this is a matter which may require full consideration after detailed argument and consideration of practice elsewhere if there is a taxation in due course. However, for present purposes I propose to take a figure of £50 per hour in this particular case.
49. Next I must turn to the total number of hours claimed for. The schedule shows that Mr and Mrs Weston claim to have spent a total of 637 hours up to the 17th January. Mr Journeaux submitted that this was far too much and that I should only allow 200 hours, which was the figure allowed by the Master. I asked Mr Journeaux how many hours work his firm had recorded in order that I might obtain a comparison and, after making enquiries, he informed me that his firm had recorded 438 hours up until the end of March 2008. There is authority for the proposition that, on a taxation, some allowance should be made for the fact that a litigant in person will take longer than a lawyer and I agree that some allowance should be made for this when assessing security for costs. As against that, it is common practice for hours claimed (whether by lawyers or others) to be reduced upon taxation and, as Mr Journeaux submitted, I must also make some allowance for the fact that time may have been spent on matters where costs orders have already been made against Admatch. Doing the best I can and taking a broad view, I consider that a reduction of 20% in the hours claimed would be fair for the purposes of assessing the level of security to be ordered.
50. In summary, I allow the appeal and I award a sum by way of security which is to be calculated as follows from Mr Weston's schedule:-
(i) An hourly rate of £170 is to be allowed for up to 40 hours in any particular week. Where more than 40 hours have been worked in a particular week, any hours in excess of 40 can be claimed at £50 per hour.
(ii) The sum so calculated is to be reduced by 20% as described in para 49.
(iii) To that I add the disbursements of £1,889.60 shown in the summary of costs. As did the Master, I also allow £1,000 in respect of the anticipated costs of the solicitor in Leeds.
There is liberty to apply in the unlikely event that the calculation cannot be agreed.
51. This security is for the period up to and including 17th January 2008. If Admatch wishes to bring an application for further security, I will consider it. The company will need to produce a similar summary of costs to date and a draft bill of costs in respect of the period up to completion of trial. I would be likely to apply the same principles as I have applied here and accordingly I would hope that the parties can agree on any further sum which should be provided by way of security.
52. Leeds 2007 is the current operator of Leeds United Football Club and I see no reason why it should not produce these monies promptly. I therefore order that the security must be paid within 21 days.
53. I repeat the warning I gave earlier. Should Admatch be successful in the action and be awarded its costs, it will be a matter entirely for the taxation officer as to whether he is satisfied that Admatch has suffered an 'actual pecuniary loss' and, if so, how that should be calculated. He will also have to determine the rate to be paid for working outside 'normal working hours'. He will not be bound in any way by the decision I have reached. I am considering a very different question, namely the amount which should be ordered as security for costs in the light of the information provided to me at this stage.
54. Finally, it is clear that the terms of Rule 12/6 are not very happily phrased for some individuals, let alone for companies. I invite those concerned to give consideration to amending the terms of the Rule.
