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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bestfort Developments LLP & Ors v Ras Al Khaimah Investment Authority & Ors [2016] EWCA Civ 1099 (08 November 2016) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/1099.html Cite as: [2016] EWCA Civ 1099, [2017] CP Rep 9 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice David Richards
CH/2015/0494
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE GLOSTER
and
LORD JUSTICE BRIGGS
____________________
| BESTFORT DEVELOPMENTS LLP AND OTHERS |
Appellants |
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| - and - |
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| RAS AL KHAIMAH INVESTMENT AUTHORITY AND OTHERS |
Respondents |
____________________
Richard Millett QC and Andrew Holden (instructed by Dechert LLP) for the Respondents
Further submissions received 23 June 2016 and 11 July 2016
Hearing date: 9 February 2016
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Crown Copyright ©
Lady Justice Gloster:
Introduction
The procedural background to the security appeal and the security for costs application
"
25. I turn therefore to the question of whether such grounds exist, and to the question as to the burden to be satisfied by an applicant for security where security is sought upon such grounds. As to the latter I find myself in complete agreement with Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC, 2625 (Comm); namely that, as a matter of both principle and authority (the authority being Nasser) the court needs to be satisfied that there is likely to be an obstacle, or burden, to enforcement, by which is meant, in accord with paragraph 62 of Nasser, that there is likely to be a substantial obstacle, or burden, to enforcement, and that a real possibility that such an obstacle or burden might exist is insufficient. The point of principle identified by Hamblen J. that a mere, or real, possibility that there might be a substantial obstacle or burden in respect of enforcement should not be sufficient to justify different treatment being applied to a resident outside the UK, EEA or EU, as compared with a person resident within those jurisdictions.
49. However, in my judgment, that is not sufficient to enable a court to conclude in reliance on, or in respect of, Article 68(2)(e) that it is likely that there may be substantial difficulties in recognition or enforcement arising from the lack of a bilateral arrangement. It is undoubtedly possible, but not, on the evidence as I see it, likely."
"to pay any order for costs made against the respondents [i.e. the respondents/claimants] in relation to the Hearing [i.e. the hearing defined in the order as that "before Rose J listed to commence with a reading day on 9 November 2015 and a hearing from 10 November 2015"] to a maximum sum of £500,000, being the amount sought by the Appellants [i.e. the appellants/defendants] by way of security."
That undertaking was provided on a voluntary basis and without any admission of liability.
"3. …in support of the cross-application by the [appellants/defendants] for security for costs of the appeal and for certain conditions to be imposed if any permission to appeal were granted by the Court of Appeal to the [respondents/claimants]. |The condition is that further security be provided in respect of currently unsecured costs of the proceedings below."
"16. ……the respondents [i.e. the appellants/defendants] do not accept that there is any basis for a stay of the payment on account ordered by Mrs Justice Rose. Alternatively, and only if required by the Court of Appeal, the respondents are prepared to accede to an arrangement under which the sum of £475,000 is held in an interest bearing account by my firm, pending the outcome of the Applicants' [i.e. the respondents/claimants] permission application (and any subsequent appeal if permission is granted).
……
21... As described above, security for the respondents' costs and the amount of £500,000 was provided in the form of an undertaking to the Court to pay any costs order up to that. It would be inconsistent now for the Applicants to resist providing further security in respect of their intended appeal. This is even more so where the Applicants' above application for a stay of payment on account was sought partly on the basis that they have provided security in respect of the costs below."
"as security in respect of the costs of the respondents [i.e. the appellants/defendants], such sum to be held subject to the court's further directions."
However, he did not continue the stay of execution granted by Patten LJ. Before us Mr Millett contended that this was an error and that the order should have so provided. (Subsequently McCombe LJ varied that order to provide for a stay of execution – see below.) That substantive appeal against Rose J's dismissal of the section 25 proceedings remains listed to be heard in this court with a time estimate of two days. It was not before us.
The position before this Court at, and after, the hearing of the security appeal and the security for costs application
i) the security appeal remained live in relation to the costs of the hearings before the Master and David Richards J below; (from the evidence that appeared to involve the sum of approximately £76,000 which the appellants/defendants had duly paid to the respondents/claimants; one can assume that the former's costs would have been similar;)
ii) the same legal issues as those raised by the security appeal were raised by the appellants/defendants' security for costs application in relation to their potential costs of the respondents/claimants' section 25 appeal;
see pages 5-9 of the transcript for 10 February 2016. Mr Millett QC did not demur from this position. Accordingly, on that basis, the court proceeded with the hearing of the appeal over 2 days.
i) they are secured in relation to their first instance costs of the section 25 proceedings before Rose J in the sum of £500,000, pursuant to:
a) as to £475,000, the second Dechert undertaking;b) as to £25,000, the (original) Dechert undertaking;
ii) they remain unsecured in relation to:
a) the balance of their first instance costs of the section 25 proceedings before Rose J in the sum of £208,889.40;b) their costs incurred before the Master, David Richards J. and this Court in respect of their original security for costs application and the security appeal, which, if they win the security appeal, they are likely (subject to any order of this Court) to be entitled to recover; and
iii) they are currently unsecured in respect of their prospective costs of the section 25 appeal in the sum of £192,062.52, in relation to which they make the security for costs application to this Court.
The judgment of David Richards J
"5. CPR 25.12 entitles a defendant to any claim to apply for security for its costs of the proceedings but the court may make an order for security for costs under CPR 25.13 only if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order, and (so far as relevant to the present application) one or more of the conditions in CPR 25.13(2) applies. The application was made only by reference to the condition specified in paragraph (2)(a) of CPR 25.13:
"the claimant is –
(i) resident out of the jurisdiction; but(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982."
6. It is common ground that none of the claimants is either resident within the jurisdiction or resident in any of the states referred in paragraph (2)(a)(ii) (Convention states). It is not said that the claimants lack the means to meet an order for costs against them, but it is common ground that none of them has any assets in the UK or in any Convention state.
7. It is also common ground that an application for security for costs against a claimant falling within paragraph 2(a) engages articles 6 and 14 of the European Convention on Human Rights. An order for security for costs against a claimant resident outside the United Kingdom or a Convention state is capable of amounting to discrimination under article 14 in the entitlement to effective access to the courts under article 6, on grounds of national origin where such an order could not be made against a person who was resident either in the United Kingdom or in a Convention state.[1] This was established by the decision of the Court of Appeal in Nasser v United Bank of Kuwait [2001] EWCA Civ 556, [2002] 1 WLR 1868.
8. There will be no breach of article 14 if the making of an order for security for costs is objectively justified. Potential difficulties or burdens of enforcement in the relevant state, which would not be encountered in enforcement in the United Kingdom or a Convention state, are capable of providing objective justification for these purposes. If that condition is met, the issue for the court is whether, having regard to all the circumstances of the case, it is satisfied that it would be just to make an order for security for costs.
9. The first and principal ground of appeal is that the Master applied too high a test in determining whether the defendants would face potential difficulties or burdens in enforcing an order for costs against the claimants. The Master held that the court must be satisfied that the defendants would be likely to face such difficulties or burdens of enforcement, whereas the defendants submit that the test is the lower test of showing that there is a real, as opposed to a fanciful, risk of such difficulties or burdens. If the defendants are correct, the Master made an error of law. The defendants submit that, if the right test were applied, the evidence showed that they would face a real risk of being unable to enforce an order for costs. A further ground of appeal is that, in any event, the Master erred in failing to take account of relevant matters or took into account irrelevant matters.
10. Some of the claimants are incorporated in Ras Al Khaimah while the others are incorporated in Georgia. Without conceding the point, the claimants did not seriously challenge before the Master the defendants' case that there would be difficulties of enforcement in Ras Al Khaimah. Their case before the Master, and before me, is that they have assets in Georgia and the defendants could not show that there would be such difficulties of enforcement in Georgia as would justify the making of an order for security of costs."
"22. Reading the judgment of Mance LJ as a whole, and in particular in the light of the passages cited above, it is clear to me that he was setting the bar at likelihood, rather than a lower test of a real risk. It is, however, fair to make these points. First, it does not appear from the judgment to have been the subject of argument between the parties. Secondly, the word "likely" will not necessarily mean more likely than not. Its meaning will depend on its context: see In Re Harris Simons Construction Ltd [1989] 1 WLR 368."
"23. As earlier indicated, the lynchpin of the submissions on behalf of the defendants is the decision of the Court of Appeal in De Beer v Kanaar. Mr Marshall QC, who appeared as counsel in that case, submits that it makes clear that the relevant test for these purposes is one of a real risk. On analysis, I do not consider that the judgment of the court (Jonathan Parker LJ and Rimer J) will bear the weight placed on it by Mr Marshall."
He referred with approval to the decision of Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC 2625, who concluded, after full argument on the relevant test and consideration of Mance LJ's judgment in Nasser, that:
"25. In my judgment as a matter of both principle and authority the court needs to be satisfied that there is likely to be an obstacle or burden. A mere possibility of this should not justify treating a party resident outside a Brussels or Lugano state differently. This is particularly so given that all that needs to be shown is an "obstacle" to enforcement. This is also supported by a number of passages in Mance LJ's judgment."
"42. …… Having regard to the view which I have formed of the judgment in that case, as explained above, I do not consider that the lack of citation of De Beer affects the authority of the judgments and observations in those three cases.
43. The position is therefore that the judgment of Mance LJ in Nasser is expressed in terms which, in my judgment, provide for a threshold test of likelihood. That was the view taken by Hamblen J after argument in Dumrul. I should follow that decision unless I am convinced that it is wrong. I am far from convinced that it is wrong. On the contrary, it is in my judgment entirely consistent with the judgment of Mance LJ in Nasser. The judgment of Hamblen J in Dumrul has been approved and applied by Tomlinson LJ in Star Reefers.
44. In those circumstances I am clear that I should follow the judgment of Hamblen J and reject the submission made on behalf of the defendants in the present case that the Master applied the wrong threshold test."
The appellants' arguments before this Court
i) the existence of a real risk of an unenforceable costs order against the respondents/claimants as residents in a non-Convention state was sufficient to distinguish such claimants from a claimant resident in a Convention state and that accordingly there was no discrimination for the purposes of Article 14 of the ECHR because the two categories of claimants were not in analogous situations;
ii) indeed, if the two categories of claimants were indeed in different positions, and account were not properly taken of their different positions, that in itself could amount to a breach of the appellants/defendants' Article 14 rights because of the failure to recognise the difference;
iii) alternatively, if the two categories of claimants were in an analogous situation, and accordingly there was prima facie discrimination against the litigants who were residents in a non-Convention state, then the existence of that real risk of unenforceability provided a rational and sufficient justification for the respondents/claimants being treated differently for the purposes of Article 14;
iv) the respondents/claimants were wrong to suggest that CPR r 25.13(2)(a) was prima facie discriminatory on grounds of nationality and, as a result, "very weighty reasons" were required to justify any discrimination; the relevant criterion prescribed by CPR r 25.13(2)(a) was residence, not nationality; the covert or indirect discrimination doctrine applicable under EU law did not exist under ECHR law; accordingly, discrimination on grounds of residence did not engage discrimination on grounds of nationality where a higher threshold might apply; accordingly, such discrimination, if any, as arose, was on grounds of "or other status" within Article 14, with the result that a less stringent test applied; that supported the appellants/defendants' contention that the relevant test was one of a real risk of unenforceability, which provided a rational and sufficient justification for different treatment of the respondents/claimants from that of a litigant resident in a Convention state;
v) as to the decision of Hamblen J in Dumrul (to the effect that the existence of a risk of possible unenforceability would not be sufficient to prevent discrimination contrary to Article 14 and it had to be proved that it was likely that a costs order would be unenforceable abroad), if by the use of the word "likely", one meant more likely than not, so that the civil trial standard of proof (i.e. balance of probabilities) was engaged, that would be wrong in principle; it would be inconsistent with the approach taken in a number of other cases, and would cause very significant practical difficulties, especially where the position abroad, as in this case, was highly uncertain; in fact in Dumrul Hamblen J did not need to come to any conclusion as to whether the relevant test was one of a real risk of enforceability or whether it was one which required satisfying some civil trial type of threshold of balance of probabilities, because, whichever test was applied to the facts in Dumrul, there was not sufficient evidence of any obstacle to enforcement;
vi) thus the approach adopted by Hamblen J in Dumrul was wrong in principle and resulted from an inappropriate semantic exercise carried out by reference to certain words used by Mance LJ in Nasser without regard to what was actually argued and the relevant context; Hamblen J's approach was adopted without having considered the relevant authorities including De Beer v Kanaar, Aim Asset Management Sdn. Bhd & Anor v Kazakhstan Investment Fund Ltd (unreported, 22 May 2002) and Texuna International Ltd v Cairn Energy Plc. [2004] EWHC 1102 (Comm);
vii) in the alternative, even if "likely" were the correct expression to use, it did not follow that one had to apply a balance of probabilities test or trial standard of proof; the word "likely" had different meanings depending upon its context; that was clear from cases such as: Re Harris Simons Construction Limited [1989] 1 WLR 368 at 370; Three Rivers District Council v Bank of England (No 4) [2002] EWCA Civ 1182 per Chadwick LJ at [20]-[33] and Cream Holdings Ltd v Banerjee [2005] 1 AC 253; likelihood was a flexible concept as the judge himself noted; a real risk would be sufficient to fit within the concept of "likely", if that word were flexibly construed;
viii) the appellants/defendants' test of a real risk of unenforceability was also supported by a number of factors;
a) first, the test was a practical one to apply; it was the type of threshold which was commonly used by the court in interlocutory proceedings, the most obvious comparator being a "real risk of dissipation" in the context of an application for a freezing order; it recognised the reality that the court was inherently dealing with an uncertain situation and a future risk; in those circumstances it might well be difficult for the court to come to a clear assessment in advance;
b) second, it was also a flexible test which allowed the court to tailor the level of security to the size of the risk and take into account the prejudice to each side;
c) third, as Gross J pointed out in Texuna, if the court had to be satisfied on the balance of probabilities, that could give rise to heavy satellite litigation at an interlocutory stage, with potentially cross-examination of experts on foreign law and procedure; that was undesirable in principle;
d) fourth, authority showed that the test was perfectly workable in practice; see for example De Beer v Kanaar, Aims and Texuna where such a test was applied;
e) fifth, in general where the court is dealing with what is a discretionary power to be exercised at an interlocutory stage the court is reluctant to impose a high threshold to the court's jurisdiction.
The respondents' arguments before this Court
i) the test for the exercise of the jurisdiction to award security for costs to a defendant under CPR r 25.13.2(a) was one of likelihood of significant obstacles to, or burdens of, enforcement; "likelihood" in this context meant a balance of probabilities test; whilst it was accepted that, in an interlocutory context, finality of proof could not be established, nonetheless an applicant for security had to demonstrate that it had "much the better of the argument" that there were significant obstacles to, or burdens of, enforcement; in other words, that meant that an applicant had to show, on the material before the court, that there was more than a 50% probability of there being such significant obstacles; or, to use the words of Sir Thomas Bingham in Fitzgerald v Williams [1996] QB 657 at 675, "very cogent evidence of substantial difficulty in enforcing a judgment in that other" state, as adopted by Mance LJ in Nasser at [54];
ii) Nasser was authority for the proposition that, in its present form, rule 25.13(2)(a) did indeed discriminate on grounds of nationality, and not only residence, for the purposes of Article 14 of the ECHR;
iii) Nasser (in particular at [58], [61-62]) established, as a jurisdictional precondition to the condition under rule 25.13.2(a) being satisfied, a test of likelihood, namely that it was more likely than not that there would be substantial obstacles to, or burdens of, enforcement in the relevant non-Convention country;
iv) a test of that level was required because very weighty reasons were needed to justify what would otherwise be indirect discrimination on the grounds of nationality; a test of real risk, however one shaded it, did not provide such reasons; it was a disproportionately low test, which was satisfied on one side of the evidence only;
v) the test of likelihood (viz. that there would be substantial obstacles to, or burdens of, enforcement in the relevant non-Convention country) was specifically considered by Hamblen J in Dumrul and applied by the Court of Appeal in Star Reefers Pool Inc v JFC Group [2011] EWCA Civ 1065, in which the court endorsed the Dumrul decision as "helpful and useful"; it had been used regularly by first instance judges: there was no suggestion anywhere in the authorities that that test was difficult or unfair in its application;
vi) this court must, or at least should, follow Nasser; the appellants' arguments required this court to depart from Nasser: there were four errors in that approach:
a) first, it was wrong to say (as Mr Marshall submitted) that there was no discrimination here because the distinction was between claimants against whom there was a real risk of difficulty of enforcement, as opposed to where there was not; that was not where the line was drawn by Nasser; that case made clear that the key driver of the risk of discrimination was national origin; moreover, in PLP v Lord Chancellor [2015] EWCA Civ 1193 it was accepted by this Court that a residence test was discriminatory within the meaning of Article 14;b) second, Mr Marshall was wrong to contend that the equation between residence and nationality in the EU cases did not apply outside the EU, where the only consideration was the ECHR; that was also contrary to the decision in Nasser;
c) third, Mr Marshall was wrong to submit that there was no such thing as indirect discrimination under the ECHR;
d) fourth, Mr Marshall was wrong to submit, in the light of Nasser, that residence per se could never be a suspect category, and therefore never deserved severe scrutiny, regardless of its context;
vii) four points were to be made about what the English cases showed:
a) first, rule 25.13 (2)(a) was a rule of jurisdiction, in the sense that it was a precondition of the exercise of the jurisdiction; the court could not exercise the jurisdiction to order security for costs unless it was satisfied that there were likely to be substantial obstacles to enforcement;b) the second point was that the court simply had no power to order security for costs against an EU resident at all;
c) third, the court had the jurisdiction to order security for costs against a non-EU resident, but since the exercise of that jurisdiction tends to discriminate indirectly on grounds of nationality, the court could only exercise the jurisdiction in a way which was proportionate and justified a legitimate aim;
d) fourth, although the class of persons within the rule was expressly denoted by residence, residence in this context was a personal characteristic and was to be equated with nationality; see Nasser;
viii) the subsequent ECHR cases, such as Runkee v United Kingdom [2007] ECHR 42989/98 and Carson v United Kingdom (2010) 51 EHRR 13, had not changed the position as described in Nasser, i.e. that discrimination on grounds of residence involved indirect discrimination on grounds of nationality in the context of the rule.
The evidence
i) The Master found (without substantial opposition from the respondents) that there would be significant obstacles to enforcement in Ras Al Khaimah. That remained the position on appeal.
ii) So far as enforcement of any costs order in Georgia was concerned, the appellants/defendants' evidence, supported by their Georgian law expert, Professor Kereselidze, was to the effect that there was a real risk that the appellants would not be able to obtain recognition in Georgia of any costs order made in their favour in these proceedings, due to the terms of Article 68 of the Law of Georgia on International Private Law (the "IPL") which provided the basis upon which Georgian courts may recognise a foreign decision. That showed that a foreign judgment may not be enforced in Georgia:
a) under Article 68(2)(e), where the foreign country does not recognise court decisions of Georgia;b) under Article 68(2)(f) if "proceedings are pending in Georgia between the same parties on the same issue and on the same basis"; and
c) under Article 68(2)(g) if "the decision contradicts the basic legal principles of Georgia".
iii) As regards Article 68(2)(e), Professor Kereselidze opined that, given that there are no multilateral or bilateral enforcement treaties in place between Georgia and England, there was a real risk that an English judgment for costs would not be enforced in Georgia. Professor Kereselidze drew attention to two decisions of the Georgian Courts where money or property judgments had not been recognised given the absence of any international agreement, and, consequently, the absence of any obligation on the foreign state to recognise Georgian court decisions: the first (Ruling No. A-2046-SH-57-2010 of 20 December 2010), a decision in respect of a judgment of the courts of Israel, and the second, an application to recognise a foreign judgment dealing with the distribution of matrimonial property.
iv) In response, the respondents' Georgian law expert, Professor Ninidze, opined that the view expressed by Professor Kereselidze that a Georgian court would not recognise an order made in a foreign country due to the absence of a bilateral or multilateral treaty was outdated and no longer followed by the Supreme Court of Georgia. He expressed the view that more recent authority demonstrated that the Georgian court was very willing and prepared to recognise legally effective foreign judgments, unless there was positive proof that Georgian judgments would not be recognised in that jurisdiction. Accordingly, he said that the lack of a bilateral or multilateral convention did not prevent recognition of a foreign judgment. In support of this view he exhibited four matrimonial cases in which the Georgian courts had recognised foreign divorces; two German and two Greek.
v) In reply Professor Kereselidze expressed the view that family law cases (such as recognition of a marriage or divorce) were cases which arose in a completely different context and were not relevant for present purposes. He expressed the view that family cases were treated differently from cases concerning commercial law or property, and that in a family law context the Georgian courts had a greater expectation that their judgments would be enforced abroad and, as such, were more willing to enforce foreign family law judgments in Georgia, which usually involved recognition but did not require enforcement. However, he went on to say that outside the family law context, the position was uncertain. He said:
"One line of authority…… states that absence of bilateral or multilateral treaties is about recognition. It is true that there is a different line of authority, even outside family law cases, which appears to acknowledge that foreign court decisions may be recognised despite the absence of multilateral bilateral treaties (see for example cases ..). However it is not correct to say, as Professor Ninidze does, that the decision of A-2046-SH-57-2010 is "outdated and "no longer followed". The reality is that there is no discernible consistency in the approach of the Georgian Courts, and as such it is very difficult to predict the outcome in any particular case (See for example case of #a-1369-sh-30-2012 where a foreign court decision was again not recognised). The decisions of the Georgian Courts do not always contain a fully reasoned judgment and so this further increases the difficulty in deducing their approach to this issue with any certainty."
vi) So far as Article 68(2)(f) of the IPL was concerned, Professor Kereselidze's evidence was that recognition might be refused on this basis, on the grounds that the section 25 proceedings in England and the claims brought by the respondents currently pending in the Georgian courts were arguably "between the same parties on the same issue and on the same basis". In his response, Professor Ninidze rejected that view, stating that that was "simply incorrect" since the English proceedings were proceedings for worldwide freezing orders and for the appointment of receivers and, as such, there could "never be proceedings on the same issues and on the same basis" in Georgia. In response, Professor Kereselidze disagreed, stating that in circumstances where the English section 25 proceedings were ancillary proceedings commenced by the respondents/claimants in support of their Georgian claims, it was at least arguable that the Georgian courts would consider it appropriate to refuse recognition on the basis of Article 68.2(f), at least until such time as the Georgian claims were resolved in Georgia.
Discussion and determination
Approach
"Article 14
The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."
"CPR r 25.13
Conditions to be satisfied
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 or more of the conditions in paragraph (2) applies, or(ii) an enactment permits the court to require security for costs.
(2) The conditions are –
(a) the claimant is –(i) resident out of the jurisdiction; but(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982[2]; ……(c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;(d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;(e) the claimant failed to give his address in the claim form, or gave an incorrect address in that form;(f) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, 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.
(Rule 3.4 allows the court to strike out a statement of case and Part 24 for it to give summary judgment)."
Is the rule prima facie discriminatory?
What is the basis of such prima facie discrimination in the context of CPR r 25.13 (2) (a)?
"As regards compliance with Article 14, the Court recalls that a difference in treatment is discriminatory for the purposes of this provision if it "has no objective and reasonable justification", that is if it does not pursue a "legitimate aim" or if there is not a "reasonable relationship of proportionality between the means employed and the aim sought to be realised" (Petrovic v. Austria judgment of 27 March 1998, Reports 1998-II, § 30). Moreover the Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify different treatment (Gaygusuz v. Austria judgment of 16 September 1996, Reports 1996-IV, § 42).
The Court is not persuaded by the applicant's argument that the difference in treatment at issue is based on his national origin. In the first place the criterion mentioned in Section 227 § 1 of the Social Security Act is not the nationality of the person seeking to make voluntary payments (see, however, the above quoted Gaygusus v. Austria judgment, op. cit., § 50). Moreover, to make participation in the scheme dependent on employment in a specific country and to accept payments for alternative periods only on the basis that these periods are passed in the same country does not appear unreasonable or arbitrary (No. 14128, R.W. v. Austria, Dec. 12.2.1990, unpublished)."
What is the criterion by which the discrimination involved may be justified in the exercise of a discretion under CPR r 25.13 case?
"What is discrimination?
14. There is no doubt that Ms Carson is being treated differently from a pensioner who has the same contribution record but lives in the United Kingdom or a treaty country. But that is not enough to amount to discrimination. Discrimination means a failure to treat like cases alike. There is obviously no discrimination when the cases are relevantly different. Indeed, it may be a breach of article 14 not to recognise the difference: see Thlimmenos v Greece (2001) 31 EHRR 411. There is discrimination only if the cases are not sufficiently different to justify the difference in treatment. The Strasbourg court sometimes expresses this by saying that the two cases must be in an "analogous situation": see Van der Mussele v Belgium (1983) 6 EHRR 163, 179-180, para 46.
15. Whether cases are sufficiently different is partly a matter of values and partly a question of rationality. Article 14 expresses the Enlightenment value that every human being is entitled to equal respect and to be treated as an end and not a means. Characteristics such as race, caste, noble birth, membership of a political party and (here a change in values since the Enlightenment) gender, are seldom, if ever, acceptable grounds for differences in treatment. In some constitutions, the prohibition on discrimination is confined to grounds of this kind and I rather suspect that article 14 was also intended to be so limited. But the Strasbourg court has given it a wide interpretation, approaching that of the 14th Amendment, and it is therefore necessary, as in the United States, to distinguish between those grounds of discrimination which prima facie appear to offend our notions of the respect due to the individual and those which merely require some rational justification: Massachusetts Board of Retirement v Murgia (1976) 438 US 285.
16. There are two important consequences of making this distinction. First, discrimination in the first category cannot be justified merely on utilitarian grounds, eg that it is rational to prefer to employ men rather than women because more women than men give up employment to look after children. That offends the notion that everyone is entitled to be treated as an individual and not a statistical unit. On the other hand, differences in treatment in the second category (eg on grounds of ability, education, wealth, occupation) usually depend upon considerations of the general public interest. Secondly, while the courts, as guardians of the right of the individual to equal respect, will carefully examine the reasons offered for any discrimination in the first category, decisions about the general public interest which underpin differences in treatment in the second category are very much a matter for the democratically elected branches of government.[7]
17. There may be borderline cases in which it is not easy to allocate the ground of discrimination to one category or the other hand, as I have observed, there are shifts in the values of society on these matters. Ghaidan v Godin-Mendoza [2004] 2 AC 557 recognised that discrimination on grounds of sexual orientation was now firmly in the first category. Discrimination on grounds of old age may be a contemporary example of a borderline case. But there is usually no difficulty about deciding whether one is dealing with a case in which the right to respect for the individuality of a human being is at stake or merely a question of general social policy. In the present case, the answer seems to me to be clear."
" 'Suspect' grounds of discrimination
55. The proposition that not all possible grounds of discrimination are equally potent is not very clearly spelled out in the jurisprudence of the Strasbourg Court. It appears much more clearly in the jurisprudence of the United States Supreme Court, which in applying the equal protection clause of the 14th Amendment has developed a doctrine of "suspect" grounds of discrimination which the court will subject to particularly severe scrutiny. They are personal characteristics (including sex, race and sexual orientation) which an individual cannot change (apart from the wholly exceptional case of transsexual gender reassignment) and which, if used as a ground for discrimination, are recognised as particularly demeaning for the victim.
56. The United States Supreme Court described the concept of a "suspect class" in San Antonio School District v Rodriguez (1973) 411 US 1, 29 as a class:
"saddled with such disabilities, or subjected to such a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to command extraordinary protection from the majoritarian political process."
Under the law of Massachusetts uniformed state police officers had to retire at the age of 50. This was challenged in Massachusetts Board of Retirement v Murgia (1976) 427 US 307. The Supreme Court held that in the circumstances of the case the appropriate test for equal protection of the laws was not strict scrutiny. The only issue was whether the mandatory retirement age had a rational basis, which it did: maintenance of a police force fit enough to carry out arduous and demanding duties. The majority opinion observed (at p 314):
"This inquiry employs a relatively relaxed standard reflecting the court's awareness that the drawing of lines which create distinctions is peculiarly a legislative task and an unavoidable one. Perfection in making the necessary classifications is neither possible nor necessary."
57. As I have said, these distinctions are not so clearly signalled in the jurisprudence of the European Court of Human Rights. But Mr Howell QC (for the respondent Secretary of State) submitted, in my opinion correctly, that the equivalent doctrine is to be found there. Where there is an allegation that article 14 has been infringed by discrimination on one of the most sensitive grounds, severe scrutiny is called for. As my noble and learned friend, Lord Nicholls of Birkenhead put it in Ghaidan v Godin-Mendoza [2004] 2 AC 557, 568, para 19:
". . .where the alleged violation comprises differential treatment based on grounds such as race or sex or sexual orientation the court will scrutinise with intensity any reasons said to constitute justification. The reasons must be cogent if such differential treatment is to be justified."
58. In its judgments the European Court of Human Rights often refers to "very weighty reasons" being required to justify discrimination on these particularly sensitive grounds. This appears, for instance (in relation to cases of discrimination on the ground of sex) in Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, 501, para 78; Schmidt v Germany (1994) 18 EHRR 513, 527, para 24; Van Raalte v Netherlands (1997) 24 EHRR 503, 518-519, para 39. When Harris, O'Boyle and Warbrick's valuable work, Law of the European Convention on Human Rights, was published in 1995, the authors recognised that the Strasbourg Court had its own suspect categories, identifying them as discrimination on the grounds of race, gender or illegitimacy. Since then religion, nationality and sexual orientation have, it seems, been added: see Jacobs and White, European Law of Human Rights, 3rd ed (2002), pp 355-6, citing Hoffmann v Austria (1994) 17 EHRR 293, 316, para 36; Gaygusuz v Austria (1997) 23 EHRR 364, 381, para 42 and Salgueiro da Silva Mouta v Portugal (2001) 31 EHRR 1055, 1071, para 36. Where an individual lives is in principle a matter of choice. So although it can be regarded as a personal characteristic it is not immutable. Nor is there anything intrinsically demeaning about an individual's place of residence. Social or business practices which amount to what is sometimes called a "postcode lottery" might, if devoid of any rational basis, constitute discrimination. But that is not this case.
59. Mr Blake QC (for Mrs Carson) submitted that the category of suspect grounds is not yet closed, and that discrimination on the ground of residence is at least half-way to admission to the suspect category. Mr Manjit Gill QC (for Ms Reynolds) made a similar submission in relation to age. Attractively though counsel made these submissions, I would not accept them."
"31. It is common ground that the residence test is discriminatory within the meaning of ECHR Article 14 read with Article 6. I need not set out these provisions; the only question on this part of the case is whether the residence test, being discriminatory, can be justified as a proportionate measure for the achievement of a legitimate aim. The relevant aim is the saving of public expenditure; that is plainly legitimate. But it is necessary to decide by what criterion or criteria the issue of justification should be determined."Manifestly Without Reasonable Foundation"
32. In my view the question whether State funding of legal expenses in civil matters should (subject to exceptions) be limited to recipients resident in the United Kingdom is essentially a political question, concerned as it is with the strategic distribution of scarce public resources; and one upon which, as I have said, reasonable people may entertain contrary opinions. In those circumstances one would expect that the law, in setting the criterion by which the discrimination involved may be justified, will allow a very considerable margin of discretion to the elected arms of government. The decision of such questions is their particular responsibility, and it is an important muscle in our democracy that that should be so.
…..
Cases under the Law's Special Protection
35. It is clear, however, that the "manifestly without reasonable foundation" test does not cover the whole field of government decisions challenged on grounds of discrimination (or other public law grounds impugning the decision's merits: I am not concerned here with claims of illegality or procedural impropriety, for which see CCSU v Minister for the Civil Service [1985] 1 AC 374, per Lord Diplock at 410F, 411A). The standard of review varies with the context of the case. At paragraph 16 in Humphreys Baroness Hale cited this passage from Stec (paragraph 52):
"The scope of this margin will vary according to the circumstances, the subject-matter and the background. As a general rule, very weighty reasons would have to be put forward before the Court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy."36. It is plain, then, that there are certain classes of case where our law will apply a more intrusive judgment to the justification of discrimination. In Carson v Secretary of State…..[and then Laws LJ cites paragraphs 15 and 16 of Lord Hoffmann's speech which I have already quoted above]
37. Thus certain grounds for discrimination – race, sex and so forth – will be especially hard to justify, because they offend the Kantian principle that every individual is to be treated as an end and not a means (pace Lord Hoffmann, I think an appeal in this context to an entitlement to "equal respect" is apt to be unhelpful and misleading). The courts' approach to questions of justification in discrimination cases of that kind will be correspondingly muscular. But in my judgment the classes of case where the law will control discrimination with particular vigour are not exclusively defined by reference to the grounds of the discrimination in question. Some are defined by reference to the context in which it arises. These are areas under the special protection of the law, most notably the doing of justice and the presumption of individual liberty. If these constitutional fundamentals are undercut by the elected powers, the courts will defend their legal pre-eminence without inhibition: no less if the threat is by way of a discriminatory measure than if it is by action across the whole field.
38. In light of all these considerations, the "manifestly without reasonable foundation" test for justification constitutes in my judgment the law's default position in any discrimination case where the subject-matter is one of broad, or strategic, economic and/or social policy. It will however be disapplied, and a more vigorous, intrusive approach adopted, where either the grounds of discrimination or the context of the case call for the law's special protection: the former because of the law's attribution of value to every individual, the latter because of the law's special responsibility in certain areas such as access to justice. And it is no coincidence that these two categories are specially protected. The common law's care for the value of the individual dictates both. The principle that every individual is to be treated as an end and not a means demands, if it is to mean anything in a society lively with dispute and confrontation (as most societies are), a justice system which presumes in favour of liberty and insists on high standards of fairness applicable in every case.
This Case
39. In my judgment it is clear that the respondent PLP cannot look to the courts to exercise an intrusive judgment by reference to the grounds of discrimination which are inherent in the Order under challenge. Place of residence – the ground in question– is not a characteristic, such as sex or race, which is specially protected by the law on the footing I have described. Is there a more promising line of argument based not on the grounds of discrimination but on the context of the case? Mr Fordham submits there is: the context is access to justice. ……
43. Mr Fordham's case is that this case falls squarely within the protected space: it is about access to justice. He drew an imaginative, but I think in the end jesuitical, distinction between cases where State funding is provided to meet a need – health care is the obvious example – which arises independently of any decision made by the State, and cases where State funds are to be provided in order to make good a right which the State has itself conferred, such as a sound claim in law. But the need for services which have to be paid for arises in both cases. There is no moral or logical force in attributing a special status (when it comes to a court challenge) to the latter class of case merely on the ground that the source of the need is the law, rather than God or nature.
44. Mr Fordham's better point is the simple one that the context of the case is access to justice. His difficulty, in my judgment, is that there is a profound difference between on the one hand the State's duty to ensure fair and impartial procedures and to avoid undue legal obstacles to access to the courts, and on the other a putative duty to fund legal representation. In Witham v The Lord Chancellor [1998] QB 575 in the Divisional Court, in a judgment with which Rose LJ agreed, I said at 586:
"26. Mr Richards submitted that it was for the Lord Chancellor's discretion to decide what litigation should be supported by taxpayers' money and what should not. As regards the expenses of legal representation, I am sure that is right. Payment out of legal aid of lawyers' fees to conduct litigation is a subsidy by the State which in general is well within the power of the executive, subject to the relevant main legislation, to regulate. But the impost of court fees is, to my mind, subject to wholly different considerations. They are the cost of going to court at all, lawyers or no lawyers. They are not at the choice of the litigant, who may by contrast choose how much to spend on his lawyers."If I may say so that still seems to me to be correct and I am not aware that it has been contradicted.
Conclusion on the Discrimination Issue
46. For all these reasons, I would hold that the test for justification in this discrimination case is whether the residence test is "manifestly without reasonable foundation". Plainly, that test is not met. ……."
What is the threshold test which the evidence in support of an application for security under CPR r 25.13 (2)(a) has to satisfy, in order to prevent the exercise of the court's discretion falling foul of article 14?
"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."
In other words, the discretion is very widely expressed and does not easily lend itself to the notion that it is to be circumscribed by inflexible semantic tests as to what the evidence has to show. Likewise, I do not consider that the requirement to demonstrate that there are rational and objectively justifiable reasons for treating a non-Convention state resident differently from a Convention state resident requires the application of a strict inflexible test.
"Security For Costs
25.12.2 The purpose of an order for security for costs is to protect a party in whose favour it is made against the risk of being unable to enforce any costs order they [sic] may later obtain. The order, if complied with, will provide the party in whose favour it is made with a fund normally held by the court against which he can enforce any award of costs they [sic] may later obtain."
61. 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. The former principle was that, once the power to order security arose because of foreign residence, impecuniosity became one along with other material factors: see the case of Thune cited above. This principle cannot in my judgment survive, in an era which no longer permits discrimination in access to justice on grounds of national origin. Impecuniosity of an individual claimant resident within the jurisdiction or in a Brussels or Lugano state is not a basis for seeking security. Insolvent or impecunious companies present a different situation, since the power under CPR Part 25.13(2)(c) applies to companies wherever incorporated and resident, and is not discriminatory.
62. The justification for the discretion under Part 25.13(2)(a) and (b) and 25.15(1) 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 of any available opportunity to avoid or hinder such enforcement abroad.
63. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under Part 25.13(2)(a) or (b) or 25.15(1) is to be exercised, there must be a proper basis for considering that such obstacles may exist, or that enforcement may be encumbered by some extra burden (such as costs or the burden of an irrecoverable contingency fee or simply delay).
64. The courts may and should, however, take notice of obvious realities without formal evidence. There are some parts of the world where the natural assumption would be without more that there would not just be substantial obstacles but complete impossibility of enforcement; and there are many cases where the natural assumption would be that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. But in other cases - particularly other common law countries which introduced in relation to English judgments legislation equivalent to Part I of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act 1920) - it may be incumbent on an applicant to show some basis for concluding that enforcement would face any substantial obstacle or extra burden, meriting the protection of an order for security for costs. Even then, it seems to me that the court should consider tailoring the order for security to the particular circumstances. If, for example, there is likely at the end of the day to be no obstacle to or difficulty about enforcement, but simply an extra burden in the form of costs (or an irrecoverable contingency fee) or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden.
65. I also consider that the mere absence of reciprocal arrangements or legislation providing for enforcement of foreign judgments cannot of itself justify an inference that enforcement will not be possible. The present case illustrates this. It is a remarkable fact that no country has ever entered into any treaty providing for recognition and enforcement of judgments with the United States of America. But the reason is concern about the breadth of American jurisdiction, the corollary of which has been a willingness on the United States part to recognise and enforce foreign judgments by action on a similarly liberal and flexible basis: see e.g. Jurisdictional Salvation and the Hague Treaty, Kevin M. Clermont (1999) 85 Cornell Law Review 89, 97-98. I am not aware that anyone has ever suggested that access to justice or to the means of executing justice is an American problem. Certainly no evidence has been put before us to suggest that the defendants would, or even could, face any real obstacle or difficulty of legal principle in enforcing in the United States any English judgment for costs against this claimant.
66. There is also no express suggestion in any evidence in this case that the defendants would face any extra burden in taking any such enforcement action against the claimant for costs. But we can, I think, infer without more that it would in the case of this particular claimant resident in Milwaukee. First, the respondents would have to bring an action on any English judgment for costs, before proceeding to any enforcement steps that United States law or the law of Wisconsin permits. Second, the claimant's impecuniosity has collateral relevance, in so far as it is likely that the respondents would have to investigate whether it is as real and great as she asserts, and this is likely to be more expensive to undertake abroad than it would be if she was resident in the United Kingdom or a Brussels/Lugano state. Third, the course of the present litigation to date suggests that the claimant is a determined litigant who can be relied upon by one means or another to take every conceivable step she can to defend what she asserts to be her rights, but whose very lack of means to fund the appropriate conduct of litigation appears prone to add to the difficulty faced by the defendants. Fourth, there would be likely to be delay in enforcement, by reason of each of the first three points. Viewing the matter both in the light of these factors and as a matter of general common-sense, I consider that it is open to us to infer that steps taken to enforce any English judgment for costs in the United States would thus be likely to involve a significantly greater burden in terms of costs and delay than enforcement of a costs order made against an unsuccessful domestic or Brussels/Lugano claimant or appellant. It is possible that an irrecoverable costs burden (or an irrecoverable contingency fee) would also be involved, even if the claimant proved to have sufficient assets to satisfy any judgment, but I do not think that this can be assumed without evidence.
67. 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.
i) Paragraph 61 of Nasser, when it speaks of the exercise of the discretion on "objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned", is simply addressing the point that a justifiable rationale is required for the prima facie discrimination in the light of article 14. In other words, it is simply explaining why the assumption that a security order will be made in the case of a non-resident claimant, is no longer justifiable. It does not linguistically or otherwise support an evidential hurdle requiring the proven existence of substantial enforcement difficulties.
ii) Likewise, insofar as Mance LJ did adopt the terminology of "likely" or "likelihood", or "will" or "would" (for example in paragraphs 64, 65 and 66), it is unrealistic, in my view, to construe those words in their particular context, or in the context of the judgment as a whole, as prescribing a mandatory threshold test which an applicant had to satisfy by his evidence as to the existence of an obstacle to enforcement. That to my mind is attaching far too much weight to the use of the particular words in question. It seems to me to be highly unlikely that, in the absence of any argument on the point, Mance LJ was intending to depart from earlier case law that identified protection against real risk of unenforceability as the purpose of the jurisdiction[10] and as the touchstone for justification for discrimination (as is evident from his own judgment at paragraph 67). His use of the word "likely", in context, was perfectly consistent with a test of real risk having regard to the different shades of meaning such a word can have in everyday use; see: e.g. Re Harris Simons Construction Limited, supra; and Cream Holdings Ltd v Banerjee [2005] 1 AC 253
iii) Moreover, in paragraph 63 of his judgment (not referred to in Hamblen J's analysis), where Mance LJ expressly states what must be shown by way of evidence if the discretion is to be exercised, he formulates the test as follows: "there must be a proper basis for considering that such obstacles may exist or that enforcement may be encumbered by some extra burden…" (My emphasis). That articulation does not require evidence that such obstacles do indeed exist; on the contrary, it simply requires "a proper basis for considering that" they might exist.
"A conclusion based on facts85. The starting point here is that courts act on evidence. They reach their decisions on the basis of the evidence before them. When considering whether an applicant for a care order has shown that the child is suffering harm or is likely to do so, a court will have regard to the undisputed evidence. The judge will attach to that evidence such weight, or importance, as he considers appropriate. Likewise with regard to disputed evidence which the judge accepts as reliable. None of that is controversial. But the rejection of a disputed allegation as not proved on the balance of probability leaves scope for the possibility that the non-proven allegation may be true after all. There remains room for the judge to have doubts and suspicions on this score. This is the area of controversy.
86. In my view these unresolved judicial doubts and suspicions can no more form the basis of a conclusion that the second threshold condition in section 31(2)(a) has been established than they can form the basis of a conclusion that the first has been established. My reasons are as follows.
87. Evidence is the means whereby relevant facts are proved in court. What the evidence is required to establish depends upon the issue the court has to decide. At some interlocutory hearings, for instance, the issue will be whether the plaintiff has a good arguable case. The plaintiff may assert he is at risk of the defendant trespassing on his land or committing a breach of contract and that, in consequence, he will suffer serious damage. When deciding whether to grant an interlocutory injunction the court will not be concerned to resolve disputes raised by the parties' conflicting affidavit evidence.
88. At trials, however, the court normally has to resolve disputed issues of relevant fact before it can reach its conclusion on the issue it has to decide. This is a commonplace exercise, carried out daily by courts and tribunals throughout the country. This exercise applies as much where the issue is whether an event may happen in the future as where the issue is whether an event did or did not happen in the past. To decide whether a car was being driven negligently, the court will have to decide what was happening immediately before the accident and how the car was being driven and why. Its findings on these facts form the essential basis for its conclusion on the issue of whether the car was being driven with reasonable care. Likewise, if the issue before the court concerns the possibility of something happening in the future, such as whether the name or get-up under which goods are being sold is likely to deceive future buyers. To decide that issue the court must identify and, when disputed, decide the relevant facts about the way the goods are being sold and to whom and in what circumstances. Then, but only then. can the court reach a conclusion on the crucial issue. A decision by a court on the likelihood of a future happening must be founded on a basis of present facts and the inferences fairly to be drawn therefrom.
89. The same, familiar approach is applicable when a court is considering whether the threshold conditions in section 31(2)(a) are established. Here, as much as anywhere else, the court's conclusion must be founded on a factual base. The court must have before it facts on which its conclusion can properly be based. That is clearly so in the case of the first limb of section 31(2)(2). There must be facts, proved to the court's satisfaction if disputed, on which the court can properly conclude that the child is suffering harm. An alleged but non-proven fact is not a fact for this purpose. Similarly with the second limb: there must be facts from which the court can properly conclude there is a real possibility that the child will suffer harm in the future. Here also, if the facts are disputed, the court must resolve the dispute so far as necessary to reach a proper conclusion on the issue it has to decide.
90. There are several indications in the Act that when considering the threshold conditions the court is to apply the ordinary approach, of founding its conclusion on facts, and that nothing less will do. The first pointer is the difference in the statutory language when dealing with earlier stages in the procedures which may culminate in a care order. Under Part V of the Act a local authority is under a duty to investigate where it has "reasonable cause to suspect" that a child is suffering or is likely to suffer harm. The court may make a child assessment order if satisfied that the applicant has "reasonable cause to suspect" that the child is suffering or is likely to suffer harm. The police may take steps to remove or prevent the removal of a child where a constable has "reasonable cause to believe" that the child would otherwise be likely to suffer harm. The court may make an emergency protection order only if satisfied there is "reasonable cause to believe" that the child is likely to suffer harm in certain eventualities. Under section 38 the court may make an interim care order or an interim supervision order if satisfied there are "reasonable grounds for believing" that the section 31(2) circumstances exist.
91. In marked contrast is the wording of section 31(2). The earlier stages are concerned with preliminary or interim steps or orders. Reasonable cause to believe or suspect provides the test. At those stages, as in my example of an application for an interlocutory injunction, there will usually not have been a full court hearing. But when the stage is reached of making a care order, with the far-reaching consequences this may have for the child and the parents, Parliament prescribed a different and higher test: "a court may only make a care or supervision order if it is satisfied . . . that ... the child . . . is suffering, or is likely to suffer, significant harm ..." This is the language of proof, not suspicion. At this stage more is required than suspicion, however reasonably based."
"the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied."
see Ninemia Maritime Corp v Trave Schiffahrts GmbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412, 1422E-H per Kerr LJ. A claimant has to adduce "solid evidence of risk of dissipation by the defendant" to support his assertion that there is a real risk that the judgment or award will go unsatisfied.[14] As the authors go on to state, "since each case depends on its own facts it is impossible to lay down any general guidelines on satisfying this evidential burden", although they then outline some of the factors which may be relevant. Likewise, in the context of an application for security for costs, I consider that a similar – and necessarily flexible - test is appropriate for the purposes of deciding whether an order for security should be made. The analogy with the freezing order jurisdiction is particularly apt, in my view, because it reflects the test which a claimant has to satisfy in order to obtain protection for satisfaction of any judgment which it might obtain against a defendant. An application by a defendant for an order for security for his costs is the converse side of the coin[15]. There should, it seems to me, be an appropriate symmetry between the two tests that respectively entitle a claimant to a freezing order to satisfy any judgment, and a defendant (or appellant) to security for its costs. There are further similarities. On the making of a freezing order, the court makes an interim finding on the merits (the existence of a good arguable case) which is later tested at trial; on the issue of risk of dissipation, however, it makes a determination on an issue that is never tested at trial, namely: is there, on the whole of the evidence then before the court, a real risk of dissipation? As Mr Marshall submitted, that approach reflects the perceived justice of protecting the applicant against the risk of his being unable to enforce any judgment he may later obtain because of unjustified dissipation, when a trial on the risk of dissipation is not practicable or proportionate. It is directly comparable to the security for costs jurisdiction which protects against "the risk of being unable to enforce any costs order they may later obtain". It follows that the tests should be similar.
"… in terms of the risk in relation to enforcement against the defendant, there is a very substantial risk which cannot presently be quantified but nevertheless a very substantial risk that enforcement of an English judgment for costs in Kazakhstan would, even if not impossible, be extremely difficult and expensive. It seems to me that is a risk against which the claimants are entitled to be protected…"
It was thus clear that Mr Moss QC considered that a real but unquantifiable risk was a sufficient basis upon which to order the provision of security.
"…23(ix) As to the applicant for security demonstrating the risk (Nasser, at [67]) of additional obstacles to or burdens of enforcement in a country outside the zone, evidential requirements will necessarily depend on the facts of the individual case: Nasser, at [64]. Satellite litigation is undesirable so that in some cases the Court will no doubt be content to take notice of obvious realities or to draw commonsense inferences, without formal evidence. But, ordinarily, even if the Court is minded to take a broad brush, commonsense approach, it will be necessary for the applicant at least to show some evidential basis for the conclusion that there would be a realistic risk of additional obstacles or burdens in the way of enforcement in a country outside the zone; it will be recollected that Nasser, at [63], precludes the Court from making any inflexible, generalised assumption".
Further at paragraph 24, he said:
"Having now taken account of Nasser, I remain of the view that security is to be ordered – but by reference to the realistic risk of an additional burden of enforcement outside the zone rather than the likely costs of the proceedings."
Gross J's approach appears to me to be one that is eminently sensible and reflects what in my experience is the approach habitually taken by judges and masters in this area.
Disposition
Lord Justice Briggs:
Lady Justice Black:
Note 1 All emphasis in this judgment is mine. [Back] Note 2 1982 c. 27, as amended by the Civil Jurisdiction and Judgments Act 1991 (c. 12) and by S.I.1989/1346, S.I. 1990/2591, S.I. 1993/603, S.I. 2000/1824 and S.I. 2001/3929. [Back] Note 3 The “sensitive” or “suspect” grounds” where the court is required to "scrutinise with intensity any reason said to constitute justification. The reasons must be cogent if such differential treatment is to be justified."; see per Lord Walker at paragraphs 57-58 of Carson in the House of Lords, where he quotes from Lord Nicholls in Ghaidan v Godin-Mendoza [2004] 2 AC 557, 568, para 19. [Back] Note 4 Although see contra per Parker and Russell LJJ in Berkeley Administration Inc v McClelland [1990] 2 QB 407, Staughton LJ dissenting on this point. [Back] Note 5 See the discussion in Frans Pennings, ‘Non-Discrimination on the Ground of Nationality in Social Security’, Utrecht Law Review, vol 9 issue 1 (January 2013) at 123. [Back] Note 6 Lord Walker agreed with the result proposed by Lord Hoffmann but gave his own, albeit substantially similar, reasons. [Back] Note 7 All text emphasised in Bold font reflects my emphasis. [Back] Note 8 As per the test articulated by Sir Thomas Bingham in Fitzgerald v Williams at 675 in the context of an order for security for costs against a national or resident of another Convention state. [Back] Note 9 See paragraph 25 of Hamblen J's judgment. [Back] Note 10 See for example Thune v London Properties Ltd [1990] 1 WLR 562 per Bingham LJ, at 574. [Back] Note 11 See Nasser at paragraph 61. [Back] Note 12 See Nasser at paragraph 63. [Back] Note 13 With whom Lord Goff and Lord Mustill agreed. [Back] Note 14 See Gee on Commercial Injunctions, Sixth Edition, para 12-033 citing: Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (The Niedersachsen) [1983] 2 Lloyd’s Rep. 600 at 606–607, per Mustill J; Choy Chee Kee Collin v Public Utilities Board [1997] 1 S.L.R. 604 at [19]–[22]; Lee Kuan Yew v Tang Liang Hong (o.1) [1997] 2 S.L.R. 819 at [7]; Meespierson NV v Industrial and Commercial Bank of Vietnam [1998] 2 S.L.R. 632 at [16]. [Back] Note 15 Although the analogy is not precise, since a freezing order does not provide actual security for the claim. [Back]
