Sinclair v British Telecommunications plc

The court has inherent jurisdiction to stay a second action until an unpaid costs order from an earlier action based on substantially the same cause has been satisfied. The jurisdiction extends to an assignee of the earlier claimant. The assignment cannot place the cause of action, or the assignee, in a better position than before.

This jurisdiction is distinct from the statutory power to order a company to provide security for future costs. A claimant who contends that payment would stifle the later action must provide compelling evidence of an inability to pay or raise the money. Bare assertions of impecuniosity are insufficient.

A company controlled by the claimant brought proceedings against British Telecommunications plc in 1992 concerning payments under a telephone chatline contract. That action was eventually dismissed for want of prosecution, with assessed costs of £3,000 remaining unpaid. A separate action brought personally by the claimant in 1995 was also struck out.

After receiving assignments from the companies potentially entitled under four relevant contracts, the claimant began a third action in 1997. Buckley J stayed that action until the earlier costs were paid and ordered it to be struck out if payment was not made within three months.

The claimant appealed. He disputed that the actions involved the same cause of action, relied on Norglen and Eurocross, alleged that the order would stifle his claim, and proposed postponing payment until after judgment. The central issue was whether the court's inherent jurisdiction permitted the condition imposed on an assignee pursuing substantially the same claim.

1. Appeal dismissed unanimously. Ferris J held that the 1997 action included the same contractual claim which Vox Telecom Limited had advanced in 1992. The claimant was pursuing that claim as the company's assignee. Judge LJ agreed, and Peter Gibson LJ agreed with both judgments.

2. The court possesses an inherent jurisdiction to prevent a litigant who has failed in earlier proceedings from seeking identical or equivalent relief without paying the costs of those proceedings. The principle stated in Morton v Palmer (1882) 9 QBD 89 and applied in Thames Investment & Securities plc v Benjamin [1984] 1 WLR 1381 was not confined to a further action by the same nominal claimant. It extended to the first claimant's successor in title. The cause of action passed subject to the practical impairment created by the unpaid costs order, and the assignee could occupy no better position than the assignor.

3. Norglen Ltd v Reeds Rains Prudential Ltd [1999] 2 AC 1 and Eurocross Sales Ltd v Cornhill Insurance plc [1995] 1 WLR 1517 did not preclude the order. Those authorities concerned security for future costs, including the effect of section 726 of the Companies Act 1985 when a corporate cause of action was assigned to an individual. The present jurisdiction was distinct. It enforced an existing judgment debt arising from a previous unsuccessful action.

4. Per Judge LJ, the use of separate proceedings and an assignment to circumvent the ordinary costs consequences imposed an unfair and disproportionate burden on the defendant and constituted a misuse of process. The inherent jurisdiction permitted the court to remove the resulting advantage without taking the disproportionate course of striking out the new proceedings immediately.

5. The claimant failed to establish that the order would stifle the action. His affidavit contained only bare assertions about unemployment, benefits and lack of assets. It did not address possible third-party assistance, attempts to raise £3,000, his interests in the relevant companies, or the substantial sums previously received from the defendant. Compelling evidence was required in these circumstances.

6. Although the discretion could in principle postpone payment until after judgment, that course would seldom be proper. It would remove the jurisdiction's disciplinary effect and risk leaving the earlier costs unsatisfied. The appeal was dismissed, leave to appeal was refused, and consequential costs and legal-aid taxation orders were made.

1. Court of Appeal: Dismissed the claimant's appeal unanimously and upheld Buckley J's stay and conditional strike-out order. Leave to appeal was refused.

2. High Court, Queen's Bench Division: Buckley J stayed the 1997 action until £3,000 costs from the 1992 action were paid. He ordered that, absent payment within three months, the action be struck out and judgment entered for British Telecommunications plc.

3. Earlier proceedings: The 1992 corporate action was dismissed for want of prosecution, with assessed costs of £3,000. The claimant's personal 1995 action was struck out because he could not show that he was a contracting party.