Northern & Shell Plc v Champion Children Ltd

Failure to provide agreed security for costs does not ordinarily justify striking out an appeal where no court order has been breached. The proper procedural route is an application for an order for security. The court may retain an improperly framed application as the vehicle for making the agreed security order where that causes no material additional expense. In exercising its procedural and costs discretion, the court should pursue the overriding objective by saving expense, acting proportionately, and dealing with the matter expeditiously and fairly. Repeated assurances and delay in providing agreed security may justify an order for costs, although the applicant’s own procedural error may lead to a reduced award.

The claimant, successful in the court below and respondent to the defendant’s proposed appeal, applied to strike out that appeal because the defendant had not provided £10,000 security for costs by the agreed date. Correspondence had recorded agreement on the amount and timing of security, but the method of provision remained unresolved and payment was delayed.

By the hearing, the parties had agreed the terms of a draft order requiring security, with costs as the only disputed issue. The central questions were whether the strike-out application was procedurally appropriate and how the costs of the application should be allocated.

Potter LJ dismissed the application to strike out the defendant’s appeal. He ordered the appellant to give security for the respondent’s costs in the sum of £10,000 within seven days by payment into court. Proceedings were stayed meanwhile, and the appeal was to stand dismissed without further order if the security was not provided within that period.

1. Proper procedural route. The claimant had been wrong to seek strike-out. No previous court order had been breached, so there was no reasonable prospect of obtaining an order striking out the appeal for failure to provide security. The appropriate course was an application for security in the agreed sum, with the issue of costs identified separately.
2. Use of the existing application. Although technically inappropriate, the application had not significantly increased the costs on the basis sensibly agreed by the parties. It could therefore remain in being as the vehicle for making the security order.
3. Overriding objective. The parties should pursue litigation in the cheapest and most sensible way, with regard to saving expense, proportionality, expedition and fairness. Poor relations between solicitors did not justify obstructive conduct. Payment to the claimant’s solicitors against their undertaking to hold the money as security would have been a sensible course, and it had not been suggested that the undertaking would be broken.
4. Costs. The claimant had reasonable grounds for concern because of delay and repeated broken assurances. However, its decision to issue a strike-out application rather than a security application was an error. The defendant was therefore ordered to pay half the application costs, summarily assessed at £950, forthwith.

• Court of Appeal (Civil Division): On an application by the successful claimant in the court below, the proposed appeal was not struck out. The court ordered security for costs and made a costs order. The decision is reported at [2001] EWCA Civ 1103.