Kelway v Guardian Insurance Ltd

When security for costs is sought as a condition of pursuing an appeal, the court must balance protection against unrecoverable costs with the appellant’s ability to proceed. A substantial payment should not be ordered where the appellant’s means mean that it would effectively stifle the appeal. The court may nevertheless require a modest payment to demonstrate an intention to pursue the appeal and to provide some security. The assessment includes the appellant’s means, the apparent prospects of success and the respondent’s risk of failing to recover costs. Non-payment of the ordered sum may result in a stay of the appeal.

The claimant sought permission to appeal and an extension of time from the Central London County Court proceedings. Guardian Insurance Ltd applied for security for costs as a condition of allowing the permission application and any appeal to proceed. Following judgment, Judge Hallgarten QC had ordered the claimant to pay £3,500 forthwith and £10,000 within 14 days to the respondent’s solicitors, but nothing had been paid. The central issue was whether requiring payment or security would be fair, given the claimant’s asserted lack of means and the apparent prospects of the appeal.

Lord Justice Tuckey allowed the application for permission to appeal and extension of time, and allowed Guardian’s application for security for costs in a limited amount.

1. Fairness and ability to proceed. The court had to decide whether it was fair to require payment or security when the claimant said that he lacked sufficient funds. The evidence was limited, but the information provided that morning satisfied the court that he could not meet any substantial order. A substantial payment would therefore have effectively stifled the appeal.
2. Prospects of success. The court took account of the fact that Rix LJ must have considered that the claimant had at least some prospect of success, since otherwise the earlier order would not have been made.
3. Limited security. It was nevertheless fair to require a small payment. The payment would demonstrate the claimant’s intention to pursue the appeal and provide some security to Guardian, which was unlikely to recover its costs if successful.
4. Order. The sum was fixed at £500, payable into court within 14 days. Unless paid, the appeal would be stayed. The costs of both applications were ordered to be costs in the application and the appeal.

• Court of Appeal (Civil Division): Permission to appeal and an extension of time were allowed. Guardian’s application for security for costs was allowed in the sum of £500, with a stay to follow upon non-payment.
• Central London County Court: After judgment, Judge Hallgarten QC ordered payment of £3,500 forthwith and £10,000 within 14 days. The judgment was stated to be on appeal from that court, before Deputy Master Joseph.