Vedatech Corporation v Seagate Software Information Management Group Ltd

Permission to appeal against orders for security for costs is governed by different thresholds. A second appeal requires an important point of principle or practice, or another compelling reason. A first appeal requires a realistic prospect of success. Where an absent respondent may be affected by a stay, the court should give an opportunity to be heard before deciding permission and the stay. An arguable error in the costs figures, and the possible relevance of a Part 36 offer under the Civil Procedure Rules 1998, may justify further consideration without determining the appeal at a renewed application.

Vedatech Corporation v Seagate Software Information Management Group Ltd concerned a renewed application for permission to appeal from a Chancery Division case-management order made by Lightman J on 9 May 2001.

The order adjourned a ten-day trial, permitted a company officer to represent the claimant subject to Civil Procedure Rules 1998 Part 39, and required staged security for costs. The applicant challenged orders requiring £60,000 and a further £141,750, as well as earlier costs orders, and sought a stay. The central issues were whether the proposed challenges met the applicable permission threshold and whether the instalment payments should be stayed pending a hearing with the respondent present.

Lord Justice Chadwick disposed of the renewed application as follows:

1. Second-tier appeal. The challenges to the orders for £58,000 and £60,000 were second appeals. Under section 55 of the Access to Justice Act 1999 and CPR 52 rule 13, permission required an important point of principle or practice, or another compelling reason. No such ground was identified. The court would not interfere with the exercise of discretion requiring £138,000 to be paid into court as security for expensive and complex litigation by a company with no assets within the jurisdiction. Permission was refused in relation to paragraphs 13 and 16 of the order.
2. First appeal. The challenge to the further £141,750 was a first appeal, for which the applicable test was whether there was a realistic prospect of success. The applicant identified an apparent misunderstanding of the estimated costs and the possible relevance of a Part 36 offer concerning the quantum meruit element of the claim when assessing costs attributable to other elements. Those points had some force, but the court did not determine whether they would ultimately justify permission or success.
3. Opportunity to be heard. Because the respondent was absent, it had to be given an opportunity to address both permission and the proposed stay before those matters were finally determined. The paragraph 14 application was therefore stood over and listed on notice, with any appeal to follow if permission were granted.
4. Interim stay. Instalments due on 30 June, 31 July, 31 August and 30 September 2001 were stayed. The final instalment due on 31 October was not stayed because the hearing was expected before then. The respondent was permitted to apply to vary the order on 48 hours’ notice.

• Court of Appeal (Civil Division): On the renewed application, permission was refused in relation to paragraphs 13 and 16 of the Chancery Division order. The paragraph 14 application was stood over, and instalment payments were stayed pending an on-notice hearing.
• Chancery Division: Lightman J made the case-management order dated 9 May 2001, including the staged security-for-costs orders and permission for representation by a company officer subject to CPR Part 39.
• Court of Appeal (Civil Division): Peter Gibson LJ refused an application for a stay on paper on 30 May 2001.
• Earlier orders: Master Moncaster ordered payment of £60,000 on 13 February 2001. An order dated 23 April 1998 required payment of £58,000 in costs.