Rainbow Estates Ltd v Tokenhold Ltd & Ors

An application to reinstate an appeal dismissed for failure to provide security for costs requires the applicant to show cause for revival. The evidence should explain the default, including whether the applicant was unable to provide security or chose not to comply. Where the papers disclose little prospect of success, the Court of Appeal may dismiss the application in limine without requiring the respondents to attend, particularly where a hearing would impose costs on the applicant. A later settlement arrangement or explanation for non-attendance does not itself establish cause to revive an appeal after a prolonged, unexplained default.

In Rainbow Estates Ltd v Tokenhold Ltd & Ors, the High Court gave Rainbow Estates summary judgment against Tokenhold Ltd and Mr Herman Herskovic for rent and interest under two leases. Permission to appeal was granted. The Court of Appeal later ordered £12,000 security for the appeal costs and provided that the appeal would stand dismissed if the security was not furnished in accordance with the order. No security was provided and the appeal was dismissed on 5 October 1998.

Mr Herskovic subsequently sought permission to reinstate the appeal. The papers did not explain why the security had not been provided, and correspondence later received by the court contained a purported settlement order. The central issue was whether the application should proceed or be dismissed in limine.

The application was dismissed. Lord Justice Chadwick held that Mr Herskovic had not shown cause why an appeal dismissed more than two and a half years earlier for failure to comply with a security-for-costs order should be revived.

1. The Court of Appeal’s order of 26 August 1998 required Tokenhold Ltd and Mr Herskovic to provide £12,000 security by 23 September 1998. The appeal was stayed pending compliance. The order provided for dismissal without further order if the required notice of payment under the Rules of the Supreme Court Ord.22,r.8 (1) was not received, or if any payment instrument was dishonoured. No security was provided and the appeal was dismissed on 5 October 1998.
2. An applicant seeking reinstatement had to provide material explaining the failure to comply. The papers did not show whether Mr Herskovic had been unable to provide the security or had chosen not to do so. That omission was significant because the original order had allowed recourse to assets subject to a Mareva injunction.
3. It was appropriate to consider the application on paper before requiring the respondents to attend. Where the material disclosed little prospect of success, a hearing would impose costs which might ultimately fall on the applicant. The application could therefore be dismissed in limine.
4. The later correspondence and purported consent order provided some explanation for Mr Herskovic’s absence and indicated that the application was not being pursued. They did not establish cause to revive the dismissed appeal. The application dated 6 December 2000 was accordingly dismissed.

• Court of Appeal (Civil Division) — On 7 June 2001, the application dated 6 December 2000 for permission to reinstate the dismissed appeal was dismissed in [2001] EWCA Civ 975.
• Court of Appeal (Civil Division) — The underlying appeal was dismissed on 5 October 1998 without further order after the appellants failed to provide security for costs in accordance with the order of 26 August 1998.
• High Court (Chancery Division) — On 4 March 1998, a deputy judge entered summary judgment for Rainbow Estates Ltd against Tokenhold Ltd and Mr Herman Herskovic for rent arrears and interest under two leases.