Phillips & Anor v Messrs Eversheds (A Firm) & Ors

Security for an appeal may be ordered against a company where the evidence shows a significant danger that it cannot meet an adverse costs order. The court may draw an adverse inference where the company has failed to file accounts and offers no explanation of either that failure or its current financial position.

Where a company and its controlling individual pursue an effectively indistinguishable appeal, the court may stay both appeals until the company provides security. This prevents the individual from continuing, in substance, the company’s stayed appeal.

The administrators of an estate sought documents from a firm of solicitors. A company and its controlling shareholder intervened, claiming that some documents might be confidential documents held by the firm as their solicitors. Hart J established a process by which the firm could assess ownership of the documents and granted the interveners permission to appeal.

Before the substantive appeal, the administrators applied for security for costs. They relied on the company’s doubtful ability to meet a costs order and the individual’s residence outside the jurisdiction. Neither intervener filed evidence or appeared at the hearing. The central issues were whether security should be ordered against the company and whether both interveners’ appeals should be stayed until it was lodged.

1. Application granted. Buxton LJ ordered Robin Symes Limited to lodge £25,000 as security for the costs of the appeal within 14 days. Both its appeal and Mr Symes’s appeal were stayed pending lodgement of that security.

2. The evidence established a significant danger that the company would be unable to meet an adverse costs order. It had filed no accounts since 1998. The court could draw an adverse inference from that omission because the company had provided no explanation of either its failure to file accounts or its current financial position. An order for security was therefore right, equitable and justified.

3. The evidence did not establish that Mr Symes had left the jurisdiction to avoid enforcement. His position nevertheless could not be separated realistically from that of the company. He owned and effectively controlled it. The two interveners had used the same solicitors and counsel, incurred the same costs and made no apparent distinction between their respective claims to the documents. They had pursued the substantive proceedings as parties making common cause.

4. It would consequently have been artificial to stay only the company’s appeal. Without a corresponding stay against Mr Symes, he could pursue what was effectively the company’s appeal despite its failure to provide security.

5. Because neither intervener appeared, both were given liberty to apply to set aside or qualify the order following prompt notification. The application was allowed with costs summarily assessed at £6,500, payable jointly and severally by the interveners.

1. Court of Appeal (Civil Division): On an application ancillary to the pending appeal, ordered Robin Symes Limited to provide £25,000 security and stayed both interveners’ appeals until compliance: [2002] EWCA Civ 486.

2. High Court, Chancery Division: Hart J ordered a process by which the solicitors could assess whether particular documents belonged to the interveners. He granted permission to appeal, although he later expressed substantial doubt about having done so.