Choudhary & Ors v Bhatter & Ors

The court refused an application for security for costs in respect of an imminent appeal brought by the sole appellant, Mr Bhatter. The judge exercised his discretion against ordering security, relying on the principle in Nasser v Bank of Kuwait about the danger of discriminating against foreign appellants and requiring clear evidence that the appellant would seek to hinder enforcement abroad. The evidence did not allow an inference that Mr Bhatter would frustrate enforcement of a costs order; furthermore the connection of the dispute to England was remote, and the court considered it unjust to require a foreign appellant to provide security where he had a legitimate right to appeal.

This is an urgent application in the Court of Appeal for security for costs in respect of an appeal expected to be heard shortly. At first instance the Chancery Division (Mr David Donaldson QC) had made an injunction restraining Mr Damodar Prasad Bhatter from acting in relation to the management of the third defendant company and from convening meetings or procuring changes to the board or shareholdings. The dispute concerns control of a company incorporated in 1872 under the Companies Act 1862, with registered office and members' register in England, but with a largely foreign connection.

The appellant, Mr Bhatter, is the only person subject to the injunction and the only person with the right to appeal. Permission to appeal was granted by Stanley Burnton LJ. The respondents applied for an order that Mr Bhatter provide security for the costs of the appeal on the basis that he is resident in India and, it was said, impecunious and unlikely to facilitate enforcement abroad.

The court framed the issues as whether there was sufficient evidence to justify ordering security for costs of the appeal, having regard to the risk of discrimination against a foreign appellant and the need to infer a real risk of hindrance to enforcement abroad. The judge reviewed Nasser v Bank of Kuwait and its guidance that impecuniosity is relevant only to the extent it makes enforcement abroad more difficult or that the respondent would take steps to avoid enforcement.

Applying those principles the court found the evidence did not permit an inference that Mr Bhatter would seek to avoid or hinder enforcement of a costs order in India. Although enforcement under the Foreign Judgments (Reciprocal Enforcement) Act 1933 might be resisted in India, the judge considered such enforcement would be comparatively straightforward and the risk of discrimination against a foreign appellant weighed against ordering security. The court also noted the remoteness of the connection with England and described the claimants' invocation of English jurisdiction as a matter of "luxuriousness"; while convenience is irrelevant to jurisdiction under the EC Regulation, it was a factor in the exercise of discretion. For these reasons the application for security for costs of the appeal was refused.

Application for security for costs refused. The judge exercised his discretionary power against ordering security because the evidence did not support an inference that the appellant would frustrate enforcement abroad, and there was a real risk of discriminating against a foreign appellant given the remote connection with England.

On appeal from the High Court of Justice, Chancery Division (Mr David Donaldson QC). Permission to appeal was granted by Stanley Burnton LJ. The present judgment [2009] EWCA Civ 510 refuses the respondents' application for security for costs in respect of that appeal.