Allen v Bloomsbury Publishing Ltd & Anor

A court considering a conditional order under the summary judgment or general case-management powers has a wide discretion to secure justice. Where the proposed condition amounts to security for costs, the court should have regard to the principles governing security under the Civil Procedure Rules 1998, but those principles do not rigidly limit the available order.

Full, staged security may be justified by a combination of very weak prospects, a nominal claimant without apparent assets, want of good faith in conducting the litigation, inadequate disclosure about available funding and a finding that security will not stifle the claim. An unless order providing for strike-out upon non-payment may be appropriate. An appellate court will interfere with such discretionary decisions only for legal misdirection or an order which is plainly wrong.

The claimant, acting as trustee of the estate of a deceased author, alleged that substantial parts of the author's book had been copied in Harry Potter and the Goblet of Fire. The defendants applied for summary judgment and the publisher alternatively sought security for costs.

Kitchin J held that the claim might succeed but probably would not. He subsequently ordered the claimant to pay staged security for the defendants' costs, with the action to be struck out if payment was not made. The costs of the applications were made costs in the case.

The claimant appealed against the amount of security, the use of an unless order rather than a stay, and the costs order. The central issues were whether the judge had misdirected himself when exercising his discretion and whether the resulting orders fell outside the permissible range.

1. Appeal dismissed. Lloyd LJ, with whom Sullivan and Rix LJJ agreed, held that the judge had exercised his discretion properly. An appellate court may interfere with a discretionary order where the judge made an error of law, took account of irrelevant matters, omitted relevant matters, or made an order so plainly wrong that a misdirection must be inferred. None of those grounds was established.

2. The court's powers under Parts 3, 24 and 25 of the Civil Procedure Rules 1998 should be considered as a coherent whole. When a conditional order under rule 24.6 or a condition under rule 3.1 amounts to security for costs, the principles underlying rules 25.12 and 25.13 should be borne in mind to prevent circumvention. They do not impose a rigid ceiling limiting the condition to the order which Part 25 alone would permit.

3. The full staged security was justified by the combined circumstances. The claim had very limited prospects; the claimant was a nominal claimant without disclosed assets sufficient to meet a substantial costs order; those pursuing the claim had demonstrated want of good faith in the relevant procedural sense; the evidence about funding and those who would benefit was inadequate; and the judge was entitled to find that the order would not stifle the litigation. The foreign-enforcement reasoning in Nasser v United Bank of Kuwait [2001] EWCA Civ 556 concerned a materially different basis for security and did not require security here to be restricted to additional enforcement costs.

4. A trustee proceeding under rule 19.7A is not thereby a representative claimant within rules 19.6 or 19.7. The claimant therefore did not fall within the representative-claimant exception relied upon against security under rule 25.13(2)(f). Nor did the joinder of the beneficiary for costs purposes remove the need for security: a non-party costs order under section 51 of the Senior Courts Act 1981 could not be assumed.

5. The unless order was permissible. The payment timetable had been agreed, the litigation required finality, and paragraph 5.2 of the relevant Part 24 practice direction contemplated strike-out as the model sanction for breach of a conditional order. Radu v Houston [2006] EWCA Civ 1575 did not establish that a stay was the normal consequence in these circumstances.

6. The costs-in-the-case order also fell within the legitimate range. The summary judgment and conditional-order issues overlapped, each side had achieved a measure of success, and the judge was better placed to assess the significance of the relevant work and costs.

1. Court of Appeal (Civil Division): The claimant's appeal was dismissed. The staged security, strike-out sanction and costs-in-the-case order were upheld: [2011] EWCA Civ 943.
2. High Court of Justice, Chancery Division: Kitchin J declined to give summary judgment but found that the claim would probably fail. He later ordered staged payment of substantial security, with strike-out for non-compliance, and directed that the application costs be costs in the case. No citation is stated in the judgment.