Mashate v Kaguta

A court may require payment of costs before a litigant takes a further step, including applying to lift a stay, but the power must be exercised with great caution. The relevant considerations include whether the claim is bona fide and properly pleaded, whether the litigant has flouted procedure or acted without good faith, and whether the claim is so weak that it has no real prospect of success. A party asserting that payment would stifle the claim must provide material evidence of inability to comply; a bare assertion is insufficient. A stay under the Civil Procedure Rules 1998 does not prevent a properly justified costs condition. Such an order is a case-management measure, not a civil restraint order, where the party has had an opportunity to address it.

The appellant brought a claim exceeding £18 million based on an alleged 1997 agreement concerning compensation for the closure or expropriation of a Ugandan newspaper. The proceedings had been stayed by Blair J in 2008 because the claim was defective. In 2011, HHJ Seymour QC ordered payment of £50,000 on account of costs. In May 2013, HHJ Yelton refused to lift the stay and ordered that no further application to lift it could be made until the costs order was complied with.

Permission to appeal was granted only on the question whether that precondition improperly fettered access to justice, stifled the claim, or amounted to a civil restraint order.

Lord Justice Treacy gave the principal judgment, with Lord Justice Sullivan agreeing. The appeal was dismissed.

1. The power to order security for costs, including a condition requiring compliance with an earlier costs condition, must be exercised with great caution. Applying the approach in Ali v Hudson [2003] EWCA Civ 1793, an order should be exceptional if it would stifle a bona fide claim or appeal. Ordinarily, the court should require evidence of regular flouting of proper procedures or want of good faith. Weakness of the case is ordinarily relevant only where there is no real prospect of success.
2. The appellant supplied no material evidence of inability to pay and relied only on a bare verbal reference to security concerns. The court was entitled to reject that explanation. The history showed serious procedural misconduct, including steps taken despite the stay, conduct characterised as misleading the court, deliberate pleading in a personal capacity to avoid the State Immunity Act 1978, and failure to attend an examination of means.
3. The claim appeared inherently weak. The alleged agreement required immediate payment and appeared statute-barred. The suggested reaffirmations appeared incapable of avoiding that result under sections 29(7) and 30 of the Limitation Act 1980. The pleadings had also remained inadequately formulated for nearly seven years.
4. Rule 40.11(c) of the Civil Procedure Rules 1998 did not prevent a court, in a proper case, from requiring costs to be paid before any further step. The explanation in Minster of Foreign Affairs, Trade and Industry v Vehicles and Supplies Ltd [1991] 1 WLR 550 supported that conclusion. The order was not tantamount to a civil restraint order. Reserved costs from an earlier appeal did not create a set-off.
5. There was no ambush. The judge had considered striking out the claim, indicated the type of order contemplated, and gave the appellant an opportunity to address it. The order was a proper exercise of case-management powers. Appeal dismissed.

• Court of Appeal (Civil Division): on 10 March 2015, dismissed the appeal concerning the precondition requiring payment of £50,000 on account of costs: [2015] EWCA Civ 342.
• Queen’s Bench Division: HHJ Yelton, sitting as a High Court judge, on 17 May 2013 refused to lift the stay and ordered that no further application could be made until the earlier costs order was complied with.