DARREN JAMES POPELY v POPLAR ESTATES LIMITED & Ors

The appeal concerned an order for security for costs made under Civil Procedure Rules, r.25.13 in proceedings brought as a petition under section 996 of the Companies Act 2006. The judge below (Deputy Insolvency and Companies Court Judge Barnett) found that the petitioner had moved residence to Florida, had given an incorrect address in the amended petition, and had taken steps in relation to his assets that would make enforcement of costs orders difficult, including apparent dissipation of about £270,000. Three gateways under r.25.13 were therefore established (in particular grounds (a), (e) and (g)).

The appellate court rejected the contention that ground (e) only applies to the address originally stated in the claim form, and held that the judge had addressed the discretionary arguments advanced by the appellant (notably that an order would stifle litigation and that other assets or costs orders should be taken into account). The judge had given sufficient reasons, even though ex tempore and concise, and had properly taken a global view of the established gateways and the factual findings. The appeal was dismissed.

This was an appeal against an order of Deputy Insolvency and Companies Court Judge Barnett dated 31 January 2020 that required the petitioner to provide security for costs in the sum of 30,000. The underlying proceedings were a petition under section 996 of the Companies Act 2006 by a 20% shareholder of Poplar Estates Limited. Permission to appeal was granted on 9 June 2020 and the appeal was heard by Fancourt J on 16 December 2020.

The respondents sought security for costs under CPR r.25.13 on four pleaded grounds: (a) the claimant was resident out of the jurisdiction, (d) the claimant had changed his address since the claim was commenced with a view to evading the consequences of the litigation, (e) the claimant had failed to give his address in the claim form or had given an incorrect address in that form, and (g) the claimant had taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.

Key facts found by the judge below were: sale of the petitioners Kent house for about 1.4m in May 2018; repayment of a 600,000 loan; transfer of funds and chattels to Florida; acquisition of a Florida property registered in the petitioners wifes name; apparent dissipation of about 270,000 such that only about 130,000 remained in an English bank account at the time of the hearing; and attempts to conceal the sale, the transfer of assets and the petitioners address. The petitioner conceded at the hearing that steps had been taken in relation to assets that would hinder enforcement, such that ground (g) was admitted and grounds (a) and (e) were found proved; ground (d) was not proved.

The principal issues on appeal were (i) whether ground (e) applied to an updated address given during proceedings and (ii) whether the judge had given sufficient reasons and properly exercised his discretion in ordering security for costs. The appellate judge held that r.25.13 is not confined to the original address on the claim form, so ground (e) was available where a subsequently stated address was incorrect. On discretion, the appellate court concluded the judge had considered and rejected the appellants discretionary arguments (stifling the litigation and reliance on other assets or costs orders), had made relevant factual findings about residence, concealment and dissipation, and had exercised a global discretion. The modest amount of security sought (30,000) and the lack of full and frank disclosure by the petitioner were material considerations. The appeal was dismissed.

Appeal dismissed. The Court held that CPR r.25.13 is not limited to the address originally given on the claim form and that the judge below had established grounds (a), (e) and (g). He had considered the discretionary arguments advanced, made relevant factual findings (residence in Florida, concealment, dissipation of funds and inadequate disclosure) and was entitled to take a global view in exercising his discretion to order 30,000 security for costs; the reasons given, though concise and ex tempore, were sufficient.

Order of Deputy Insolvency and Companies Court Judge Barnett dated 31 January 2020 granting security for costs 30,000; permission to appeal granted 9 June 2020; appeal heard in the High Court (Chancery Appeals) before Fancourt J, judgment [2020] EWHC 3934 (Ch) 16 December 2020.