Ahmad Hamad Algosaibi and Brothers Company (“AHAB”) v Saad Investments Company Ltd (in official Liquidation) (“SICL”)
| Jurisdiction | Cayman Islands |
| Judge | Anthony Smellie |
| Judgment Date | 19 October 2017 |
| Date | 19 October 2017 |
| Docket Number | CAUSE NO. FSD 54 OF 2009 (ASCJ) |
| Court | Grand Court (Cayman Islands) |
THE HON. Anthony Smellie, CHIEF JUSTICE
CAUSE NO. FSD 54 OF 2009 (ASCJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Jurisdiction vested by Grand Court Rule Order 23, Rule 1 to make orders for security for costs to be exercised in a non-discriminatory manner consistent with the right to fair trial guaranteed by the Constitution — the imposition of such orders by simply having regard to a plaintiff's non-resident status would be contrary to that right — principles applicable to the making of awards for full security for costs different from those applicable to making an award for security for the costs of enforcement of a costs judgment abroad — jurisdiction to award further security where order for the whole action already made exists only where a material change of circumstances arises since earlier order was made.
Mr. Thomas Lowe QC and Mr. Jack Watson instructed by Mr. William Peake of Harneys for the liquidators of SIFCO 5.
Miss Shelley White and Miss Sarah Gavin of Walkers for the liquidators of the GT Defendants.
Ms. Harriet Fear Davies instructed by Mr. Ian Lambert of HSM Chambers for the liquidators of the AWALCo Defendants.
Mr. Hector Robinson QC instructed by Ms. Delia McMahon of Mourant for the plaintiff, AHAB.
The Defendants apply for further security for their costs in the context of this very complex and lengthy case in which some US$76. 1 million have already been ordered by the court and provided by way of security for the Defendants' 2 costs. While that very large sum included security to cover the Defendants' recoverable costs up to and including the costs of the trial, it did not anticipate the actual overrun on the estimated length of the trial and so the Defendants now seek to secure the further costs attributable to that overrun by reference to the realized time costs and disbursement costs of the trial.
AHAB does not contend that the Defendants should not be entitled to security for the further costs but, in light of modern developments in the English and local case law, argues for the application of different principles to the determination of that entitlement.
AHAB's primary contention is that the Defendants should be entitled to security only for such costs as could reasonably be incurred by them in having to enforce abroad in AHAB's domicile of Saudi Arabia, any ultimate award of costs against AHAB obtained in these proceedings. This proposition implicitly contemplates the risk that AHAB might fail to honour such an award and, at least, that there would be costs of enforcement against AHAB in Saudi Arabia.
This concession as to a limited kind of security which I will call the “costs of enforcement”, would stand in contra-distinction to security for the full amount of any recoverable costs of the action to be awarded against AHAB, in the event the Defendants are successful (which I will call “full security”).
As a corollary to its primary contention that only the costs of enforcement should be awarded, AHAB argues through Mr. Robinson QC, that as the relative amount of such costs would be very small (if not indeed de minimis, in the context of this case), the Defendants should be regarded as being adequately secured for them by the very large sums of security already awarded.
AHAB's contention proceeds on the basis that in the circumstances of this case and notwithstanding the large sums of security already awarded the Defendants are unable to satisfy the test laid down by the modern case law for the grant of full security.
Citing the same leading cases as cited by the Defendants to be discussed below 3, Mr. Robinson submits that the only justifiable rationale for the existence of the jurisdiction to award security for costs, are the potential difficulties and burdens of enforcement in Saudi Arabia. Accordingly, that the cases have set the evidential threshold which must be met by the applicant seeking full security at “ a real risk that (the applicant) will not be in a position to enforce an order for costs” 4. That threshold, he submits, is referable to whether or not enforcement is possible, not merely to whether there will be difficulties in the enforcement process. This he further submits, is the only basis upon which a distinction can be drawn between the test for an award of full security and that for an award for the costs of enforcement, the former contemplating insuperable obstacles but the latter contemplating merely that there will be difficulties or burdens to be encountered in the process of enforcement.
Thus understood, Mr. Robinson argues that the test for an award of full security in the circumstances of this case is that the applicants must show that enforcement in Saudi Arabia would be practically impossible.
Miss White and Ms. Davies disagree 5: they contend that the test is different and that by reference to the same leading case authority that “it is sufficient for an applicant for security for costs simply to adduce evidence to show that ‘on objectively justified grounds relating to obstacles to or the burden of enforcement’, there is a real risk that it will not be in a position to enforce an order for costs against the plaintiff and that, in all the circumstances, it is just to make an order for security” 6.
I am satisfied that this is the correct statement of the applicable principle and that which has been applied in the recent case law in this jurisdiction such that it is now to be regarded as part of the established law on the subject of security for costs. 7
Mr. Robinson's formulation of the test is different and unacceptable for more than mere semantic reasons. In placing undue emphasis upon the need to show proven insuperable difficulties rather than simply a real risk of difficulties, it would impose a mandatory but unrealistic requirement, that an applicant for security must adduce evidence as to the actual existence of an insuperable obstacle to the enforcement of a costs judgment in the home jurisdiction of the plaintiff. That approach would, in my view, hamper unduly the purpose of the jurisdiction to award security for costs.
In the practical application of the Rules as developed in the case law, it is now settled that the purpose of the jurisdiction is to protect a successful defendant from the real risk of
“Where, on the application of a defendant to an action or other proceedings it appears to the Court—
(a) That the plaintiff is ordinarily resident out of the jurisdiction; …then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceedings as it thinks just.” [Emphasis added].
The words in emphasis connote a broad discretion such as would be incompatible with the exclusion from consideration of apparent or real risk of difficulties, while confining the consideration only to circumstances of insuperable difficulties.
Nothing in the modern case law suggests the need to confine the judicial discretion artificially in that way.
As will be further explained below, the focal concern of the modern case law is not to ensure that a plaintiff is seldom required to provide security or that orders for security are only exceptionally made but to ensure that such orders are not imposed in an arbitrary or discriminatory manner. Accordingly, the making of such orders against a non-resident plaintiff would be appropriate, and may now be justified, not simply on the
discriminatory basis of the plaintiff's foreign status but because real risks of unenforceability are shown “on objectively justified grounds” to exist: per Lady Justice Gloster in her dictum cited above from Bestfort, applying the dictum of Mance LJ from NasserThis approach dictated by the modern cases, is aimed at addressing not only basic tenets of fairness but more particularly, the requirements of the Constitutional Bill of Rights 9 where, in section 16, it is mandated that “government shall not treat any person in a discriminatory manner in respect of the rights under this Part of the Constitution” 10 — the most directly operative here being that right to a fair and public trial guaranteed by section 7 11 which states that “Everyone has the right to a fair and public hearing in the determination of his or her legal rights and obligations by an independent and impartial court within a reasonable time.”
And while under section 1(3) of the Constitution it is provided that the reference in section 16 to “government” shall “include public officials and the Legislature but shall not include the courts”, it must be recognized that it is by an act of government, in the exercise of the legislative authority delegated to the Grand Court Rules Committee that GCR Order 23, Rule 1 is promulgated, pursuant to section 19 of the Grand Court Law (as revised). 12
Accordingly, as Mr. Lowe submits and as I accept, it should now be taken as understood that the policy underlying the action of “government” taken in the promulgation and
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