Radu, Prince of Hohenzollern v Houston & Anor

LORD JUSTICE CARNWATH: This application arises in libel proceedings brought by Prince Radu of Hohenzollern. He is a son-in-law of King Michael of Romania, who was deposed by the communists in 1947. The action was brought against the editor and the publisher of Royalty Monthly. It related to an article in September 2004 which challenged the right of the claimant to his title of Prince and also accused him of being a member of the former secret police. I am not concerned with any of the detail of that. I am concerned only with arguments about security for costs, and conditions relating to a potential appeal.

The background is this. The proceedings commenced in February 2005. An application was made by the defendants for security for costs in June 2005. On 14 July Master Turner ordered that £125,000 security should be paid by 25 August, failing which there would be judgment for the defendants. He gave permission to appeal but did not order a stay. During the vacation, Treacy J refused an application for an extension of time for payment. There was no appeal against that. On 26 August final judgment was entered for the defendant.

There was, however, an appeal against the order for security, following the leave granted by Master Turner. That came before Eady J in January of this year. He gave judgment on 7 March. He upheld the appeal, in the sense that he said that Master Turner had been wrong on certain grounds, particularly in not giving an adjournment to deal with new evidence from the defendants. He also found that Master Turner’s award of security was too high, since what it was supposed to represent was only the additional costs of enforcement in Romania. Eady J thought the right figure would have been £80,000.

By that time the King of Romania, King Michael, had apparently made available £125,000, which would have been sufficient to cover the security then being proposed. However the judge said that, given that there was a final order, and given that no valid grounds had been put forward for challenging the basis on which that had been given nor the basis on which Treacy J had refused an extension of time, that order should stand. That made the question of security academic.

Laws LJ gave permission to appeal against Eady J’s order on 21 April 2006. He also ordered a stay of the detailed assessment of costs. In granting permission, he said:

“Arguable but difficult: the appellant may have an uphill struggle. The point is not without some importance.”

Following that there began the sequence of events leading to the hearing before me. The defendants sought security in relation to the appeal. On 28 April 2006 they wrote referring to the recent grant of permission to appeal:

“As you know from our recent correspondence we are now in the process of considering the issue of Conditions in the above regard.

“In the meantime, the purpose of this present letter is to invite you to state your client’s proposals to provide Security for Costs of the Appeal.”

There followed some discussion as to precisely what the security was for. It was made clear that the figure being sought was £100,000, but there was some debate about whether this was security for the costs of the appeal as such, or was intended to be security representing the additional costs of enforcement of any award in Romania. Happily, I do not need to enter into that debate. Suffice to say that on 26 May, the defendants lodged an application in this form: 1) security for the defendant’s costs of the appeal by paying the court the sum of £100,000; 2) paying to the court the further sum of £350,000 as a condition of permission to appeal; and 3) a sum representing the costs of this application.

That application was supported by the ninth witness statement of the defendant’s solicitor, Mr Pennal. This is a substantial document running to some 32 pages. It makes fairly strong attacks on the way the matter has been handled by the claimants. There are copious underlinings and no punches are pulled. The main purpose of that statement is to support the application for what is, I think, clearly accepted to be an unusual order, that is the condition requiring £350,000 to be paid into court. That is said to represent a conservative estimate of the costs which had been incurred so far.

Thus, there were two elements to the application: one was the question of security for costs; the other the question of conditions. Without having to go into the legal issues in any detail, it seems fairly clear to me that the case for security was a persuasive one, whereas the case for the condition was much more difficult.

I have been taken through subsequent correspondence between the parties. Mr Cogley for the defendants says that it shows the unreasonableness of the claimants. The defendants made clear, he says, that provided they got genuine security for costs, in the sense of an actual bank guarantee or better still an actual payment, then they would not be pursuing their conditions application. The high point of that suggestion comes in the letters of 13 and 14 July 2006.

On 17 July the solicitors for the claimant replied that now King Michael had in fact agreed to facilitate a bank loan of £100,000, which would enable a payment into court to be made so that a guarantee would no longer be needed. They added:

“With regard to the costs of your clients’ application, we invite your clients to agree to them being determined by the Court of Appeal, so as to avoid the need for a hearing later this month. The vast majority of the costs relate to your clients’ application for conditions that is ill founded. These will be very much greater than the costs of your clients’ application for security, which our client has not opposed.”

There were then further exchanges which I do not think I need to read, save to note that in a letter of 20 July the defendant’s solicitors said in relation to conditions:

“We reiterate, for the avoidance of any doubt whatsoever, that there will be no contested Hearing if you agree to what we say above at paras 1 and 2. We have offered, for pragmatic reasons, to drop the application for Conditions. That part of the Application will only proceed in the event that you do not agree to what we say at paras 1 and 2. That is the principal focus of the Application, and our correspondence, and it has always been.”

Paragraphs 1 and 2 were those dealing with the questions of security and costs of the application.

On 21 July the solicitors for the claimant replied. They said that the money was being sent via the Swift system from Romania and should arrive today or tomorrow. They continued:

“Until your clients withdraw their Conditions Application we must proceed with our preparations to contest it. In this regard your clients have the choice of either agreeing now to pay our client’s costs of and occasioned by the application (in which case our client will also invite your clients to agree to a substantial on account payment) or agreeing that the costs of the Conditions and Security Applications should be dealt with by the Court of Appeal at the hearing of the appeal. This latter course has the obvious benefit of avoiding the need for a hearing next week.”

On 24 July they followed that with a letter saying that the agreed sum of £100,000 had now been received and they were taking steps to pay it in. In the meantime on 21 July a third witness statement had been sworn by Prince Radu, responding to the allegations in Mr Pennal’s ninth statement, relating principally to, as I read it, the conditions application.

Before me Mr Cogley made clear he was not pursuing the conditions application. It is also clear that the security for costs issue has, in effect, been disposed of by agreement. The money has not yet been paid into court because permission has to be given by the court, which I can do today. So what we are left with is argument about costs. As to that, the position seems to me tolerably clear. Although I have been through the background correspondence, this court is not involved in a negotiating game. The court was faced with, in effect, two separate elements of application; one for security for costs and one for conditions. The conditions application is not being pursued and, in the normal course of events, that would result in the costs of that being paid by the person who made the application.

So far Mr Moloney has said that the appropriate order would be for me to give permission for payment in of the £100,000, that the claimant should pay the costs of the application for security but that the defendants should pay the costs of the application for conditions, both matters being subject to detailed assessment. Mr Moloney also suggests that since I cannot take any view at this stage of the respective balance of the costs, there should be no payment on account. But he says that the costs of today could have been avoided had his offer been accepted as made in the last letter that I have referred to and therefore he should have the costs of today.

I think that the approach proposed by Mr Moloney is an appropriate one, with one qualification. I think the offer he has made today, particularly in relation to the question of there being no payment on account, is not entirely the same in substance as the offer made previously. I accept that it is possible that today’s hearing might have been avoided but it seems to me that it would be appropriate for him to have half his costs of today’s hearing but not the whole of the costs.

To summarise: I will order leave to pay in £100,000; costs of the security application to be paid by the defendants to the claimant; costs of the conditions application to be paid by the defendants to the claimant, both to be subject to assessment if not agreed; no payment on account, but half the costs of today’s hearing to be paid by the defendants to the claimant.