Mbasogo & Anor v Logo Ltd & Ors

LORD JUSTICE AULD: There are two cross-applications for security for costs before the court in respect of cross-appeals of the parties; on the one hand, the claimants/appellants, the President of the Republic of Equatorial Guinea and the Republic itself, and on the other, three of the six defendants/respondents, namely the first, second and fourth. The claim in the action arises out of what is alleged to have been an unsuccessful attempted coup d’etat by the respondents directed at the claimants in about March 2004. The claim, which is for damages, including exemplary damages and injunctive relief, is pleaded so as to rely on three putative causes of action: first, a conspiracy between the respondents by unlawful means; second, a tort of intentional infliction of harm by unlawful means, which the first appellant maintains sounds in damage for emotional distress short of physical or psychiatric harm; and third, assault on the first appellant.

Each of those claims, which on 21 September 2005 Davis J struck out as disclosing no cause of action, is likely to be the subject of considerable legal argument on the appellants’ appeal to this court from his order and on the respondents’ cross-appeal, with the permission of Dyson LJ and of mine today in respect of a further ground of appeal seeking to uphold Davis J’s orders on different and/or additional grounds. In particular, there is likely to be much dispute, in relation to the “unlawful means” conspiracy pleaded, on the question whether unlawfulness is enough or whether a necessary ingredient to the tort is that it should also be actionable against any of the respondents. There is also an important issue as to the existence of the tort of intentional infliction of harm by unlawful means, alleged by the appellants, and whether, if it does exist, it is actionable in respect of claims of emotional distress falling short of physical or psychiatric injury.

The damages claimed by the appellants are considerable, it is said for several million dollars, and the injunctive relief extensive. Both sides say that the various issues of law are of importance not just to the parties, but also of general public importance, concerning, as they do, alleged international terrorism and co-operation between nations. In those circumstances the respondents, who have estimated their costs of the appeal, set down for a four day hearing in early May, to be about £120,000, have sought security for them in the sum of £107,500 pursuant to CPR Rules 25(13)(2)(a) and (c) and 25(15)(1)(b). They rely on the fact that the appellants are outside the jurisdiction and in the case of the second appellant, under CPR 25(13)(2)(c), that there is reason to believe that it will be unable or unwilling to pay their costs if ordered to do so.

The appellants, in their turn, have sought security for costs against the respondents in respect of the cross-appeal pursuant to the same rules, but at a figure in the sum of £25,000. That is some £5,000 less than their estimate of their additional costs arising out of the cross-appeal, and they refer in support of its reasonableness to a similar sum at one stage claimed in error by the respondents in respect of the additional cost to them of their cross-appeal.

Before I continue with the manner in which the appellants and the respondents maintain their cross-applications for security, I should mention some other litigation between them arising out of the same matters. In early April 2004 the appellants obtained an ex parte order in the Royal Court of Guernsey directing a bank to disclose documents and information to enable them to pursue claims the same as, or similar to, those in these proceedings against the respondents in that jurisdiction. The Court of Appeal in Guernsey in April 2005 allowed the respondents to challenge that order. The matter then went to the Privy Council, which, on 27 February 2006, allowed the appellants’ appeal with costs, I think against the first and second respondents only. The costs were estimated by the appellants to be in the region of £280,000 excluding the costs in the Guernsey courts. However, the Privy Council stayed the enforcement of the costs order in proceedings before it, pending resolution by this court of the same or similar matters before it. The first, second and fourth respondents have sought to persuade the Privy Council, through correspondence with its registrar, to vary that order as to costs, either as to the substance of the order or as to the stay directed by the board. It appears, however, that the registrar, having consulted their lordships, has indicated that they are not minded to vary the order and that if the respondents seek to persist in their argument in support of such variation, they will have to do so by way of formal petition to the board. That is how the matter stands in relation to that matter at the moment.

In the circumstances, the appellants have offered the first, second and fourth respondents, by way of security for the main appeal, a sum of £105,000 – that is to say, just short of the £107,500 sought by those respondents. But the appellants have made that offer subject to the important condition that it should be effected by way of an undertaking by them, the appellants, to hold the sum of £105,000 to the account of the first, second and fourth respondents and to be set off against any sum up to that amount that the Privy Council may order the respondents to pay pursuant to its order as to costs, when presented with the figures and when the proceedings in this court have been resolved.

The first, second and fourth respondents’ initial response was to accept the appellants’ offer in principle, but subject to a condition of their own that, pending any agreement of, or an order in respect of, the appellants’ costs in their successful appeal to the Privy Council, the appellants should immediately provide security for the £105,000 sought. Their declared reason was that, pending any such resolution of the position as to costs in the Privy Council proceedings, they would be at risk in their costs of the appeal in this court. Mr Shah, on their behalf, has submitted today that the conditional offer made by the appellants amounted to no more that a personal undertaking by them to use any future monies accruing from the likely Privy Council award of costs, in respect of which there is likely to be a considerable delay. He added – and I do not think this is necessarily disputed – that the appellants would have no difficulty in providing the money.

Returning to the history of the matter, the appellants rejected that proposed counter-condition. They maintained, and they maintain through Mr McLinden on their behalf today, that the respondents are in no such interim risk given their, the appellants’, estimate of their recoverable costs in the Privy Council of about £280,000, a figure which they compared with the respondents’ estimate of their costs in the Privy Council of over £225,000 (albeit including the Guernsey proceedings). Thus, Mr McLinden submitted, as had been maintained by his instructing solicitors in the correspondence, that the Privy Council costs, whenever assessed, are likely to be well in excess of any costs recoverable by the first, second and fourth respondents if successful in the proceedings before this court. He submitted also that there is no risk to those respondents in dealing with the matter in the way proposed by the appellants because, if this court made an order today in the terms of the proffered undertaking, the respondents would be protected immediately.

More particularly, Mr McLinden submitted that the respondents’ position would be protected because, as he put it, the money would be within their control, funded – as it would be – by the order of costs against it in the Privy Council when that becomes payable. He added that that was how this court should approach the matter; that is, by reference to the extant order of the Privy Council, whatever expectations the first, second and fourth respondents may have in persuading the Privy Council in some way to vary that order, should they seek to do so by way of formal petition. Secondly, Mr McLinden submitted that the Privy Council made its order as to costs notwithstanding the Board’s knowledge of the issues pending before this court. Thirdly, he pointed out that, failing an order for an undertaking of the sort proffered by the appellants, they would have no security against the first, second and fourth respondents’ not honouring the Privy Council order for costs when finally given effect.

In addition the appellants seek, as I have said, security in the sum of £25,000 towards their costs of the cross-appeal. Mr McLinden pointed out that that figure of £25,000 was similar to those estimated by the first, second and fourth respondents for their costs in respect of the cross-appeal. Secondly, he emphasised that such security was vital because the cross-appeal was vital to the outcome of the whole claim; that is to say, it included the aspects of relief that Davis J did not strike out. Thirdly, on the merits of the matter and the requirements of the CPR to which I have referred, he said this not only met the criterion of non-residence by individuals or corporations outside the country under 25(13)(2)(a), but also that in sub-paragraph (2)(c) where there is “reason to believe that [they] would be unable to pay the [appellants’] costs if ordered to do so”.

None of the parties to these proceedings is resident in the United Kingdom. Whilst there is no doubt reason to believe that the first appellant, the President of the Republic of Equatorial Guinea, and the Republic itself, the second appellant, are of substantial means and good for any order for costs that might be made against them in these proceedings, that cannot be said about the companies and individuals comprising the respondents. Importantly, with the requirements of CRP 25(13)(2)(c) in mind, none of the respondents – notwithstanding the history of this matter and much rattle of accoutrements before the battle over the issues of costs and the need for security – has sought to put forward any information as to his or its means.

In my view, the observations of Mance LJ, as he then was, at paragraphs 11 and 13 of his judgment in Marine Blast Limited v Targe Towing Limited [2003] EWCA Civ 1940, and of Buxton LJ, at paragraph 6 in Phillips v Eversheds [2002] EWCA Civ 486, are relevant to the approach of the court in considering whether there is reason to believe that the party against whom security is sought will be unable to pay the other party’s costs if and when ordered to do so. It is an approach that falls below the level of balance of probability, as Mance LJ pointed out. And, where it arises as a result of the party against whom the order is sought either providing unsatisfactory financial information as to his or its affairs, or as in this case none at all, it is not a big step for the court to take to conclude that there is reason for such belief. As Buxton LJ put it in paragraph 6 of his judgment in Phillips v Eversheds there is, at the very least, significant danger in this case of one or more of the respondents not being able to meet any order for costs made against them when the time comes.

In the case of the appellants, the means that they may have at their disposal may not be readily translatable here into enforcement of any order for costs that may be made against them. In my view, for the reasons advanced by Mr Shah and seemingly conceded by the appellants, it would be fair and just to provide the first, second and fourth respondents with security for their costs of the appeal in some form. However, given the extant order of the Privy Council against the respondents in respect of the costs in those proceedings, I consider that it would be just to require the appellants to provide such security in the form of the undertaking proffered by them. There is at present no basis on which I could second-guess the durability of the order of the Privy Council if the respondents were to petition the board with a view to securing a variation of that order in some form.

The position at present is that the Privy Council has ordered the respondents to pay those costs. For the purposes of this application, I am satisfied that the likelihood is, when the time comes, that an order would be made in excess of £200,000, more than twice the amount the respondents reasonably claim to be a sum close to their own costs in the appeal. Unless the respondents honour the Privy Council’s order, which will flow from its judgment unless persuaded to the contrary on a petition by the respondents, there will be no sum against which, if they are minded not to honour that order, to protect the appellants in the associated and inter-related litigation before the Privy Council – an inter-relationship acknowledged by the Privy Council, it seems to me, in paragraph 28 of its judgment.

Accordingly I am minded either to grant the first, second and fourth respondent’s application for security on condition of them providing an undertaking in the form set out in the appellants’ solicitors’ letter of 30 March 2006.

As to the appellants’ application for security as to £25,000 in respect of their anticipated costs in the cross-appeal, I would grant it for the reasons given by Mr McLinden which I have rehearsed. In short, I consider that it would be just to make such an order in respect of these respondents, who are out of the country and none of whom, as I have said, has provided any information as to his means. Secondly, this sum seems to me to be a reasonable amount, not least having regard to its similarity to the sum estimated by the first, second and fourth respondents in respect of their costs of the cross-appeal. Accordingly I would so order, subject to any submissions counsel may wish to make as to the precise form of order in relation to the respondents’ security for costs.