Security for Costs in Applications for Leave to Appeal

Global Legal Solutions

Security for Costs in Applications 16 March 2015 for Leave to Appeal

In a recent judgment in Re BTU Power Company (In Official Liquidation)[(C.I.C.A. Cause No: 20 of 2014), unreported, Smellie CJ, 6 March 2015], the Chief Justice, sitting as a single judge of the Court of Appeal, has confirmed the Court’s jurisdiction to order security for costs in the context of a pending application for leave to appeal out of time.1

Background The proposed appellant, the former sole director of BTU Power Company (In Official Liquidation) (the Company“ ”), sought leave from the Court of Appeal to appeal out of time against every order made in the course of the Company’s winding-up proceedings on the basis of an alleged apparent lack of independence and/or alleged presence of apparent bias on the part of the supervising judge, Cresswell J (the “Leave Application”).

The Leave Application, and any substantive appeal on the merits which may be allowed to proceed, were listed to be heard sequentially before the full Court of Appeal in April 2015. Consequentially, the JOLs were required to incur substantive costs of preparing for a contested appeal hearing (regardless of whether or not the Leave Application was ultimately successful).

Given that the proposed appellant, a resident of the United States, was not resident within the jurisdiction and did not have any assets within the Cayman Islands with which to satisfy any future costs order, in order to safeguard the interests of the Company’s stakeholders, the JOLs sought security for costs in the amount of US$150,000.

Issues before the Court Section 19(2) of the Court of Appeal Law (2011 Revision) provides that upon issuing a notice of appeal an appellant may be ordered to provide security for costs.

Given that the proposed appellant’s Leave Application had yet to be determined by the Court of Appeal (and therefore no notice of appeal had technically been filed), the proposed appellant argued there was no extant appeal in respect of which an order for security for costs could be made pursuant to section 19(2) of the Court of Appeal Law. Put another way, it was said that the Court lacked the requisite jurisdiction to make an order for security for costs under section 19(2) in respect of an application for leave to appeal out of time.

1 Walkers acted, together with Leading Counsel, Francis Tregear QC of XXIV Old Buildings, for the Company’s liquidators, Michael Penner and Stuart Sybersma of Deloitte & Touche (the “JOLs”). Global Legal Solutions

In view of this apparent lacuna in the legislation, the Court went on to consider whether there were any alternative statutory provisions which conferred the necessary jurisdiction.

Sections 33 and 36 of the Court of Appeal Law In considering his jurisdiction to make an order for security for costs, the Chief Justice referred to Section 33 of the Court of Appeal Law which, relevantly, provides as follows:

“All the powers conferred by the [Court of Appeal Law], any other law or rules of the court on a single [Court of Appeal] Judge may, for all purposes be exercised by a single Judge of the Grand Court…”.

The Chief Justice was therefore satisfied that, in sitting as a single judge of the Court of Appeal, he was able to exercise such powers contemplated by section 33 of the Court of Appeal Law, whether conferred by the Court of Appeal Law itself or “other law or rules of court”.

The Chief Justice then considered whether, in the absence of any express power contained in the Court of Appeal Law, he had jurisdiction to make an order for security for costs in these circumstances.

It was held that the answer to this question could be found in section 36 of the Court of Appeal Law which provides:

“Where, in any case, no special provision is contained in this or any other law, or in rules of court, with reference thereto, any jurisdiction in relation to appeals in criminal or civil matters shall be exercised by the Court as nearly as may be in conformity with the law and practice for the time being observed in Jamaica, and where such law and practice has no application, then to the law and practice for the time being observed by the Court of Appeal having equivalent jurisdiction in England”.

Leading Counsel for the JOLs successfully argued that, in the event the Court considered there were no express provisions regarding the Court’s jurisdiction to order security for costs in respect of the Leave Application, a single judge of the Court of Appeal had, and could exercise, the same powers to award security for costs as were available to the Court of Appeal of Jamaica (or failing any such power in that Court, the Court of Appeal of England and Wales).

Notably, the rules relating to security for costs in Jamaica are significantly broader and more comprehensive than those applicable under the Cayman legislation. In particular, the Chief Justice considered rule 2.12(1) of the Jamaica Court of Appeal Rules which provides that:

” The Court may order – (a) an appellant; or (b) a respondent who files a counter notice asking the Court to vary or set aside an order of a lower court, to give security for costs of the appeal”

If there was any doubt that the above provision would cover an order for security for costs being given by an applicant for leave to appeal, the Chief Justice also referred to Rule 1.7 dealing with the Jamaican Court of Appeal’s general powers of management, which provides as follows:

“(3) When the court makes an order or gives a direction, it may (a) make it subject to conditions; and (b) specify the consequence of failure to comply with the order or condition; (4) The conditions which the court may impose include requiring – (a) a party to give security; … (c) the payment of money into court or as the court may direct”

The Chief Justice was satisfied that by exercising the enabling provision set out in section 36 of the Court of Appeal Law, he was able to exercise the express jurisdiction conferred on the Jamaican Court to make an order requiring the proposed appellant to provide security for the JOLs’ costs of contesting the Leave Application.2

Re Dyxnet Holdings Ltd The Chief Justice’s ruling also referred to the recent Court of Appeal decision in Re Dyxnet Holdings [(C.I.C.A. Cause No. 33 of 2013) unreported, Court of Appeal, 20 February 2015] as authority for the proposition that the Court of Appeal has a residual inherent power and jurisdiction to award security for costs in winding up proceedings.

Conclusion The decision in BTU Power provides useful clarification of the Court’s jurisdiction to award security for costs in circumstances where a proposed appellant has sought, but not yet obtained, leave to appeal.3 By invoking the power to refer to the laws and powers of the Jamaican Courts under Section 36 of the Court of Appeal Law, the Court was able to reach a decision which is consistent with established common law authorities and practice and provides the Company’s stakeholders with a degree of protection in circumstances where the JOLs have little choice but to incur significant costs in preparing for the Leave Application.

Contacts

For further information please speak with your usual contact at Walkers or one of the following:

Matthew Goucke Barnaby Gowrie Partner - Cayman Islands Partner - Cayman Islands T: +1 345 914 6332 T: +1 345 914 6365 E: [email protected] E: [email protected]

Neil Lupton Colette Wilkins Partner - Cayman Islands Partner - Cayman Islands T: +1 345 914 4286 T: +1 345 914 4215 E: [email protected] E: [email protected]

Fraser Hern Robert Foote Partner - Hong Kong Partner - Singapore T: +852 2596 3348 T: +65 6603 1695 E: [email protected] E: [email protected]

John O’Driscoll Senior Counsel - London T: +44 (0)20 7220 4987 E: john.o’[email protected]

2 It should be noted that the position in England is virtually identical to Jamaica due to very similar general provisions contained in the CPR. 3 It should be noted that the proposed appellant has stated an intention to appeal the Chief Justice’s decision.

Disclaimer The information contained in this advisory is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.