Continental Baking Company Ltd v Super Plus Food Stores Ltd & Tikal Ltd

• Jurisdiction: Jamaica
• Court: Court of Appeal (Jamaica)
• Judge: Brooks JA
• Judgment Date: 17 September 2014
• Neutral Citation: JM 2014 CA 90
• Docket Number: APPEAL NO 29/2014 APPLICATION NO 133/2014
• Date: 17 September 2014

Between

Continental Baking Co Ltd

Applicant

and

Super Plus Food Stores Ltd

1st Respondent

and

Tikal Ltd

2nd Respondent

[2014] JMCA App 30

APPEAL NO 29/2014

APPLICATION NO 133/2014

JAMAICA

IN THE COURT OF APPEAL

SUPREME COURT CIVIL

JUDGMENTS - Judgment debt - Leave to appeal judgment sum - Whether sum awarded was in excess of debt - Whether order for security for costs appropriate

Mrs M Georgia Gibson-Henlin instructed by Henlin Gibson Henlin for the applicant

Nigel Jones and Miss Kashina Moore instructed by Nigel Jones and Co for the respondents

IN CHAMBERS

ORAL JUDGMENT

Brooks JA

1 Super Plus Food Stores Limited and Tikal Limited (together referred to herein as ‘the appellants’) are companies in financial trouble. They are suffering from massive debts owed to a number of creditors. Among their creditors is the applicant, Continental Baking Company Limited (Continental Baking). On 24 May 2013, E Brown J handed down a judgment against the appellants in favour of Continental Baking. The judgment, in the sums of $139,951,452.00, $16,774,552.00 and $33,093,241.00, was based on admissions made by the appellants.

2 In their appeal against the judgment, the appellants have complained that the sums awarded are in excess of the amount that Continental Baking had claimed against them. It is the appellants, however, that had admitted in their defence, to owing those sums to Continental Baking. This is although the claim had stipulated that $139,951,452.00 was owed to Continental Baking, $16,953,744.00 was owed to Rainforest Seafood Ltd (Rainforest) and $41,153,680.00 was owed to Copper Wood Limited (Copper Wood), all creditors of the appellants. These creditors are hereafter collectively referred to as the claimants. The claimants' separate claims were included in a single action against the appellants.

3 The explanation for the curiously rolled-up claim seems to lie in the fact that there were prior negotiations between the claimants and the appellants in which the sum due to each claimant was agreed and a method of settlement was proposed. They failed to agree on the method of ensuring the payment and, in the absence of payment, the claimants filed their claim in the Supreme Court.

4 Continental Baking views the appeal as denying it a judgment to which it is entitled and is alarmed that the appeal, by virtue of the costs which will be incurred, will only increase the sums due to it, which sums the appellants may be unable to pay. It has therefore applied for this court to order that the appellants give security for the costs of the appeal.

5 The appellants have resisted that application stating that even though they have financial difficulties there are a number of reasons for refusing the application, not least of them being that the appeal stands a good chance of success. Continental Baking has filed a counter-notice of appeal contending that this court has the jurisdiction to order the pleadings amended so as to accord with the judgment. It is confident, therefore, that the appeal and counter-notice of appeal will be resolved in its favour and that it should not be further out of pocket.

6 The question for this court is whether an order for security for costs should be made, bearing in mind the appellants' financial woes on the one hand, and a strong ground of appeal on the other. The general law with regard to applications for security for costs will first be examined before applying the relevant principles to the circumstances of this application.

The principles governing an application for security for costs

7 Rule 2.11(1)(a) of the Court of Appeal Rules (CAR) authorises a single judge of this court to make orders for the giving of security for the costs occasioned by an appeal. The grant of security for costs lies in the discretion of the judge. Rule 2.12(3) of the CAR, although intended as guidance to the court as to the exercise of that discretion, also assists a single judge of the court in the consideration of such applications. It states:

‘(3) In deciding whether to order a party to give security for the costs of the appeal, the court must consider –

• (a) the likely ability of that party to pay the costs of the appeal if ordered to do so ; and

• (b) whether in all the circumstances it is just to make the order.’ (Emphasis supplied)

8 Guidance may also be found in the unreported decisions of this court in the cases of Speedways Jamaica Ltd v Shell Company (WI) Ltd and Another SCCA No 66/2001 (delivered 20 December 2004), Cablemax Limited and Others v Logic One Limited SCCA No 91/2009 (Application No 203/2009 – delivered 21 January 2010), The Shell Company (WI) Ltd v Fun Snax Ltd and Another [2011] JMCA App 6 and Disciplinary Committee of the General Legal Counsel v Oswald James [2014] JMCA App 3.

9 The fact that an appellant is impecunious is important. It has serious implications for the respondent to the appeal. Section 388 of the Companies Act authorises the court to require an impecunious company to provide security for costs.

The section states:

‘388. Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given.’

The provision would also apply to an appellant.

10 In Speedways Jamaica Ltd v Shell Company (WI) Ltd and Another, P Harrison JA (as he then was) stated the approach of the appellate court in applications for security for costs where the appellant is said to be impecunious. He said at page 6 of the judgment of the court.

‘As a general rule an appellate court will grant an order for security for [sic] costs of an appeal in circumstances where an appellant is impecunious and it seems likely that if he fails in his appeal the respondent would experience considerable delay and would be put to unnecessary expense to recover his costs of the appeal. The court will exercise its discretion depending on all the circumstances of the case.’

Harrison JA also pointed out that it is necessary for the applicant for security for costs to clearly show that the appellant is impecunious.

11 The issues in relation to a company's ability to meet an order for the payment of the costs of an appeal were specifically considered in Cablemax Limited, where Morrison JA set out certain principles that assist in this analysis. He said at paragraph [14] of his judgment:

‘[14] In Keary Developments Ltd and Tarmac Construction Ltd and another [1995] 3 ALL ER 534, the principles governing the exercise of the jurisdiction to order security for costs against a plaintiff company under the equivalent provision of the UK Companies Act 1985 were reviewed and restated by Peter Gibson LJ (at pages 539 – 542). These principles, which are in my view equally applicable to an application made under rule 2.12 of the CAR, may be summarised as follows:

• (i) The court has a complete discretion whether to order security and accordingly it will act in the light of all the relevant circumstances.

• (ii) The possibility or probability that the party from whom security for costs is sought will be deterred from pursuing its appeal by an order for security is not without more a sufficient reason for not ordering security.

• (iii) In considering an application for security for costs, the court must carry out a balancing exercise. That is, it must weigh the possibility of injustice to the appellant if prevented from pursuing a proper appeal by an order for security against the possibility of injustice to the respondent if no security is ordered and the appeal ultimately fails and the respondent finds himself unable to recover from the appellant the costs which have been incurred by him in resisting the appeal.

• (iv) In considering all the circumstances, the court will have regard to the appellant's chances of success, though it is not required to go into the merits in detail unless it can be clearly demonstrated that there is a high degree of probability of success or failure.

• (v) Before the court refuses to order security on the ground that it would unduly stifle a valid appeal, it must be satisfied that, in all the circumstances, it is probable that the appeal would be stifled.

• (vi) In considering the amount of security that might be ordered the court will bear in mind that it can order any amount up to the full amount claimed, but it is not bound to order a substantial amount, provided that it should not be a simply nominal amount.

• (vii) The lateness of the application for security is a factor to be taken into account, but what weight is to be given to this factor will depend upon all the circumstances of the case.’

I respectfully adopt those principles as being applicable to this case.

12 The timing of an application for security for costs is referred to by Morrison JA in the quotation above. Where an application has been filed very late, it may be viewed as reflecting insincerity on the part of the applicant. In addition, it may also work injustice. In A Co v K Ltd [1987] 3 All ER 377, Sir John Donaldson MR...