Jan 2018
BERMUDA
SUPREME COURT
APPLICATION FOR SECURITY FOR COSTS ON APPEAL – RULES OF THE COURT OF APPEAL – THE REGISTRAR’S SUMMONS UNDER RULE 2/7
Background
In July 2017 Capital Partners Securities Co. Ltd. (“CPS”), a Japanese securities company, filed an appeal against the Supreme Court’s decision in winding-up proceedings relating to Sturgeon Central Asia Balanced Fund Ltd (“the Fund”), a Bermuda exempted company. The Supreme Court refused to wind up the Fund and CPS sought to appeal. In December 2017 the Supreme Court Registrar heard arguments from CPS and the Fund with respect to the disputed issue of security for costs. The dispute centred on the appropriate sum in security and the correct principles of law in determining the quantum of security for cases on appeal from the Supreme Court.
Legal framework governing security for costs
Examining the law on security for costs on appeal, the Court noted that the legal framework governing security for costs on appeal differs from Order 23 of the Rules of the Supreme Court (“RSC”). RSC Order 23 states that the court may order the plaintiff to give security for the defendant’s costs only in certain circumstances. Order 2 of the Rules of the Court of Appeal requires the appellant to give security for a sum determined by the Registrar for the prosecution of the appeal and for the payment of any costs which the appellant is ordered to pay. The Court may require security for costs or for performance of the orders to be made on appeal in addition to the quantum decided.
Comparing the approach to an order for security between first instance and appeal cases, the Court found that in order to preserve the right of access to justice “a more lenient approach requires to be taken where the court is considering whether to make a security for costs order, or to order the payment of the other side’s costs, as a condition of proceeding at first instance”.
In examining the correct approach to deciding quantum for security for costs the Ruling cited the judgment in Allied Trust & Allied Development Partners Ltd -v- Attorney General and Minister of Affairs [2016] Bda LR 31:
“The Court has to balance the interest of not depriving a litigant of access to the Court on the one hand with that of leaving a winning litigant with an irrecoverable bill of costs on the other.”