clr/1984/1984_1_345.pdf

(1984)judicially; that having regard to the nature of thecounterclaim and the issues raised therein the application for security for costs is properly founded; and that accordingly an order for security for costs must be made. Application granted.. 5 Cases referred to: Esta ShippingCo. Ltd. v. Laskos

(1976)I C.L.R. 22; Neck v. Taylor [18931 I Q.B.D. 560: Almana Engineering v. GlyfosCommercial

(1981)1C.L.R. 273; Breidiand Another v. Ship "Gloriana"

(1981)I C.L.R. 177. 10 Application. Application for an order directing the defendants to give security for the plaintiffs' costs in defending the counterclaim. M. Montanios with R. lordanous(Miss), for the applicants. Λ'. Kanias for C. Erotokritou, for the respondents. 15 PIKIS J. gave the following judgment. The plaintiffs, a company with its seat at Paris, sued the Ship "Sofia", then lying at the port of Limassol, iaising a claim for US $15,000.-, plus interest, allegedly due by a contiactual undertaking that preceded the release of theship at Bordeaux, France, then under 20 arrest in the context of proceedings between the parties. By virtue of an order of the Court dated 24.2.1983, made on the application of the plaintiffs, the boat was arrested as security for the satisfaction of plaintiffs' claim. A bank guarantee furnished by defendants substituted the security forfeited by 25 the release of the boat. The defendants resisted the claim as founded upon an agree­ ment liable to be set aside, on account of misrepresentations made on behalf of plaintiffs. They joined a counterclaim asking not only for the discharge of the agreement founding 30 plaintiffs' claim, but also for the return of an amount of US $ 25,000.- paid for the release of the boat at Bordeaux and, damages for its wrongful detention thereat, estimated at US $ 50,000.346 1 C I .R. Grainiere v. Ship "Sofia' Pikii., J . Presently, we are required to resolve an application made by the plaintiffs for security foi the costs they are likely to incur indefending the counterclaim; legally, theapplication is founded on Ord. 185 of the Cyprus Admiralty Jurisdiction Order, 1893 5 and, factually, upon the undisputed fact that counterclaimants are resident abroad. The defendants' opposition to the application primarily rests, as it may be gathered from the affidavit in support thereof, on the sufficiency of the security given to cover the costs of the defendants in the proceedings. Inasmuch 10 as the claim of the plaintiffs on its face value is worth about 0:8,300.-, that is, the equivalent of US $15,000-, the balance amounting to about C£l,700.- may legitimately be applied for the satisfaction of the claim of plaintiffs for costs in the proceedings, including costs incurred in defending their countcr15 claim. In argument, counsel submitted that the claim for security for costs should, in any event, be dismissed because of the association of the counteiclaim with the defence and the improbability of plaintiffs incurring additional costs for the defence of the counterclaim. Counsel referred me to the deci20 sion of the Court in Esta ShippingCompanyLimited v. Nikiforos A. M. Laskos

(1976)1C.L.R. 22, deciding that the Court may withhold security whenever the counterclaim is but a reflection of another aspect of the defence. In so holding, Malachtos, J. derived support from the English decision in Neck v. Taylor 25 [1983J 1 Q.B.D. 560. This contention was disputed by the plaintiffs who pointed out with a degree of justification, it must be said, that on its face the counteiclaim goes far beyond the range of the defence. It raises new substantial issues likely to lesult in plaintiffs incurring litigation costs, additional to 30 those necessary for the proof of their case. By the express provisions of Ord. 185, the Court is empowered to make an order for security for costs at the instance of a plaintiff defending a counterclaim. In fact, it makes no distinction between a defendant defending an action and one defending a counter35 claim. The power to order security is not absolute but discretionary. The discretion is exercised judicially. The principal object of the discretion is to empower the Court to protect a defendant from the risks inherent in defending an action by a foreign plaintiff, arising from apparent inability to 40 enforce an order for costs. In Almana Engineering v. Glyfos Commercial

(1981)1 C.L.R. 273, Savvides, J. concluded, on a review of Cyprus and English caselaw, that the normal practice 347 Pikis J Graimere v. Ship "Sofia"

(1984)is to make an order for security for costs whenever the plaintiff is a foreign resident The rule is not inflexible and, like every case involving the exercise of discretionary powers, it must be fastened to the facts of the case Thus, in Esta Shipping Co. Ltd., supra Malachtos, J. declined correctly, if I can say so 5 with respect, to order security at the instance of a plaintiff defending a counterclaim because the counterclaim was so interwoven with the defence as to make it unlikely for the plaintiff to incur, for the defence of the counterclaim, any expenses additional to those he would normally incur to piove his claim 10 Another case, I must notice in determining this application. isthat of Bietdi AndAnothet v. Skip "Glortana"

(1981)I C.L.R 177 a decision of Demetnades, J , on the subject of security for costs. The essence of the decision, as I comprehend it. is that security given for the icleasc of a boat cannot be applied 15 for any purposes other than those foi which it i& expressly given, in this case for theclaimof plaintiffs andcostsfor proving their claim. Thus, the submission that any part of the security may be applied towards the costs plaintiffs may bear in defending the counterclaim, cannot be sustained 20 At this stage of the proceedings, 1cannot pause to evaluate the merits of the counterclaim or the defence thereto, except perhaps in the most clear of cases. This question is canvassed at length in the decision of Sawides, J., in Almana Engineering, supra Having due regard to the nature of the counterclaim 25 and the issues laised Iherein, as well as the principles referred to above, I consider the application properly founded. An order for security for costs must be made. In adjudging the amount to be ordered, in the case of a counterclaim, it is proper to have regard to the nexus between defence and counter- 30 claim in order to make a prima facie estimate of the costs plaintiffs will be likely to incur additionally to the costs necessary for the prosecution of their claim. Having given the matter due consideration, including the allegations made in the affidavit sworn to in support of the 35 application, I consider an amount of C£l,250.- as sufficient. Therefore, I make an order in the following terms: Defendants are required to lodge in Court within forty days an amount of C£1,250- as security for the costs of plaintiffs 348 I C.I..W. (irainieir \. Ship "Sofia" Pikis .1. in defending the counterclaim. Pending the lodgment of security, the counterclaim will be stayed. In case of failure 10 file security as directed, the counterclaim will stand dismissed The costs of this iipplicalioiv will be costs in cause but. in any event, not against the plaintiffs. Order according!). Order (Hci')\lin\ir-. 349