The status of money in court as security for costs or supporting cross undertaking in damages

22 October 2018

In  a closely reasoned judgment that analyses the status of money paid into Court (1) RUSSELL CRUMPLER (2) SARAH BOWER (Joint Liquidators of PEAK HOTELS & RESORTS LTD in Liquidation) v CANDEY LTD (2018) [2018] EWCA Civ 2256 CA (Civ Div) (Patten LJ, Henderson LJ, Sir Colin Rimer)  the Court of Appeal affirmed that the payer of money into court by way of providing security for costs, or in support of a cross-undertaking in damages, retained its property in the money. However, such interest was subject to the security interest that the payment gave the other side in the litigation, and the ultimate payment out of the money was dependent on the making of a court order.

The Court of Appeal rejected the argument that in W.A. Sherratt Ltd v. John Bromley (Church Stretton) Ltd [1985] 1 QB 1038 the Court of Appeal (Oliver LJ) had held that they amounted to a holding that the payer of money into court thereupon disposes of his property interest in it. All that the Court was here saying was that upon making a payment into court the payer puts his money wholly out of his own control and exclusively into that of the court. That is enough to put the money beyond the reach of a trustee in bankruptcy, who will only be able to access it for the benefit of creditors if he can first obtain an order for its payment out. At the end of the litigation, and in light of its outcome, the court will exercise its discretion as to whom, and/or in what proportions, the money is to be paid out.

The Court of Appeal followed the reasoning and conclusions in Emmott v. Michael Wilson & Partners Ltd (No 3) [2017] EWCA Civ 367; [2017] 1 WLR 4330 that reflected a clear acceptance by the Court of Appeal that the payer of money into court by way of security for the other party’s costs retains the property in the money, although of course such interest is subject to the security interest that the payment in gives to the other party.

 

Philip Shepherd QC appeared for Mr Emmott instructed by Kerman & Co LLP

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