The Supreme Court has ordered Superwood companies to provide security for the insurers’ legal costs before proceeding with an appeal arising from a fire at the companies’ premises in 1987.
The litigation began in 1989 after the plaintiffs sought compensation under insurance policies following the fire. Their claim was initially dismissed after a 116-day High Court hearing, but the Supreme Court reversed that decision in 1995 and ordered a retrial limited to damages.
That damages hearing lasted 281 days and generated about 41,000 pages of transcript. In April 2001, Mr Justice Smyth awarded Superwood Limited and Superwood Exports Limited £314,940.20, including interest to November 2000, but ordered that the award be reduced by sums already received under a settlement with another insurer. The plaintiffs appealed on 336 separate grounds.
The first three defendant insurers then sought security for the costs of defending that appeal under section 390 of the Companies Act 1963.
The Supreme Court found that the plaintiffs did not have sufficient available funds to meet the respondents’ likely costs if their appeal failed. The parties agreed that no more than £145,655.21 was then available to the plaintiffs, before accounting for the defendants’ High Court costs and a possible £100,000 solicitors’ claim. Even on what the court regarded as the most optimistic estimate, appeal costs were unlikely to be less than £250,000.
The court accepted that the plaintiffs had an arguable appeal on the amount of damages, but said that was not decisive. It noted that their damages claim had risen over time from £2 million to £92 million and had already generated exceptionally lengthy and expensive litigation.
The Supreme Court exercised its discretion to require security for costs. Further steps in the appeal were stayed until the plaintiffs provided security in a sum to be determined by the Master of the High Court.