In the recent judgment of Coral Reef Ltd v (1) Silverbond Enterprises Ltd (2) Eiroholdings Invest (2016), held before a Master sitting in the High Court, an interesting point regarding the doctrine of precedent has highlighted how care must be taken when using legal precedents as the basis for tactical decisions in litigation.[i]
We reported in editions 110 and 132 of BC Disease News, on a High Court decision on a security for costs application, Sarpd Oil International Ltd v Addax Energy SA & Anor [2016] EWCA Civ 120. The judge in that case decided that a claimant company registered in the BVI should not have a refusal to provide information about its assets held against it when fighting a defendant’s application for security for costs. The Court of Appeal recently overturned that decision, holding that it was perfectly sound practice for security for costs to be granted against a foreign company which declines to reveal anything about its financial position. Coral Reef was a case concerned with similar facts and heard only a day after the Court of Appeal decision was made public.
The claimant in Coral Reef was a company based in Hong Kong in a dispute over ownership of a London casino business. The claimant refused to volunteer information about its assets in the face of the defendant’s request for security for costs, so the defendant applied to court. The claimant then attempted to rely on the decision of the High Court in Sarpd Oil on the basis that its refusal to volunteer information about its assets was made before the Court of Appeal decision and so they could expect any master hearing the application by the defendant to have been bound by precedent i.e. to have found that its refusal should not be held against it when fighting a defendant’s application for security for costs.
The Master faced the following question: would he have been bound by legal precedent to follow the High Court Judge in the Sarpd Oil case if the application had come before him prior to the release of the subsequent Court of Appeal decision?
It was held that:
‘With regard to the doctrine of precedent, a Supreme Court decision had to be followed by the Court of Appeal and a Court of Appeal decision had to be followed by courts of first instant. The High Court should follow previous decisions of other High Court judges unless convinced that they were wrong. High Court decisions were binding on the county court. County court decisions did not bind other county court judges by precedent. The relationship between the High Court and the county court was that of superior court and inferior court and the decisions of the former, whether made on appeal or at first instance, were binding on the latter. It was true that masters' judgments were sometimes cited, especially when the master was a specialist. However, it was the nature of the doctrine of precedent that clear guidance was needed on what was binding and there was no routine reporting of masters' decisions. The fact that the High Court and a master sat in the same court was not determinative as to whether the doctrine of precedent applied between them. The CPR also emphasised the relationship between a High Court judge and a master: CPR PD 52A para.4.3 dealt with appeals within the High Court from a master to "a High Court judge". CPR PD 52B made provisions as to appeals within the High Court from a master to "a judge of the High Court". That did not mean that the status of the judge determined the operation of the doctrine; what mattered was the judicial function, not the particular office. A High Court master's decision was binding on the county court as a matter of precedent. The decision of a High Court judge was binding on a master’.
The decisive factor for the Master, in the absence of any precedent on the specific point, was that the status of the court, rather than the judge, was what was important. In contrast with a county court judge being absolutely bound by a High Court decision, or an appeal court considering the decision of a lower court, a master exercising jurisdiction at first instance at High Court level has co-ordinate jurisdiction with a High Court judge hearing a case at the same level. Each should follow the other’s previous decisions unless convinced that they are wrong.
As such it should be borne in mind that Masters sitting in the High Court may depart from the decisions of High Court judges when decided at the same level. Especially, as in this case they are safe in the knowledge that the Court of Appeal would support them.
As such, the appeal of the claimant was dismissed.
[i] Accessed via Lawtel.