15 May 2017Print This Post

Judge accepts “material change” argument in increasing security for costs

Security for costs: balance of prejudice

The High Court has agreed to order a claimant to pay additional security for costs, even though the ‘material change’ in circumstances behind the defendant’s application were known to the judge who made the original order.

Mr Robin Dicker QC, sitting as a deputy High Court judge, said it would be “unsatisfactory” if a defendant was unable to apply for any further security “merely because a potential event had been one which it was apparent might occur”.

The case concerns a dispute over the sale of a company. Last year, the defendants sought £3m in security for costs for estimated costs of £4m. Mrs Justice Carr ordered the claimants to provide security of £1.2m, having taken account of £1.8m potentially available under after-the-event insurance.

In the current case, Vald Nielsen Holding A/S & Anor v Baldorino & Ors [2017] EWHC 1033 (Comm), the defendants sought additional security of £885,000 in the light of the claimants obtaining permission to serve re-amended particulars of claim and the trial being delayed by a year; it is set to be heard next March, with an estimate of 20-24 days.

The claimants opposed the application, contending that there had been no material change in circumstances – required to order additional security – as both the factors were taken into account by Carr J.

Mr Dicker accepted that these were “plainly envisaged” when the original application for security was heard and that the figure Carr J awarded was based on all the circumstances, including “the likely future progress of the litigation”.

However, he continued: “It does not, in my view, indicate that she was intending to provide an award of security which would necessarily cover the defendants’ entire costs to trial in the event that permission to re-amend was granted and the trial was adjourned.

“[This is] not least because, whilst those may have been likely developments, it was not, at that stage, clear that they would occur and, more importantly, even if they did, no estimate had been provided to her which would have enabled her to make a reasonable assessment of the defendants’ entire future costs to trial in that event and the defendants were not seeking security to cover such matters at this stage.”

Mr Dicker said that while all applications for security in respect of future costs were likely to require “some element of prediction as to the future”, it would be “unsatisfactory” if a defendant was unable to apply for any further security merely because a potential event had been one which it was apparent might occur.

The decision that there had been a material change was, he said, supported by the fact that an award of security was designed to take into account the ‘balance of prejudice’ and “by the fact that the claimants have not said that the claim would be stifled if additional security was ordered to be provided”.

However, the judge accepted the claimants’ submission that a substantial part of the costs sought by the defendants were, for various reasons, not justified, and ordered additional security of £200,000.

By Neil Rose


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