Judge confirms the threshold test for security for costs applications

http://www.bailii.org/ew/cases/EWHC/Ch/2015/3197.html

Of issue in this case was the threshold test for a security for costs application based on the condition in CPR r25.13 that the claimant is resident outside of the jurisdiction and not resident in a contracting state under the Brussels/Lugano Convention or EC Regulation 1215/2012 (condition 2(a)). The defendant argued that the Master had applied too high a test in determining whether it would encounter potential difficulties or burdens of enforcement in the relevant state. The Master held that the court must be satisfied that the defendant would be "likely" to face such difficulties or burdens, whereas the defendant argued that it was a lower test – namely, whether there is a "real, as opposed to a fanciful, risk" of such difficulties or burdens.

The defendant sought to rely on the Court of Appeal decision of De Beer v Kanaar [2003]. However, Richards J has held that there was no discussion in that case of the correct test. Instead, reliance should be placed on the decision of Mance LJ in Nasser v United Bank of Kuwait [2001] which provides for a threshold test of likelihood.

Furthermore, the Master had not been wrong to take into account an undertaking proffered by the claimants to meet any costs order made against them within 14 days and/or not to oppose recognition of any order obtained. The Master was entitled to assess what weight should be given to such undertakings. Richards J also found that it was of "very little significance" that security was being sought for only a short period.