Court considers security for costs application

http://www.bailii.org/ew/cases/EWHC/Comm/2015/996.html

In the opening paragraphs of his judgment, Walker J set out some "suggested universal guiding principles" for practitioners. In particular, correspondence/advocacy should be conducted "in a way which will lower the temperature rather than raise it": "it is perfectly possible to be vigorous without being insulting". The parties should work together to agree a timetable and notification should be given if a party will not rely on a point which it might otherwise take.

This case involved an application for security for costs against the claimant. The ground relied upon was ground (c) of CPR r25.13 ie the claimant is a company (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so. The judge referred to the factors listed by Lord Denning in Sir Lindsay Parkinson v Triplan [1973] in deciding whether to exercise his discretion to order security once it has been established that there is an inability to pay. However, the claimant sought to rely on an additional factor – namely, that the claimant's shareholders and creditors would be prejudiced "if money which could otherwise be put to good use by the claimants is not available because it is held by the court as security". Unsurprisingly, that argument was rejected by the court. It was held that shareholders' and creditors' interests should stand or fall according to the court's conclusion as to the justice of the application, and they cannot expect any special treatment.

A further argument raised in this case was the application of the European Convention on Human Rights to ground (a) of CPR r25.13 ie the claimant is resident outside of the EEA. Walker J agreed that on its face, the residence pre-condition discriminates against claimants who reside outside the European legal market. However, Walker J summarised the position as follows: "In order to comply with the non-discrimination provisions in Article 14 as regards access to justice under Article 6, the grant of security when the residence pre-condition has been satisfied should not be either automatic or inflexible. Instead the court should consider whether residence out of the jurisdiction gives a basis for concluding that enforcement would face any substantial obstacle or extra burden meriting the protection of an order for security for costs and thus justifying the difference in treatment. Moreover, the court should consider tailoring the order to the particular circumstances: if there is likely to be no difficulty about enforcement, but simply an extra burden in the form of costs or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden".