Application for security for costs and the effect of an earlier payment into court
The defendants sought security for costs on the ground (inter alia) that there was reason to believe that the claimant company will be unable to pay the defendants’ costs if ordered to do so. One of the points raised by the claimant was that the court should take account of an amount of USD 10 million which it was about to pay into court. That amount was to stand as security for payment of any damages pursuant to the claimant’s cross-undertaking in damages (which it supplied whilst applying for injunctive relief from the court).
Henderson J said that that amount could not be treated as an asset of the claimant (so as to demonstrate the claimant’s ability to pay an eventual costs order): “ I am satisfied that the money standing in court cannot be regarded as an asset available to [the claimant] unless and until an application is made by [the claimant] for some or all of the money to be released to it, and the court accedes to the application. Mr Brisby QC submitted on behalf of [the claimant] that USD 10 million is now far in excess of any possible exposure of [the claimant] pursuant to the cross-undertakings, but the fact remains that no such application has yet been made”.
The judge therefore decided to order security. He rejected a further argument advanced by the claimant that the defendants already had more than adequate security for costs because of the USD 10 million paid into court. There had been no proviso to the original order that this amount could be used for anything other than payment of damages pursuant to the claimant’s cross-undertaking in damages.