Court assesses amount of security of costs to be provided by a claimant

The defendants sought security for costs against the claimant, on the basis that she is an individual resident outside the EU/EEA (CPR r25.13(2)(a)). The Court of Appeal held that once, as here, it had been established that there are "substantial obstacles" sufficient to create a real risk of non-enforcement, the starting point is the defendant should get security for the entirety of its costs. The issue in this case was therefore how much security it would be fair and just to order.

The defendants accepted that it was unrealistic for them to be ordered 100% of their costs, but they sought 85-90%, on the basis that, if the claim failed, it was very likely that costs would be ordered to be assessed on the indemnity basis. The claimant argued that claims for security should be on the basis of 60% of the defendant's costs, because it was impermissible for the court to delve into the merits of the claim and consider whether indemnity costs would be ordered.

Teare J held that it was necessary to bear in mind the nature of the claimant's claims. Here, if the claims failed, it was more likely that that would be because her evidence was dishonest, and so it was a reasonable possibility that costs would be assessed on the indemnity basis: "Where there is no possibility of costs being assessed on an indemnity basis or where such possibility is no more than speculative the courts generally make orders for security for costs by reference to 60-70% of the incurred and expected costs. Cases noted by [the defendants' counsel] suggest a range of 60-75% but my experience suggests that 60-70% is more usual. It appears to me that where there is a reasonable possibility of indemnity costs the order should be made (at any rate in this case where very substantial costs are involved) by reference to about 75% of the incurred and expected costs".

When considering whether the order for security would stifle the claim, the court can also take into account amounts which the claimant can reasonably expect to receive from third parties and relatives or, as in this case, "business associates". It was concluded that the claim would not be stifled. Nor was this a case where a counterclaim would be pursued even if the claim was struck out (a factor which weighs in favour of a refusal or order security) – and, in any event, the parties were bound by an earlier decision by a judge who had held that the point did not arise on the facts of the case.