Case Alert - [2018] EWHC 313 (Ch)

Security for costs and counterclaiming defendant

The defendant sought security for costs against the claimants. One of the issues in the case was that the defendant is counterclaiming (this was not a case where it was just happenstance who commenced litigation first – the claimants were the "prime movers"). Prior caselaw has confirmed that it is possible to make an order for security for costs against a defendant who is counterclaiming if the counterclaim has "an independent vitality of its own" and the defendant is doing more than simply defending himself.

In Chuku v Chuku, the judge refused to make the security for costs order, in part because if the order was made and the claimant failed to provide security, the claim would be struck out but the counterclaim would still fall to be fought out. The same problem was raised here, but Master Bowles said that the solution to this problem was that canvassed in Dumrul v SCB: The defendant must undertake to discontinue the counterclaim if the claimants' claims are dismissed arising from their failure to put up security.

Nor did the fact that the claim had been allowed to proceed at length before the application for security was made preclude the making of the order. This was not a case where the claimants had been lulled into believing security would not be sought and so had pursued the litigation, which they would not otherwise have done. It was held that "The only relevance, as I see it, of delay, loosely so described, in this case, is that, the court, in the exercise of its very broad discretion as to the quantum of any security, may take the view that where a defendant has taken substantial steps in the litigation without the protection of an order for security and then applies that, in those circumstances, security should not be retrospective but should only ordered in respect of costs yet to be incurred".