Following this judgment, it now seems likely that in certain cases it will be easier to get security for costs in England and Wales than in the Cayman Islands. To obtain an order for security of costs in both England and Wales and the Cayman Islands, the defendant has to satisfy the judge “that there is reason to believe” that if the defendant is successful in his defence the assets of the claimant will be insufficient to pay his costs.
Following SARPD, the English Court of Appeal has cast doubt over the well-established principle in the Cayman Islands that a court cannot draw inferences about a company’s ability to meet a costs order from its mere refusal to give information about itself. The claimant in SARPD, a BVI company, was only obliged to keep financial records sufficient to explain its financial position and these records were not publicly available. As a result the defendant was unable to produce any evidence about the claimant’s financial position.
The Judge at first instance refused to order security for costs on the basis that the company’s reticence in providing information was, inter alia, to protect its position in the settlement negotiations. The Court of Appeal overturned this decision and held that if a company is given every opportunity to show that it can pay a defendant’s costs and deliberately refuses to do so, there is every reason to believe that if and when it is required to pay a defendant’s costs, it will be unable to do so. This is in direct contrast to the current position in the Cayman Islands (as per BTU v Hayat) where the failure of a respondent to make disclosure of his means is, of itself, an insufficient ground on which to form a view that the respondent could not meet an order for costs.
It remains to be seen whether the decision in SARPD will be followed in the Cayman Islands. However this case will help ensure that companies incorporated in jurisdictions that do not require financial information to be publicly accessible, will enjoy no advantage over companies incorporated in England and Wales.