The defendants applies for security for costs on the grounds that the claimant is resident outside the EEA and will be unable to pay the defendants' costs, if so ordered. A key issue was that the claimant, which is resident in Hong Kong, had (lawfully) failed to file any financial information. In the recent Court of Appeal decision of Sarpd Oil v Addax (see Weekly Update 10/16), which reversed an earlier decision by Smith J (see Weekly Update 31/15), it was 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, in our view, every reason to believe that, if and when it is required to pay a defendant's costs, it will be unable to do so".
Unfortunately for the claimant in this case, the Court of Appeal's ruling came out on the day of its hearing before Master Matthews. It sought to argue that it had relied on the earlier decision by Smith J, but the Master said that argument had "a strong air of unreality": other judges have reached different conclusions on the same issue and there would have been a doubt as to whether the decision would be followed. The Master pointed out that "the claimant was taking an obvious and significant risk in refusing to provide any information".
The Master acknowledged that the claimant could realistically have expected the application to be heard by a Master in the Chancery Division, and the claimant argued that a Master is bound by the decision of a High Court Judge. There is little prior caselaw on this point, but, having reviewed the available materials, the Master concluded that a Master exercising the jurisdiction of the High Court is bound by relevant decisions of the Court of Appeal and Supreme Court, but is not bound by a relevant decision of a High Court judge. He went on to conclude that Smith J had been wrong on the issue in this case. He found that there was reason to believe that the claimant would not pay a costs order in favour of the defendant, and so ordered security for costs.