Security for costs application where earlier application was dropped/co-claimant's assets

The defendant applied for security for costs against the company claimant. It was undisputed that the claimant would be unable to meet the defendant's costs, if ordered to do so, and so CPR r 25.13(c) was satisfied. However, two defences were advanced by the claimant:

(1) This was the second time the application had been made, the first application having been withdrawn by the defendant, and so it was an abuse of process to pursue the application again.

Nugee HHJ acknowledged that prior authority on the abuse of process point was conflicting: some authorities have held that a material change of circumstances is needed, whereas others have held that the rule is not so strict for interlocutory matters and it should not matter if conclusive evidence had been available at the time of the first application. The judge found that he did not need to resolve this issue because, on the facts, the relevant material had not been available to the defendant at the time of the first application, because misleading information had been supplied by the claimant.

The judge did, however, also find that a reservation of rights given by the defendant at the time of the first application had not in itself entitled the defendant to bring the second application without showing good reason to do so. The earlier application had been withdrawn, rather than adjourned, and "Once however the application has been argued and a decision made, that is usually intended to govern the position until trial absent a sufficient change of circumstances".

(2) The claimant also argued that if the claim failed, the defendant would be able to obtain a costs order against the co-claimant, the owner of the claimant (as the co-claimant is an individual, CPR r25.13(c) did not apply and security could not be ordered against him).

Prior authority has established that if the co-claimant could be shown both to be liable for the same costs and a "good mark" for those costs, that is capable of being a good reason not to order security.

The judge did not accept that this was a reason not to grant security against the claimant here. There was considerable uncertainty as to the current value of the co-claimant's interest in certain property and, in any event, it would take some time to realise that asset. It is established that when deciding if CPR r25.13(c) applies, the relevant question is whether the claimant would be able to pay the defendant's costs within, usually, 14 or 28 days of the costs order: "A company that has illiquid assets and could pay in the end but is unable to pay with any high degree of promptness is within the wording of the rule … The same must apply if the question is whether a co-claimant is a good mark, as the principle is that security need not be ordered against a company that is unable to pay if someone else will".

Accordingly, the claimant's defences failed and a security for costs order was made.