| COSTS — Security for costs — Foreign claimant — Defendants seeking security for costs — Claimant giving limited information as to means available — Whether court having discretion to set amount representing best estimate of what claimant could afford — CPR r 25.13
Al-Koronky and another v Time Life Entertainment Group Ltd and another
CA: Justice Sedley LJ, Keene LJ and Longmore LJ : 28 July 2006
A court deciding whether to make an order for security for costs which was faced with an insufficiently full and candid account of the resources available to the claimant had discretion to set an amount which represented its best estimate of what the claimant could afford.
The Court of Appeal held when dismissing the appeal of the claimants, Abdel Mahmoud Al-Koronky and Hanan Ibrahim Mohammed, who were resident in Sudan, against a decision of Eady J on 29 July 2005 [2005] EWHC 1688(QB), inter alia, to order them to put up £375,000 security for the costs of the defendants, Time Life Entertainment Group Ltd and Damien Lewis, in an action for libel.
SEDLEY LJ, giving the judgment of the court, said that the court must not order security in a sum which it knew the claimant could not afford: the principle of affordability. A claimant resident abroad who wanted to ensure that any security he was required to put up was within his means must be full and candid in setting out what his means were. The court still needed to scrutinise as much as it was told with a critical eye and to note any unexplained gaps in the information volunteered or in the documentary support for it. Once satisfied that the claimant ought to put up security the court would find itself in one of two situations. Either it would be satisfied that it probably had a full account of the resources available to the claimant in which case it could calculate with reasonable confidence how much the claimant could afford to put up; or it would not be satisfied and so could not make the calculation. It did not follow in the latter situation that the court must go straight to the amount sought by the defendant and, having pruned it of anything which appeared excessive or disproportionate, fix that as security. There was a middle way to set an amount which represented the court’s best estimate of what the claimant, despite having been insufficiently candid , could afford.
Such a power resided in the court’s discretion rather than in legal principle. Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms had a bearing on the issue by virtue of section 3(1) of the Human Rights Act 1998. The domestic obligation to read CPR r 25.13 conformably with the law of the Convention was met. A party’s entry into a conditional fee arrangement with his solicitor had by itself no impact on the case for or against making an order for security for costs. What might matter, however, was what insurance the claimant had obtained against the eventuality of having to pay the defendant’s costs. A claimant with satisfactory after-the- event insurance might be able to resist an order to put up security on the grounds that his insurance cover gave the defendant sufficient protection. The judge had been entitled to order security for costs and had set a suitable sum in the exercise of his discretion.
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