W Harold John (Metals) Ltd & Anor v Arthur Gait & Co (A Firm)

Where entitlement to security for costs of an appeal is established, the amount should reflect a realistic assessment of the reasonable costs and expenses likely to be incurred. This may include substantial preparation, the personal attendance of a solicitor familiar with the issues, and appropriate counsel’s fees. The assessment should recognise the scale and complexity of the appeal while avoiding obviously excessive work or unnecessary duplication of personnel.

The claim was a substantial accountants’ negligence action. After a 28-day trial, the High Court gave judgment for nearly £1 million, together with more than £600,000 interest. The claimants’ legal bill exceeded £800,000, and contributory negligence had been assessed at 25 per cent.

The defendants appealed. The claimants applied for security for the costs of the appeal. The defendants accepted that the court had jurisdiction to order security and that no special circumstances affected the exercise of discretion. The only issue before the Court of Appeal was the appropriate amount.

Lord Justice Brooke granted the application and ordered security for costs in the sum of £75,000.

1. The amount had to be assessed by reference to the reasonable costs and expenses expected to arise from the appeal, including solicitors’ preparation and attendance and counsel’s fees.
2. The proposed hourly rate was reasonable. Given the importance and complexity of the litigation, it was also reasonable for a partner familiar with the issues to attend counsel personally rather than delegate the work to a junior solicitor.
3. The appeal would require substantial professional work to assemble the large body of documents and evidence into a manageable form. Time spent on reconnaissance and preparation was not wasted, provided it was not obviously excessive.
4. The court nevertheless identified a risk of unnecessary duplication, described as triple-manning, in the proposed staffing and time estimates. The figures were therefore moderated.
5. The court allowed £1,350 for costs incurred to date, £5,000 for the solicitor’s attendance, travel and hearing expenses, £63,000 as a global sum for counsel’s fees, and £6,000 for preparation. The total was rounded down to £75,000.

The security was to be paid into court within 28 days, unless the parties agreed another effective mechanism. The appeal was stayed meanwhile. If security was not provided, the appeal would stand dismissed after a further seven days. The defendants were ordered to pay the claimants’ costs of the application.

• High Court, Queen’s Bench Division, Cardiff District Registry: After a 28-day trial, His Honour Judge Graham Jones, sitting as a Deputy High Court Judge, gave judgment for the claimants in a substantial accountants’ negligence action and found 25 per cent contributory negligence.
• Court of Appeal (Civil Division): The claimants’ application for security for the costs of the appeal was granted. Security was fixed at £75,000 and the appeal was stayed pending compliance.