Citadel Management Inc v Hertzog

Security for costs may properly be ordered where an appellant ordinarily resides outside the jurisdiction and is not a person against whom a claim can be enforced under the Brussels or Lugano Convention. The amount must not be excessive. Substantial sums at stake, difficult issues and a possible longer hearing do not justify an excessive figure. Security of £50,000 was ordered instead of the £110,000 sought.

Citadel Management Inc applied for security for costs in an appeal brought by Johan Hertzog. Crane J had refused to set aside a default judgment exceeding £30 million. Hertzog, apparently resident in Miami Beach, had permission to appeal on one ground and sought permission on other matters, including a contempt finding. The respondent’s estimated appeal costs exceeded £108,000. The issue was whether security should be ordered and, if so, in what amount.

Lord Justice Robert Walker granted the application.

1. The application was made under rules 12, 13 and 15 of Rule 25 of the Civil Procedure Rules. It was a proper case for security because the appellant appeared to be ordinarily resident outside the jurisdiction and had taken no step to dispute that he was not a person against whom a claim could be enforced under either the Brussels Convention or the Lugano Convention.
2. The sum sought had to be assessed in a summary and restrained manner. Although the litigation involved sums exceeding £30 million and difficult points, £110,000 was excessive. It remained excessive even on the unlikely assumption that the appeal would occupy four days rather than half a day. Security was therefore fixed at £50,000.
3. Security was ordered to be provided within 28 days, with the appeal stayed meanwhile. If security was not provided, the appeal would be dismissed automatically without further order. If it was provided, the respondent was to serve its skeleton argument within 28 days, with liberty to the appellant to serve a reply within 21 days of receipt. The order recorded costs of £2,500 payable by the appellant to the respondent within 14 days.

• Court of Appeal (Civil Division): On the application in the appeal, security for costs was ordered in the sum of £50,000: [2001] EWCA Civ 157.
• High Court of Justice, Queen’s Bench Division: Crane J refused to set aside the default judgment and refused permission to appeal on certain additional matters.