Glencore International AG v Metro Trading International Inc & Ors

Under CPR 25.13(2)(c), the court first considers whether there is reason to believe that the party against whom security is sought cannot pay the applicant’s costs. If that condition is met, the court must decide whether security is just in all the circumstances. A company’s inability to fund representation, and the absence of legal aid for companies, do not by themselves make an order unjust. Nor need assets held by receivers be treated as a practical source of recovery where the applicant claims a proprietary interest and competing claims exceed their value. The amount ordered should reflect any overlap between apparently discrete appeal issues.

Glencore applied for security for the costs of resisting Metro Trading International Inc’s cross-appeal. The application was unopposed. MTI was hopelessly insolvent, its previous litigation funding had ended, and its solicitors had come off the record.

The cross-appeal arose from judgments of Mr Justice Moore-Bick in the High Court’s Commercial Court concerning competing proprietary claims to oil stored off Fujairah. The central questions were whether the statutory condition for security was satisfied, whether it was just to order security despite MTI’s lack of representation and alleged access to assets held by receivers, and what sum should be ordered.

1. Statutory condition. Lord Justice Tuckey held that the condition in CPR 25.13(2)(c) was satisfied. MTI was hopelessly insolvent, its costs funding had ceased, and there was reason to believe that it could not pay Glencore’s costs if ordered to do so.
2. Justice of the order. The absence of legal aid for companies and MTI’s inability to fund counsel did not make the order unjust. MTI had received a fair trial, and Glencore should not bear the risk of being unable to recover its costs if the cross-appeal failed.
3. Receiver-held assets. No application had been made to the receivers for funding. In any event, Glencore asserted a proprietary interest in the assets, and claims against them greatly exceeded their value. Enforcement of a costs order against those assets would therefore provide little practical recovery.
4. Amount and consequence. Although the co-mingling and blending issues were discrete, there was unavoidable overlap in the work required. Glencore’s estimate was therefore reduced, and security of £80,000 was ordered by 4.00pm on 30 August 2002. If security was not provided, MTI’s cross-appeal was to stand dismissed with costs without further order.

1. Court of Appeal (Civil Division). On 31 July 2002, the court granted Glencore’s unopposed application for security for the costs of MTI’s cross-appeal: [2002] EWCA Civ 1252.
2. High Court of Justice, Queen’s Bench Division, Commercial Court. Mr Justice Moore-Bick delivered the judgments from which Glencore’s appeal and MTI’s cross-appeal arose. No citation for those judgments was stated.