Aoun v Bahri & Anor

Security for costs must give the opposing party practical protection, not merely represent an asset with a possible value. Alternative security is permissible, but it must be enforceable in a simple and straightforward way. Security based on bearer shares may be inadequate where ownership, marketability, valuation or enforcement is uncertain. The standard is not reduced merely because security is ordered pending an appeal. Failure to provide satisfactory security within the time specified by an unless order may result in dismissal of the appeal.

The claimant appealed an order of Moore-Bick J requiring substantial security for the defendants’ costs. The Court of Appeal later made an unless order requiring security for the respondents’ costs of the appeal in the form of a first-class bank guarantee or other reasonably satisfactory security.

Instead of providing a bank guarantee, the claimant deposited with solicitors a bearer share certificate representing 10 per cent of the capital of Apex General Trading SA. He asserted that the shares were valuable. One respondent alleged that the shares had been stolen, and the related Greek criminal investigation remained ongoing. The central issue was whether the deposited certificate constituted reasonably satisfactory security under the unless order.

1. Appeal dismissed. The tendered share certificate was not reasonably satisfactory security, and the appellant had failed to comply with the unless order.
2. Security for costs is ordinarily provided by payment into court, solicitors’ undertakings or a first-class bank guarantee. Other forms are permissible, but they must be sufficiently certain and enforceable to give the respondent real protection if the appeal succeeds.
3. The relevant quality is practical realisability. The court assumed, without deciding, that Apex had substantial value, but the certificate raised uncertainty about ownership, the absence of evidence of a market, uncertainty about the value of a minority holding, possible need to wind up the company, and difficulty in enforcing one certificate for two respondents with separate interests.
4. The respondents could not be compelled to accept the share certificate merely because they allegedly controlled Apex, possessed information about its assets, or had not disproved the asserted value. Security on appeal should not be less stringent than security ordered at first instance.
5. The approach was consistent with AP (UK) v West Midlands Fire and Civil Defence Authority [2001] EWCA Civ 1917.
6. The appeal was dismissed forthwith with costs. The security tendered was declared not reasonably satisfactory, and the solicitors were released from specified undertakings.

• Court of Appeal (Civil Division): Moore-Bick J had ordered the claimant to provide substantial security for the defendants’ costs. The Court of Appeal made an unless order requiring security for the costs of the appeal, then dismissed the appeal when the claimant deposited a share certificate instead of providing reasonably satisfactory security.