Gordon v Gordon & Ors

Applications for security for costs should be made in good time. The relevant question is whether the appellant will be unable to meet an order for costs when it is made. Where a company is funded or controlled by persons standing behind it, it may be just to require them, indirectly through the company, to provide security if they wish the litigation to continue. Delay remains relevant to the exercise of discretion. A late application may justify a reduced order, even where the security threshold is satisfied.

Caversham Trustees Limited applied for security for costs against Oakham Securities Limited in a pending appeal. The appeal arose from an order made in the High Court, Family Division, on 4 February 2002, with permission subsequently granted by Lord Justice Thorpe. Caversham sought £35,000, including £10,000 for the appeal. Oakham challenged the application, particularly its lateness and the inclusion of trial costs.

The central issues were whether Oakham would be unable to meet an adverse costs order when made, whether it was just to require security having regard to those funding or standing behind the company, and what order was appropriate given the delay.

1. Application allowed. Oakham was ordered to provide security for costs in the modest sum of £2,500 by 16.30 on the Friday of the same week. If security was not provided, the appeal would be stayed. The reasonable costs of providing the security were to be treated as costs of the appeal.
2. The test was whether the appellant will be unable to meet an order for costs when that order is made. The court was satisfied that Oakham met that test because arrangements would have to be made before it could meet any adverse order.
3. It was less clear whether Oakham would probably be unable to make those arrangements. That uncertainty was aggravated by the lateness of the application. Applications made late create difficulty in resolving the appellant’s ability to provide security and in determining the appropriate order.
4. It could be just to require those behind a company to put it in funds where they wish the company to continue litigation but are unwilling to fund a potential liability to the opposing party. Lord Justice Clarke treated the observation of Sir Donald Nicholls V-C in Re Unisoft Group Ltd (No 2) [1993] BCLC 532 as having undoubted force.
5. Although a full order would probably have been made had the application been timely, the delay and surrounding circumstances made a very modest order appropriate. The existence of shareholders and another interested funding entity supported the conclusion that £2,500 could be provided within seven days.

• Court of Appeal (Civil Division): On an application in the pending appeal, ordered Oakham Securities Limited to provide £2,500 security for costs. Failure to provide security by the specified time would result in a stay of the appeal.
• High Court, Family Division: An order dated 4 February 2002 was under appeal. Permission to appeal was initially refused but was later granted by Lord Justice Thorpe.