Al-Koronky & Anor v Time-Life Entertainment Group Ltd & Anor

On an appeal concerning security for costs, the court may not set security at a sum which it knows an individual claimant cannot afford, since that would effectively strike out the claim. A claimant who relies on inability to pay must nevertheless give a full and candid account of actual and potential means. If that account is inadequate, the court retains a discretion to fix a suitable sum on the evidence available.

Foreign residence alone does not justify security under CPR 25.13. There must be a proper basis for finding substantial difficulty, burden or delay in enforcing a costs order abroad. A conditional fee agreement does not itself affect the making or amount of security, although effective after-the-event insurance may provide sufficient protection.

The claimants sued the defendants for libel arising from a book which alleged that they had kept a domestic servant as a slave in London. The defendants pleaded justification.

Eady J ordered the claimants, who were resident in Sudan, to provide £375,000 security for the defendants’ costs until disclosure: [2005] EWHC 1688 (QB). He found that the claimants had not shown a strong likelihood of success, that a costs order would not in practice be enforceable in Sudan, and that their evidence of means was inadequate.

The claimants appealed, sought to adduce fresh evidence, and challenged the amount of security, the enforcement finding, and its compatibility with international comity and article 6.

1. Appeal dismissed. The court refused, save for an admission that the Sudanese Embassy had paid £20,000 towards the litigation, to admit the fresh evidence. CPR 52.11(2) gives a broad discretion, but the principles in Ladd v Marshall [1954] 1 WLR 1489 remain powerful guidance. Their strictness may be relaxed on an interlocutory appeal, yet parties must ordinarily put their full case before the first-instance judge. The further material could largely have been obtained earlier, and its disputed nature would have produced a new and materially different hearing.

2. A claimant who is highly likely to succeed at trial should not be required to provide security. Foreign residence alone also cannot justify security; there must be a proper basis for finding obstacles or an additional material burden in enforcing a costs order abroad. The evidence justified the finding that a costs order in this particular case would probably not be enforceable in Sudan.

3. Comity did not prevent the court from considering enforceability. General assertions by an unidentified foreign lawyer about judicial partiality or ineffectiveness require properly attested examples before they can found a conclusion. However, the unrebutted specific assertion that a judgment concerning slavery in Sudan would not be enforced on grounds of public policy was sufficient evidence for the judge’s conclusion.

4. The court must not fix security at an amount which it knows the claimant cannot afford. Such an order is tantamount to striking out the claim and engages article 6, including the requirement of a proportionate restriction on access to a court. The claimant must be full and candid about available resources. Where the court cannot calculate affordability because that account is inadequate, it may, in its discretion, select a suitable sum on the evidence available.

5. A conditional fee agreement does not itself count for or against security. Effective after-the-event insurance may give a defendant sufficient protection, but the claimants’ insurance was likely to be ineffective if they lost because they had not told the truth.

6. Eady J had made no error of law or taken an extraneous consideration into account. His discretionary choice of £375,000 was therefore unappealable.

• Court of Appeal (Civil Division) — dismissed the claimants’ appeal against the security-for-costs order: [2006] EWCA Civ 1123 .

• High Court of Justice, Queen’s Bench Division — Eady J ordered £375,000 security for the defendants’ costs until completion of disclosure: [2005] EWHC 1688 (QB).