Mbasogo & Anor v Logo Ltd & Ors

The threshold for finding reason to believe that a party will be unable to pay an adverse costs order is lower than the balance of probabilities. A failure to provide satisfactory financial information, including providing none, may readily satisfy that threshold.

Security must nevertheless be just in all the circumstances. Its form and amount may take account of enforceability, the estimated costs and an existing costs order arising from closely related litigation. An undertaking linked to sums payable under that order may provide adequate security.

The claimants appealed against Davis J’s order of 21 September 2005 striking out claims arising from an alleged attempted coup d’état. The first, second and fourth defendants cross-appealed to uphold the order on additional grounds.

Before the substantive hearing, each side applied for security for the costs of the other’s appeal. The defendants sought £107,500 because the claimants were outside the jurisdiction and might not satisfy a costs order. The claimants offered security through an undertaking linked to an extant Privy Council costs order in their favour and sought £25,000 security for the cross-appeal. The issues were whether the statutory conditions for security were met and what form and amount of security would be just.

1. Both applications for security for costs were allowed. The applicable inquiry into whether there was reason to believe that a party would be unable to pay an adverse costs order imposed a threshold below the balance of probabilities. Where a party supplied unsatisfactory financial information, or none at all, the court could readily conclude that the required reason for belief existed. Marine Blast Limited v Targe Towing Limited [2003] EWCA Civ 1940 and Phillips v Eversheds [2002] EWCA Civ 486 were applied.

2. The claimants were outside the jurisdiction. Although apparently of substantial means, their assets might not be readily available to enforce an English costs order. It was therefore fair and just to provide the first, second and fourth defendants with security for the costs of the main appeal.

3. The claimants’ proposed undertaking was an adequate form of security. An extant Privy Council order required the relevant defendants to pay the claimants’ costs in closely related proceedings. Those recoverable costs were likely to exceed £200,000 and therefore to exceed substantially the security reasonably required for the appeal. The court would not speculate that the Privy Council might later vary its order. Security for £105,000 could accordingly be provided through the proposed undertaking linked to the sums payable under that order.

4. The claimants were also entitled to £25,000 security for the costs of the cross-appeal. The relevant defendants were outside the jurisdiction and had provided no information about their means. The sum was reasonable, particularly when compared with the defendants’ own estimate of the additional costs attributable to the cross-appeal.

1. Court of Appeal (Civil Division): On the pending appeal and cross-appeal, allowed both sides’ applications for security for costs: [2006] EWCA Civ 608.
2. Queen’s Bench Division: Davis J struck out the claimants’ three pleaded causes of action on 21 September 2005. No citation is stated in the judgment.