Prince Radu of Hohenzollern v Houston & Anor

Security for costs must reflect the additional cost of enforcing a possible costs order in the claimant’s jurisdiction, compared with enforcement in a Convention jurisdiction. Residence outside the Convention zone creates no presumption that security should be ordered.

The court must base the assessment on evidence of enforceability and comparative costs. Where expert evidence is admitted from one side on a disputed issue, procedural fairness ordinarily requires the other side a proper opportunity to respond. An appellate court reviewing a Master’s discretionary decision must identify legal error, procedural unfairness, or a decision outside the reasonable range. A successful appeal against the security figure does not, without more, undo a regularly entered judgment in default.

The claimant brought a libel claim against the editor and publisher of Royalty Monthly. The defendants obtained an order requiring £125,000 security for costs, based principally on the anticipated difficulty and expense of enforcing a costs order in Romania. The claimant failed to pay, and judgment was entered for the defendants in default. An application for a stay and an extension of time was refused and was not appealed.

On appeal, the claimant challenged the refusal of an adjournment, the admission and assessment of evidence concerning Romanian enforcement, and the amount of security. By the hearing, third-party funding removed the issue whether security would stifle the claim. The central issues were whether the original process had been procedurally fair, what additional enforcement costs were reasonably established, and whether the regularly entered judgment could be set aside.

1. The appeal from the Senior Master was not a rehearing. The court could interfere only for legal error, procedural unfairness, or an exercise of discretion outside the range of reasonable decisions available on the facts. The claimant nevertheless established procedural unfairness. The defendants had relied on unilateral expert evidence concerning Romanian law and practice, while the claimant had no effective opportunity to respond. This offended the requirement of equality of arms. Ground 1 was therefore upheld.

2. The further expert evidence was admitted under the principles in Ladd v Marshall. Having admitted it and found the first ground established, the court exercised its own judgment on the evidence.

3. Under Nasser v United Bank of Kuwait, residence outside the relevant Convention zone does not itself justify security for costs. The defendants had to show that enforcement would be impossible, substantially more difficult, or correspondingly more expensive. Where enforcement remained realistically possible, security should be limited to the additional enforcement cost compared with a Convention jurisdiction.

4. Romania’s adoption of legislation corresponding to the European Union regime did not establish that enforcement would be trouble-free in practice. Evidence concerning continuing delay, inefficiency and corruption justified an assessment of additional costs, but the assessment had to focus on the differential rather than the total cost of enforcement. The evidence supported security of £80,000, not £125,000. Grounds 2 and 4 succeeded; Ground 3 failed.

5. The successful challenge to the security order did not justify setting aside the judgment regularly entered after the claimant failed to comply. The refusal of a stay by Treacy J remained in force and had not been appealed. The judgment therefore stood, making the revised security figure academic.

High Court (Queen’s Bench Division): The claimant appealed from the Senior Master’s security-for-costs order. The court upheld the procedural unfairness ground, admitted further evidence, reduced the appropriate security figure to £80,000, but declined to set aside the judgment entered in default.