Zodiac Training Ltd v Third Eye Technologies Ltd & Anor.

Where an application for security for costs fails, the ordinary starting point is that costs follow the event. A successful party may nevertheless receive less than its assessed costs where its conduct materially increases the cost or difficulty of the application, including unjustified late service of evidence. The court may mark its displeasure at such conduct through a proportionate costs reduction. In assessing recoverable costs, the court may reduce time claimed for unnecessary work, disallow avoidable travelling time, and assess counsel’s brief fee on the basis that counsel generally bears the risk of an application taking longer than anticipated, subject to different considerations where it runs into a second day.

The defendants applied for security for costs in ongoing proceedings. The application was dismissed after a contested hearing. The court had assumed, for the purpose of assessing the claimant’s financial position, that judgment would be given for the defendants in July 2011 and that the claimant would then incur a contingent liability for their costs.

The claimant had provided an undertaking concerning repayment of a director’s loan. A separate outstanding payment relating to a share buy-back was subject to the agreement and the Companies Acts. After the application failed, the defendants sought their costs or a departure from the usual order. The central issues were the appropriate costs order, the effect of the claimant’s late evidence, and the proper assessment of the claimant’s costs.

1. Disposition. The security-for-costs application had failed. The claimant was therefore entitled to its costs in the ordinary way, subject to a reduction for its conduct.
2. The claimant’s evidence had been served at 5 pm on the Friday before the hearing, contrary to the expectation in paragraph 6.4 of the TCC Guide that evidence in opposition to all but simple applications should be served at least five working days before the hearing. No explanation for the delay had been given, and the timing appeared tactical.
3. The late service did not cause the application to fail, because the issues had substantially been addressed before the hearing and the claimant’s position concerning the director’s loan was adequately protected by an undertaking. It nevertheless warranted criticism and a costs sanction. The claimant was awarded 85 per cent of its assessed costs.
4. The claimant’s costs were assessed at £19,828. The court reduced the claim for attendance on documents as excessive, reduced travelling time to exclude an avoidable return journey, and reduced leading counsel’s fee because a brief fee should generally be agreed in advance and should not be time-dependent. Counsel normally takes the risk that an application will take longer than anticipated, while benefiting if it concludes sooner. Different considerations may arise if an application runs into a second day.
5. The defendants were ordered to pay £16,853.80, being 85 per cent of £19,828, within 21 days of the judgment.