Stokors SA & Ors v IG Markets Ltd

An appellate court should interfere with a case-management decision only where the judge erred in principle, considered irrelevant matters or was otherwise plainly wrong. First-instance judges who make robust but fair case-management decisions should receive appellate support.

The amount of security for costs is a discretionary, broad-brush estimate of the costs likely to survive detailed assessment. The ordinary balance of prejudice favouring an under-secured defendant does not require every imprecision in that assessment to be resolved in the defendant’s favour. Security should ordinarily reflect standard-basis costs unless sufficient material justifies another basis.

The underlying Commercial Court proceedings concerned claims that a financial services firm had dishonestly assisted breaches of trust or fiduciary duty by an insolvent broker and had knowingly received misapplied client funds. Shortly before trial, the defendant was permitted to plead allegations of unlawful insider trading against certain claimants. Teare J retained the trial date but ordered a partial trial of liability, leaving quantum and the availability of equitable remedies for a later hearing.

In separate proceedings, Popplewell J ordered £450,000 in further security for the unexpectedly high costs of disclosure. The Court of Appeal considered whether permission should be granted to challenge Teare J’s case-management decision and whether Popplewell J had erred in fixing the amount of security.

1. Disposition. The court unanimously dismissed the appeal from Popplewell J’s security-for-costs order and refused permission to appeal from Teare J’s order for a partial trial of liability.

2. An appellate court should interfere with a case-management decision only if the first-instance judge erred in principle, took account of irrelevant matters or was otherwise plainly wrong. The court must support robust but fair case management. Teare J had recognised the possible duplication of evidence and risk of inconsistent findings. He was nevertheless entitled to conclude that credibility was unlikely to dominate the first trial and that maintaining the long-fixed trial date was the least unjust and inconvenient course. His decision fell within the ambit of reasonable decision-making.

3. The amount of security for costs was a discretionary case-management judgment requiring a broad-brush assessment. Popplewell J was entitled to evaluate what proportion of the defendant’s actual and estimated solicitor-and-client costs was likely to survive detailed assessment. His identification of concerns about the time spent and the handling of privileged documents justified reducing the £725,000 figure to £450,000.

4. The ordinary balance of prejudice may favour a defendant because under-security can leave costs irrecoverable, while over-security usually imposes only the additional cost of providing it. That consideration did not require the judge to treat the inherent imprecision of estimating recoverable costs as a doubt to be resolved in the defendant’s favour. Nor was there material justifying security at 80 per cent on the ground that indemnity costs might ultimately be awarded. The judge properly declined to investigate the merits and proceeded on the hypothesis that any costs would be assessed on the standard basis.

• Court of Appeal (Civil Division): The appeal from Popplewell J’s order was dismissed, and permission to appeal from Teare J’s order was refused: [2012] EWCA Civ 1706.

• Commercial Court (Popplewell J): The claimants were ordered to provide £450,000 in further security for disclosure costs.

• Commercial Court (Teare J): The defendant’s amendment was permitted. The existing trial date was retained for a partial trial of liability, with quantum and the availability of equitable remedies deferred.

• Commercial Court (David Steel J): An earlier order required £320,000 in security for costs through completion of disclosure.