Concept Elite Inc v (Thames Enterprises Ltd & Ors

Security for costs under Civil Procedure Rules 1998, rule 25.13, is discretionary. Satisfying a condition in rule 25.13(2) does not itself justify an order; the court must decide whether security is just in all the circumstances. The court balances the claimant’s ability to pursue a proper claim against the defendant’s risk of irrecoverable costs, while guarding against oppression. Detailed examination of the merits is inappropriate unless success or failure is highly probable. Delay carries weight according to its length and resulting prejudice. An order may properly be made where the claimant provides inadequate financial evidence and its assets offer no practical security.

The petitioner, a Liberian company holding shares in the eighth respondent, brought an unfair-prejudice petition under section 994 of the Companies Act 2006. The first to seventh respondents applied for security for costs under rule 25.13, relying on the petitioner’s foreign residence and the risk that it would be unable to meet an adverse costs order.

The court considered the value and enforceability of the petitioner’s assets, the potential effect of security on continuation of the petition, delay, and the merits. The central issue was whether it was just to order security in the circumstances.

1. The court found jurisdiction under rule 25.13(2)(a) and reason to believe under rule 25.13(2)(c) that the petitioner would be unable to pay the respondents’ costs. Those conditions did not remove the separate requirement under rule 25.13(1) that an order be just.
2. Applying Keary Developments Ltd v Tarmac Construction Ltd and another [1995] 2 BCLC 394, the court balanced the risk of irrecoverable costs against the injustice of preventing pursuit of a proper claim. There was no evidence that security would stifle or deter the petition.
3. The petitioner’s assets had no demonstrated value or offered no practical security. Its financial evidence was inadequate, and enforcement against assets connected with a Liberian company presented difficulties.
4. The court declined to conduct a detailed merits review. The petitioner had not shown a high probability of success, while the respondents’ defences were not fanciful. There was no relevant prejudicial delay.
5. The application succeeded. Security was to be provided by payment into court or a suitable bank guarantee, unless another form was agreed.

First-instance decision. No prior appellate decision is stated in the judgment.