Probiz Central Ltd v Beech & 3 Ors

Where security for costs has already been ordered for a defined stage of proceedings, a further application covering that same stage requires a subsequent material change of circumstances, or new material which could not validly have been placed before the court earlier. Matters that were foreseeable when the original order was made do not justify revisiting it. Security for later stages may be ordered on the basis of the existing case-management directions, even where those directions may later be varied. The court may adopt a broad-brush assessment and stage payment dates, but should exclude unsupported or presently unauthorised items, including proposed expert costs where no permission for expert evidence has been given.

The defendants applied for further security for costs in ongoing corporate proceedings. A previous order by Master Marsh had required the claimant company to provide £70,000 for costs up to and including inspection of documents, while permitting a later application for further security, including VAT.

The defendants relied on an alleged costs overrun, anticipated costs relating to quantum, future trial preparation and irrecoverable VAT. The claimant argued that the earlier order should not be revisited and that further security should await clarification of whether the trial would be split between liability and quantum.

The central issues were whether the earlier security order could be revisited, what future costs should be secured, and how the security should be staged.

1. The application was allowed in part. The court refused to revisit the security already ordered for costs up to and including disclosure and inspection. Under CPR 3.1(7) principles, a material change of circumstances, or new material which for a valid reason was not previously before the court, had to be shown. The alleged extent and complexity of disclosure, electronic disclosure work, search terms and document review were foreseeable when Master Marsh made his order.
2. The Court of Appeal decisions in Gordano Building Contractors Ltd v Burgess [1988] 1 WLR 890 and Kristjansson v R Verney & Co Ltd (t/a Fuerst Day Lawson Fish) [1998] ADR.L.R. 06/18; [1998] EWCA Civ 1029 supported the distinction between revisiting an existing order and seeking security for later stages.
3. The court rejected the claimant’s submission that security should await the forthcoming case-management conference or be limited to liability. Existing directions required preparation for both liability and quantum. The application should therefore be dealt with on the present directions, while preserving power for later adjustment if those directions changed.
4. No security was allowed for proposed expert evidence or experts’ fees. There was no case-management direction permitting expert evidence, and the evidence did not identify the disciplines or issues requiring it. No VAT allowance was made because the evidence did not establish the defendants’ liability for irrecoverable VAT more clearly than at the earlier hearing.
5. Staged security was ordered for future costs. The court applied 60 per cent of the relevant solicitors’ estimated costs, excluding VAT, and fixed payment dates of 18 April, 28 June and 30 August 2013. The order was subject to any later order varying the phasing or level of security.