Tchenguiz & Anor v Director of the Serious Fraud Office

On an application for security for costs, the court has a broad discretion to order such security as is just, having regard to all the circumstances. The amount need not correspond exactly to the defendant’s total costs, and there is no hard and fast rule that it must be proportionate to the pleaded value of the claim. The court may consider the nature and seriousness of the issues, the costs likely to have been incurred on a stand-alone basis, the extent to which costs can be separated between claims, and the amount of the claim. The assessment is necessarily approximate and should not predetermine the costs decision at trial.

The Director of the Serious Fraud Office applied for security for costs against R20 Ltd under CPR 25.13(2)(c), on the ground that R20 would be unable to pay the SFO’s costs if ordered to do so. The claims arose from searches, seizures, arrests and a subsequently abandoned SFO investigation. R20’s claims had initially included approximately £1.5 million in pecuniary loss, reputation and goodwill claims, but shortly before the hearing it reduced its pecuniary claim to approximately £264,000 and abandoned other heads of loss.

The SFO reduced its application from £6.25 million to a proposed figure between £3.5 million and £3.95 million. The principal issue was the amount of security that was just in the circumstances.

1. The application was granted. Security for costs was fixed at £2.5 million, comprising £2 million for historic costs and £500,000 for future costs. The period for providing security remained to be considered with counsel.

2. The court’s jurisdiction was conceded under CPR 25.13(2)(c). Under CPR 25.12.7, the amount of security was a matter for the court’s discretion. The court had to fix such sum as it considered just, having regard to all the circumstances. Security could relate to costs already incurred and costs likely to be incurred, but it need not do so in every case.

3. The pleaded value of the claim was relevant to proportionality, including the possible costs order under CPR 44.2 and the requirement under CPR 44.4(3) to consider all the circumstances, including the amount of the claim. It was not, however, determinative. The court also considered the seriousness and complexity of the allegations, the overlap between R20’s claims and the other claims, the difficulty of allocating costs, and the likelihood that substantial costs would have been incurred even if R20’s claims had proceeded alone.

4. The assessment was neither precise nor scientific. The figures represented the court’s best estimate of what would likely be recoverable if R20 failed at trial. The assessment was provisional in character and should not necessarily affect the court’s later discretion on costs.

First-instance decision. No earlier appellate decision was stated in the judgment.