Dass v Beggs & Anor

For security for costs under rule 25.13(2)(g), the defendant must first identify an objective step taken by the claimant in relation to assets which has made enforcement of a future costs order difficult. The claimant’s motive is irrelevant to that gateway, although it may bear on the later discretionary question whether an order is just. The step must have a causal nexus with enforcement difficulty, and the effect may be spent by lapse of time. The court must address the gateway and discretion separately, unless it is appropriate to decline the gateway issue because the order would in any event be unjust. A payment made before bankruptcy did not satisfy the gateway where, had it remained in the claimant’s account, the money would probably have passed to the bankruptcy trustee.

The defendants sought security for costs in proceedings concerning the sale of two London properties managed for the claimant. Security had already been ordered under rule 25.13(2)(a), because the claimant lived outside the jurisdiction. The defendants additionally relied on rule 25.13(2)(g), alleging that a payment of £192,454 to the claimant’s son had made enforcement of a future costs order difficult.

A Master refused the application. The defendants renewed their application for permission to appeal. The central questions were whether the payment satisfied the gateway in rule 25.13(2)(g), and whether the court should exercise its discretion to order security.

1. The renewed application for permission to appeal was refused. The appeal had no realistic prospect of success. Even if permission had been granted, the appeal would have been dismissed.

2. Rule 25.13(2)(g), read with rule 25.13(1)(a), requires an objective assessment of whether the claimant has taken a step in relation to assets which would make enforcement of a costs order difficult. The defendant need not prove an intention to defeat enforcement. Dishonest or reprehensible conduct is insufficient unless it constitutes such a step. This approach was supported by Aoun v Bahri [2002] EWHC 29 (Comm) and Harris v Wallis [2006] EWHC 630 (Ch).

3. There must be a nexus between the step and the enforcement difficulty. The causal effect may be exhausted by the passage of time, as indicated by Chandler v Brown [2001] CP Rep 103.

4. The court should first decide whether the gateway is satisfied and only then consider whether it is just, in all the circumstances, to order security. The court may, for procedural efficiency, decline to determine the gateway if the discretionary evaluation would necessarily result in refusal.

5. On the evidence, the payment to the claimant’s son did not make enforcement more difficult. If the money had remained in an account in the claimant’s name, it would probably have passed to the bankruptcy trustee. Diversion may instead have preserved a theoretical possibility of recovery, subject to the trustee’s rights. The additional bankruptcy material could be considered; Ladd v Marshall did not prevent its use in the circumstances.

• High Court (Chancery Division): permission to appeal from the Master’s order of 23 May 2013 was refused. The judge stated that, if permission had been granted, the appeal would have been dismissed.