Ontulmus & Ors v Collett & Ors

For security for costs, residence is a factual question. A person may reside in more than one country at the same time. The court considers physical presence, permanence, continuity, settled purpose and the person’s connections with each place.

For a corporate claimant, the relevant question is whether there is reason to believe that it will be unable to pay an adverse costs order within the ordinary period for payment, normally 14 days. Where the threshold conditions are met, the court must still decide whether security is just having regard to all the circumstances, including the apparent strength of the claim, enforcement difficulties and the likely costs.

The claimants brought a libel action concerning emails which allegedly accused them of fraud and criminal activity. The third defendant applied for security for costs under CPR 25.13.

The application concerned whether the first claimant resided in Germany or had changed or misstated his address, and whether the corporate claimants were likely to be unable to pay an adverse costs order. The court also considered the justice of ordering security, the merits of the claims, enforcement difficulties and the amount and form of security.

1. Residence. The court applied the principles summarised in Grace v HMRC [2009] EWCA Civ 1082. Residence is not limited to a person’s permanent base. A person may reside in more than one place or country. The relevant considerations include time spent, the nature of the presence, connections, permanence, continuity and settled purpose. Mr Ontulmus retained residence in Germany despite spending substantial time in Turkey.
2. Address and evasion. The Turkish address on the claim form was not false, although it might not have been an address at which the claimant resided or carried on business as required by the CPR. The evidence did not establish that he had changed his address to evade the litigation. His inconsistent and evasive evidence did not itself justify security.
3. Corporate claimants. The principles in Jirehouse Capital v Beller [2009] 1 WLR 751 and Longstaff International Ltd v Baker & McKenzie [2004] 1 WLR 2917 were applied. The relevant ability to pay is ability to pay within the ordinary period for payment of costs, usually 14 days, rather than within a longer period in which assets might be realised. The threshold condition was therefore satisfied for both corporate claimants.
4. Justice and amount. The court did not need to reach concluded views on the merits. The claims were not so strong that ordering security would be unjust. The likely costs, enforcement difficulties and the unusual difficulty of establishing substantial special damage supported an order. Security was ordered in stages, initially representing half of the third defendant’s costs, with liberty to apply for further security for trial costs.