Dena Technology (Thailand) Ltd & Anor v Dena Technology Ltd & Anor

On an application for security for costs, the court should not investigate the merits in detail unless success or failure can be shown with a high degree of probability. Such investigation is exceptional. Where the evidence permits a strong provisional view, the merits may nevertheless be taken into account when fixing the amount of security. The court may also consider whether the claimant’s impecuniosity was caused by the defendant’s conduct, but only as part of its assessment of the merits. Security should not be refused merely because it may affect funding where the evidence does not establish that the order would stifle the claim.

The claimants, Thai companies, brought proceedings arising from a failed joint venture and alleged fraudulent misrepresentations concerning technology, products and purported commercial transactions. The first defendant was in liquidation and the claim was practically pursued against the second defendant, Dr Sulaiman.

Dr Sulaiman applied for security for costs under CPR 25.13(a) and CPR 25.13(c). The claimants accepted that the relevant conditions were satisfied. The issues were whether security was just, whether the merits could properly be considered, whether the claimants’ impecuniosity was relevant, and whether an order would stifle the claim.

1. Application granted in part. The court ordered security for costs of £50,000.
2. The usual approach is not to investigate the merits in detail on a security application. The merits may be considered only where it can be shown without detailed investigation that the claim is certain or almost certain to succeed or fail. This was the principle stated in Porzelack KG v Porzelack (UK) Limited [1987] 1 All ER 1074 and Keary Developments Ltd v Tarmac Construction Ltd [1993] All ER 534.
3. This was an exceptional case. The documentary evidence concerning the brochure, the purported Kempinski Hotel transaction and the purported Campaign Land transaction gave rise, taken together, to a high probability that fraudulent misrepresentations would be established. The merits could therefore properly influence the exercise of the discretion.
4. The claimants’ impecuniosity could provide an additional reason for reflecting the court’s assessment of the merits where the defendant’s conduct was said to have caused it. The principle in Sir Lindsay Parkinson v Triplan [1973] QB 609 was relevant, but the point could not be given independent weight apart from the merits.
5. The evidence did not establish that security of £100,000 would stifle the claim. The associated funder had substantial assets and profits, and could reasonably be expected to provide the required security if it considered continued funding worthwhile. The inability to enforce a costs order in Thailand was also relevant to the amount of security.
6. The strong provisional view of the claimants’ prospects did not eliminate the defendants’ entitlement to protection. The amount sought was discounted by 50 per cent, producing an order for £50,000.