Vald. Nielsen Holding A/S & Anor v Baldorino & Ors

An order for additional security for costs requires a material change of circumstances. The fact that a possible future event was envisaged when the original order was made does not, by itself, prevent that event from constituting a material change. The court must examine the basis on which the original application was presented and the extent to which the possible consequences were actually estimated and taken into account.

Costs already incurred, or matters already being addressed when the original application was heard, will generally not justify additional security if they could and should have been included then. The court may adopt a broad-brush approach to quantum, considering the existing order, the reasonableness of the additional costs and the balance of prejudice.

The claim concerns alleged fraudulent misrepresentations arising from the sale of shares in Updata Infrastructure (UK) Limited. The defendants had previously obtained an order requiring the claimants to provide £1.2 million security for costs.

After permission was given to re-amend the Particulars of Claim and the trial was adjourned, the defendants sought a further £885,000. They argued that these events materially increased the likely costs. The claimants argued that the events had been envisaged and taken into account when the original order was made. The court also had to determine reserved costs arising from the re-amendment and adjournment applications.

1. The application for additional security was allowed in part. The claimants were ordered to provide a further £200,000, in the form previously ordered by Carr J.

2. The governing principle is that the court will not order additional security without a material change of circumstances. The fact that an event was foreseeable or envisaged at the earlier hearing is not conclusive. The court must determine whether, and on what basis, the event and its financial consequences were taken into account.

3. The original estimate did not estimate the defendants’ future costs on the assumption that permission to re-amend would be granted and the trial adjourned. The earlier hearing treated those possibilities principally as showing that the existing estimate might be conservative. The subsequent occurrence of the events, and the ability to estimate their consequences, could therefore amount to a material change.

4. No additional security was allowed for costs incurred between 1 November 2016 and 28 February 2017. Those costs concerned matters already arising or being addressed before the original hearing, and could and should have been included in the earlier estimate.

5. Some additional security was justified for limited elements of the post-1 March 2017 forecast, including certain further costs associated with supplemental witness statements and Danish law evidence. The court rejected a pro-rata increase based merely on the longer trial estimate and excluded costs which were insufficiently justified.

6. Quantum required a broad-brush assessment, having regard to all the circumstances, the earlier order, the reasonableness of the additional costs and the balance of prejudice.

7. The claimants’ costs of the re-amendment application were payable by the defendants. Costs relating to non-assignment amendments were costs in the case; costs relating to assignment amendments were reserved. Costs of the adjournment application were costs in the cause.

The judgment records an earlier first-instance security order by Carr J on 21 December 2016 requiring £1.2 million security, followed by permission to re-amend the Particulars of Claim and an adjournment of the trial on 12 January 2017. This judgment determined the subsequent application for additional security and reserved costs.