CNM Estates (Tolworth Tower) Ltd v VeCREF I Sarl & Ors

Where the evidence establishes a clear case for security for costs, the court should require reasonable security, while determining the amount and timing fairly between the defendants’ need for protection and the claimant’s financial position. The court may structure provision by instalments to reflect incurred and anticipated costs, procedural stages, and the claimant’s ability to raise funds. Related case-management issues, including proposed preliminary issues or amendments, should ordinarily be addressed at a full case management conference rather than piecemeal.

The claimant brought proceedings against the defendants, with Knight Frank LLP joined as a third party. The first and second defendants applied for security for costs, while arrangements concerning the third and fourth defendants had substantially been agreed before the hearing. The claimant accepted that, absent a change of circumstances, reasonable security should be provided, but disputed the amount and timing. The court also considered the appropriate initial case-management directions, including proposed amendments and any application for preliminary issues.

1. Security for costs. On the evidence, this was a plain case for requiring security. The claimant’s late evidence, including the suggestion that providing full reasonable security might stifle the claim, did not justify a different conclusion. The court accepted that the claimant should reasonably secure all defendants’ costs, subject to the amount and timing of provision.
2. Amount and timing. The court was required to act fairly between defendants whose costs needed protection and a claimant in financial difficulty whose ultimate beneficial owner would probably support the security. The amount was assessed by reference to costs incurred to date and anticipated costs for pleadings, the case management conference, disclosure and settlement efforts. Security of £280,000 was ordered for the first and second defendants, payable in staged instalments of £120,000 by 9 November 2018, followed by £30,000, £50,000, £40,000 and £40,000 on 30 November, 28 December, 25 January and 22 March respectively.
3. Case management. A first full case management conference, estimated at half a day, was directed for February or March 2019. Any application concerning preliminary issues was to be considered as part of that full review, rather than separately. Draft amended particulars of claim were to be served by 16 November 2018, with consequential amendments to the defences by 21 December 2018. Security was to be paid into court funds or provided in a form agreed by the beneficiaries, subject to liberty to apply.
4. The first and second defendants’ costs were summarily assessed at £40,000.