JSC VTB Bank v Skurikhin & Ors

A party defending an application to discharge or vary a receivership order remains, in substance, a defendant where it seeks only to resist enforcement and recover control of its assets. Security for costs under CPR 25.12 is unavailable in those circumstances. Security under CPR 3.1 or the inherent jurisdiction is exceptional and requires more than delay, suspicion or a weak case.

VTB had obtained a receivership order over membership interests in an English limited liability partnership, arguing that they were assets in equity of Mr Skurikhin, against whom it held unsatisfied Russian judgments. Berenger, the beneficial owner, later applied to discharge the order, relying partly on Mr Skurikhin’s exclusion from the relevant foundation and trust structures.

VTB sought £120,000 security for the costs of defending the application under CPR 25.12(1), alternatively under CPR 3.1 and the inherent jurisdiction. The central issues were whether VTB was a defendant to a claim and whether security should otherwise be ordered.

1. Application dismissed. VTB was not entitled to security under CPR 25.12(1).
2. The court examined the substance of the litigation. Berenger’s application was defensive: it sought to remove itself from proceedings initiated by VTB and regain control of its assets. It sought no positive relief against VTB and had no independent claim with independent vitality.
3. The conclusion was unaffected by the late application, new evidence, changed circumstances, or the possible application of issue estoppel or abuse of process. Those matters did not convert Berenger’s position into that of a claimant.
4. The alternative jurisdiction under CPR 3.1 and the inherent jurisdiction had to be exercised with great caution against a party substantively in the position of a defendant. Following Ali v Hudson, security ordinarily required proof of regular procedural default or want of good faith. Delay, suspicion of abuse and doubts about the merits were insufficient.
5. The evidence did not establish the necessary abuse or bad faith. VTB’s application was dismissed.