Stunt v Associated Newspapers Limited

An application for security for costs under CPR 25.13 involves two stages. The court must first determine whether a specified condition is satisfied. If so, it must decide whether security is just in all the circumstances.

Under rule 25.13(2)(g), the applicant must establish objectively that the claimant has taken steps in relation to assets and that those steps would make enforcement of a costs order difficult. Proof of motive or merely a risk of difficulty is unnecessary. Asset sales, encumbrances, unpaid debts and related dealings may be assessed cumulatively. A restraint order does not itself provide security to an opposing party where the assets remain unavailable, but any order for security must be framed so that it does not conflict with the restraint order.

The defendant sought security for its costs of a privacy, data protection and harassment claim. The application initially relied on CPR 25.13(2)(d), but was advanced under sub-rules (e) and (g).

The claimant’s claim form gave his solicitors’ address rather than his residential or business address. The defendant also relied on evidence of asset dealings, unpaid debts, asset encumbrances and insolvency-related proceedings. The claimant disputed the significance of those matters and relied on the value of his assets.

A restraint order made under the Proceeds of Crime Act 2002 froze the claimant’s assets. The central questions were whether the threshold conditions were met and whether an order for security was just, having regard to that restraint order.

1. Threshold conditions. CPR 25.13 requires a two-stage approach. The court must first determine whether a condition in paragraph (2) applies and then exercise its discretion justly in all the circumstances. The claimant’s claim form did not state his residential or business address and instead gave his former solicitors’ office address. That contravened CPR 16.2 and Practice Direction 16. The breach was sufficient for rule 25.13(2)(e), although that condition alone would not have justified an order in the exercise of discretion.
2. Steps relating to assets. Rule 25.13(2)(g) required proof that the claimant had taken steps in relation to his assets and that those steps would make enforcement difficult. The test was objective and concerned the effect of the steps, not their motive. The evidence established, among other matters, asset sales, encumbrances, substantial unpaid liabilities and failures to pay solicitors. These matters showed steps likely to make enforcement of a costs order more difficult, so the condition was satisfied.
3. Discretion. The claimant was best placed to provide detailed evidence of his overall net asset position. General assertions of wealth and evidence concerning one art collection were insufficient. The court was entitled to draw realistic inferences from largely unexplained asset realisation and unpaid debts.
4. Restraint order. The restraint order did not make the defendant secure because frozen assets were unavailable to meet a costs order. Sections 58 and 69 of the Proceeds of Crime Act 2002, as explained in Director of the Serious Fraud Office v Lexi Holdings Plc (in Administration) [2008] EWCA (Crim) 1443, [2009] QB 376, required the security order to be wholly without prejudice to the restraint order. Security was therefore ordered from other sources.
5. The defendant’s application succeeded. Security was ordered in the sum of £460,000, without prejudice to a further application, and the claimant was ordered to pay £36,000 on summary assessment.

Not stated in the judgment.