Dimension Data Advanced Infrastructure Ltd v Berkeley Homes Plc & Ors

Where the statutory or procedural conditions for security for costs are satisfied, the court must decide whether security is just having regard to all the circumstances. The claimant’s possible insolvency, administration and potential inability to participate in related proceedings do not, without more, make security unjust. The court may order security where refusing it would leave defendants exposed to an impecunious claimant. A stay, rather than strike-out, is not appropriate merely to preserve the claimant’s position in possible future proceedings against a guarantor or bondsman if that would leave the claim hanging over the defendants or influence their commercial decisions. Security may be ordered in stages, with the amounts subject to later review where appropriate.

The defendants applied under Part 25.12 of the Civil Procedure Rules 1998 for security for costs against the claimant, a company in administration. The parties had contracted for infrastructure and fit-out works. The claimant commenced proceedings and an adjudication concerning extension of time and the effect of a contractual final-account provision. The defendants disputed the adjudicator’s jurisdiction and brought a counterclaim involving substantial liquidated damages.

The defendants also had the benefit of a performance bond and a parent company guarantee, each permitting claims against the relevant third party without first proceeding against the claimant. The claimant argued that security should be refused, or that the proceedings should be stayed rather than struck out if security was not provided, because related proceedings might determine issues affecting its claim. The central issues were whether security should be ordered and whether an unusual stay-and-revival order was justified.

1. The conditions in Parts 25.12 and 25.13 of the Civil Procedure Rules 1998 were satisfied. There was no dispute that the claimant was a company with reason to believe that it would be unable to pay the defendants’ costs if ordered to do so.

2. The discretion whether to order security was governed by whether, having regard to all the circumstances, it was just to do so. The claimant had chosen to continue the proceedings after service of the claim documents. Its explanation that the proceedings had initially been commenced defensively to protect its position under the contract did not justify refusing security, particularly because that concern had not been expressly raised with the defendants and alternative procedural steps had been available.

3. The bond and parent company guarantee were relevant to the practical background but did not remove the defendants’ ordinary entitlement to seek security. Their contractual rights to proceed directly against the bondsman or guarantor meant that the claimant’s potential prejudice was not caused by the security order. It substantially reflected the position in which the claimant would have been if those proceedings had been commenced first.

4. A stay, whether for a defined period or indefinitely, was inappropriate. A time-limited stay could encourage the defendants to delay proceedings against the bondsman or guarantor. An indefinite stay would leave the claim hanging over them for an uncertain period and would improperly affect their decisions about pursuing those parties.

5. Security was therefore ordered in the agreed staged amounts. The claim would be struck out if the security was not provided. The sums could be revisited at a later case and costs management conference, if held.