Wojakovski v Matyas & Ors

Security for costs under CPR 25.13(2)(g) may be ordered where a claimant has structured ownership of assets so that enforcement would be difficult. The relevant question is objective and concerns the effect of the steps taken, not the claimant’s purpose or the date on which the arrangements were made. There is no temporal limit on the relevant steps. Impecuniosity alone is not a ground for security, but the claimant must show that security cannot be provided from personal resources or with assistance from others. The court must then decide whether an order is just in all the circumstances and may order less than the full costs claimed.

The petitioner brought an unfair prejudice petition under Companies Act 2006, s 994, against several respondents. The sixth and seventh respondents applied for security for costs under CPR 25.12, relying on CPR 25.13(2)(c) and (g). The application concerned costs incurred to date because the claims against those respondents were not due to be tried in the forthcoming trial and might never proceed.

The central issues were whether the petitioner’s status as an individual prevented reliance on CPR 25.13(2)(c), whether arrangements involving offshore companies and trusts satisfied CPR 25.13(2)(g), and whether it was just to order security under CPR 25.13(1)(a).

1. Application granted in principle. CPR 25.13(2)(c) applies only where the claimant is a company or other incorporated body. It therefore did not apply to the petitioner, an individual. The judge relied on the principle that impecuniosity is not itself a ground for security for costs.
2. Under CPR 25.13(2)(g), the question is whether the claimant has taken steps in relation to assets which would make enforcement of a costs order difficult. The test is objective. It is concerned with the effect of the arrangements, not their purpose. There is no temporal limitation, so arrangements made before proceedings or their contemplation may qualify.
3. Foreign bank accounts, foreign nationality, and the mere location of companies overseas did not, on the evidence, amount to relevant steps. By contrast, the probable structuring of property and artwork through offshore companies and discretionary trusts made enforcement more difficult. The requirements of CPR 25.13(2)(g) were therefore satisfied.
4. The court then considered whether an order was just under CPR 25.13(1)(a). The petitioner’s proposed security over UK assets was insufficient because their ownership and value were uncertain, and some assets might represent traceable proceeds beneficially belonging to other companies. The petitioner also failed to provide sufficient evidence that he could not raise security from his own resources or from relatives, friends, or other assistance.
5. In the circumstances, the applicants faced a real prospect of being unable to enforce a costs order and it was just to order security. The proposed starting figure was £193,207, subject to a 30 per cent discount for the risk of reduction on detailed assessment, producing proposed security of £135,244.90. The parties were given an opportunity to make further submissions on the amount, form, and timing.