Pisante & Ors v Logothetis & Ors

For security for costs, a person may be resident in more than one jurisdiction. A person who habitually and lawfully chooses to spend a significant part of their time in a Contracting State is resident there for CPR r 25.13(2)(a), even if they also live elsewhere.

Security against a non-Contracting foreign company requires objectively justified grounds for a real risk of substantial enforcement obstacles or burden. Assets in a Contracting State do not remove that risk where their continued availability is uncertain. Under CPR r 25.13(2)(c), the court must have reason to believe that a company will be unable to pay, rather than mere doubt about its means.

The claimants alleged that the defendants had fraudulently induced investments in a shipping joint venture, and sought damages exceeding US$14 million. The defendants applied for further security for costs.

The first claimant was an Italian national who divided his time between Greece and New York. The second to fourth claimants were offshore companies resident in the British Virgin Islands and the Marshall Islands. They relied on assets said to be available in Greece, the United Kingdom and Switzerland, including a substantial investment portfolio held by the second claimant.

The central issues were whether the court had power to order security, whether the enforcement-risk condition was met, and the just amount and form of security.

1. The application was granted in part. The court had no power to order security against the first claimant, but ordered the second to fourth claimants to provide security for costs of £805,000.

2. The first claimant was resident in Greece, a Contracting State, for CPR r 25.13(2)(a). Residence was a question of fact and degree. The evidence showed that he habitually and lawfully lived in Greece for a settled purpose, notwithstanding his substantial periods in New York. His earlier failure to disclose reliance on Greek residence showed a lack of frankness, but did not displace the credible evidence of his Greek residence.

3. The corporate claimants were resident outside the jurisdiction and outside the relevant Convention area. Applying Nasser v United Bank of Kuwait [2002] 1 WLR 1868, the court held that the defendants had shown a real risk of substantial obstacles to enforcement. The Greek house, yacht, and asserted shareholdings did not provide reliable and promptly enforceable assets. The second claimant's Swiss portfolio was liquid, its composition and associated liabilities were not transparent, and it could be moved. If it were moved, tracing and enforcing against a BVI company would present serious practical obstacles and additional cost.

4. The court also held, for completeness, that CPR r 25.13(2)(c) was satisfied. The test was whether there was reason to believe that the companies would be unable to pay an adverse costs order. The cumulative lack of frank and timely financial information, absence of supporting documents, offshore structures, hostility between the parties, and mobility of the portfolio supplied that reason.

5. It was just to order security. A bona fide claim with reasonable prospects was only one discretionary factor and did not outweigh the enforcement risk. The court assessed costs broadly, rather than as on detailed assessment, and fixed security at about two thirds of the estimated costs, with a further 7.5% reduction for the first claimant's separate claim. The parties were invited to agree an acceptable bank guarantee or another form of security.

High Court (Commercial Court): First-instance application for security for costs. The claimants had previously agreed to provide £500,000 security, but the defendants sought further security as their estimated costs increased. No appellate history is stated.