Pisante & Ors v Logothetis & Ors

When assessing whether an offer of security for costs has been bettered, the court compares the rejected offer with the security ultimately ordered. The applicant’s costs of the application are not deducted from that comparison.

A cross-undertaking in the form contemplated by Appendix 10, paragraph 5 of the Commercial Court Guide need not be confined to exceptional or unusual cases. The court should determine the application on its merits. Evidence that providing security may cause additional costs, together with the claimant’s circumstances and the basis on which security is required, may justify an undertaking. Questions concerning the existence and amount of compensable loss can be left for later determination.

The claimants were required to provide security for costs to the second to fourth defendants in the sum of £805,000. The court was asked to determine the incidence of the costs of that application and whether the defendants should provide an undertaking in the form contemplated by Appendix 10, paragraph 5 of the Commercial Court Guide.

The defendants had sought approximately £1.3 million, while the claimants had made offers of £700,000 and later £750,000. The defendants ultimately obtained security exceeding the rejected offer, although only against some of the claimants. The central issues were how the rejected offer should be compared with the result and whether the circumstances justified requiring a cross-undertaking.

1. The defendants had succeeded in obtaining security and had bettered the claimants’ rejected offer of £750,000. The correct comparison was between the amount offered and the outcome of the application. The defendants’ own costs of the application were not to be deducted from the security obtained. The defendants were therefore prima facie entitled to their costs.

2. A modest deduction was appropriate because security had been obtained against only two of the four claimants. The issues on which the defendants failed were limited, and the security ordered had already been discounted to reflect that failure. The defendants were awarded 95 per cent of their costs of the application.

3. Appendix 10, paragraph 5 of the Commercial Court Guide permits security to be ordered on terms that the applicant gives an undertaking concerning loss caused by the order, where appropriate. The authorities did not establish that such undertakings were available only in exceptional or unusual circumstances. The application had to be assessed on its merits.

4. The court distinguished the concerns discussed in TBD (Owen Holland) Limited v Simons [2020] EWHC 2681 (Ch). Those concerns would carry less force where the undertaking merely left the question of compensation to be decided later, rather than automatically holding the claimant harmless.

5. There was evidence, or a fair inference, that providing the security would involve bank charges and the tying up of funds. Other relevant considerations included the claimants’ substantial assets, the reasons for requiring security, the possibility that the fraud claim might succeed, and the position of Mr Pisante as an individual claimant. Taken together, these factors justified requiring an undertaking in the Commercial Court Guide form.