Blue Power Group SARL & Ors v ENI Norge SA & Ors

When assessing security for costs, the court must estimate the likely costs order and adopt a percentage that balances the risks of under-estimation and over-estimation. Security on an indemnity basis requires a sufficient possibility that such an order will be made; an allegation of fraud alone may not establish that possibility where the claim raises wider issues. The court may reduce the percentage for particular categories of work where there is a real risk that detailed assessment will identify unnecessary work or duplication. It may nevertheless allow the standard percentage where the evidence establishes that the estimated work will be undertaken and the costs are reasonably incurred.

The defendants applied for security for costs in ongoing proceedings. The application concerned the basis on which trial costs might be assessed and the appropriate percentage of estimated costs for several categories of work.

The disputed categories were preparation of witness statements, work on an amended defence, and brief fees. The claimants argued that some witness-statement costs duplicated security previously ordered and that brief fees should be deferred until nearer trial.

1. Basis of assessment. The court was not satisfied that there was a sufficient possibility of an indemnity costs order if the claimants lost at trial. The application for security therefore proceeded on the assumption that trial costs would probably be assessed on the standard basis. The alleged fraudulent document was insufficient by itself, since the claim involved wider issues and failure to establish the document would not necessarily amount to conduct justifying indemnity costs.
2. Starting percentage. The appropriate general starting point was 60 per cent of the estimated costs. That percentage balanced the risks of under-estimation and over-estimation.
3. Witness statements. Although the defendants had supported the estimated expenditure with a statement of truth, the substantially repleaded case and additional witness work created a concern that some work might be unnecessary or duplicative on detailed assessment. Security for witness-statement costs was therefore fixed at 50 per cent, rather than 60 per cent.
4. Amended defence. The solicitors’ estimated fees were very high in the circumstances, despite the substantial investigation required. Security for those costs was also fixed at 50 per cent.
5. Brief fees. The fees were being paid as a retainer for work across all aspects of the case during the relevant three-month period, rather than solely for trial preparation. The objection to ordering security before trial therefore failed. Security for brief fees was ordered at 60 per cent of the sums claimed.