Adam Robert Giaquinto & Ors v ITI Capital Ltd

The slip rule cannot be used to revisit a consciously approved order or to permit second thoughts. It corrects an accidental slip or omission so that an order reflects the court’s intention.

The power to vary an order under CPR 3.1(7) is broad, but must be exercised consistently with finality, the overriding objective, compliance with court orders and the avoidance of a collateral appeal. A material change of circumstances must ordinarily be beyond the applicant’s control and supported by adequate evidence.

Where security for costs is ordered, alternative security must address the identified risks in substance. Deficient anti-avoidance cover, uncertainty about incurred costs and inadequate protection on insolvency justified refusal of variation. Failure to provide the ordered security resulted in striking out the corporate claimants’ claims.

The claimants brought claims exceeding £4 million concerning unsuccessful investments in an option-trading strategy. The corporate claimants were ordered to provide security for costs, alternatively by an after-the-event insurance policy meeting specified requirements concerning adverse-costs cover, anti-avoidance protection, insolvency and direct enforcement.

The consequential Security Order, agreed in material respects and sealed on 1 June 2022, also contained debarring provisions. The corporate claimants later sought to amend it under the slip rule, vary it under CPR 3.1(7), and obtain a seven-day extension to provide alternative security. They relied on an alleged drafting mistake, a change in the insurer’s licensing position and a new policy.

The issues were whether the order could be amended or varied, whether the proposed policy provided adequate alternative security, whether time should be extended, and whether the corporate claims should consequently be struck out.

1. Slip rule. The application under CPR 40.12(1) failed. The court had consciously approved the agreed draft order, knew that it was more prescriptive than the earlier judgment, and considered it consistent with that judgment. There was no accidental slip, omission or mistake. The rule could not be used to introduce new authorities, revisit the substance of the earlier decision or replace an unsuccessful appeal.
2. Variation. The power under CPR 3.1(7) was broad, but its exercise was constrained by finality, the need to avoid two bites at the cherry, the overriding objective and the requirement to enforce orders. The alleged licensing difficulty was not shown to be a material change of circumstances beyond the claimants’ control. The claimants had failed to act proactively, had delayed, and had not adequately explained why they had not approached the insurers directly.
3. Adequacy of proposed security. The new policy was materially inferior. Its anti-avoidance cover was not ring-fenced for the four corporate claimants and was therefore substantially diluted. It did not clearly cover costs incurred before inception. Other cumulative deficiencies reduced the value of the policy, and direct access was less effective for the Isle of Man claimant than a deed of indemnity. The fact that another tribunal had accepted similar wording was fact-specific and did not determine this application.
4. Extension of time. Because the application was made in time, the court applied CPR 3.1(2)(a) and the overriding objective, while exercising particular caution because an unless order was involved. There had been no bona fide attempt to comply, significant delay had caused the loss of a hearing date and a trial date, and the proposed security remained inadequate. An extension was refused. The result would have been the same by analogy with the Denton principles.
5. Disposition. The applications to amend, vary and extend time were refused. Pursuant to the debarring provisions of the Security Order, the corporate claimants’ actions were struck out. Consequential directions were left for the parties to draft.

First instance decision. The judgment refers to an earlier security-for-costs judgment by the same court, [2022] EWHC 973 (QB) , but the present decision concerned consequential applications and was not an appeal from that judgment.