My Protection Guru Limited v Lifesearch Partners Limited

The court construed a consent order according to its substance and context. A provision making no order as to costs of a discontinued application also covered costs incurred in responding to and compromising that application. Security for costs requires evidence supporting a reason to believe that the claimant may be unable to pay, but a claimant resisting security on stifling grounds must show, on the balance of probabilities, that it cannot provide security and cannot obtain appropriate assistance. The court should not investigate merits unless success or failure is highly probable. The amount, form and timing of security are discretionary, informed by the costs budget, balance of prejudice and the claimant’s ability to raise funds. Security may be staged and may be satisfied by suitable ATE insurance.

The claimant, an insurance broker’s former appointed representative, brought substantial contractual claims for unpaid commission and damages. The defendant counterclaimed and applied for costs arising from restrictions on public access to statements of case and for security for costs.

The access restrictions were ultimately settled by consent, with redacted pleadings available to non-parties and unredacted pleadings held under seal. The defendant sought costs under the consent order. It also sought further security after an earlier order had been complied with. The central issues were the construction and discretionary effect of the consent order, and whether further security would stifle the claim.

1. Costs application. The February Consent Order was construed as providing no order as to costs of the claimant’s discontinued application, including the defendant’s costs of responding to and compromising it. The costs reserved were principally those incurred in carrying out the redaction process. Parts 2 and 3 of the defendant’s costs application were therefore dismissed.
2. Alternatively, the same result followed as a matter of discretion. CPR 5.4C embodies open justice and general public access to statements of case. Any restriction must be justified and limited to the minimum necessary. The claimant was entitled, under CPR 16.4, to plead the contractual arrangements necessary to particularise its claim, and doing so fell within the contractual disclosure exception. Both parties acted reasonably in seeking their respective positions, and the agreed redaction regime represented a sensible balance. The defendant was to bear its own pre-application costs.
3. Security for costs. The defendant satisfied the gateway under CPR 25.13(2)(c) by showing evidence supporting a reason to believe that the claimant might be unable to pay its costs. The claimant accepted that it was impecunious relative to the likely costs.
4. The claimant failed to establish that security would stifle the claim. It provided no full and frank evidence concerning its own resources, those of its shareholders or directors, or its ability to obtain assistance. The governing requirement was that the claimant show that it could neither provide security nor obtain appropriate assistance to do so. The availability of an appropriate ATE policy, the claimant’s previous ability to fund the litigation and compliance with the earlier security order pointed against stifling.
5. The merits were not sufficiently clear to affect the discretion. Security of £575,147 was ordered, calculated by reference to 50% of incurred costs and 90% of budgeted costs. Payment was staged in three tranches. The claimant could elect to provide suitable ATE insurance instead of paying money into court. No immediate order required disclosure of the identity of any third-party funder.