Andrew Jonathan Milne v Open Access Finance Limited & Anor

For security for costs under CPR r 25.13(2)(g), the applicant must show objectively that the claimant has taken steps in relation to assets which would make enforcement of a costs order difficult. The court is concerned with past events, not future risk, and with the effect of the steps rather than the claimant’s motivation. A double inference may be drawn from undisclosed assets: that the assets exist and that they have been put beyond reach. However, dishonesty, obfuscation or reprehensible conduct alone is insufficient. Conventional ownership of property, ordinary buying and selling, and litigation expenditure do not necessarily establish the gateway. The applicant bears the burden on the balance of probabilities. If the gateway is not satisfied, the discretionary stage does not arise.

The claimant brought proceedings concerning loans made through a peer-to-peer lending platform. The first defendant applied for security for costs under CPR r 25.13(2)(e) and (g), relying on the address stated in the claim form and alleged dealings with the claimant’s assets which were said to make enforcement difficult.

The court found that the claimant carried on business at the address stated. It also considered evidence concerning his properties, investments, litigation, financial explanations and credibility, including findings made in separate proceedings. The central issue was whether the evidence established the jurisdictional gateway in rule 25.13(2)(g).

1. Application dismissed. The first defendant failed to establish either a sufficient basis under CPR r 25.13(2)(e) or the jurisdictional gateway in CPR r 25.13(2)(g).
2. The address given in the claim form was an address at which the claimant carried on business. That was sufficient for the relevant procedural requirement. In any event, the address had been used successfully for service and any defect would not, by itself, have justified security for costs.
3. The governing principles under rule 25.13(2)(g), identified in Ackerman v Ackerman [2011] EWHC 2183 (Ch), are objective. The claimant must have taken steps in relation to assets which would, if a costs order were made, make enforcement difficult. The inquiry concerns the effect of the steps, not the claimant’s motive. It is insufficient that the claimant has behaved dishonestly or reprehensibly.
4. The court accepted that a double inference can in principle be drawn. The first inference is that undisclosed assets exist; the second is that they have been put out of reach of creditors. That possibility arose from Dubai Islamic Bank v PSI Energy Holding Company [2011] EWCA Civ 761 and was considered in Compagnie Noga D’Importation et D’Exportation SA [2004] EWHC 2601 (Comm). The inference requires evidence sufficient to establish that the assets had been dealt with so as to make enforcement difficult, rather than merely creating a possibility of future difficulty.
5. The claimant’s property transactions, litigation and unconventional explanations raised questions but did not prove the necessary dealing with assets. The properties were held conventionally, beneficial ownership had not been hidden, and the evidence did not show unexplained expenditure or dissipation. Separate findings concerning credibility were taken into account cautiously because they arose from a different issue and different proceedings.
6. The application therefore failed at the jurisdictional stage. The question whether security should nevertheless be ordered as a matter of discretion did not arise.