England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		29/11/2016

Mr Justice Nugee:

Introduction

1. This is an application by the Defendants for security for costs. I need not recite the background to the action: a summary of it (almost wholly taken from an earlier judgment of Arnold J) can be found in a judgment which I handed down on 29 April 2016 on the Claimants' application for a notification injunction; see Holyoake v Candy [2016] EWHC 970 (Ch) at [2]-[3]. As there appears, Mr Holyoake and Hotblack Holdings Ltd ("Hotblack"), a Jersey company ultimately owned by Mr Holyoake, claim damages in excess of £132m effectively for conspiracy to injure; the Defendants deny all liability.
2. The application is brought under CPR 25.13(2)(c) on the basis that Hotblack is a company and there is reason to believe that it will be unable to pay the Defendants' costs if ordered to do so. It is not disputed that Hotblack does not itself have the resources that would be required to meet the Defendants' likely costs if the claims fail (other than the policy referred to below), but the Claimants' answer to the application is three-fold: (i) this is the second time the Defendants have applied for security, and having withdrawn the previous application, it is an abuse of process for them to pursue the question again; (ii) if the claims fail, the Defendants will also obtain an order for the costs of the action against Mr Holyoake and he will be able to meet them, so the inability of Hotblack to do so is no reason to order security; (iii) Hotblack has obtained an after-the-event or ATE insurance policy which is either sufficient to show that it will be able to meet the Defendants' costs, or at any rate adequate security.
3. So far as the insurance policy is concerned, a number of points were argued at the hearing as to whether the Defendants (and the Court) could be confident that the policy could in fact be relied on if the Defendants were successful at trial, but in correspondence after the hearing the position was reached that the Defendants accepted that the policy might serve as adequate security up to its limit of £4m; however they continue to maintain (i) that it was not an abuse of process for them to renew the application for security; (ii) that they are entitled to security; and (iii) that £4m is inadequate and further security should be ordered to be provided by payment into court or bank guarantee.

Abuse of process – the facts

4. I will consider first whether it is an abuse of process for the Defendants to bring the application.
5. The facts are as follows. The action was commenced by claim form dated 12 August 2015. As early as 18 September 2015 the Defendants' solicitors (then called Wragge Lawrence Graham & Co LLP, and now called Gowling WLG (UK) LLP ("Gowling")), wrote to the Claimant's solicitors, gunnercooke LLP ("gunnercooke"), expressing concern that Hotblack would not be able to meet any order for costs and threatening an application for security in the absence of the Claimants providing information allaying their concerns; and on 4 December 2015 the Defendants issued an application for security for costs against Hotblack.
6. The hearing of that application was ultimately listed for Monday 23 May 2016 before Newey J. A considerable amount of evidence was served, consisting of witness statements of Mr Andrew Smith of Gowling in support of the application, and of Mr Harvey Stringfellow of gunnercooke in opposition to it. I will refer to them as "Smith 2", "Stringfellow 4" and the like. For present purposes, as will become apparent, what is significant is what this evidence said about Mr Holyoake's interests in a seafood business referred to as the Iceland Seafood Group.
7. In Smith 2 (dated 4 December 2015), Mr Smith dealt in some detail with what the Defendants then knew about Mr Holyoake's financial standing. After dealing with his property assets, he referred to Mr Holyoake's "only other appreciable known asset", namely his investment in the Iceland Seafood Group. Mr Smith referred to accounts showing that the group had made a loss in each of the last three years, and to litigation between Mr Holyoake and a Mr Peter Whitfield. Mr Smith described Mr Whitfield as the other major shareholder in the business, and indeed the documents exhibited by Mr Smith included both a report on an Icelandic company called Iceland Seafood International ehf ("ISI"), which showed it as owned by a Luxembourg company called International Seafood Holdings S.àr.l. ("ISH"), and also an extract from the Luxembourg register of companies which showed Mr Whitfield as owning 45% of ISH (being the owner of 5,582 shares, and Oakvest S.àr.l., a company owned by Mr Holyoake, being the owner of the other 6,823 shares). In the litigation Mr Whitfield (and a company owned by him called The Conon Fishings Company Ltd) had sued Mr Holyoake for repayment of certain loans; Mr Holyoake's defence was that it had been agreed that repayment of the loans would not be made until after a proposed sale by ISH of its shares in ISI, at which point the proceeds would be divided in such a way that Mr Whitfield would receive 45% of the sale proceeds plus the debts due to him and his company.
8. In a letter also dated 4 December 2015 gunnercooke referred briefly to the litigation between Mr Whitfield and Mr Holyoake, saying that Mr Holyoake had cross-claims against Mr Whitfield which meant that there was a balance due in his favour. When the Claimants' evidence in response to the application was given (in Stringfellow 4, dated 16 March 2016), it asserted that Mr Holyoake was a man of considerable means but said nothing about his interest in ISH and ISI or the dispute he had with Mr Whitfield. Nor was anything relevant said in further rounds of evidence (Smith 7 dated 13 April 2016, Stringfellow 8 dated 28 April 2015 and Smith 10 dated 12 May 2016).
9. At 16.29 on Friday 20 May 2016 (the last working day before the hearing of the application) Stringfellow 9 was served. This said a number of things about "Mr Holyoake's company Icelandic seafood group", which I should set out in some detail:

(1) Mr Holyoake had informed Mr Stringfellow that the dispute with Mr Whitfield had been resolved by Mr Holyoake buying all of the remaining shares in the company.

(2) The business was being made a public company by being listed on the NASDAQ First North Iceland Market, the listing being conducted by Kvika Bank in Iceland.

(3) Mr Stringfellow exhibited a letter from Mr Jónsson, the CEO of Kvika Bank, about which he said this:

"The letter … confirms that Kvika bank acted on behalf of Iceland Seafood International hf (which was until the share offering ultimately 100% owned by Mr Holyoake) in a pre-IPO share auction which has resulted in 40% of the shares in the company being sold for a value in excess of €20 million, with Mr Holyoake retaining a 60% controlling interest in the company, which it is said, by the bank, to be valued at a minimum of €30 million. Therefore, quite the contrary to Smith 2 and Defendants' suggestion that Mr Holyoake's seafood business is not valuable, and is difficult to realise, the Defendants assertion is demonstrably wrong. Clearly the value of the whole of Mr Holyoake's interest in Icelandic Seafioods hf, at the time the application for Security for Costs was made, was in the region of at least €50 million, which has been demonstrated by the evidence I have referred to."

Mr Jónsson's letter in fact showed that the bank had been appointed as advisor to ISH at the instruction of Mr Holyoake ("the ultimate beneficial owner of ISH") and confirmed the sale by ISH of 40% of its shares in ISI for in excess of €20m, the funds being paid out on 20 May 2016, with ISH legally retaining a 60% interest with a value of at least €30m.

(4) Mr Stringfellow had spoken on the telephone that day to Mr Prastarson (in fact I think Mr Þrastarson), the manager of the Capital Markets division, who had told him that there was no lockout preventing Mr Holyoake selling further shares in the company. He added:

"He confirmed that the monies have been paid by the investors and are sitting in Mr Holyoake's account."

10. Faced with this last-minute evidence, the Defendants decided to withdraw their application, and there was an exchange of e-mails over the weekend. Again it is necessary to set out the exchange in some detail. At 17.22 on Friday 20 May 2016 gunnercooke followed up the service of Stringfellow 9 with an e-mail containing a letter without prejudice save as to costs; this said that since the service of confirmation of an ATE policy and Stringfellow 9 the application was hopeless; if the Defendants withdrew their application, the claimants would agree to costs being in the case. This was followed by two e-mails sent on Saturday 21 May, the first by Gowling at 17.39 which read:

"Our clients accept your offer of withdrawal of the Security for Costs application, with an order that costs be in the case.

This is on the basis that:

1. Your clients accept that they are jointly and severally liable for the costs of the action (as stated in paragraph 13.1 of your counsels' skeleton for this application and in the fourth witness statement of Mr Stringfellow at paragraphs 7.3 and 24); and

2. For the avoidance of doubt our clients do not accept the contents of the fourth or ninth witness statements of Mr Stringfellow, and reserve all of their rights in respect of them, the ability to bring a security for costs application in the future and generally."

The second, a reply by gunnercooke at 18.58, was as follows:

"We refer to your e-mail of 17.39pm today in which you have agreed to accept our clients' without prejudice save as to costs offer in respect of the hearing next week.

As far as the conditions set out in your e-mail are concerned we would respond as follows:

1. The claimants do not resile from the position as set out in the fourth witness statement of Mr Stringfellow and the Claimants skeleton argument;

2. We note what you say in relation to the fourth and ninth witness statements and that you reserve the right to bring a further application for Security for Costs."

11. A consent order was then agreed and made by Newey J on 23 May. This simply provided that

"The Defendants' application for security for costs dated 4 December 2014 having been withdrawn there be no order other than that the costs of the application be in the case."

Abuse of process – the law

12. Mr Stewart QC, who appeared for the Claimants, submitted that in the circumstances it was an abuse of process for the Defendants, having voluntarily withdrawn the first application, to bring a second application on effectively the same grounds. He relied on the principle known as the rule in Henderson v Henderson (1843) 3 Hare 100, as interpreted by Lord Bingham in Johnson v Gore Wood [2002] 2 AC 1 at 31, where he referred to a:

"broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing on the question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before."

13. In Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485 ("Chanel"), the plaintiffs, in an action for trade mark infringement and passing-off, obtained ex parte interlocutory injunctions; on the inter partes hearing the defendants felt constrained to give undertakings and by consent the motion was stood over to trial (without being opened or the evidence read) on the defendants giving undertakings "until judgment or further order". The defendants then carried out some research which led them to think they had an argument after all and applied to discharge the undertakings. Foster J refused the application, and the Court of Appeal refused leave to appeal. Buckley LJ held (at 492D) that an order (or undertaking) expressed to be until further order gave a right to the party bound to apply to have the order (or undertaking) discharged if good grounds for doing so are shown. He then said he would assume (without deciding) that the evidence the defendants had uncovered would have enabled them to resist the motion, and continued (at 492H):

"The defendants are seeking a rehearing on evidence which, or much of which, so far as one can tell, they could have adduced on the earlier occasion if they had sought an adjournment, which they would probably have obtained. Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter. The fact that he capitulated at the first encounter cannot improve a party's position."

14. In Woodhouse v Consignia plc [2002] EWCA Civ 275, a claimant who had unsuccessfully sought to lift a stay applied to do so a second time, and both the district judge and judge held that he could not have a second bite at the cherry. The Court of Appeal allowed an appeal. Brooke LJ, giving the judgment of the Court, said that there was a public interest in discouraging a party from making a subsequent application for the same relief based on material which was not, but could have been, deployed in the first application; that one of the reasons was the need to protect respondents to successive applications from oppression [55]; but that although the policy that underpins the rule in Henderson v Henderson had relevance as regards successive pre-trial applications for the same relief:

"it should be applied less strictly than in relation to a final decision of the court, at any rate where the earlier pre-trial application has been dismissed." [56]

He then gave an example where an application for summary judgment under CPR Pt 24 had been dismissed, but a second application was made based on evidence that, although available at the time of the first application, was not then deployed through incompetence, but which was conclusive; the second application ought to be allowed to proceed [57]. The district judge and judge had therefore been wrong to regard the fact that the second application was a second bite at the cherry as decisive [58], and the Court of Appeal proceeded to consider the second application on its merits, regarding the fact that it was a second bite at the cherry as an important factor [61], but in the event decided that it would be a disproportionate penalty for the claimant to lose his right to damages due to a pardonable mistake by his solicitor, and lifted the stay [63].

15. In Orb a.r.l. v Ruhan [2016] EWHC 850 (Comm) Popplewell J had to deal with a number of applications arising out of a freezing order made by Cooke J which had been obtained by the defendant (Mr Ruhan) against the claimants (the Orb Parties) [1]-[2]. The order required Mr Ruhan to fortify his cross undertaking in damages by charging certain shares [48]. Mr Ruhan had done so but the Orb Parties sought further fortification on the ground that the shares were inadequate security. Popplewell J dismissed the application for a number of reasons, the first of which was that it was open to the Orb Parties to take the point before Cooke J but they had failed to do so. None of the material relied on had come to their attention subsequently; Cooke J had given them an opportunity to raise any objections to the shares as fortification, but they had not raised the points now sought to be raised, although they were well known to them; there had been no significant or material change of circumstances [81]. Popplewell J continued [82]:

"That is fatal to this ground for discharge: see Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485. Mr Drake emphasised that that case involved a consent order. But the principle is well established, and often applied, in relation to contested interlocutory hearings. It is that if a point is open to a party on an interlocutory application and is not pursued, then the applicant cannot take the point at a subsequent interlocutory hearing in relation to the same or similar relief, absent a significant and material change of circumstances or his becoming aware of facts which he did not know and could not reasonably have discovered at the time of the first hearing. It is based on the principle that a party must bring forward in argument all points reasonably available to him at the first opportunity; and that to allow him to take them serially in subsequent applications would permit abuse and obstruct the efficacy of the judicial process by undermining the necessary finality of unappealed interlocutory decisions."

16. Mr Stewart also referred to a judgment of Etherton C in this action, Holyoake v Candy [2016] EWHC 1718 (Ch). The Claimants had initially applied for a notification injunction, making the decision not to apply for a freezing injunction. I granted that application in a modified form. The Claimants then applied for a freezing order after all. It was that application which came before the Chancellor. He dismissed it. The Claimants' counsel, Mr Trace QC, had submitted that all that he needed to show was the usual prerequisites for a freezing order, namely a good arguable case on the merits, a real risk of dissipation and that the balance of convenience favoured the grant of the order [18]. The Chancellor disagreed, saying [21]:

"I do not agree with Mr Trace's statement of principle. The starting point in such a case as the present is that the claimants must point to something that has happened since the grant of the original order. They must show something material has changed to make it appropriate to investigate the same issues over again at yet another extensive hearing with even more voluminous evidential material. Absent any such change, the application for a freezing order is not only a disproportionate call on the court's resources, but an abuse of the court's process, in effect making successive applications for the same objective but testing the court's willingness each time to see how far the court will go, each such application involving, to a greater or lesser extent, duplication of issues, evidence and arguments."

He then examined, and rejected, various matters which were said to amount to a sufficiently material change of circumstances.

17. These authorities are not entirely easy to reconcile with each other. The decisions in Orb v Ruhan and Holyoake v Candy proceed on the basis that a party who has sought and obtained relief on an interlocutory application cannot return to court and ask to extend (or "upgrade", in the words of the Chancellor) the relief without showing a material change of circumstances. It is easy to see the policy reasons behind such a principle which are well articulated by both judges. Chanel indicates that similar considerations apply where a party has submitted to an order, and that the question does not turn on whether the applicant did in fact have the evidence at the earlier hearing but on whether it was reasonably available to him. Yet in Woodhouse v Consignia the Court of Appeal held that the rule in Henderson v Henderson was not applied so strictly in interlocutory matters, that the judges below had been wrong to dismiss the second application as a second bite at the cherry, and that it did not matter that the evidence deployed had in fact been available to the applicant at the time of the first application, at any rate if the evidence was conclusive.
18. I propose not to resolve these difficulties at this stage but to consider first the answers given by Mr Plewman QC, who appeared for the Defendants, to the suggestion that the application is an abuse of process. I will then consider whether it is necessary to give any further consideration to the principles.

Was it agreed that the Defendants could apply again?

19. Mr Plewman's first answer was that the parties had proceeded on the agreed basis that the Defendants could make a further application. The first stage in this argument was that the consent order made by Newey J on 23 May 2016 reflected a real agreement between the parties. I accept this submission, which was not disputed by Mr Stewart. It is well established that an interim order made by consent may have a true contractual foundation and evidence a real contract between the parties; or it may simply reflect an acceptance by the parties that the order is the correct order to make in the circumstances, in which case the words "by consent" really mean "the parties not objecting": see Foskett on Compromise (8^th edn, 2015) at §6-22 and cases there cited, particularly Siebe Gorman Ltd v Pneupac Ltd [1982] 1 WLR 185 at 189 per Lord Denning MR. In the present case the exchange of e-mails over the weekend (paragraph 10 above), couched as they were in terms of offer and acceptance, seem to me to fall clearly on the contractual side of the line. The consent order was not the result of a simple acceptance by Gowling that it was right to make no order on the application, but was the result of a bargain between the parties that in return for Gowling withdrawing the application, the costs would be costs in the case.
20. The second stage in the argument was that it was part of that agreement that the Defendants should be entitled to reopen the matter. Mr Plewman said that this meant that they were not limited to having to show a misrepresentation or change of circumstances or discovery of new facts, but had an unrestricted ability to apply again.
21. In this connection he relied on Butt v Butt [1987] 1 WLR 1351. Like Chanel, this was another case where the plaintiff had obtained an interlocutory injunction in the motions court ex parte, and the matter came back for an inter partes hearing at which the defendant gave undertakings, in this case among other things not to sell his former matrimonial home, those undertakings being expressed to be until trial or further order (despite its name, it was not in fact, as Mr Plewman suggested, a matrimonial dispute but a commercial dispute between two cousins over the ownership of a coal yard, in which the plaintiff sought Mareva relief against the defendant). The defendant later sought to be discharged from his undertakings on the grounds of non-disclosure. The Court of Appeal distinguished Chanel. The judge's judgment recorded that it had been expressly stated to the Court when the defendant's undertakings were given that they were being given as a matter of expediency and that he might later apply to discharge them, especially on the grounds of possible material non-disclosure (see at 1353C). Nourse LJ said (at 1354F) that that showed that it was:

"expressly contemplated that the defendant might wish to apply to be discharged from his undertakings on the ground that there had been a material non-disclosure when the plaintiff first made his ex parte application to Judge Fitzhugh. It seems to me that it would be quite wrong to prevent the defendant from making that application."

Mustill LJ said (at 1355A):

"If there is an inter partes hearing on which an undertaking is given in lieu of an injunction, and if it is made plain and understood by all concerned in the hearing that the undertaking is given in the contemplation that the defendant may subsequently wish to apply for the discharge of the undertaking when his evidence is in order, there would, in my judgment, be something wrong with the law if that common understanding were to be frustrated simply because the relief takes the form of an undertaking rather than an injunction…

In my judgment the situation in the present case is that the court should meet the justice of the matter by giving effect to the explicitly evinced intention of the parties once that intention had been established…

The defendant had signalled the possibility (not yet crystallised into a firm intention) of returning to court to have the injunction discharged. I believe it would be wrong in such circumstances to hold that the defendant's advisers had succeeded in shutting out their client from arguing that the plaintiff had failed to fulfil his obligations to the court at the ex parte stage of making a full disclosure of all the material facts."

Mr Plewman said that that was completely on all fours with the present case.

22. Mr Stewart submitted that it was not a term of the contract between the parties in the present case that the Defendants could apply again. All that had happened was that the Defendants had said they were reserving their rights, including the right to apply again, and the Claimants had noted that they had done so. That could not be regarded as an agreement that the Defendants could make a fresh application without having to show some material misrepresentation or the like: it was doing no more than accepting that if they had a right to apply again they were reserving it. In other words it preserved whatever rights they had; it did not create any new rights that they would not otherwise have had. Butt v Butt was a quite different situation where the Court itself had recognised that there was a possibility of an application to discharge which was being reserved.
23. I have not found this an entirely straightforward question. I agree with Mr Stewart that when gunnercooke said in their e-mail at 18.58 on 21 May that they "noted" that the Defendants reserved their rights, that was not a contractual agreement to the effect that the Defendants could apply again on any grounds they liked. The contract was formed by the offer made by the Claimants which was accepted by the Defendants in Gowling's e-mail of 17.39; it may well have been (and probably was) subject to confirmation that the Claimants accepted joint and several liability for the costs, but I do not think the reservation of rights in Gowling's e-mail was put forward as a proposed new term of the contract (amounting to a counteroffer requiring acceptance) – it was a statement of the basis on which the Defendants had accepted the Claimants' offer, and understood as such.
24. As I read Butt v Butt, that is not however the determining criterion. In that case the plaintiff never accepted that the defendant could apply to discharge the undertakings without showing Chanel grounds: see at 1354G which records that the plaintiff's counsel made this point at the inter partes hearing when the undertakings were given. So the basis for the decision in Butt v Butt is not that the plaintiff had contractually agreed that the defendant could apply to discharge, but that the defendant had made it clear when giving the undertakings (and the plaintiff and the Court had understood) that it was contemplating applying to discharge.
25. I do not however accept Mr Plewman's submission that this case is on all fours with Butt v Butt: in that case one of the grounds of Nourse LJ's decision – indeed the primary ground – was that the motion was not stood over to trial (as it had been in Chanel) but was adjourned generally with liberty to apply, which indicated that it had not been dealt with and disposed of: see at 1354A-B. In the present case by contrast the application was not adjourned on 23 May; it was withdrawn and no order was made on it, which on any view must be regarded as a disposal of the application. Somewhat curiously, the CPR do not appear to contain any express provision for "withdrawal" of an application (unlike I think the RSC, although my recollection may be faulty), but there is I think no doubt that the effect (and the intended effect) of Newey J's order, which not only recorded that the application had been withdrawn but made no order on it, was to put an end to the application.
26. Both Chanel and Butt v Butt seem to me to be decisions based on the regular practice in what was then the motions court and is now the Applications Court. Both are cases where the plaintiff sought an injunction initially ex parte, which was granted in the usual way until the return date when the matter came back inter partes. In the Applications Court the well-known practice is that applications for interlocutory injunctions will be adjourned from time to time until they are ready to be heard, with a temporary injunction being granted (or undertaking given in lieu) to hold the ring until the application can be argued substantively. Once however the application has been argued and a decision made, that is usually intended to govern the position until trial absent a sufficient change of circumstances. What Chanel decides is that the position is no different if the respondent accepts, without the matter having to be argued, that the case for an injunction is made out, or, which comes to the same thing, gives an undertaking. In either case this is intended to dispose of the application and it cannot thereafter be reopened without good reason. What Butt v Butt decides is that the position is different if an undertaking is given, and is understood (not only by the other side but by the Court) to be given, not as a way of disposing of the application, but as a provisional measure pending further investigation. In effect the respondent is merely agreeing to the undertaking temporarily, which is why Nourse LJ regarded it as significant that the motion was adjourned generally, rather than (as in Chanel) stood over to trial as the practice then was.
27. Seen in this light, it does seem to me that Butt v Butt is not truly analogous to the position here. There was nothing temporary or provisional about Newey J's order dealing with the first application: it was disposed of and that was an end of it. It was not in any sense adjourned and could not be restored – there was nothing left to restore. There is nothing in the terms of the order to suggest (nor any other reason to think) that Newey J understood he was being asked to make a temporary order preserving the position pending further consideration. Mr Plewman pointed to some of the phrases used by Mustill LJ such as "if it is made plain and understood by all concerned that the defendant may wish to apply for the discharge of the undertaking when his evidence is in order" (at 1355B), "giving effect to the explicitly evinced intention of the parties" (at 1355E), and "the defendant has signalled the possibility … of returning to court". He said that that was the same here. Attractively although the point was made, I do not accept it: it is to my mind an illustration of the danger of taking phrases out of a judgment and seeking to apply them to a different factual situation.
28. I agree with Mr Stewart therefore that the Defendants' reservation of their rights in the e-mail of 17.39 on 21 May did not by itself entitle them to launch a fresh application without having to show a good reason for doing so, and that the fact that gunnercooke in their reply at 18.58 noted the position took the matter no further. If Mr Plewman were right, it would mean that despite agreeing to withdraw the application on 21 May and the consent order being made on 23 May, the Defendants could immediately have brought a second application on 24 May without any new material at all. That would I think have been prima facie an abuse; and if Gowling wished gunnercooke to agree to their having the right to do that, it would have required much more explicit agreement than they sought or obtained. I therefore reject Mr Plewman's first answer to the abuse question.

Were good grounds shown for a second application?

29. Mr Plewman's second answer was that Stringfellow 9 was misleading. This requires me to explain the further facts that have come to light since the first application was compromised.
30. It will be recalled that Stringfellow 9 said, among other things, that (i) the dispute with Mr Whitfield had been resolved by Mr Holyoake buying all the remaining shares; (ii) that ISI was until the share offering ultimately 100% owned by Mr Holyoake; (iii) that 40% of the share capital had been sold for in excess of €20m; (iv) that Mr Holyoake retained a 60% interest in the company with a value of at least €30m; (v) that the monies had been paid by the investors and were sitting in Mr Holyoake's account; and (vi) that:

"Clearly the value of the whole of Mr Holyoake's interest in Icelandic Seafoods hf, at the time the application for Security for Costs was made, was in the region of at least €50 million, which has been demonstrated by the evidence I have referred to."

31. The Defendants admit that they were frankly suspicious of this evidence. Within half an hour of the exchange of e-mails agreeing to the withdrawal of their application, Gowling sent an e-mail (at 19.22 on 21 May) seeking evidence of the settlement between Mr Holyoake and Mr Whitfield, and asking whether Mr Holyoake held any of the shares as nominee for Mr Whitfield, and how much, if any, of the €20m had been or was due to be paid to Mr Whitfield or his associates.
32. No reply was received to this e-mail and by letter dated 25 May Gowling referred to a website article which reported that Mr Holyoake had sold down his majority stake in ISI "netting €11.25m", and asked for the position to be explained in full. In fact as Smith 15 (dated 15 July 2016 and served in support of the current application) explains, the website article appears to be based on a misreading of a Company Description released by ISI. A more natural reading of this document is that ISI sold a combination of newly issued shares and shares held itself amounting to 10% of the capital, and ISH sold a further 30%, leaving it with 60%, with the proceeds (equivalent to just over €20m) being split 75% to ISH and 25% to ISI itself.
33. On 7 June the Defendants obtained from the Luxembourg company register notice of a filing in relation to ISH which recorded that Mr Whitfield had transferred his 5,582 shares in ISH to Oakvest, Mr Holyoake's company for €1, with effect from 27 May 2016. On 21 June Gowling wrote a letter referring to this filing, saying that it appeared that ISI was not owned 100% by Mr Holyoake prior to the share offering as stated in Stringfellow 9 and requiring a sworn affidavit from Mr Holyoake clarifying the position and in particular the present availability of the proceeds of the share sale. A chasing letter was sent on 29 June.
34. That was how matters stood when the current application was brought on 15 July 2016, supported by Smith 15 which set out these matters in detail. It was answered by Stringfellow 15 dated 25 August. Among other things Mr Stringfellow said as follows:

(1) The Defendants seemed to accept that the 60% shareholding in ISI that was not subject to the IPO no longer had anything to do with Mr Whitfield; he did not see there could be any argument that the 60% was now beneficially owned by Mr Holyoake; and the current value of the shares was just in excess of €30m.

(2) The amount that was raised on the sale of the 40% had been queried by reference to media reports that Mr Holyoake had only received €11.25m; he was instructed that the media report Mr Smith relied on was wrong; and he referred back to the letter from the CEO of Kvika Bank which confirmed the figure of €20m being received for a sale of 40% of ISI shares.

(3) ISH had two shareholders, Mr Whitfield and Mr Holyoake; they had business dealings over 20 years; negotiations became contentious, and:

"Mr Holyoake informs me that when the sums due to each of the parties from the other were taken into consideration there was a net balance due to Mr Holyoake and they settled their dispute taking this into account."

(4) Mr Whitfield had agreed with Mr Holyoake in May 2016 to sell his shares to him for £1 prior to the IPO of ISI; Mr Stringfellow had understood at the time of Stringfellow 9 that Mr Holyoake was the sole owner of ISH; but he had checked the position with Mr Holyoake who informed him that whilst he had agreed to purchase Mr Whitfield's shares in ISH (and his lawyers held signed transfers prior to the IPO) the actual share transfer was not completed until 27 May 2016. Mr Stringfellow added:

"I in no way meant to mislead the Court and on discussing this with Mr Holyoake, he informed me that he had understood that the transfer of the beneficial ownership of Mr Whitfield's shares was planned to happen on 20 May 2016, which would have meant that he was the 100% owner at that time, but this did not happen until 27 May 2016."

(5) The resolution of Mr Holyoake's disputes with Mr Whitfield led to a net payment to Mr Whitfield of €8m which recognised the significant sums due to Mr Holyoake from Mr Whitfield.

35. There was a further round of evidence consisting of Smith 20 (dated 7 September) and Stringfellow 16 (dated 13 September). Smith 20 expressed continuing concern over the lack of clarity as to the true position in relation to ISI, and in particular referred to the notable lack of any documentary evidence demonstrating Mr Holyoake to be in possession of the €20m proceeds of sale (at any stage) or any evidence coming directly from Mr Holyoake, and said that the Court could not know what sum he had actually received, or what had happened to the money; Stringfellow 16 said that Mr Stringfellow had spoken to DLA, the lawyers dealing with both the disputes between Mr Holyoake and Mr Whitfield and the sale of Mr Whitfield's shares, and they:

"have confirmed information that I have included in my statement in relation to these matters."

36. Mr Plewman says that the clear import of Stringfellow 9 was that Mr Holyoake had owned ISI 100% before the IPO, that he had sold 40% before the IPO for €20m, that the money for that sale had been paid and that it was sitting in Mr Holyoake's account. He summarised what was being presented as that "There is a cash asset of €20m sitting there which makes him a good mark and makes your application for security a hopeless one." That, he says, was misleading in two respects: first, Mr Holyoake was not the owner of the shares before the IPO and second, Mr Holyoake did not have a €20m cash pile available to him as his asset, because €8m was payable to Mr Whitfield. That was a misrepresentation that entitled the Defendants to set aside the consent order, or alternatively a sufficient change of circumstances to mean that the second application was not an abuse.
37. Mr Stewart said that there was no misrepresentation in Stringfellow 9. The Defendants knew that Mr Whitfield was or had been a shareholder in the business (as shown by Smith 2); and they knew that there had been a dispute, leading to litigation, between Mr Holyoake and Mr Whitfield (as shown by Smith 2 and gunnercooke's letter of 4 December 2015). Against that background the statements in Stringfellow 9 that the dispute had been settled by Mr Holyoake buying all the remaining shares in the company, that until the share offering ISI was ultimately 100% owned by Mr Holyoake, and that 40% of the shares had been sold for in excess of €20m with Mr Holyoake retaining a 60% interest which had been valued at more than €30m were all true, with the immaterial exception of the difference between Mr Holyoake being the legal owner, and being the equitable owner, of 100% of the company. In the context of what had been said the statement that the monies had been paid by the investors and were sitting in Mr Holyoake's account could not have been taken as a statement that they were in any way earmarked to him, or that he did not owe any other monies, or what the terms of the settlement had been or whether any money was owing to Mr Whitfield. And the almost immediate query from Gowling at 19.22 on 21 May asking how much of the money was payable to Mr Whitfield showed that the Defendants did not in fact believe that there was €20m available for them.
38. I have not of course heard any oral evidence or seen underlying documents confirming the position, and in circumstances where I am due to be the trial judge and issues both of credibility and of the value of Mr Holyoake's assets are likely to be a significant feature at trial, I am hesitant about making any definitive findings of fact at this stage. Nevertheless it does seem to me that the material currently before me does indeed paint a materially different picture from that presented in Stringfellow 9. I say that for the following reasons.
39. The combination of statements in Stringfellow 9 that ISI was owned 100% by Mr Holyoake, that 40% of the shares had been sold, and that Mr Holyoake retained 60% implied that it was Mr Holyoake who had sold the 40%. When one adds to that the statements that the sale of the 40% was for in excess of €20m, that the monies had been paid by the investors and that they were sitting in Mr Holyoake's account, the clear implication was that a sum of in excess of €20m had been paid to, and was then in, Mr Holyoake's account.
40. In fact it now seems rather doubtful if that is the case. The Company Description issued by ISI indicates that the 40% was not all sold by Mr Holyoake but part by ISI itself, with the result that only €15m was payable to ISH.
41. But it does not stop there. Stringfellow 9 also said that Mr Holyoake's dispute with Mr Whitfield had been resolved by Mr Holyoake buying all the remaining shares, and that ISI was ultimately 100% owned by Mr Holyoake before the IPO. To be more precise it said that the letter from Mr Jónsson "confirms that Kvika bank acted on behalf of Iceland Seafood International hf (which was until the share offering ultimately 100% owned by Mr Holyoake)", but the use of the word "confirms" indicates that this is not just a statement by the bank but one which is being put forward as correct. When one adds to that the statement that the value of Mr Holyoake's interest in ISI was in the region of €50m, this amounts to a statement that Mr Holyoake personally was the beneficial owner of the whole company, and hence implies that the €20m received by him was his beneficially as well.
42. In fact it now appears that this is very doubtful as well. It is now accepted that Mr Whitfield's shares had not been transferred to Mr Holyoake before the IPO offering. By itself I accept that this is not necessarily significant: a person who has the benefit of a contract to purchase shares in a private company can legitimately be regarded as the beneficial owner of those shares on the well-known principle that a vendor of property under a specifically enforceable contract becomes a constructive trustee for the purchaser, a doctrine originally developed in relation to contracts for the sale of land but also applicable to contracts for the sale of shares in a private company. And if all that has to be paid for the shares is €1 (or £1), and the purchaser already holds a signed transfer of the shares, it follows that the purchaser is in practice in very nearly the same position as an owner of the shares and the value of his interest in the company can be measured by the value of the shares.
43. But it now appears that not only had Mr Holyoake not already acquired Mr Whitfield's shares, but that a further €8m was payable to Mr Whitfield. Not having seen any documentary evidence of the agreement between Mr Holyoake and Mr Whitfield, I am left in some uncertainty as to the precise terms, but what the evidence suggests is that the transfer of Mr Whitfield's shares for €1 was part of a larger deal which involved Mr Holyoake paying €8m to him. Since it is said that the dealings between them resulted in a net amount due to Mr Holyoake, this cannot be explained as money otherwise due, and the natural inference is that it was part of the terms on which Mr Whitfield agreed to transfer his shares.
44. Mr Stewart said that Stringfellow 9 said nothing about the terms of the settlement between Mr Holyoake and Mr Whitfield or indicated that the €20m was earmarked to Mr Holyoake or that nothing was payable to Mr Whitfield. But this seems to me to overlook the fact that Stringfellow 9 also said that the value of Mr Holyoake's interest in the company was about €50m. This was an assertion that he was personally beneficially entitled to both the €30m of value represented by the 60% shares retained and the €20m of value represented by the proceeds of sale. But if the terms under which Mr Holyoake was able to acquire Mr Whitfield's shares required Mr Holyoake to pay over €8m of the proceeds to Mr Whitfield, then I think it very doubtful if it could really be said that the value of his interest in the proceeds of sale was €20m. On the face of it, it was €8m less.
45. Putting these two points together, I am left with no confidence that Mr Holyoake actually received €20m into his bank account, or that the value of his interest in ISI was about €50m; it may have been more like €37m (being €30m for the retained 60%, plus €15m received on the sale of shares, less €8m payable to Mr Whitfield).
46. That seems to me to be sufficient to entitle the Defendants to re-open the question of security. I do not need to decide if it was a misrepresentation as such, because Mr Plewman did not actually seek to set aside the consent order disposing of the first application for security – what he seeks to do is bring a second application – but I am satisfied that the circumstances at least come within the principle in Chanel that a party cannot re-open matters unless he "has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter."
47. It may be said that the difference between the picture presented in Stringfellow 9 and what is now apparent is not of great significance, as the question whether Mr Holyoake had an interest in ISI worth €50m or €37m does not affect his ability to meet the Defendants' costs. But that seems to me to underestimate the impact of the new evidence. The import of Stringfellow 9 was, for the reasons I have given, that Mr Holyoake had €20m sitting in a bank account which belonged to him. The import of the new evidence is that he did not. The answer given by Mr Stewart was that Stringfellow 9 said nothing about whether there were any calls on that money, and the fact that €8m was payable to Mr Whitfield did not make Stringfellow 9 misleading. But the logic of this position is that Stringfellow 9 equally says nothing to indicate that there may not be other calls on that money, or indeed that it may not all have been already paid, or committed, to others. The same logic applies to the 60% shareholding said to be worth €30m. There is nothing in Stringfellow 9 which says that those shares have not been charged or otherwise been earmarked for others, or that confirms that they will be available to meet any costs order. The real import of the new evidence therefore is not just to cast doubt on whether Mr Holyoake's interest in ISI is worth €50m or only €37m, but to cast doubt on how reliable either figure might be. I am now left quite unsure not only what the value of Mr Holyoake's current interest is, but what value would be available at the end of the trial.
48. In these circumstances I am satisfied that it is not an abuse of process for the Defendants to bring this second application. In terms of the broad merits-based judgment referred to by Lord Bingham in Johnson v Gore Wood, it does not seem to me that there is anything inappropriate in the Defendants having withdrawn the first application at a stage when, although they had suspicions, they had no material to indicate that the impression given by Stringfellow 9 was wrong, and then applying again once they had obtained evidence casting real doubt on that impression.
49. In those circumstances I do not think it is necessary to consider any further the apparent tension between the statements of principle in such cases as Chanel or Orb v Ruhan, and that in Consignia Ltd v Woodhouse.

Is Mr Holyoake a good mark?

50. Mr Stewart's second answer to the application was that Mr Holyoake would be jointly liable with Hotblack for almost all of the costs, and since he would be able to meet them (is a "good mark" for the costs), there is no need for security to be granted against Hotblack.
51. That requires identifying first the likely level of costs for which the Claimants might be liable if the claim fails, and then assessing whether Mr Holyoake is a good mark for costs of that order. Since it is accepted that the ATE policy is good security to the level of £4m, the significant question is the extent to which the Defendants' recoverable costs exceed £4m.
52. The total figure now put forward by the Defendants for their estimated actual costs to trial is £8,412,212.36 plus VAT of £841,221.24 (there are 6 Defendants only 3 of whom can recover VAT). Since security for costs can only be awarded against Hotblack, and not against Mr Holyoake, it is accepted that security can only be ordered for the costs of Hotblack's claims. Mr Holyoake has claims under the Consumer Credit Act 1974 which are brought by him alone, and both parties agree that the costs attributable to these claims should be left out of account. The Defendants suggest a figure of £200,000 for these claims reducing the total to £8,212,212.36 plus VAT. They also acknowledge that they would not recover the total costs on a detailed assessment, but suggest they would recover 75%, which is about £6.15m plus VAT or £6.75m in all.
53. Mr Stewart does not suggest that this is anything other a genuine estimate of what the trial will now cost the Defendants but he points to the constant and substantial increases in the Defendants' estimates of costs. Smith 2, served in support of the first application and dated 4 December 2015, gave an estimate of £3.9m (not including VAT); Smith 7, dated 13 April 2016, increased that to £5.4m; Smith 15, dated 15 July 2016, to £6.2m; and Smith 18, dated 12 August 2016, to the current £8.4m. Mr Stewart says that these increases are primarily not due to any change in the nature of the case (although he accepts that disclosure has been a more extensive exercise than originally anticipated) but to the fact that the Defendants have chosen to change their counsel team and are now to be represented by two silks and a junior at trial, and the estimates for such matters as witness statements and experts' reports have increased due to increased involvement of counsel including leading counsel. That goes to two matters: first, as to whether this level of costs would be recoverable on assessment and second as to the exercise of the Court's discretion. Mr Stewart also put forward a figure of £600,000 for the Consumer Credit Act claims rather than £200,000; and as to the percentage recoverable on assessment, Mr Stringfellow's evidence is that his experience is that for large firms like Gowling, the rate of recovery is more likely to be of the order of 60% to 65% than 75%.
54. A number of detailed points were also taken in the evidence but I do not think I need to go through them one by one. For present purposes what I need to do is decide on an amount that is likely to be recoverable on an assessment and for that purpose there are bound to be numerous uncertainties and all I can do is adopt a broad brush approach. I propose to take the Defendants' figure for the Consumer Credit Act claims of £200,000, largely on the basis that I have evidence from Mr Smith that he has reached this figure after considering the question but I have no evidence which supports the £600,000 figure. It also seems probable that the point will not require much if any separate evidence or disclosure, so it is likely to simply be a question of time taken up with legal argument. Allowing for that brings the total estimated to be incurred down to about £8.2m.
55. So far as the recoverable costs are concerned, however, there is some force in the Claimants' criticisms. The figures now being put forward are not only very large in themselves, but are very substantial increases even from figures put forward as recently as July. Some of that is no doubt due to an increase in documents disclosed, which has a knock-on effect on trial preparation and witness statements and the like, but the overall figures are still larger than one would have expected for a trial estimated to last 7 weeks. Mr Plewman accepted also that there would inevitably be some duplication caused by the decision to change counsel, although he said it would be small.
56. What I propose to do is reflect these matters by taking the lower end of the percentages put forward, that is 60%, as the likely recoverable rate of costs. It is impossible to be more scientific than that. Taking 60% of £8.2m gives £4.92m, which I will round up to £5m, and adding the irrecoverable VAT (1/2 of 20%) makes £5.5m. That still seems to me to be a very substantial figure for the costs of this litigation but it does not seem unrealistic.
57. On that basis the ATE policy of £4m is not sufficient by itself to meet the likely costs. Since Hotblack has no other assets itself, the threshold condition in CPR 25.13(2)(c) is satisfied, and the remaining question is one of discretion. There was no dispute between the parties as to the correct approach. The existence of a co-claimant against whom no security can be ordered is not a bar to the ordering of security, but is a factor to be taken into account in exercising the discretion (see Pearson v Naydler [1977] 1 WLR 899 at 905D); and if the co-claimant could be shown both to be liable for the same costs and a good mark for those costs, that is capable of being a good reason not to order security (see the decision of the Irish High Court in Kimpton v Ferox [2013] IEHC 577). Mr Stewart accepts that the onus of showing that Mr Holyoake is a good mark lies on the Claimants.
58. Two assets are relied on for this purpose. One is Mr Holyoake's interest in ISI which I have already referred to above. The other is his house, a villa in Ibiza with some surrounding land. The villa is owned by an Irish company called Hollywell Ltd, and two other plots of adjoining land which form part of the same estate are owned by another Irish company called Blue Valley Ltd. Both companies are owned by Mr Holyoake and his wife equally.
59. As with other aspects of this application the question of the value of Mr Holyoake's interest in the property has been addressed in successive rounds of evidence. This indicates the following:

(1) The accounts for Hollywell Ltd for the year ended 30 September 2011 stated the value of its investment property (which is a reference to the villa) as €14,581,921. The property was said to have been subject to external valuation as at 30 September 2011 and to be stated at market value. The accounts for Blue Valley Ltd for the same period stated the net book value of its property asset as €1,418,079, that the directors were of the opinion that the net book value equated to its open market value, and that it was valued on a desktop basis by Savills Commercial Ltd on 28 June 2011. The two figures together come to €16m.

(2) The 2012 accounts gave the same figures; the 2013 accounts gave the same overall figure of €16m, but split differently, €13.2m now being attributed to Hollywell and €2.8m to Blue Valley. The 2014 accounts (signed off by Mr Holyoake as recently as 15 July 2016) showed a modest increase in both values to €13.58m and €2.88m respectively, a total of €16.46m.

(3) A number of valuations have taken place over the years. In May 2010 Savills valued the villa alone (ie the property held by Hollywell and not the plots held by Blue Valley) for Citi Private Bank at €14.5m. As appears from the 2011 accounts it seems that Savills gave a desktop valuation for the whole estate of €16m, although I have not seen it. I have also not seen a valuation that appears to have been carried out by Brian Francis & Associates in Gibraltar for a financial lending institution in September 2012, and I do not know what value they reported. In November 2012 Property Works carried out a valuation for ABN Amro Bank (Luxembourg) SA ("ABN") which valued the villa alone at €14m (but with a forced sale valuation with a reduced marketing period of 12 months of only €8m), but all three plots together at €18.5m. Also in November 2012 Savills updated their valuation to €16.5m.

(4) In August 2015 Knight Frank Espana prepared a sales mandate for Mr Holyoake which referred to marketing the property and seeking offers substantially in excess of €30m. A sales mandate does not imply a formal valuation: it is just an instruction as to the price at which to market a property, although it presumably reflects advice from the agent as to a price at which it makes sense to offer the property to the market.

(5) In April 2016 Mr Francis of Brian Francis & Associates provided a desktop valuation based on his 2012 inspection, saying it was understood to be required for internal book keeping purposes. This valued the villa at €18.8m, and the two other plots at €5.5m and €3.5m, making a total of €27.8m. A note indicated that the market value assumed a normal marketing period of 18-24 months; for a forced sale in less than 6 months, at least a 25-30% discount would need to be reflected. There is reference in the valuation to planning permits having recently been granted for construction on each of the Blue Valley plots, one in January 2016 for guest accommodation on the larger plot, and the other in October 2015 for a sports and entertainment complex on the smaller plot. These seem to be just permits in principle or outline permissions. The valuation says that it is a valuation of the estate as a whole with villa and land "without the benefit of the planning permission for the proposed schemes to be submitted for planning approval being the Lounge complex and the Sports Facility"; this is unexplained as the valuation attributes significant value to the plots which one would have thought could only be as a result of the permits obtained. I infer that what Mr Francis probably means is without the benefit of detailed planning approval which would require the submission of detailed schemes.

60. On the basis of this evidence, it seems to me that there is a consistency in the valuation of the villa itself, at between €14m or so and €18.8m, and that until the recent valuation by Mr Francis, the addition of the Blue Valley plots did not significantly add to the value, the whole estate being valued at between €16m and €18.5m. It is only Mr Francis's valuation which attributes very significant values to the plots. This may be because of the planning permits that have been obtained, but these matters have not been explored in evidence or submissions before me, and on the face of it it seems a little surprising that plots of land with permission in principle to build ancillary accommodation should be valued at €9m when the main house, described as a grand detached villa, is valued at €18.8m. Moreover even taking Mr Francis's figures a forced sale within 6 months would reduce them by "at least" 25%-30% which would mean a total of €19.46m to €20.85m, or say about €20m. It is also noticeable that the discount proposed by Property Works for a forced sale within 12 months was rather larger, discounting the value of the villa from €14m to €8m, a reduction of over 42%. A comparable reduction on Mr Francis's figures would reduce the value of the estate on a forced sale to under €16m.
61. The other factor to take into account is the loan charged on the property. The evidence is as follows:

(1) The 2013 accounts for Hollywell state that the company repaid a bank loan of €5.5m to City Private Bank (sic) in January 2013 and entered into a new loan agreement with ABN, with a charge secured for a maximum liability of €16,187,500. The total of bank loans and overdrafts shown in the accounts was €12,950,000. The 2014 accounts contained similar entries.

(2) Stringfellow 4 (16 March 2016) said that the amount drawn down on the ABN facility was only €6.5m and not the €12.9m referred to in the accounts; Mr Stringfellow's third affidavit, sworn on 26 April 2016 in support of an application for injunctive relief, referred to what was described as a current statement of the amount outstanding on the mortgage of €7.76m. In fact what is exhibited is the first page of a portfolio valuation as at 31 March 2016 which appears to show some €13m as owing to the bank but with assets (funds, shares and bonds) valued at some €5.3m, leaving a net asset position of - €7.76m. That is not I think the same as the current amount outstanding on the mortgage being €7.76m: in the absence of further explanation, I would take that to mean that the entire €13m (which is noticeably close to the €12.95m shown in the 2013 and 2014 accounts) was secured by the charge, albeit that the bank no doubt also has security over the financial assets.

62. In these circumstances I am left in considerable uncertainty as to the current value of Mr Holyoake's interest in the property. There are a number of unknowns. I do not think I can be confident that on a forced sale it would realise more than €16m, and it might realise less. If the property were sold, ABN might be entitled to have recourse to the proceeds of sale for the entirety of the debt which is currently about €13m. More significantly, I am told that ABN's facility has a maximum liability of over €16m, and I cannot know whether Mr and Mrs Holyoake will draw down on the facility between now and the end of the trial (or indeed whether they have already drawn down on it since March) – among other things I have no evidence as to how Mr Holyoake is financing this litigation, or indeed what his own costs are anticipated to be, although even if he is not spending the same as the Defendants, the costs are bound to be very heavy.
63. There is also another aspect to it. It is established that in considering, for the purposes of CPR 25.13(2)(c), whether there is reason to believe that a company claimant will be unable to pay the defendant's costs if ordered to do so, the relevant question is whether it would pay within the time ordered, that is usually 14 days or 28 days. A company that has illiquid assets and could pay in the end but is unable to pay with any high degree of promptness is within the wording of the rule: Longstaff v Baker & McKenzie [2004] 1 WLR 2917 at [17]. The same must apply if the question is whether a co-claimant is a good mark, as the principle is that security need not be ordered against a company that is unable to pay if someone else will. Whatever the value of Mr Holyoake's interest in the property, it is inevitably going to take some time to realise. I cannot conclude on the material before me that Mr Holyoake's ownership through the Irish companies of the property means that he will be able to meet an order for costs in favour of the Defendants within anything like the normal timescale; and to be fair to Mr Stewart he accepted that if that was Mr Holyoake's only asset he did not suggest that it would be enough to show he was a good mark.
64. That leaves Mr Holyoake's interest in ISI. I have dealt with this above. For reasons already given, I can have no confidence whether any of the proceeds of sale that were said to have paid to Mr Holyoake's account are still there, or will still be there at the end of the trial; and although there is undoubtedly evidence that Mr Holyoake owns (through ISH) a 60% shareholding in what appears to be a substantial and valuable company, I am not told that that is unencumbered and am left unsure whether it will be available to meet any costs order at the end of the trial. Nor do I think I know how long it would take to realise. Mr Stewart suggested that even if it could not be sold quickly, money could be raised on it quite quickly. That seems a reasonable assumption, but in fact serves to illustrate that the fact that Mr Holyoake currently owns the shareholding does not demonstrate that it will be available at the end of the trial. My conclusion is that Mr Holyoake does have substantial assets, but that the question that needs to be addressed – has it been shown that he would be able to pay any costs ordered promptly? – is not the same, and I am not satisfied that it has. In those circumstances I do not consider that Mr Holyoake's assets are an answer to the Defendants' application.
65. The third answer that Mr Stewart gave to the application was the ATE policy, which is accepted to be sufficient to meet £4m of costs; but is not by itself sufficient to meet the figure of £5.5m which I have adopted as the likely recoverable costs.
66. Mr Stewart also relied on a number of supporting considerations as to why what is ultimately a discretion should not be exercised in the Defendants' favour. One of these was the delay in the matter being brought before the Court; it does seem to me however that it was reasonable for the Defendants to withdraw their first application in the light of the apparent evidence that Mr Holyoake had €20m sitting in an account, and that since then the time taken to bring the matter back before the Court has not been the fault of the Defendants. He referred to the apparently excessive estimate of costs; but I have already factored that into account in assessing the likely level of recoverability. He referred also to the real possibility that there is an element of seeking to stifle or quash the claim; but it seems to me very difficult for Mr Holyoake at one and the same time to say that he has ample assets to meet any order for costs and yet that it will cause him difficulties if Hotblack is required to comply with an order for security.
67. The general principle is that a defendant who is sued by an impecunious company should not be at risk, if he succeeds in his defence and has an order for costs in his favour, of that order being left unsatisfied. It is therefore generally just, once the risk has been shown to be more than fanciful, that security should be ordered. I see no reason to take a different view in the present case and will therefore order Hotblack to provide security in the sum of £5.5m, of which it is agreed that the ATE policy will stand for £4m. I will hear counsel, unless the parties are able to reach agreement, as to what order should be made as to how and when the balance should be provided.