BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Fetter Lane, London, EC4A 1NL |
||
B e f o r e :
____________________
MRS NEHA BERIWALA |
Claimant |
|
- and - |
||
(1) WOODSTONE PROPERTIES (BIRMINGHAM) LIMITED (2) MR JOGA KHANGURE |
Defendants |
____________________
John Randall QC (instructed by Aspect Law Limited) for the Defendants
Hearing dates: 10 September 2020
____________________
Crown Copyright ©
Master Kaye :
25.13
(1) The court may make an order for security for costs under rule 25.12 if –
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b)
(i) one or more of the conditions in paragraph (2) applies,
…
(2) The conditions are –
…
(e) the claimant failed to give his address in the claim form, or gave an incorrect address in that form;
(f) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that he will be unable to pay the defendant's costs if ordered to do so;
(g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.
Background
Security for Costs:
CPR 25.13(2)(e) - Address on Claim Form
"…I am not at all sure that it is fair to say that the defendant's lawyers have known the right addresses throughout given the state of the evidence about what the residential address was. In any event, the requirement of the rule is not that the opponent's lawyers should know the right addresses but that they should be stated in the claim form. On a proper analysis, I believe that Mr Higginson's real argument is not that the rule was complied with but rather that there has been nothing but a technical breach, of which Associated is making far too much of a meal. I shall have to consider that issue when it comes to discretion, but the fact remains – and in reality it is undeniable – that when it was issued the claim form did not include any residential or business address of Mr Stunt. That is a contravention of Part 16 and its Practice Direction.
"All this said, I do not believe that I would have granted an order for security as a matter of discretion on the basis of this sub-rule."
"The requirement to state the claimant's address in the claim form is a requirement of the rules, and not a mere practice direction. In any event, the claimants' request for Sohan's address was not put on the basis of the practice direction. The claimants' solicitors merely asked for his address, to which Sohan's solicitors replied that the claimants already knew it. There is some material in the evidence that suggests that this may have been so, and in any event the address has now been given in Sohan's witness statement, backed up by supporting documentation. In these circumstances, even if I had taken a different view on the construction of the rules, I would not have exercised my discretion to order security on this ground.
CPR 25.13(2)(g)- Steps to Put Assets Put of Reach of Creditors
It is true that in that case Langley J [Noga] did not feel it appropriate to make the double inference of the existence of assets and relevant steps taken in relation to them, but for my part I think it clear that the judge did regard it as a permissible line of reasoning that, if there is a reasonable inference on all the evidence before the court that a party does have undisclosed assets, then his failure to disclose them could itself although it might not necessarily lead to the inference that he had put them out of reach of his creditors including a potential creditor for costs. The judge simply did not feel that the double inference was justified in the circumstances of that case.
Where a party seeks to suggest that he is devoid of assets and yet able to maintain an expensive lifestyle and to fund litigation on the basis of loans from his family or other third parties, it is incumbent upon him in my judgment to provide details of the nature of those loans, the terms upon which they are granted and in particular to condescend to some further detail in relation to the efforts he has made in order to obtain further funds from the same sources.
When no such details are given and when the evidence is at such a high level of generality as to say that the source of living expenses and legal expenses is mostly loans from family and family affiliated companies and third parties without any further details volunteered, it is in my judgment possible and in many cases appropriate for the court to draw the double inference on which Langley J spoke in the Noga case, which is to the effect both that there are undisclosed assets and also that the failure to disclose them leads to the inference that they have been put out of reach of creditors including of course a potential creditor for costs.
20 It is common ground that the applicant must show two things if this provision is to be relied on: (i) that the claimant has taken steps in relation to his assets; and (ii) that those steps would make it difficult to enforce an order for costs against him.
21 It is to be observed that this is not a provision which, on its face, is concerned with proof of risk. The applicant is required to satisfy the court that steps have, in fact, been taken and that those steps would (not might) make it difficult to enforce a costs order. The authorities make clear that that is an objective test.
Delay
Counterclaim
"In general, the courts recognise that, where there are cross-proceedings, the position is as I have described, and the courts do not order a person in the position of A to provide security for costs of the claim which he is making himself. . . Another application of the same underlying policy is the proposition that, if the defendant advances a counterclaim but the counterclaim is in substance a defence to the original claim, the counter-claimant will not normally be ordered to provide security for the costs of his counterclaim. …"
"The trend of authority makes it plain that, even though a counterclaiming defendant may technically be ordered to give security for the costs of a plaintiff against whom he counterclaims, such an order should not ordinarily be made if all the defendant is doing, in substance, is to defend himself. Such an approach is consistent with the general rule that security may not be ordered against a defendant. So the question may arise, as a question of substance, not formality or pleading: is the defendant simply defending himself, or is he going beyond mere self-defence and launching a cross-claim with an independent vitality of its own?"