Court of Appeal rejects "sliding scale" test in assessing quantum of security for costs
The first instance decision in this case was reported in our last Newsletter. The Defendants sought security for costs against the Claimant on the basis that she was an individual resident outside of the EU/EEA (CPR r25.13(2)(a)). The judge found that there was a real risk of non-enforcement in Russia, but the greater probability was that enforcement would be possible but take longer and be more difficult. The judge held that in such circumstances, a "sliding scale" should be applied to the costs claimed. The Court of Appeal has now upheld an appeal from that decision.
Prior case law has held that where there is a risk of non-enforcement, the court may order security to cover the full likely recoverable amount of costs to date and then later to trial, but where the risk is limited to additional costs or delay, security should usually be ordered by reference to that extra burden of enforcement. Hamblen LJ observed in this case that "[m]ere difficulty of enforcement in itself is not enough (save in so far as it results in additional costs and therefore an extra burden of enforcement)". It was therefore difficult to see how delay could be quantified in terms of security, unless that delay was also likely to result in some additional cost or interest burden. Furthermore, a sliding scale approach would require a detailed evidentiary exercise, which the courts should avoid in security for costs cases.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
