Case No. B50CF015
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
CARDIFF DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

Cardiff Civil Justice Centre
2 Park Street
Cardiff, 
CF10 1ET

Date: 6th July 2016

Before:

His Honour Judge Keyser Q.C.
sitting as a Judge of the High Court
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Between :

	DAWNUS SIERRA LEONE LIMITED	Claimant	
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	TIMIS MINING CORPORATION LIMITED & ANOR	Defendant	

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Counsel for the Claimant: MR ANDREW BUTLER
Counsel for the Defendant: MR BRIAN DYE
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Judgment Approved By the Court

H.H. Judge Keyser Q.C.  

Disclosure of identity of third party funder
1.	By application notice dated 29 June 2016, the claimant seeks, among other things, an order that the defendant disclose the identity of the third party funder that is funding its litigation both here and in Sierra Leone and confirm in respect of each such funder whether he, she or it comes within the conditions set out in CPR r. 25.14(2)(b).  
2.	Rule 25.14(2)(b) immediately follows the two rules that deal with an order for security for costs against a party.  Rule 25.14 reads, so far as material:
“(1)	The defendant may seek an order against someone other than the claimant, and the court may make an order for security for costs against that person 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) 	one or more of the conditions in paragraph (2) applies.
(2) 	The conditions are that the person …
(b)	has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property which the claimant may recover in the proceedings; and
is a person against whom a costs order may be made.”
3.	It is convenient to deal with this part of the application out of turn.  The claimant’s reliance on r. 25.14 is really in the alternative to the application for security for costs against the defendant, on which I have not yet ruled.  It also follows from that fact, and from the wording of paragraph (1) of the rule, that the claimant makes this particular application as being in the position of defendant to the counterclaim brought by Timis.  For the purposes of considering the application under r. 25.14, I shall assume that the claimant is such a defendant. 
4.	The court is able to give efficacy to its power under r. 25.14 by making an order for disclosure such as the claimant seeks.  However, in the present case the evidence that has been put in by the defendant and has not been contradicted is to the effect that its funding comes from two sources: first, its own resources; second, a third party who has received no agreement for a share of proceeds of the litigation, who has taken no security and who has received no fee for the lending.  In those circumstances, it seems to me that there is simply no evidential basis on which I could properly order disclosure in furtherance of the court’s power under r. 25.14.  
5.	The alternative way in which the matter is put on behalf of the claimant is that the court has power under section 51 of the Senior Courts Act 1981 and Part 46 of the Civil Procedure Rules 1998 to make an order for costs against a third party, which may include in a given case a third party funder, and that for the purpose of giving efficacy to that power the court has an ancillary power to order disclosure of the identity of the third party funder and, where appropriate, the basis of the funding agreement. 
6.	In my judgment, the exercise of such an ancillary power at this stage would be clearly inappropriate.  If hereafter the claimant were intending to seek an order for costs against a third party funder and there appeared to be grounds on which such an order might be made, of course the court would not be prevented from making a third party costs order because it lacked knowledge of the identity of the third party funder; it would, if it considered appropriate, make an order for disclosure of the identity of the funder and the basis on which the funding had been provided.  However, I see no proper basis at all for making that kind of an order in advance of circumstances in which an application could be countenanced.  To do so would be inappropriately intrusive and in the nature of a fishing expedition.  So that part of the application in the application notice dated 29 June 2016 will be refused.
[Hearing continues]
The substantive security for costs applications
7.	Each party has applied for security for costs against the other party under CPR r. 25.13.  
8.	The background to the proceedings is familiar to the parties and I may therefore set it out in short summary.  The parties were in a contract of some form—there is a dispute as to what form and what terms—concerning works to be done by the claimant for the defendant at the Marampa mine in Sierra Leone.  When the relationship between the parties came to an end by virtue of the termination of the contract by the election of the defendant, there was, as both parties accept, an account to be struck as to what moneys were due and owing and to whom.  On the one side of the account stand moneys payable to the claimant for (broadly speaking) work that had been done, and on the other side of the account stand payments made by the defendant to the claimant.  The defendant says that it has already paid far more than the claimant was entitled to receive in respect of its work.  The claimant says that far more is owed to it in respect of its work than has been paid to it by the defendant,  In essence, that is what the case is about.  There are disputes concerning the applicable contractual terms and also disputes concerning quantification and valuation.  When the dispute initially arose, the defendant commenced proceedings in Sierra Leone, seeking repayment of the alleged overpayments.  It also obtained an injunction, initially ex parte and thereafter continued after an inter partes hearing, to restrain the removal by the claimant of its items of plant and equipment from whatever might have been their then current location.  The injunction was sought on two grounds: first, that the claimant was seeking to put the items beyond the reach of enforcement of any future judgment; second, that the defendant had a lien on the equipment to secure its entitlement to repayment.  Whatever may have been its precise terms in other material respects, the contract between the parties contained a non-exclusive jurisdiction clause specifying England and Wales as the non-exclusive jurisdiction.  In reliance on that clause, the claimant has done two relevant things.  First, it has commenced proceedings in this court, seeking payment due to it on the account and damages in respect of what it alleges to be the wrongful restraint of its plant, equipment and machinery.  Second, it has sought to restrain in Sierra Leone the proceedings going on there, on the basis that the proceedings ought to be taken here if anywhere.
9.	At an earlier stage of these proceedings, I refused an injunction to restrain the defendant from carrying on the proceedings in Sierra Leone, instead leaving it to the court of Sierra Leone to decide what should happen to those proceedings, and I permitted the claimant to continue with these proceedings on the basis, put shortly, that it had a contractual right to do so, even though there were a consequent risk of two parallel lots of proceedings going on at the same time.
10.	The amount sought by each party on the account is somewhere around US$17 million; the amounts, though not identical, are quite similar.  The claimant also seeks quite substantial ongoing damages which take the claim, as it is formulated, above US$40 million in respect of what is alleged to be the unlawful restraint of its machinery, plant and equipment. 
11.	In these circumstances, each party applies for security for costs against the other under r. 25.12 (1): “A defendant to any claim may apply under this Section of this Part for security for his costs of the proceedings.”  Importantly, in this context “defendant” refers to the role that one has in respect of a claim brought in proceedings so that a claimant may be a defendant to a counterclaim.  
12.	Rule 25.13 provides, so far as material for present purposes:
“(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…
(c)	the claimant is a company… (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so…”
13.	Each party is a company; the claimant is registered in England and Wales, and the defendant is registered outside Great Britain.  Each party accepts, for the purposes of these applications, that there is reason to believe that it will be unable to pay the other parties’ costs if ordered to do so.  Therefore, as regards the defendant’s application for security for costs, the question is whether, having regard to all the circumstances of the case, it is just to make such an order.  As regards the claimant’s application for security for costs, there is the further question whether the claimant properly falls to be considered as a defendant in respect of the counterclaim for the purposes of the rule. 
14.	In considering the justice of the case under r. 25.13(1)(a), the court has to have regard to all of the circumstances.  Many cases provide further guidance, among them Sir Lindsay Parkinson & Co v Triplan Ltd [1973] Q.B. 609.  For the most part that guidance does not take things very much further in this case.  For present purposes, each party’s case is to be considered as bona fide and not a sham  Each party is to be considered, on the information before me, as having reasonably good prospects of success.  It is generally inappropriate, and is inappropriate in this case, to attempt to investigate the merits where they are not plain and obvious.  Neither party suggests that the application for security is being used oppressively against it, for example, in order to force it into a position where it may not be able to continue the proceedings.  Both parties have made their applications at a reasonably early stage.  In the circumstances, the critical issues are, first, the relative and respective positions of the parties and the question whether the defendant is to be considered as a claimant in respect of the counterclaim, and, second, the amount of any security that might be ordered.  
15.	I turn first to the defendant’s application for security from the claimant.  The evidence is principally set out in the third statement of Miss Katie Pritchard, the defendant’s solicitor.  She estimates that the total costs of conducting the litigation will be £1.4 million or thereabouts.  This is not demonstrated in the form of a Precedent H costs budget; because of the value of the case, the cost management provisions of Part 3 of the Civil Procedure Rules do not apply.  In her statement, she seeks security of £1 million as against an offer made by the claimant by a letter dated 10 June 2016, before the filing of the application, of £400,000.  After the application was filed, the claimant made an offer to give security of £500,000.  The former offer was conditional on reciprocity, that is, on the provision of similar security by the defendant.  
16.	For the defendant, Mr Dye submits that an appropriate order would be for the claimant to provide security of either £1 million for the whole proceedings but in staged payments as the various stages of the litigation progressed or, alternatively, something of the order of £750,000 to £800,000 to take the matter to and including the stage of the pre-trial review, when the need for any further security could be considered.  
17.	Mr Dye specifically addressed the issue that was raised by Bingham LJ, with whom Parker LJ agreed, in BJ Crabtree v GPT Communication Systems [1990] 59 BLR 43 at 52:
“It is… necessary, as I think, to consider what the effect of an order for security in this case would be if security were not given.  It would have the effect, as the defendants acknowledge, of preventing the plaintiffs pursuing their claim.  It would, however, leave the defendants free to pursue their counterclaim.  The plaintiffs could then defend themselves against the counterclaim although their own claim was stayed.  It seems quite clear - and indeed was not, I think, in controversy - that in the course of defending the counterclaim all the same matters would be canvassed as would be canvassed if the plaintiffs were to pursue their claim, but on that basis they would defend the claim and advance their own in a somewhat hobbled manner, and would be conducting the litigation (to change the metaphor) with one hand tied behind their back.  I have to say that that does not appeal to me on the facts of this case as a just or attractive way to oblige a party to conduct its litigation.”
Mr Dye said that, if the claimant were ordered to provide security but failed to do so, the defendant would agree that its counterclaim stand in the same position as the claim: thus, if the claim were stayed for non-provision of the security, the counterclaim would also be stayed; if the claim were struck out for non-provision of the security, the counterclaim would also be struck out.
18.	Subject to considerations of reciprocity, the claimant accepts that it would appropriately be ordered to give security and has has offered security of £500,000.  In the circumstances, I shall state my conclusions on the defendant’s application after considering the claimant’s application, for it is on the claimant’s application that much if not all turns.
19.	The critical question concerns the significance of the counterclaim.  In one sense, of course, it is quite clear that the defendant is claimant on the counterclaim.  But that simple point is not the be all and the end all.  The defendant’s contention is that its counterclaim is effectively simply the defence to the claim.  It is facing a claim for payment of the balance on an account, and its answer to that claim, if correct, involves there being a balance in its favour.  The counterclaim does not become an independent claim just because the defendant says that certain additional factors have to be taken into the account or, indeed, just because it says that the account produces a balance in its favour rather than producing no balance either way.  To order security to be given would, in effect, be to give the claimant security for the costs of meeting the defence to its claim, which is contrary to principle. 
20.	Importantly, Mr Dye submits that it is certain that the defendant would not have sought to instigate proceedings in this court if the claimant had not done so.  The defendant had already commenced proceedings in Sierra Leone; it neither wished nor would ever have wished to pursue a claim in this jurisdiction as well and indeed took such steps as were open to it to attempt to bring the proceedings in this jurisdiction to an end.
21.	The basic principle underlying security for costs in was identified by Black LJ in Autoweld Systems Ltd v Kito Enterprises [2010] EWCA Civ 1469, at [69]:
“It must be borne in mind that the design of the rules is to protect a defendant (or a claimant placed in a similar position by a counterclaim) who is forced into litigation at the election of someone else against adverse costs consequences of that litigation.”
22.	That point was elaborated and its ramifications drawn out by Sonia Proudman QC, as she then was, sitting as a deputy judge of the High Court in Thistle Hotels Ltd v Gamma Four Ltd & Ors [2004] EWHC 322 (Ch), [2004] 2 BCLC 174, at [28]:
“The policy behind the jurisdiction to order security for costs is to counter the prejudice suffered by a defendant who is unsuccessfully pursued by a claimant unable to meet an order for costs.  It is not intended to counter prejudice to a claimant in meeting a defence that proves unsuccessful.  It is the claimant’s business if he chooses to sue a defendant who is not good for costs.  An impecunious defendant is not to be prejudiced in defending the main claim by an order for security on the counterclaim.  In CT Bowring v Corsi [1995] 1 BCLC 148 at 153 Dillon LJ said that there was: 
‘…a strongly established rule of practice that a person who is in the position of a defendant is to be at liberty to defend himself and is not to be called upon to give security...  I regard this as a rule of practice, and not a mere matter of discretion to be determined on the facts of each individual case - although of course any decision even to order a plaintiff to give security is a matter for the court's discretion… I regard this rule of practice as of the same class as the rule of practice under which any litigant other than the Crown or a public authority as law enforcer, who obtains an interlocutory injunction is required to give a cross-undertaking in damages.  That is not a matter for discretion in the individual case.
...it is clear that an impecunious company which makes a, counterclaim which is more than a mere formulation of its defence can be ordered to give security for the plaintiff's costs of the counterclaim’.”
23.	The principles concerning the role of defendants were set out by Lawton LJ, with whom Sir Stanley Reece agreed, in Samuel J Cohl Co v Eastern Mediterranean Maritime Ltd (“The Silver Fir”) [1980] 1 Lloyd’s Rep 371.  Having referred to some other cases, Lawton LJ continued at 374 as follows:
“I invite attention to a passage in the judgment of Lord Esher MR [in Neck v Taylor [1893] 1QB 560] at p.562:
'Where however, the counterclaim is not in respect of a wholly distinct matter, but arises in respect of the same matter or transaction upon which the claim is founded, the court will not, merely because the party counterclaiming is resident out of the jurisdiction, order security for costs; it will in that case consider whether the counterclaim is not in substance put forward as a defence to the claim, whatever form in point of strict law and of pleading it may take, and, if so, what under all the circumstances will be just and fair as between the parties; and will act accordingly.’
What Lord Esher MR was saying was that there is a discretion to award security for costs even in cases which arise out of the same subject matter.  But if the counterclaim is a defence and nothing more then normally the discretion should not be exercised in favour of ordering security.”
A little later on the same page, he says:
“The problem now arises as to how the discretion should be exercised in this case.  Considerations of equity arise.  What is fair and just in all the circumstances?  In my judgment where, as in this case, both parties carry on business outside the jurisdiction, both are claiming against the other as parties who have been badly treated and have suffered damage, and it was mere chance that one started the arbitration before the other could get in a claim, then both should be treated alike.  If one gets an order for security for costs, then the other should too.”
24.	The Silver Fir was considered in Hutchison Telephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307, where the defendant was considered to have crossed the boundary between an aggressive defence and an independent counterclaim.  At 316 Dillon LJ considered the facts of that case and made more general observations:
“On which side of the line does this case fall? The claim for injurious falsehood may be covering matters which would be covered by the claim for loss of profit, though the cause of action in injurious falsehood is not the same and involves proving other matters which are not necessary to be proved to establish mere loss of profit from a breach of contract. It bears every hallmark, however, of the view that attack is at least the best form of defence. Taking, however, not just that one factor, but the claim as a whole, my conclusion is that this is not the case referred to by Lord Esher MR, where the counterclaim is in substance put forward as a defence to the claim, but where there is in truth a cross-action which goes beyond operating as a mere defence.
I should add that there are two different types of case where a question may arise that a counterclaim put forward by a defendant is really only to be regarded as part of the defence. One is the case of equitable set-off where the defendant asserts, by his counterclaim for instance, that a sum of money is in any event due to him under some other aspect of the very agreement or transaction on which the plaintiff is suing whether the plaintiff's claim be valid or not, and there is a plea of equitable set-off of the moneys so due and claimed by counterclaim against the moneys claimed by the plaintiff in his claim, should those be held otherwise to be payable. In such a case it may be (and there are suggestions that that could be the case with the commission aspect of the present case) that quantifying the amount of the counterclaim, the sum that would be set off, is no very difficult matter. In such circumstances, it may be easy to say that in truth the set-off was the defence, the counterclaim is pleading the defence, and it would not be appropriate to grant security.
The other case, where again a counterclaim may be just the automatic counterpart of the defence, is where there is a claim to establish that the plaintiffs are entitled to something, possibly merely a declaration to that effect, and there is a counterclaim for the opposite declaration, which would be the automatic counterpart of the claim of the plaintiffs failing. There again it would not, I would think, normally be appropriate to order a defendant to give security for costs of such a counterclaim. But there are other circumstances which may lead to other conclusions, as for instance where, in The Silver Fir, there were two claims on different aspects of the one event and it was a matter of chance which party happened to be the plaintiff and, on one ground or another there was jurisdiction, be it under s 726 or because of foreign residence, to order security.
It is not necessary to go into those matters in any greater detail in the present case. I conclude, looking at this counterclaim as a whole, that it is more than a mere defence and that security ought to be given.”
Particularly relevant, I think, is what Bingham LJ said at 317:
“At that point one moves on to the largely discretionary area.  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?
It appears to me that Field J put his finger on the appropriate question when he pithily observed in Mapleson v Masini (1879) 5 QBD 144 at 147.
‘The substantial position of the parties must always be looked at.’
For my part, I think that no simple rule of thumb exists to determine the answer to the question.  An order for security against a counterclaiming defendant is not precluded because the counterclaim arises out of the same transaction as the claim.  Otherwise no order could have been made in The Silver Fir.  It is again not conclusive that the counterclaim overtops the claim, although I venture to think that the relative quantum of the counterclaim and the claim is not in all circumstances irrelevant. It is clearly a relevant consideration that, if the plaintiffs had not issued proceedings, the defendants would have done, as in The Silver Fir because in such a case it may be almost a matter of chance whether a party happens to be the plaintiff or the defendant; and if the proper inference is that the defendants would have sued anyway, that fortifies the inference that the counterclaim has an independent vitality of its own and is not a mere matter of defence.”
25.	In the present case, the principal evidence in support of the claimant’s application is the statement made by Mr Hugh Hitchcock, the claimant’s solicitor, dated 6 June 2016.  He observes that the claim and the counterclaim are roughly similar in size.  (I note in passing that, as things stand, this is no longer the case, because as well as the claim for an account the claimant seeks ongoing damages in respect of the effects of the injunction granted by the High Court of Sierra Leone.)  He says that both the claim and the counterclaim are concerned with the balance of the account between the parties; subject to the claim for ongoing damages, that is correct.  He says that the counterclaim introduces complex new elements into the proceedings, such as the contractual framework within which the parties were working, the incidence of the cost of fuel and the question whether the defendant is to be credited with having paid Sierra Leonean withholding tax, and he says that those matters “will require detailed witness evidence and submissions which could extend the trial by two to three days.”  In one sense, this last point is correct.  But the important question is not whether the defendant has raised on the account matters that the claimant does not raise, such as the contention that the defendant is entitled to a credit for the cost of fuel, but rather whether the defendant stands in the position of a claimant, not merely as a matter of technicality (in that sense, it clearly does) but as a matter of substance having regard to the rationale and purpose of the rule.  
26.	Mr Hitchcock estimates that the amount of costs attributable solely to the counterclaim up to and including trial will be £875,000 of the budgeted costs.  That, at least, is my understanding of his statement, although in submissions Mr Butler put the matter slightly differently.  At the moment, nothing turns on this question.  As I say, the central question is the status of the defendant on the counterclaim. 
27.	In considering this central question, one cannot ignore what has gone on in Sierra Leone.  As the parties’ respective submissions show, it is in theory possible to view the proceedings in Sierra Leone in two different ways.  On the one hand, it can be said (as indeed it is said by Mr Butler) that the Sierra Leone proceedings demonstrate that the contention by Timis, the present defendant, that it is owed a substantial balance on the account is no mere incident of a defensive posture but is rather a vigorous assertion of a right that it actively seeks to vindicate: that, in Bingham LJ’s expression in the Hutchison Telephone case, the defendant’s counterclaim has an  “independent vitality of its own.”  On the other hand, it can be said (and it is said by Mr Dye) that the Sierra Leone proceedings show clearly that the proceedings in England and Wales are not proceedings that Timis has sought: it has attempted to have them stayed, and it would never have commenced proceedings in this jurisdiction, because it has commenced the only proceedings that it wants, namely those in Sierra Leone.  In those circumstances, Timis’s stance is properly to be viewed as that of a defendant in these proceedings, not as a claimant in a counterclaim.  These two ways of looking at the matter lie at the heart of the issue before me.  The researches of counsel have found no case that is similar in respect of the existence of foreign proceedings and the peculiarity of what may be termed a cross-claim with obvious independent vitality which, nevertheless, has not been actively sought and would not have been actively sought in this jurisdiction.  Accordingly, I must deal with the matter in accordance with the rule and its underlying rationale. 
28.	I have come to the conclusion that it is not appropriate to make an order for security for costs against the defendant, for essentially the reasons advanced by Mr Dye.  
29.	The starting point is that the purpose of the rules is not to give a claimant security for the costs of pursuing a defendant who might have a poor defence but rather to protect a party who is forced into litigation at the election of someone else against adverse costs consequences of that litigation: see the dictum of Black LJ in the Autoweld Systems case, at para 21 above.  It is important not to overlook an obvious aspect of this rationale: the rules are concerned with protection against the costs of litigation, in the sense of actual proceedings in a court to which the rules apply.  That obvious point is relevant to the correct analysis of the present case.  Timis asserts that it is owed a large amount of money on the taking of an account, and it is intent on recovering that money.  In one sense it is obvious that the case Timis advances in the counterclaim involves an assertion of right with independent vitality.  However, Timis chose to assert that right in the courts of Sierra Leone.  It was entitled to do so; commencement of proceedings in that jurisdiction did not involve any breach of contract, because the jurisdiction clause was non-exclusive, although it gave rise to the possibility that there would be proceedings in two jurisdictions concerning the same subject matter.  Dawnus then commenced proceedings in this jurisdiction.  It was (as I have previously held) perfectly entitled to do so.  But it did not have to do so; it chose to do so.  What is obvious, however, is that Timis did not want proceedings here.  It would not have started proceedings here, because it was proceeding in a foreign jurisdiction.  It attempted to stop the proceedings here.  When that attempt failed, it had no option (unless, per impossible, it rolled over and submitted to judgment) but to defend the claim, in respect both of moneys due on account and damages.  As Mr Dye rightly says, in circumstances where Timis is defending the claim for moneys due on an account, the matters that it says should result in a balance being due to it on its counterclaim are all matters that properly arise simply from the defence to the claim. 
30.	It could not be sensibly suggested that Timis could simply have raised all the matters said to be relevant to the account but abstained from asserting a counterclaim and instead simply sought the dismissal of the claim.  Any assertion of the accounting position as Timis maintains it to be produces a counterclaim, and it would be absurd to suggest that giving expression to the logic of its case crossed the line for the purposes of the rules, in circumstances where Timis has not sought and has tried to end these proceedings (and, I observe, where it also faces a large claim for ongoing damages).  The fact that Timis is pursuing its accounting claim vigorously in Sierra Leone, though much relied on by Mr Butler, advances the matter not at all.  Security for costs concerns protection against the costs of specific proceedings within this jurisdiction.  The fact that Timis has pursued its cross-claim in Sierra Leone does nothing to show that it has exposed, or should be deemed to have exposed, Dawnus to a costs’ risk in this jurisdiction against which it ought fairly to provide protection.  Quite the contrary. 
31.	Accordingly, the claimant’s application for security for costs will be refused.
32.	I return to consider the defendant’s application for security for costs.  In the circumstances, the lack of reciprocity relied on by the claimant is no reason why it should not be required to give security for costs on the terms indicated by Mr  Dye.  It seems to me that the appropriate course is to require security for the costs of the proceedings up to the pre-trial review.  The figures that have been provided to me are somewhat broad brush.  I am inclined to say that the correct figure to and including the pre-trial review is £700,000, though I shall hear any submissions as to the precise provision that should be made in that regard.  
[Hearing continues]
Costs of the claimant’s security application and the defendant’s security application
33.	I have to consider the question of costs of the claimant’s security application and the defendant’s security application.  It is rightly accepted by Mr Butler that the claimant should pay the costs of its own unsuccessful application.  
34.	In respect of the defendant’s application, the starting point is that the application was successful and so the prima facie position is that the claimant should pay the costs of the application.  However, it does seem to me that some departure from that principle is justified in this case.  
35.	After the offer of a guarantee by its parent had been refused, by letter of 10 June 2016 the claimant offered a £400,000 cash security on a condition of reciprocity.  At that stage, the claimant did not have a great deal to work on when quantifying its offer.  It is right to say that it was itself seeking security of £875,000, which might perhaps indicate where it would be expected to pitch its own offer.  However, in the letter of 3 June 2016 by which they refused the claimant’s offer of security the defendant’s solicitors had said: “There seems no point for the time being in discussing the amount of security if the form of security offered is unacceptable.”  That meant that the offer of £400,000 was made a little bit in the dark.  I do not really think it is adequate, when one is seeking security, just to say, “Well, we want security but we cannot talk figures.”  The offer of £400,000 was refused on 22 June and the application was issued on 23 June.  Obviously, by that stage the application was becoming urgent because of today’s impending hearing.  But it seems to me that, where the claimant’s solicitors were making efforts to resolve this aspect of the matter (albeit initially, though not on 27 June, subject to a condition of reciprocity), the very least that should have been done was to come up with some figures.  That is not, in my view, enough to defeat the defendant’s entitlement to costs in its entirety.  But it does affect the amount of costs that should be awarded.  I shall order that the claimant pay the defendant (a) its costs of the claimant’s application and (b) 50% of its costs of the defendant’s application.  Those costs shall be subject of a summary assessment on the standard basis, which I shall adjourn to the further case management conference.
THE	JUDGE:  Tell me again what the figures were. 

MR	DYE:  On the one that is 100%, it was £18,850.50.  And on the one that is 50%, it was £19,918.73.   

THE	JUDGE:  Right.  My inclination, given that questions of apportionment may well arise, is to say that the total costs payable by way of payment on account should at this stage be only 10,000.  Does anyone want to say anything about that?

MR	DYE:  My lord, yes.  These applications do not involve any apportionment at all.  The specific disclosure application does.  

THE	JUDGE:  What about attendance at the hearing?

MR	DYE:  I am sorry.  I thought those were matters for summary assessment as such. 

THE	JUDGE:  Well, they are.  But I assume that you have got something in there for the hearing.  Have you, or not?  I have not seen these. 

MR	DYE:  Yes.  My lord, we will accept the payment of £10,000.

MR 	BUTLER:  My lord, while I am on my feet, though, one final matter.  I am going to ask for permission to appeal if I may. 

THE	JUDGE:  On what basis?

MR 	BUTLER:  Well, my lord, the position as we see it is this.  This is plainly a counterclaim with an independent vitality, to use that phrase again.  It is in this court because the defendant agreed as a matter of contract that it could be in this court and furthermore the defendant, having agreed that, voluntarily advanced not just a defence but an aggressive and valuable counterclaim as well and we, certainly on this side of the court, find it difficult to understand how, in those circumstances, there is any justification for treating the parties differently and, in my submission, there is a real prospect, with the greatest respect, of the Court of Appeal coming to a different view on this.  Various authorities that I cited which demonstrated, in my submission, on completely analogous situations or relevantly analogous situations, this was a classic case of payment of security by both sides and, in my submission, the same approach should have been adopted in this case. 

THE	JUDGE:  Yes.  Well, I refuse permission to appeal.  For my part, I do not think that there is a realistic prospect of that argument succeeding because I do not think that the authorities referred to are relevantly analogous.  The principles appear to me to be clear and if the principles are applied in accordance with their logic, then it seems to me that the conclusion I reached was one I was driven to.  I fully accept that I have been in the position of saying that before and the Court of Appeal has disagreed but I cannot at the moment see that there is a realistic prospect of success and I will refuse permission.  I will just record the claimant’s oral application for permission to appeal against the dismissal of the claimant’s security application is refused.  It does occur to me that what I have not done here – I am sorry, this will not take a moment – I have not expressly refused that application.  So what I had better do is stick in another paragraph, had I not, saying that the claimant’s security application was dismissed.  That will affect some numbering.  Would it help you to take away a copy of the order?

MR 	BUTLER:  Yes, [might I be present for this?]

THE	JUDGE:  Yes.  Well, you might as well.  If you can hang on for just two minutes, I will print it out and that will save you waiting for it to come through in the post. 

MR 	BUTLER:  I am very grateful. 

MR	DYE:  My lord, thank you for sitting so late. 

THE	JUDGE:  Fine, thank you.  I am grateful to my clerk for sitting late. 

[Hearing ends]