Additional Security For Costs Ordered For Inquiry And Detailed Assessment Despite Discharge of Injunction.

ALTA TRADING UK LIMITED & ORS V BOSWORTH & ORS [2025] EWHC 1097 (Comm)

In Arcadia (Alta) Trading UK Limited v Bosworth, the High Court addressed multiple complex costs issues arising from the conclusion of a substantial commercial litigation. Following the dismissal of the Claimants’ claims and the success of certain Defendants’ counterclaims, the court considered applications for additional fortification and security for costs. Critically, the court rejected Mr Kelbrick/Attock Mauritius’s application for further fortification of the Claimants’ undertakings in damages, holding that it would be inappropriate to order increased fortification after the injunction’s discharge, even under CPR 3.1(5). The court instead granted additional security for costs to both Mr Bosworth/Mr Hurley and Mr Kelbrick/Attock Mauritius, reflecting the material changes in circumstances since previous security orders. These changes included the Claimants’ depletion of assets, the indemnity costs order, and the upcoming detailed assessment and damages inquiry. The court ordered the Claimants to provide £3,736,451 in security for Mr Bosworth/Mr Hurley’s costs and £2,798,000 for Mr Kelbrick/Attock Mauritius’s costs, calculated at 85% of their estimated future costs for the detailed assessment and damages inquiry, without imposing ‘unless’ orders.

"...the findings in my substantive Judgment about Mr Kelbrick's capabilities, contacts and experience increase the likelihood of his making a recovery in the Inquiry, since they potentially lend support to his case that he would, but for the injunction, have been able to find other lucrative work. That in itself is a material change of circumstances since security was previously agreed. It is also a material change of circumstances that Mr Kelbrick/Attock Mauritius have now succeeded in the litigation and the court has ordered a detailed assessment of their costs and an Inquiry into damages, both representing new sets of costs not previous contemplated or provided for."

Citations

Fiona Trust & Holding Corp v Privalov [2016] EWHC 2163 (Comm) Damages recoverable under a cross-undertaking may include all losses directly caused by the injunction, assessed by a liberal standard similar to that in contract, and including losses for lost opportunities and non-pecuniary harm. SCF Tankers Ltd v Privalov [2017] EWHC 253 (Comm), [2018] 1 WLR 5623 Once the defendant shows a prima facie loss caused by a wrongly granted injunction, the burden shifts to the claimant to show the loss would have been sustained anyway. AstraZeneca AB v KRKA dd Novo Mesto [2015] EWCA Civ 484 Defendants may rely on loss of a chance principles when seeking to quantify damages under a cross-undertaking in support of an interim injunction. Hone v Abbey Forwarding Ltd [2014] EWHC 352 (Ch), [2015] Ch 309 Damages under a cross-undertaking may include stress, upset, loss of reputation and business disruption caused by an injunction. F. Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 Undertakings in damages are given to the court rather than the opposing party, and compensation requires enforcement through court order rather than a direct claim. Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2014] EWHC 1394 (Comm), [2015] 1 WLR 2309 Where a good arguable case for fortification exists, the court should not attempt to resolve disputed causation issues at the interlocutory stage. Commodity Ocean Transport Corp v Basford Unicorn Industries Ltd (The Mito) [1987] 2 Lloyd’s Rep 197 The court should not order fortification of a cross-undertaking in damages once the interim injunction has been discharged, as this would amount to imposing retrospectively a burden not previously accepted. Thai-Lao Lignite (Thailand) Co Ltd v Government of the Lao People’s Democratic Republic [2013] EWHC 2466 (Comm), [2013] 2 All ER (Comm) 883 Fortification cannot be ordered after discharge of the injunction as it would amount to imposing an undertaking that the claimant never gave and remove the claimant’s choice whether to incur that obligation. Napp Pharmaceutical Holdings Ltd v Dr Reddy’s Laboratories (UK) Ltd [2019] EWHC 1009 (Pat) The court lacks jurisdiction to order fortification of a cross-undertaking in damages once the interim injunction to which it relates has been discharged. Miller Brewing Company v Mersey Docks and Harbour Co [2005] EWHC 1606 (Ch), [2004] FSR 5 Approved the principle that fortification must attach to the undertaking as originally offered and cannot properly be required after the injunction is lifted. Slazengers Ltd v Seaspeed Ferries Ltd [1988] 1 WLR 221 When deciding whether to order security for costs against one claimant, the court considers whether other claimants in the same proceedings can meet the potential liability. Hutchinson Telephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307 Security for costs should not be granted where the applicant has claims of their own that would result in one-sided litigation if the opposing party were denied similar protection. C T Bowring & Co (Insurance) Ltd v Corsi & Partners Ltd [1994] BCC 713 A party seeking damages under a cross-undertaking in the original proceedings remains a defendant and is entitled to security for costs from the unsuccessful claimant. JSC Karat-1 v Tugushev [2021] EWHC 743 (Comm), [2021] 4 WLR 66 A claim for damages under an undertaking is still part of the original case and the underlying party remains a defendant, eligible to apply for security for costs. Olatawura v Abiloye [2002] EWCA Civ 998, [2003] 1 WLR 275 The court has power under CPR 3.1(5) to order payment into court outside Part 25, but such powers must be exercised with caution to avoid impairing access to justice. Ali v Hudson [2003] EWCA Civ 1793 Security for costs orders under CPR 3.1(5) must not operate to stifle a genuine appeal, and should be limited to cases of bad faith or serious procedural defaults. Lazari GP Ltd v London & Newcastle (Camden) Ltd [2013] EWHC 97 (TCC) An order for payment into court made under CPR 3.1(5) may reflect sums due under the substantive claim where persistent procedural defaults have frustrated effective case management. Republic of Kazakhstan v Istil Group Inc [2005] EWCA Civ 1468, [2006] 1 WLR 596 Once an agreed order for security has been made, the court will not reopen the issue unless there is a material change in circumstances or wholly exceptional grounds. Excalibur Ventures LLC v Texas Keystone Inc (No 2) [2013] EWHC 4278 (Comm) A post-judgment award of indemnity costs is a material change in circumstances that may justify further security for costs. Stokors SA v IG Markets Ltd [2012] EWHC 1684 (Comm) Following a material change of circumstances, the court may recalculate the total security afresh without linking each element of cost to the specific change relied upon. Republic of Djibouti v Boreh [2016] EWHC 1035 (Comm) Security should not be awarded for speculative future costs where the uncertainty of outcomes makes it premature to assess the likelihood of recovery. MAN Nutzfahrzeuge AG v Freightliner Ltd [2007] EWHC 247 (QB) The court retains jurisdiction to order security for costs in respect of costs incurred in detailed assessment proceedings. Pisante v Logothetis [2020] EWHC 3332 (Comm) In determining the appropriate level of security, the court must consider the risk that a defendant will be under-secured, prioritising protection against unrecoverable costs. Hniazdzilau v Vajgel [2015] EWHC 1582 (Ch) When considering delay in security applications, the court evaluates whether the delay has prejudiced the claimant’s ability to respond or caused other litigation disadvantages. Santina Ltd v Rare Art (London) Ltd [2023] EWHC 807 (Ch) Reiterated the importance of promptly bringing security applications once justification arises, especially if further delay could limit the utility of the application. Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm), [2017] 5 Costs LR 877 Unless orders should reflect the seriousness of prior noncompliance and the need to balance efficient case management with fair opportunities to comply. Aramco Trading Fujairah FZE v Gulf Petrochem FZC [2021] EWHC 2650 (Comm) In deciding whether to strike out a non-compliant party’s case, the court must take account of the intended purpose of the relevant order and the availability of alternatives.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

Where an application is made for further security for costs following a previous order by consent, the court may grant that application if there has been a material change of circumstances, such as an order for indemnity costs or increased exposure due to a new inquiry into damages. [74, 91–92]
To obtain further security for costs in respect of proceedings such as an inquiry into damages or a detailed costs assessment, it is not necessary to have applied for such security at the outset; those costs are distinct from trial costs and justify their own security if the relevant conditions in CPR Part 25 are met. [74, 77, 92]
The quantum of security ordered may reflect a percentage (e.g., 85%) of reasonably estimated costs, particularly where complex or high-value proceedings such as long-running litigation or damages inquiries are involved, provided the estimate is not excessive and is properly supported by evidence. [79, 97]
The court may revisit and increase an earlier security for costs award notwithstanding the agreement of the parties at the time, but only if the agreement was not objectively final as to scope or quantum and the application arises from developments not reasonably anticipated at the time of the consent order. [75, 83]
Delay in making an application for further security for costs is not necessarily fatal where the costs for which security is sought had not yet arisen or were inappropriate to pursue at an earlier stage, and where no procedural prejudice has resulted. [78, 92]

"I have concluded that the Claimants should be required to provide security for Mr Bosworth/Mr Hurley's costs of the detailed assessment and the Inquiry, and that they should be secured at the level of 85% of the estimated costs, as sought. I do not assume that these costs will necessarily be recoverable on the indemnity basis, though Mr Bosworth/Mr Hurley may well have a good argument that they should be (as part of the costs of the proceedings as a whole); but nonetheless consider 85% to be the appropriate figure. I bear in mind that both the detailed assessment and the Inquiry will be substantial exercises, and that the Inquiry has already been listed for what will in substance be a two-week trial next March. Additional security should therefore be provided in the total sum of £3,736,451."

Key Findings In The Case

As at February 2025, the Claimants had significantly diminished their available assets, with the Barclays account holding only US$ 24.5 million—barely above the amount required to be reserved as fortification—while substantial reductions had also occurred in other accounts previously presented as indicative of solvency. [27]
The Claimants’ original applications for security for costs in 2023/24 did not contemplate the costs arising from any future detailed assessment or inquiry into damages; those costs were not included in the estimated figures provided to the court at the time of the earlier consent orders. [83]
Mr Bosworth and Mr Hurley’s actual costs to trial ultimately exceeded their earlier estimates by several million pounds, in part due to the Claimants’ conduct including late disclosure and attempts to introduce materially new claims shortly before trial. [84(v)]
No part of the sums previously paid into court or reserved in designated accounts pursuant to earlier security orders was specifically allocated to cover costs relating to the subsequent detailed assessment or damages inquiry; nor was it proven that any portion of those sums could be treated as surplus for that purpose under the terms of the original agreements. [94–95]
The Inquiry into damages, including complex claims based on Mr Kelbrick’s alleged lost opportunity to join Vitol and participate in its share scheme, is now set to proceed—amounting to new and significant litigation costs not previously addressed—justifying additional security provision for those costs. [73, 103]

"it is in my view appropriate and fair for the Claimants to provide additional security for costs to Mr Bosworth and Mr Hurley, to cover the estimated costs of the detailed assessment and the Inquiry, both of which are new sets of costs not previously taken into account. It is true that, when security was agreed in 2024, it was foreseeable that there might be a detailed assessment in due course and that there might be an Inquiry into damages: indeed, the possibility of an Inquiry was the premise of the agreed fortification. However, I agree with Mr Bosworth/Mr Hurley that it would have been premature to have applied long before trial for security for the costs of a detailed assessment or an Inquiry into damages. That is also in my view the answer to the Claimants' complaint that security for costs should be refused on the ground of delay."

Background

The legal dispute involved Alta Trading UK Limited and its co-claimants against Peter Miles Bosworth and various other defendants. The claim stemmed from allegations of fraudulent misrepresentation and improper trading activities. Initially, in February 2015, Teare J granted the Claimants a worldwide freezing order against the Defendants, requiring fortification of $2 million. Over the following years, the freezing order was continued, supplementary applications for fortification were made, and costs orders against different defendants were issued and reviewed. In February 2025, Mr Justice Henshaw ruled in favour of the Defendants, dismissing the Claimants’ claims and leading to various consequential applications regarding fortification and security for costs.

Costs Issues Before the Court

The primary costs issues under consideration were requests for additional fortification of the Claimants’ undertakings in damages and additional security for costs. Initially, fortification of $2 million had been ordered in 2015, and despite requests for increased amounts over the subsequent years, these had often been refused, with the Claimants offering instead to set aside various amounts in specific accounts. Following the February 2025 ruling against the Claimants, Mr Bosworth and Mr Hurley applied for additional security for costs ($3,736,451), alongside Mr Kelbrick/Attock Mauritius requesting further fortification of $89,045,000 and additional security for costs of £2,798,000 due to asset depletion and increased expected litigation costs related to the Inquiry into damages.

The Parties’ Positions

Claimants: The Claimants argued against the applications for further fortification and security for costs. They asserted no jurisdiction existed to require additional fortification as the injunction had already been discharged. They maintained the existing security (set aside in specific accounts) was adequate, and depletion of assets in jurisdiction was justifiable. The Claimants’ solicitor, Mr Morrison, presented financial documents showing substantial net assets and argued against any need for further fortification or security for costs.

Defendants: The Defendants, particularly Mr Bosworth, Mr Hurley, and Mr Kelbrick/Attock Mauritius, highlighted the insufficiency of current security given the recently ordered Inquiry into damages and detailed assessment of costs. They argued the Claimants had depleted available assets significantly, raising concerns about recovering awarded costs and damages. They sought further fortification equating to the expected extensive litigation costs and argued misconduct and dishonesty by the Claimants justified additional security.

The Court’s Decision

Mr Justice Henshaw ruled against further fortification, agreeing with the Claimants that fortification typically cannot be increased post-discharge of the injunction, applying principles from relevant case law such as The Mito and Thai-Lao Lignite (Thailand). The court found it was inappropriate to apply CPR 3.1(5) to order payment into court in these circumstances.

As to additional security for costs, Mr Justice Henshaw found significant changes in circumstances justified increasing security. The detailed assessment and Inquiry, alongside increased costs due to the Claimants’ conduct, warranted additional security. The court ordered the Claimants to provide further security for Mr Bosworth and Mr Hurley’s costs (totaling £3,736,451) and for Mr Kelbrick/Attock Mauritius (£2,798,000). The orders were not made in ‘unless’ form, allowing liberty to apply to address potential non-compliance.

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