Security For Costs Application Rejected Where Defence And Counterclaim Are Struck Out And No Detailed Cost Breakdown Provided

HNW LENDING LIMITED V LAWRENCE & SETFORDS SOLICITORS [2025] EWHC 908 (Ch)

HNW Lending Limited v Nicole Stacey Ann Lawrence [2025] EWHC 908 (Ch) addressed a complex commercial lending dispute involving security for costs and procedural applications. The High Court considered Ms Lawrence’s application for security for costs against HNW Lending Limited, which sought £300,000 for her costs and £500,000 for Setfords Solicitors’ costs, predicated on an alleged inability of HNW to satisfy a potential adverse costs order. The court comprehensively rejected the security for costs application, primarily due to the concurrent striking out of Ms Lawrence’s Defence and Counterclaim. The judge noted that had the application been otherwise meritorious, Ms Lawrence would have been required to provide a detailed costs breakdown rather than a mere assertion of estimated expenses, and the basis for Setfords’ cost claim remained entirely unexplained. Critically, the court’s determination was influenced by the successful strike-out of Ms Lawrence’s substantive defence, rendering the security for costs application procedurally inappropriate. The judgment highlights the necessity of providing substantive evidentiary support for security for costs applications, consistent with established civil procedure principles governing such ancillary relief.

Given my conclusion that the Defence and Counterclaim are to be struck out, it would not be appropriate to order security for costs. Had it been otherwise appropriate to order security, Ms Lawrence would have needed to provide a detailed breakdown of her anticipated costs rather than simply asserting that her estimated costs will amount to £300,000.

Citations

MF Tel Sarl v Visa Europe Limited [2023] EWHC 1336 (Ch) A claim may only be struck out where it is unwinnable and its continuance would serve no benefit, with the accuracy of pleaded facts generally assumed unless contradictory or manifestly false. Global 100 Ltd v Laleva [2021] EWCA Civ 1835 In possession proceedings, a defence must raise a genuinely disputed issue on substantial grounds; this is assessed using the same test applicable to summary judgment under Part 24. Pakistan International Airline Corporation v Times Travel (UK) Ltd [2021] UKSC 40 To establish economic duress, a party must show illegitimate pressure and that it lacked practicable alternatives when entering the contract. Easyair Limited (Trading As Openair) v Opal Telecom Limited [2009] EWHC 339 (Ch) A statement of case should not proceed to trial merely on speculation that disclosure might produce relevant evidence; there must already be a real prospect of success based on concrete facts. Paragon Finance Ltd v Pender [2005] 1 WLR 3412 In cases involving securitisation, legal title and the right to enforce debts and security can remain with the original lender or be conferred upon an agent, depending on the transaction structure and documentation.

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 a party seeks security for costs, the applicant must provide a detailed breakdown of anticipated legal costs to support the amount requested; general assertions or unsubstantiated figures are insufficient. [78]
A party will not be entitled to security for costs where their claim or defence has been struck out, as in such circumstances the application is rendered effectively redundant. [78]
Applications for further disclosure must be supported by evidence identifying the specific relevance and necessity of the documents sought; unsupported applications may be refused. [79]
The court will not defer disposal of a strike-out or summary judgment application solely on the speculative prospect that disclosure may reveal relevant material; more than a hope that “something may turn up” is required. [61]
An application for costs incurred by or on behalf of a third party (e.g. a third-party defendant) must be clearly justified with evidence or submissions explaining the legal basis of entitlement to such security. [78]

Ms Lawrence seeks security for her costs in the sum of £300,000 and security for the costs of Setfords in the sum of £500,000 on the grounds that there is reason to believe that HNW will be unable to pay these costs if ordered to do so.

Key Findings In The Case

Ms Lawrence was found to have authorised her solicitor, Mr Kwatia, to complete the Loan Agreement on her behalf, as evidenced by contemporaneous text messages sent on 30 November 2018, regardless of whether she had reviewed the document in full at that time [51].
The court found that Ms Lawrence had ratified the Loan Agreement by subsequently accepting the £1.52 million loan, failing to contemporaneously dispute its terms, and later entering further loan agreements by reference to it, thereby rendering her bound by its terms regardless of whether she physically signed the final annotated version [52].
The court determined there was no factual or evidential basis for Ms Lawrence’s claims of economic duress or undue influence in relation to the Loan Agreement or subsequent advances; no illegitimate pressure or relationship of trust and confidence was established [56].
The court held that HNW Lending Limited, though not the named lender in the Loan Agreement, had legal standing to enforce both the Loan Agreement and the Charge by virtue of Clause 26.7 of the Loan Agreement and section 1(1)(a) of the Contracts (Rights of Third Parties) Act 1999, which expressly conferred enforcement rights to HNW [72].
The court found that Ms Lawrence’s requests for disclosure and security for costs were procedurally deficient; disclosure was unsupported by evidence as to necessity or relevance, and no cost breakdown or justification was provided in support of the security for costs application, including that made on behalf of third parties [78]–[79].

The claim for security for costs is advanced under CPR rule 25.13(2)(c) on the basis that “the claimant is a company … and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so.” I am not satisfied that the evidence discloses reason to believe that HNW will be unable to pay the defendant’s costs if ordered to do so.

Background

The case at hand involved HNW Lending Limited (“HNW”) and Ms. Nicole Stacey Ann Lawrence (“Ms. Lawrence”), who were involved in a legal dispute regarding a loan agreement and a first charge registered against a property. HNW initiated the claim seeking possession of the property known as Former Social Club, Horton Lane, West Park Road, Epsom, KT19 8PH (the “Property”) and repayment of an outstanding loan amount of £3,535,965.82.

On 10 November 2021, HNW commenced proceedings in Kingston County Court. A possession order was initially granted on 3 May 2022, but it was set aside on 13 July 2023 due to non-service of proceedings on Ms. Lawrence. Consequently, the matter was transferred to the Chancery Division of the High Court. Subsequently, the parties filed various applications including HNW’s application to amend the Particulars of Claim and strike out the Defence and Counterclaim, while Ms. Lawrence sought to strike out the claim, other related reliefs, and security for costs.

Throughout the proceedings, Ms. Lawrence raised various defences, including allegations of duress and undue influence, contesting the validity of the Loan Agreement, and refuting HNW’s entitlement to possession of the Property.

Costs Issues Before the Court

The critical costs issue before the court was Ms. Lawrence’s application for security for costs. Ms. Lawrence sought security for her legal costs amounting to £300,000, and additionally, a separate security of £500,000 for Setfords Solicitors’ costs. The application for security for costs was grounded in the assertion that there was reason to believe that HNW would be unable to meet the costs liabilities if ordered to do so.

The Parties’ Positions

Ms. Lawrence, in her application dated 28 August 2024, contended that security for costs was necessary as there was legitimate concern regarding HNW’s ability to satisfy any potential costs orders. She posited that without such security, she and the third party (Setfords Solicitors) would face substantial financial risk.

HNW, through its submissions, disagreed with Ms. Lawrence’s assertions. The firm contended that the application for security for costs should be rejected, particularly emphasising that with the anticipated striking out of Ms. Lawrence’s Defence and Counterclaim, no basis existed for granting such an order. HNW also highlighted that Ms. Lawrence’s estimate of her own costs was unsubstantiated and lacked detailed breakdowns, thus rendering it unpersuasive.

The Court’s Decision

Judge Andrew Lenon KC thoroughly considered the applications and submissions made by both parties. The court ultimately ruled against Ms. Lawrence’s application for security for costs, reasoning that since her Defence and Counterclaim were being struck out, it would be inappropriate to order security. The judge highlighted that Ms. Lawrence’s estimate of £300,000 for her costs lacked a detailed breakdown and was insufficiently substantiated, and the justification for the security in respect to Setfords’ costs was inadequately explained.

Moreover, the overall observations underscored that further disclosure, which Ms. Lawrence also sought, was deemed unnecessary since it would not materially alter the conclusions reached regarding the binding nature of the Loan Agreement and the enforcement rights under the charge.

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