The Senior Courts Costs Office’s decision in Magomedov v Rabinovich [2026] EWHC 962 (SCCO) addresses whether the court conducting a detailed assessment has jurisdiction to order security for the costs of that assessment under CPR 25, or whether its powers are confined to the interim costs certificate procedure under CPR 47.16.
Background
The underlying litigation arose from two alleged unlawful means conspiracies. The Respondents (Claimants in the original proceedings) brought claims against the Applicants — the Eleventh, Twelfth, and Fourteenth Defendants, described as the Rabinovich Defendants — together with nineteen other defendants. The first alleged conspiracy concerned the sale of an indirect interest in a company to a Russian state-owned oil pipeline company at an undervalue, in respect of which the Respondents claimed approximately US$5 billion. The second alleged conspiracy concerned the wresting of control and practical ownership of the Respondents’ stake in one of the largest transport and logistics companies in Russia, with a claimed value of approximately US$8.8 billion, including an entitlement to acquire a further interest under option agreements.
The substantive proceedings were determined by Mr Justice Bright, whose judgment is reported at [2025] EWHC 59 (Comm). At a hearing on 3 May 2024, Bright J awarded security for costs in favour of the Applicants in the sum of £1,162,000. He rejected the Applicants’ alternative application for summary judgment or strike out in respect of certain parts of the Respondents’ claim but held that there was no jurisdiction to hear any of the Respondents’ claims. By order dated 17 January 2025, the Eleventh and Twelfth Defendants were awarded 75% of their costs on the standard basis, and the Fourteenth Defendant was awarded its costs on the indemnity basis. By order of 17 February 2025, substantial interim payments on account of costs were awarded: £1,162,000 in favour of the Eleventh and Twelfth Defendants and £211,286 in favour of the Fourteenth Defendant.
The Respondents’ funding arrangements were described as opaque. Following Bright J’s judgment, a further application was heard by Bryan J for disclosure in respect of those arrangements. That application was granted, with costs awarded in the Applicants’ favour. An interim payment on account of costs of approximately £73,116 was awarded in connection with the disclosure application, and a further interim payment of £32,312 was made in respect of a freezing injunction. The total interim payments awarded across all relevant orders amounted to approximately £1.8 million, a figure supported by an agreed schedule produced to the court. Permission to appeal Bright J’s decision was refused, though a renewal application was due to be heard shortly at the time of the costs hearing.
The Applicants served a Notice of Commencement of Detailed Assessment and a Bill of Costs in the sum of £4.2 million in respect of four costs orders made in their favour, with two further orders relating to an injunction application. At the time of the hearing before Costs Judge Brown on 11 March 2026, Points of Dispute had not yet been served — they were due on 27 March 2026 — and no Request for a Detailed Assessment Hearing had been filed. It was in this procedural context that the Applicants made an application to the Senior Courts Costs Office for security for the costs of the detailed assessment proceedings in the sum of £336,000, representing 70% of an estimated total of approximately £480,000.
The Application and Opposing Arguments
The Applicants sought security in the sum of £336,000, said to represent 70% of the estimated future costs of the detailed assessment. Those estimated costs comprised £220,000 for preparation of the Bill of Costs and approximately £259,000 for preparing Replies, conducting settlement negotiations, and representation at the detailed assessment hearing — giving a total estimate of approximately £480,000. The Applicants contended that there had been material changes of circumstances since the original security for costs order made by Bright J, which justified the court revisiting the position and granting further security specifically referable to the costs of the assessment proceedings. They identified four material changes: the award of costs on the indemnity basis in favour of the Fourteenth Defendant; the applications before Bryan J and his costs orders; the CPR 52.30 proceedings; and an increased risk of non-payment, given that the First Claimant was said to be incarcerated in Russia and had been made bankrupt, and that the Respondents would have no incentive to pay costs if permission to appeal were refused.
The Applicants, represented by Mr Thomas Mason of Fieldfisher LLP, contended that CPR 25.1 and CPR 25.2 conferred jurisdiction on the SCCO to make an order for security for the costs of the detailed assessment proceedings. They submitted that CPR 25.2(1) expressly permits an interim remedy to be made “at any time, including before proceedings are started or after judgment has been given”, and that this language was broad enough to encompass an application made in the context of detailed assessment proceedings following the determination of the substantive claim. They further submitted that, for the purposes of CPR 25.26, they should be regarded as defendants — having been compelled to participate in the original litigation — and that the costs proceedings were sufficiently ancillary to the substantive claim to bring them within the scope of the security for costs jurisdiction.
The Respondents, represented by Mr Imran Benson of Seladore Legal Limited, objected on two principal grounds. First, they submitted that the SCCO lacked jurisdiction to entertain the application at all, on the basis that the court’s powers in detailed assessment proceedings are limited to those set out in CPR 47, and that the only relevant interim measure available is the power to issue an interim costs certificate under CPR 47.16. Second, they argued that even if jurisdiction existed, the application should be dismissed on conventional principles applicable to security for costs applications, including the principle that security cannot be ordered against a party who is, in substance, the defendant to the claim in question. The Respondents contended that, in substance, the receiving party in a detailed assessment is more akin to a claimant pursuing a monetary claim, and that the paying party is in the position of a defendant compelled to participate in those proceedings.
The Respondents accepted that the relevant “gateways” for a security for costs application were satisfied and did not contend that an award would stifle the assessment proceedings.
The Jurisdictional Question
Costs Judge Brown described the application as unusual, if not unprecedented, in the context of inter partes detailed assessment proceedings in the SCCO. Neither advocate was able to find any cases on it, nor was the judge aware of any such application ever having been made in that court.
The judge began by reviewing the fundamental principles governing security for costs. As Lord Millett explained in CT Bowring v Corsi & Partners [1994] BCC 713, the purpose of the jurisdiction is to prevent “the injustice which would result if a plaintiff who was in effect immune from orders for costs were free to litigate at the defendant’s expense even if unsuccessful”. An order for security can be made only against a plaintiff; it cannot be made against a defendant, because a plaintiff institutes proceedings voluntarily whereas the defendant has no choice in the matter and must be allowed to defend himself without being subjected to the embarrassment of having to provide security for the plaintiff’s costs. The court must have regard to the substantial and not the nominal position of the parties.
The judge noted that it appears clear from a number of decisions that when dealing with the substantive claim a court can order security for the costs of the detailed assessment proceedings as costs of proceedings. Thus, while the costs sought under a costs order may be seen as a ‘claim’ by a winning defendant against a losing claimant, the costs of detailed assessment proceedings may form part of the security that the court provides to a defendant in a claim. The decisions appear to assume “proceedings” in CPR 25.26(2) must be understood as including the detailed assessment proceedings for the purpose of determining the amount of security, presumably on the basis that such proceedings are ancillary to the main proceedings, or as it may be put, the assessment of costs are part of the ‘working out’ of the substantive claim.
However, the judge held that it does not follow that merely because the court dealing with the substantive claim could include such costs as part of the security, the court in the detailed assessment proceedings can be assumed to have the same powers under CPR 25.2, rather than the more limited power under CPR 47, once the claim has been determined.
The judge observed that the meaning of the term ‘proceedings’ depends on its statutory context and on the underlying purpose of the provision in which it appears. In Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB), Foxton J held that detailed assessment proceedings were a distinct phase of the proceedings, not an originating process. However, the court was not addressing the issue as to whether for other purposes costs proceedings may be regarded as separate from the substantive proceedings, in particular for the purpose of deciding whether the terms of CPR 25 apply.
Costs Judge Brown reasoned that detailed assessment proceedings have their own particular procedure. They do not set out expressly any power to grant security for the costs of detailed assessment, nor is there any express importation of CPR 25. The only interim measure provided for is the power to order an interim certificate, which is itself a method of providing security for a claim. Whilst CPR 25.2 permits the court dealing with the substantive claim to make an interim order “after judgment has been given”, the use of the word ‘interim’ in CPR 25 at least points to the jurisdiction to make such orders being linked to determination of the claim which the court is then dealing with. It is perhaps difficult to read “after judgment” as extending the power so that it can be used at any time after judgment and even in later cost proceedings, rather than as part of the process of giving judgment.
The judge distinguished the power to order security from ordinary case management powers such as disclosure or requests for further information. Whilst the court does have power to order disclosure under its case management powers or CPR 31, and generally to order a Part 18 request for further information even though the power might not be expressly set out, the power to order security is qualitatively different from ordinary case management powers. The former are rather more obviously case management powers which are integral and necessary to the determination of disputes which arise in detailed assessment, whereas orders for security on claims which have already been determined are not.
The judge held that had it been intended that there should be a power to make orders for security in detailed assessment proceedings, the rules would have said so expressly and made clear the circumstances in which it could be applied for, and indeed who is to be regarded as the defendant and who the claimant for these purposes. The previous status of the parties as claimant and defendant for the purposes of the CPR rules is changed in detailed assessment, so that the parties are referred to as receiving party and paying party. Whilst the fact that the parties are renamed may not be decisive, it is indicative. If the Applicants were right that they should still be regarded as the defendants and CPR 25 did apply independently in costs assessment, then both parties might be able to apply for security, as the receiving party might say they were the defendant to the claim for costs. This would seem to be a highly improbable interpretation.
The judge further held that if CPR 25 had been intended to apply, the rules would have dealt with the difficult issue as to the point at which a claim for costs ceases to be merely ancillary to the original substantive claim and as to whether the court is imposing security for a claimant on a claim — which it is clear the court should not, at least in general, do.
In contrast to the position when the court is dealing with the substantive claim, there is no obvious sanction to enforce an order for security. Mr Mason did not show the judge any basis in law for striking out Points of Dispute, which are not regarded as statements of case, not being documents which require a statement of truth. In any event, in many instances such an order might be a disproportionate sanction.
The judge observed that there is no obvious need for any power to order security in detailed assessment proceedings given the wide powers of the court dealing with the substantive claim. It is far from the ordinary role of the costs court to deal with issues such as the ‘gateways’ and broader considerations which might apply in the event that there were risks of stifling — issues which are outside the SCCO’s normal remit. It is difficult to see how the Costs Court can readily determine whether there has been a material and sufficient change of circumstances when it is not the court dealing with the substantive claim. These can be expensive and time-consuming applications.
The judge noted that an order for interim payment is a form of security, and the court thus has the express power to provide security by way of an interim costs certificate. In the circumstances, and for the reasons set out, the judge was not persuaded that he could read into the provisions of CPR 47, which are at least intended to be part of a self-contained code for detailed assessment, powers that go beyond that.
Following the approach in GFN SA v Bancredit Cayman Limited [2010] Bus LR 587, the court can look to the settled practice of the court and, as the judge indicated, it does not seem that there is any practice of the court making such orders in inter partes claims. If the judge were to accept that the Applicants were right, it would be effectively to import or instigate the risk of a substantial amount of satellite litigation. Had there been such a jurisdiction it would surely have been enthusiastically employed to ward off any challenge to the claim for costs. There is good reason to believe such a jurisdiction would be used oppressively and would give rise to disproportionate costs. Such concerns strongly weighed against what seemed to the judge a novel interpretation of the rules.
The application itself appeared to have generated some £150,000 in costs. Costs proceedings are intended to be costs efficient and afford access to justice in circumstances where parties are often depleted in resources. The judge accepted that there are circumstances where a defendant to a claim may not be fully protected in respect of the costs of detailed assessment, but there are ample means of achieving security before the court dealing with the substantive claim. That must in itself be good reason for rejecting an application for security.
Costs Judge Brown concluded that he was not persuaded that the court dealing with the assessment of costs does have power to order security. But even if there were technically a jurisdiction to do so, the position is akin to a lack of jurisdiction and he should in limine refuse the application.
Material Change of Circumstances and Discretion
The judge went on to consider, in case he was wrong about jurisdiction, whether there had been a material change of circumstances justifying a revisiting of the security previously ordered, and whether in any event the application should be refused as a matter of discretion.
A defendant may obtain an order seeking an increase in security previously allowed if they can justify the further increase by reference to a material change of circumstances; and if the defendant proves such a material change of circumstances the court has a discretion to recalculate afresh the totality of the security. The judge was not satisfied that there had been any adequate or substantial change of any substance justifying the revisiting of the security for the costs of detailed assessment. Whilst the Applicant may be able to identify some changes, these were at best slight. As a matter of discretion, the judge was firmly of the view, in the particular circumstances, that he should not revisit it.
As to the indemnity costs order, the judge accepted that when a court is dealing with the substantive claim, the award of costs on an indemnity basis may amount to a material change of circumstances. However, not only was it not at all clear on what basis the security was granted in this case, the judge was not confident what, if any, difference it would make to the amount of the required security. Proportionality is unlikely to be a factor. Whether on the indemnity basis or standard, the court is required to determine the reasonableness of the costs, and the court is required to apply an objective standard of reasonableness when deciding whether costs have been reasonably incurred. In many cases the court may have little doubt about the reasonableness of the costs it is to award so that there is no need to exercise any doubt in favour of the receiving party. The basis of assessment may thus make no difference. Beyond referring to the award of costs on an indemnity basis, Mr Mason did not provide any clear basis for thinking that the basis of assessment would necessarily affect the extent of the security required. In any event the place for this point was before Bright J, not at this stage of the costs proceedings.
As to the order of Bryan J, if this changed anything it was marginal, as a substantial interim payment had been made against the costs of the disclosure application and a freezing injunction application. The judge may well have taken the view that the award of such an interim payment provided adequate security generally. The further difficulty was the failure to explain why the matter was not raised before the judge who would have been in a far better position to deal with it. In any event additional costs associated with the detailed assessment of perhaps relatively short applications would be modest. This could not justify a general revisiting of the amount of security.
As to the Part 52.30 application, plainly it was not for this court to give security in respect of other applications. It had not been heard at the time of the hearing and presumably the costs of it were not in the Bill.
As to greater risk, the judge accepted that if permission to appeal is refused the Respondents may no longer have an incentive to comply because judgment has already been given. But security is not set as a function of risk. Once the gateways are established and there is a risk of non-payment, then full security is provided. Mr Mason did demur from the judge’s suggestion that security in this case had been set on such a basis. Accordingly, the judge did not accept that the matters relied on were sufficient to justify revisiting the security.
Discretionary Refusal
The judge held that in any event he would reject the application in his discretion.
First, it seemed to the judge that the Applicants could have raised these matters before Bright J, or indeed before Bryan J, in any event when the Court was concerned with the extent of the interim payment. No adequate explanation as to the failure to raise this at an earlier stage had been provided.
Second, the fact that the Applicants recovered only 75% of their costs before Bright J seemed to weigh in favour of reducing the amount of security and may be a reason why the Applicants were content with security as it was. In any event, this confirmed the judge’s view that he would not have increased the security.
Third, there was no obvious nor appropriate sanction if the Respondents did not comply with an order of payment into court. Mr Benson was not saying that the Respondents would not pay any security ordered, but if the Respondents did not pay there would need to be consideration of the sanction. Such a consideration led the court to refuse security in Dar International FEF Co v Aon Ltd [2003] EWCA Civ 1883. The order sought did not include any unless provision, and the judge remained unclear as to what effective sanction might be provided by way of an unless order. It was difficult to see what effective and proportionate measures would follow if no payment were made. The striking out of the Points of Dispute, even if the judge had jurisdiction to do this, was liable to be disproportionate. The benefits of a Days Healthcare order (depriving the paying party of representation at any detailed assessment hearing or the right to attend) were highly questionable. In circumstances where the costs of further hearings on this issue were likely to be substantial and disproportionate, such concerns must weigh against the order in the first instance.
Fourth, although in general it is not appropriate to consider the merits of a claim when dealing with a claim for security, in a costs claim the court may be in a good position to form a relatively clear, albeit necessarily provisional, view as to the amount reasonably recoverable. Bryan J appeared to take the view that at least some of the Applicants had a real prospect of recovering more than the amount allowed by way of interim payment. Neither party suggested the judge was bound by these views and that he could not exercise his own judgment. But in any event things had moved on since then. The Applicants had produced a Bill of Costs. The judge had not been shown it and could have been shown it. The decision not to produce it in the hearing bundle seemed significant. It was later offered by the Applicants at the hearing. It would no doubt take time to consider this Bill but it should provide details of the claim and the judge could then perhaps have taken a reasonable view as to the likely reasonableness of the costs claims and possibly a more informed view than the court ordering the original interim payment.
The judge made clear his concern about the amount of costs claimed. The hearing before Bright J proved to be lengthy and the issues arising appeared intricate, but these applications were interlocutory, not trials. Fees for counsel were said to be some £800,000. They may of course be justified but this was a large sum when seen particularly in the context of the fact that much of the work was or would have been shared with other Defendants. There was quite possibly a remarkable increase in the solicitor’s costs from the costs intimated by an open letter dated February 2025 and the Bill of Costs. If the statement of costs on the application the judge was dealing with, and the number of the attendance of fee earners at the hearing, was anything to go by, it would suggest that the costs claimed in the substantive matter may be very substantially reduced. In any event there is no reliable standing or predictable measure of a disallowance on an assessment of costs whether on a standard basis or on an indemnity basis — each claim depends on its facts. Reductions for unreasonable multiple fee-earner attendance, duplication, administrative work on bundles not properly chargeable can give rise to a large reduction of costs.
The judge noted that costs of preparing the Bill were put at £220,000; at £135-140 per hour for a Grade D costs draftsman that would equate to over 40 weeks’ work at 24/25 hours per week. The hourly rate may be open for debate and there might be some involvement of higher grades of fee earner. Nevertheless these figures appeared to be very concerning in a case where substantial time had already been spent dealing with costs, preparing for the security of costs application, the statements of costs for the interim costs application, and in circumstances where the solicitors might reasonably be expected to have kept reasonable ledgers which will have been provided in detailed bills to their clients.
The judge accepted that the sums involved in the underlying claim were huge and that it would be said that the claim was of considerable importance to the parties. Without the Bill of Costs and without Points of Dispute, it was difficult to form a view with any confidence that the further security sought was reasonably necessary for the “working out” of the claim or whether it was security to pursue a significantly overstated claim for costs. The judge’s concern was that it may be the latter but, in any event, unless he was confident that it was the former, it seemed plain from first principles that he should not in his discretion grant it.
Quantum
The judge went on to consider what amount of security might have been appropriate, had jurisdiction been established and the discretion exercised in the Applicants’ favour.
The judge held that it was impossible to say with any confidence how long a detailed assessment in this case would take, certainly without Points of Dispute. However neither party was suggesting that there were any particularly difficult features to the assessment.
The judge could see that junior costs counsel might be instructed to deal with hourly rates, if in dispute, and counsel’s fees. Such counsel might reasonably be expected, on hourly rates of circa £250-325 per hour, possibly for one day, so that the fee might be put at about £7,000-9,000. One might reasonably expect a costs draftsman and/or a costs lawyer to be primarily concerned with the Replies, if any were required. Such an individual, having been involved with preparing the Bill of Costs and having already considered the underlying files, would be familiar with the documentation, and could ordinarily be expected to deal with the rest of the assessment.
There would be work preparing the files for submission to the court and ordinarily a short inter partes bundle. However, files could be expected to be in good order. Those files should not be filleted — the full files should be provided to the court. It should not take a costs draftsman familiar with the files long bookmarking the relevant documentation so that they can be shown to the assessing judge. The most demanding element of this part of the assessment is retrieving the relevant documents and if they cannot be found, explaining their absence. But in any event the assessment generally just involves going through the documents, most of which speak for themselves, and by process of sampling and extrapolating reasonable sums, a well-ordered file should not take a long time to assess.
The judge indicated that detailed assessment in this case, assuming the typical points are taken, might be nearer 5 days, if the file is well ordered and the representation effective. That may be optimistic. It could take longer. If a long time is spent explaining why documents have not been produced to the court pursuant to the normal order for production, it could take substantially longer, but that will be a matter which might lie at the door of the receiving party. But in any event dealing with the ‘nuts and bolts’ of the assessment is rarely for counsel and normally appropriate for a costs draftsman or a costs lawyer, with limited involvement of the more senior fee earners.
In short, the judge would reckon the future costs of the detailed assessment for the purposes of security to be nearer to the relatively low £10,000s. This was a fraction of the costs said to have been incurred, albeit by both parties, in the application.
It followed that even if the judge had been persuaded to give further security, he would not have done so on the basis of the estimate of costs provided by the Applicants. It was very difficult to estimate the costs of a detailed assessment in circumstances where the judge did not have the Points of Dispute. He could not see why he should not assume that the assessment would be undertaken in an efficient manner and the underlying files were well kept and in order. But whatever the reasonable figure, it struck the judge that it was a sum that was as likely to fall within a margin of error on the initial award of security for costs or the awards of interim payment costs — a matter which might confirm his concerns about proportionality and the decisions he had set out above.
The application was dismissed.
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