Security for Costs Refused Where Claimant Shows Very High Probability of Success and Defendant's Estimate Demonstrably Excessive

The King’s Bench Division refused security for costs where the claimant demonstrated a very high probability of recovering misappropriated Bitcoin, the defendant’s costs estimate was demonstrably excessive and unsustainable, and alternative security existed within the jurisdiction.

YUEN V LI & ORS [2026] EWHC 532 (KB)

In Yuen v Li & Ors, Mr Justice Cotter determined a contested application for security for costs brought by the first defendant against a claimant resident in Thailand who alleged misappropriation of Bitcoin worth £160-£180 million. The first defendant invoked CPR 25.27(b)(i), but Cotter J, applying principles from Porzelack v Porzelack [1987] 1 WLR 420, held it was not just to order security. First, the claimant demonstrated a very high probability of success based on compelling evidence, including damning audio recordings and the first defendant’s bare denial. Second, the first defendant’s costs estimate of £678,715.80 was demonstrably excessive and unsustainable, containing unrealistic figures for disclosure and preparation that failed the “eyebrow test”. Third, alternative security existed within the jurisdiction via valuable watches seized by police and claimed by the claimant, with an estimated value exceeding £250,000. The court found no evidence of substantial enforcement obstacles in Thailand or Dubai, where the claimant held assets. Consequently, the application was dismissed in its entirety.

[102] "In my judgment the Claimant has demonstrated a very high probability of success. The evidence is that he was warned of what the First Defendant was seeking to do, the transcripts are damning and when the First Defendant’s property was searched the necessary equipment to exfiltrate the Bitcoin was found. She has had numerous opportunities to give her side of the story but has declined to do so. That the Bitcoin has remained at the addresses to which it was moved is consistent with the problems with realising its value which the First Defendant herself (on the Claimant’s case) identified in the recorded conversations. Twenty four years as a first instance Judge have repeatedly highlighted the wisdom of applying Occam’s razor. That the Second Defendant was involved with the First Defendant will provide no defence for her."

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Key Points

On an application for security for costs, the court may take into account the merits of the claim where it can be clearly demonstrated that there is a very high probability of success or failure. This is a relevant circumstance when assessing whether it is just to make an order. [95-96, 101-103]
When considering the amount of security for costs, the court must scrutinise the estimate of future costs and will not accept an inflated sum. The estimate must be realistic, reasonable and proportionate to the matters in issue, and a party advancing a demonstrably excessive figure risks having its application dismissed. [104, 108-110, 112]
The existence of assets belonging to the claimant within the jurisdiction, which could be used to satisfy a future costs order, is a relevant circumstance that may negate the enforcement risk and weigh against the making of a security for costs order. [114-117]
The fact that a claimant is resident outside the jurisdiction is merely a threshold condition conferring jurisdiction; it does not create a presumption in favour of security. The court should not order security on this ground alone unless satisfied there is a real risk of substantial obstacles to, or an undue burden in, enforcing a costs order in the relevant jurisdiction. [122-124]
Where a party’s conduct in seeking a grossly excessive sum for security suggests an attempt to use the process as an instrument of oppression, this is a relevant circumstance the court may consider when deciding whether it is just to make any order for security. [110-111]

[110] "...the fact that a demonstrably excessive figure for security has been sought within what was stated (as verified) to be “a detailed estimate of future costs” is a relevant circumstance to be taken into account at the stage of whether an order should be made and not just in what amount. Indeed had this been a costs and case management hearing and the form signed with a statement of truth that the budget was a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for the First Defendant to incur in this litigation there may well have been other consequences."

Key Findings In The Case

The court determined that it would be unjust to require the Claimant to provide security for costs given that he was deprived of his principal asset, and the evidence demonstrated a very high probability of success on the merits of his claim. The Claimant’s strong case and lack of defence engagement were crucial in this decision. [101-103]
The First Defendant’s costs estimate of £678,715.80 was scrutinised and found to be grossly excessive and unsustainable across several stages of litigation, including witness statements and trial preparation, leading the court to view the application for security as potentially oppressive. [104, 108-109, 112]
The presence of valuable assets belonging to the Claimant, currently held within the jurisdiction by a third party, negated the risk of enforcement issues. This factored significantly against the granting of a security for costs order. [114-117]
The mere fact that the Claimant resides outside the jurisdiction, currently in Thailand, did not suffice to order security for costs. The court found no substantial evidence of obstacles to enforcement in Thailand or Dubai, where the Claimant also had property, thus preventing reliance solely on this ground. [122-124]
The court criticised the First Defendant’s conduct for seeking a grossly excessive sum for security costs, deeming it a relevant factor against making an order for security, as it suggested an attempt to misuse the process as a means of oppression. [110-111]

[124] "...whilst the Claimant is (on his evidence) currently resident in Thailand, as Mr Meyer has identified, he has real property (unencumbered) in Dubai and there has been no suggestion made that proceedings could not be issued in the United Arab Emirates to enforce a debt based on an order from this Court; no suggestion of a risk of serious enforcement difficulties in that jurisdiction. Dubai has long been a hub for cross-border business and international investment with an ancillary legal system. 125. The Claimant’s conviction for an assault on the First Defendant having (on his case) discovered the theft of the Bitcoin is not a relevant circumstance. Convictions for dishonesty may have been relevant; but no suggestion has been made that the Claimant has been found to be dishonest."

The King’s Bench Division’s decision in Yuen v Li & Anor [2026] EWHC 532 (KB) illustrates how the cumulative effect of a claimant’s very high probability of success, a defendant’s demonstrably excessive costs estimate, and the existence of alternative security within the jurisdiction can decisively weigh against ordering security for costs under CPR 25.27.

Background

The claim concerned the alleged misappropriation of 2,323.28423347 Bitcoin, valued between £160-£180 million. The claimant alleged that his estranged wife, the first defendant, obtained his private key and transferred the Bitcoin without authorisation on 2 August 2023. The claimant’s case rested on audio recordings from 29 and 31 July 2023, which he contended captured the first defendant discussing the exfiltration of the Bitcoin, the difficulties of converting it to cash, and the need to avoid detection.

A without notice proprietary asset preservation injunction was granted by Sweeting J on 27 November 2025. The claimant undertook to issue the claim form within 24 hours but failed to do so. On 10 December 2025, the claimant applied for relief from sanctions, which was granted by Sweeting J on 16 December 2025, with time extended to 4 December 2025.

The first defendant filed an affidavit in compliance with the injunction order which amounted to a bare denial, confirming only that she was “unaware of any information required to be provided” in response to the matters alleged.

The claimant subsequently applied to amend the claim form and particulars of claim to add causes of action including unjust enrichment, breach of confidence, misuse of private information, causing loss by unlawful means, and proprietary restitution/constructive trust. The first defendant applied to strike out the claims in conversion and trespass to goods and sought security for costs. At the hearing on 2 March 2026, Cotter J allowed the amendment application and then considered the strike-out and security for costs applications.

The Security for Costs Application

The threshold condition under CPR 25.27(b)(i) was satisfied: the claimant was resident in Thailand. The court therefore had to determine whether, having regard to all the circumstances, it was just to make an order for security for costs.

The first defendant initially sought security in the sum of £678,715.80 for future costs through to trial, supported by a costs schedule. She argued that the claimant’s residence outside the jurisdiction created an enforcement risk, that the merits were not so clear as to weigh against an order, and that the costs sought were reasonable and proportionate given the value and seriousness of the claim.

The claimant resisted on multiple grounds. He submitted there was a very high probability of success based on compelling evidence. He argued the first defendant’s costs estimate was demonstrably excessive and failed basic scrutiny. He pointed to alternative security within the jurisdiction: valuable watches seized by Sussex Police from the first defendant’s home, with an estimated combined value exceeding £250,000. Finally, he provided evidence through his solicitor of substantial assets including mortgage-free properties in Dubai and a substantial investment portfolio, but declined to provide detailed financial disclosure given the history of alleged misappropriation.

The Court’s Analysis

Cotter J dismissed the application, finding that three cumulative circumstances weighed decisively against making an order.

- - Very High Probability of Success: Applying Porzelack v Porzelack [1987] 1 WLR 420, the judge held that where it can clearly be demonstrated that there is a very high probability of success or failure, this is a matter that can properly be weighed in the balance. The court found the claimant had demonstrated a very high probability of success. The evidence included the warning from the claimant’s daughter in early July 2023, the audio recordings capturing discussions about taking the Bitcoin and avoiding detection, the discovery of cold wallets and recovery seeds during the police search of the first defendant’s home, and the first defendant’s persistent failure to provide any explanation despite numerous opportunities. The judge observed that the Bitcoin had remained at the addresses to which it was moved, consistent with the difficulties of realisation identified in the recorded conversations. This circumstance weighed heavily against ordering security.
  - Demonstrably Excessive and Unreliable Costs Estimate: The court conducted what it described as a “broad brush” analysis of the first defendant’s costs schedule and found it contained clearly unsustainable estimates. The factual dispute was straightforward, the particulars of claim extended to only 12 pages and 45 paragraphs, witness evidence would likely be limited, and disclosure could not realistically be document-heavy. Yet the estimate included: 75 hours of solicitor time (over 10 working days) to prepare a defence following a bare denial; 245 hours for disclosure in a non-document-heavy case; 75 hours to prepare for a two-hour case management conference; and 95 hours for witness statement preparation despite the simplicity of the factual issues. The judge described the estimate for the CMC as “nonsense” and found no sensible basis for the figures advanced.

During the hearing, confronted with the court’s analysis, the first defendant dramatically reduced the scope of her application from costs to trial (£678,715.80) down to costs to the case management conference only. However, the judge found “the damage was already done.”

Significantly, the court held that the fact a demonstrably excessive figure had been sought and verified by statement of truth was relevant not only to quantum but to whether any order should be made at all. The judge stated: “The purpose of an order for security for cost is to protect a party against the risk of not being able to enforce any costs order the Court must ensure that it is not used as an instrument of oppression by seeking excessive security.” The first defendant’s conduct in advancing an unreliable and excessive estimate—which the court found could constitute an attempt to use security as an instrument of oppression—weighed against making any order.

- - Alternative Security Within the Jurisdiction: The court noted that valuable property was held by Sussex Police within the jurisdiction following the first defendant’s arrest. This included numerous high-value luxury watches with individual estimated values ranging from approximately £3,600 to £94,500, and cryptocurrency hardware wallets. The claimant’s solicitor stated in his witness statement that the combined estimated value was well in excess of £250,000. The first defendant’s own solicitors had proposed a division of these items in correspondence, suggesting the claimant be left with six Rolex watches and two Patek Philippe watches. The court found it highly likely that this property would provide ample security for any reasonable costs order up to the CMC stage (the revised scope of the application), thereby negating the enforcement risk for the period in question. The property could not be released without the first defendant’s agreement or a court order, and there was no current risk of dissipation.
  - Other Circumstances: The court briefly addressed other arguments. The claimant had disclosed his assets to his solicitor and provided a reason for not sharing full details with the first defendant, which was understandable in the circumstances, though a confidentiality ring could have been considered had other circumstances been different. The court found no evidence of substantial obstacles to enforcing a costs order in Thailand or Dubai. The first defendant had not identified any special difficulty, material additional cost, systemic delay, or public policy objection to enforcement in either jurisdiction. The claimant’s conviction for assault was not a relevant factor regarding his ability to pay costs; convictions for dishonesty might have been relevant, but none were suggested.

Conclusion

The combination of the very high probability of success, the unreliable and excessive costs estimate that could constitute an instrument of oppression, and the existence of alternative security within the jurisdiction led the court to conclude it would not be just to order security for costs. The application was dismissed in its entirety. The judge emphasised that the three circumstances, taken cumulatively, weighed so strongly against making an order that it was unnecessary to decide every other contested point, though he addressed them briefly given the extent of submissions.

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