Security for Costs Refused

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.

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]