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UK Case law: Victor Pisante & Others v George Logothetis & Others  EWHC 3332 (Comm)
News & Insights 8 February 2021
Keywords: security for costs
Security for costs guidance
The claimants sued the defendants alleging that they have been fraudulently induced into certain investments. They claimed damages of about US$14 million. The defendants strongly denied the allegations and applied for security for costs against the claimants.
Henshaw J granted the application and awarded the defendants security for costs, providing guidance on points to be considered when a security for costs application is considered:
1. When assessing the adequacy of a claimant’s assets, it is important to have regard not only to the existence of those assets but also their liquidity.
2. The claimant’s liabilities should also be taken into account. Even if the claimant appears to have sufficient assets to cover the likely costs, it is necessary to consider whether other creditors may have claims against these assets or these assets are subject to freezing or other orders.
3. A claimant needs to be fully transparent about its asset position. Any lack of transparency will count against it in the assessment of its ability to pay a future costs order.
4. The assessment of whether a claimant will be able to pay a costs order should be a forward looking one, having regard to the likely position at the time a costs order may be made.
5. Finally, in assessing whether a claimant’s residence abroad may give rise to obstacles to enforcement of any costs order, it is important to have regard to the difficulties which a defendant may have in identifying the claimant’s assets as a result of its residence. Thus, if a company is registered in a country which does not require its companies to publish its accounts (such as the BVI), this fact may give rise to a complete obstacle to enforcement (so as to justify an order for security for costs) even if the assets (once located) could be enforced against in that jurisdiction.
Full commentary can be found here.