Christopher Loxton (instructed by Fieldfisher LLP) for the Deep Sky Holdings Limited Claimants.
Introduction
- This is a hearing which is dealing with various applications made by certain of the War Risk Defendants in the substantial litigation that is due to be heard at trial in front of me this coming autumn. It is a hearing concerned with applications for security for costs by the Defendants known as the HFW WR Defendants, the CMS War Risk Defendants and the Shoosmiths Defendants in their capacity as War Risk Defendants. I will refer to them globally for the present purposes as the ‘War Risk Defendants’.
- The applications are made against one set of Claimants in claim number CL-2023-000097, known for shorthand purposes as the ‘Deep Sky Claimants’. The applications involve monetary amounts as follows: on the part of the Shoosmiths Defendants £1,619,000 or so; on behalf of the HFW WR Defendants, £1,339,000 or so; and on behalf of the CMS War Risk Defendants, £2,086,000 or so.
- It is the War Risk Defendants’ position that they are plainly entitled to security for costs against the Deep Sky Claimants, and that that accordingly is what the Court should today order. The position of the Deep Sky Claimants is that the Court should not make such an order, because to do so would entail the claims brought by the Deep Sky Claimants being stifled because the ability of the Deep Sky Claimants to meet any security for costs orders in the amounts sought is such as to mean that in reality the claims would not be capable of being pursued.
- These applications were originally listed to be heard alongside other costs-related issues at a hearing that took place on 16 and 17 December 2025, but, owing to time constraints, this being very substantial litigation with a multitude of parties, the applications had to be adjourned.
- It is worth noting, in passing, that the War Risk Defendants have made security for costs applications or requests in respect of other Claimants, and that security for costs has been agreed in relation to those other Claimants. In short, as Mr Duffy KC, speaking for these purposes on behalf of all the War Risk Defendants when dealing with the matter of principle, points out, it is only the Deep Sky Claimants that have maintained their opposition to the security for costs sought by the War Risk Defendants.
Applicable principles
- The applicable principles are not in issue. It is accepted on behalf of the Deep Sky Claimants, by Mr Loxton, that this is a case where CPR 25.27 is applicable. This is the provision which provides that:
“The court may make an order for security for costs if—
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b) … one or more of the following conditions apply…
(ii) the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; …”.
- It is, therefore, accepted by Mr Loxton on behalf of the Deep Sky Claimants that they are, indeed, companies where there is reason to believe that they will be unable to pay the Defendants’ costs if ordered to do so. The issue, in such circumstances, is whether the Court should, in the exercise of its discretion and having regard to the matter in the round, make the orders that are now sought; in other words, in the language of CPR 25.27(a), having regard to all the circumstances of the case.
- I have been referred to a number of authorities in this respect. It is unnecessary for me to set them all out, but I confirm that I have had regard to them in considering these applications. One such authority is a decision of Mr Andrew Henshaw QC, as he then was, namely Deleclass Shipping Co Limied v Ingosstrakh Insurance Co Limited [2018] EWHC 1149 (Comm), where the judge said as follows at [20]:
“It is generally accepted that the factors relevant to the exercise of the discretion to order security for costs are those set out by Lord Denning in Sir Lindsay Parkinson & Co Limited v Triplan Limited [1973] QB 609, in particular:
(i) whether the claimant’s claim is bona fide and not a sham;
(ii) whether the claimant has a reasonably good prospect of success;
(iii) whether there is an admission by the defendant;
(iv) whether there is a substantial payment or an open offer of a substantial amount;
(v) whether the application for security is being used oppressively (e.g. so as to stifle a genuine claim);
(vi) whether the claimant’s want of means has been brought about by any conduct by the defendant, such as delay in payment or in doing their part of the work; and
(vii) whether the application for security is made at a late stage of the proceedings.”
- It is in relation to the fifth of those matters that the submissions advanced by Mr Duffy and Mr Loxton have today largely focussed. In short, the issue which I must determine is whether ordering security, as sought by the War Risk Defendants here, would entail a stifling of the Deep Sky Claimants’ claims.
- As to this, it is worth noting that the White Book provides the following guidance at para.25.7.2:
“If the effect of an order for security would be to prevent the respondent to application from continuing its claim, then security should not be ordered—see Goldtrail Travel Ltd v Aydin [2017] UKSC 57 … per Lord Wilson at [12]. However, the burden lies on the respondent to show, on the balance of probabilities, that the effect of an order would be to stifle the claim—see Goldtrail per Lord Wilson at [15] and [23]. To discharge that burden the claimant will need to show that it cannot provide security and cannot obtain appropriate assistance to do so. The court will expect the claimant to be full and frank in relation to these matters.”
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