Parsdome Holdings Limited v Plastic Energy Global SL
[2023] EWHC 2851 (Comm)
Bend Weld Engineering Sdn Bhd v FMC Technologies Limited
7 November 2023
[2023] EWHC 2782 (TCC)
High Court
A company (FMC) sued another company (BWE) that didn't look financially strong. The judge made BWE pay some money upfront to cover FMC's legal costs in case BWE lost the case. BWE has to pay £70,800 before the next court date.
Key Facts
- •BWE, a Malaysian metal component supplier, claims FMC, an industrial manufacturer, wrongfully terminated contracts and owes US$1,640,417.33.
- •FMC applied for security for costs due to concerns about BWE's financial viability.
- •BWE's most recent accounts showed significant losses and low cash reserves.
- •BWE agreed in principle to provide security but disputed the amount.
- •The parties' negotiations failed to reach an agreement on the quantum of security.
- •FMC provided an undertaking to dismiss its counterclaim if BWE's claim is dismissed for failure to provide security.
Legal Principles
A defendant may apply for security for costs if it is just and if the claimant is resident outside the jurisdiction or is a company reasonably believed unable to pay costs.
CPR 25.12 and 25.13
The defendant need not prove a likelihood of non-payment, but must show reason to believe non-payment; mere doubt is insufficient.
Explosive Learning Solutions Ltd v Landmarc Support Services Ltd [2023] EWHC 1263 (Comm)
If a counterclaim substantially overlaps with the claim, security for costs is usually not ordered, unless the counterclaim is purely defensive or an undertaking is given to dismiss the counterclaim if the claim is dismissed.
Explosive Learning Solutions Ltd v Landmarc Support Services Ltd [2023] EWHC 1263 (Comm)
Security for costs can include pre-action costs, but the court will consider whether these were incurred defensively or offensively.
Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120
Outcomes
Ordered BWE to provide security for FMC's costs up to the CMC in the sum of £70,800.
The court found that FMC had reason to believe BWE would be unable to pay costs, given BWE's financial position and the undertaking provided by FMC regarding its counterclaim. Pre-action costs were not included in the order, however.