Court Orders Parsdome Holdings Limited to Provide Additional Security for Costs in Landmark Case

Introduction

This article examines the case of Parsdome Holdings Limited v Plastic Energy Global SL, decided in the Commercial Court of the High Court of Justice in England and Wales. The judgment, delivered by Mr Justice Andrew Baker on Friday, 10 November 2023, concerned an application for security for costs, highlighting the considerations a court takes into account when determining such applications.

Key Facts

Parsdome Holdings Limited (“Parsdome”), the claimant, is a BVI company involved in litigation against Plastic Energy Global, S.L. (“Plastic Energy”), the defendant. Parsdome had been previously encouraged to provide security for costs and had made payments into court. However, Parsdome failed to provide reasonable financial evidence and the court found a ‘very real reason to believe’ the company would not be able to meet potential future costs orders were it to lose at trial.

Legal Principles

The application for security for costs was analyzed under the gateway provided by Civil Procedure Rules (CPR), testifying that there is good reason to believe that a claimant will not be able to pay the defendant’s costs if ordered to do so. The legal framework for determining this is standard, and the judgment reinforces that the company’s finances and ability to meet a potential costs order must be transparent.

The court also applied discretion in terms of whether to order security, considering whether alternatives to cash in court or a first-class London bank guarantee had similar practical utility for the defendant. The claimant’s patchwork of evidence regarding the financial standing of associated parties was deemed insufficient.

Mr. Justice Baker expounded on the principle that when assessing the amount for security of costs, courts tend to slightly err in favor of the applicant, as the prejudice faced by a defendant in being under-secured holds more significant financial implications compared to any excess security the claimant might provide. This balancing of potential injustice is a common theme in such applications.

Outcomes

The court was persuaded that this was a clear case for ordering security for costs. An additional £343,000 was to be provided by Parsdome, either through payment into court or secured by a first-class London bank guarantee, within 21 days.

Regarding the costs of the application itself, Mr. Justice Baker took a critical view of the defense’s costs, summarily assessing recoverable costs at £40,000 as a “reasonable and proportionate level” despite substantially higher costs actually incurred.

Conclusion

In Parsdome Holdings Limited v Plastic Energy Global SL, the court reinforced the principles governing applications for security for costs. Applications are contingent upon the claimant’s ability to provide transparent financial information, alongside the court’s discretion to determine what constitutes adequate security. The court leans towards protecting defendants against under-security when determining the quantum of security for costs, given the potential for significant financial harm. Additionally, this case serves as a reminder of the need for proportionality in incurring legal costs associated with such applications.