Seeking security: applicants for security for costs should file detailed costs budget
Monday, 24th October 2016
A High Court judge has said that a party seeking an order for security for costs should provide a detailed costs budget.
In Agents’ Mutual Ltd v Gascoigne Halman Ltd (t/a Gascoigne Halman)  EWHC 2315 (Ch), the Defendant sought additional security for costs in a claim relating to the terms of membership of online property portal OnTheMarket. The Claimant had already provided security of £500,000. However, the Defendant sought a further £1 million in circumstances where it estimated that its total costs would be just over £2.8 million.
Sitting as both a judge in the Chancery Division of the High Court and as the President of the Competition Appeal Tribunal, Mr Justice Roth considered it necessary to look with some care at the Defendant's costs estimate. This was put at £2.54 million by the Defendant's original solicitor in respect of the entire dispute. The Defendant subsequently changed firms and the second solicitor, who chose not to update the costs budget produced by their predecessors, simply served a one-page summary schedule stating the Defendant's costs to be at the higher figure of £2.8 million in respect of only the competition issues arising in the case.
Roth J was critical of the approach of the Defendant's solicitor. Although not obliged to present a costs budget in the precise form of Precedent H, the judge said that an applicant for security for costs would be expected to prepare a full schedule "showing how the sub-totals under the various specified heads were arrived at, including the rates being charged and hours estimated."
The one page summary filed by the Defendant gave no indication of hourly rates or time allocated between different fee-earners, and it was subject to those serious shortcomings that Roth J considered the Defendant's schedule. Roth J found £2.8 million to be seriously disproportionate for the costs of a case listed for trial over nine days with a single expert. The judge found the Claimant's costs of £1.86 million, as set out in its detailed costs schedule, to be far more reasonable and concluded that it was fair to proceed on the assumption that the Defendant's costs, assessed on a standard basis, would be little more than the Claimant's budget.
Roth J, therefore, decided to adopt a figure of £1.9 million in respect of the Defendant's costs and ordered that 70% of this figure (£1.33 million) would be a fair sum as security. Having already paid £500,000, the Claimant was ordered to pay an extra £830,000.
This case makes clear the importance of preparing a detailed costs budget in security for costs applications. Whilst the Defendant might have always been hard pressed to convince the Court to grant its application on the basis of its budgeted figure, it certainly did not make its life any easier by providing little detail to the court about how that figure was arrived at.
A copy of the judgment can be found here .