How Much Is Too Much?: Security For Costs Against Non-Resident Plaintiffs

A non-resident plaintiff in the Cayman Islands may be required by the Court to post security for a potential adverse costs award in favour of the defendant. But does the exercise of this judicial power impugn constitutional principles prohibiting discrimination on grounds of nationality? And if so, how should the Court interpret and apply the security for costs rules? In a 19 October 2017 judgment given in the long-running AHAB v Saad litigation, Chief Justice Smellie considered these questions in light of recent Cayman and English case law, and clarified the test defendants must meet to be awarded "full security" rather than just the additional costs of enforcement in a foreign jurisdiction.

The plaintiff, AHAB, is a Saudi Arabian partnership. The trial of its fraud, conspiracy and knowing receipt claims against a group of Cayman companies in liquidation commenced on 18 July 2016 and was originally expected to conclude in February 2017. Ultimately, the trial did not conclude until 27 July 2017. The defendants applied for additional security for costs to account for the unanticipated extension of trial. Although the previous security for costs orders made against the plaintiff proceeded on the basis that the defendants were entitled to security for the full amount of their potentially recoverable costs, on this application the plaintiff took the position that only an amount to secure the additional costs of enforcing a costs award in Saudi Arabia was warranted. The main argument focused on what evidential burden the defendants had to overcome in order for the Court to award full security.

The Court found that:

Section 16 of the Bill of Rights prohibits the government from treating any person in a discriminatory manner on grounds of domicile or nationality with respect to the right to a fair trial guaranteed in section 7 of the Bill of Rights. Because the security for costs regime set out in the Grand Court Rules is promulgated by a government organ and the Court is a creature of the Constitution, the Court must exercise its jurisdiction to award security for costs in a manner consistent with the non-discrimination requirements. The non-discrimination and fair trial principles set out in the Bill of Rights require that security for costs orders cannot be made merely because a plaintiff is a non-resident. To justify an award of full security, a defendant must adduce evidence that there is a real risk that enforcement in the plaintiff's home...