Security For Costs, Foreign Claimants And Failure To Disclose Evidence Of Assets

• Published date: 03 August 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Conyers
• Author: Mr Matthew Brown and Charles Goldblatt

A recent decision from the English High Court has highlighted the importance of disclosing details of assets when seeking to resist orders for security for costs against a non-resident claimant. In Ras Al Khaimah Investment Authority v Azima [2022] EWHC 1295 (Ch), Mr Justice Green considered the discretion to award security under English CPR 25.13(2)(a), which is broadly analogous to EC CPR 24.3(g).

A Summary of the Relevant Facts

The Ras Al Khaimah Investment Authority ("RAKIA") commenced proceedings against Mr Azima for fraudulent misrepresentation and conspiracy. As well as denying RAKIA's claims, Mr Azima alleged by way of defence and counterclaim against RAKIA and additional defendants that his email accounts had been unlawfully hacked by RAKIA and his data used against him in the case. At a CMC, RAKIA and the additional defendants applied for security for their costs of defending Mr Azima's counterclaim.
Each of the security for costs applications had been brought on the basis that Mr Azima was resident out of the jurisdiction, but not resident in a State bound by the 2005 Hague Convention (no such caveat exists in EC CPR 24.3(g)). There was no dispute that that condition was satisfied, as Mr Azima accepted that he was resident in Missouri, USA. Mr Azima, however, contested whether the court should exercise its discretion under CPR 25.13(1)(a) to order security (and also the quantum of the security sought).

The Relevant Legal Principles and the Parties' Submissions

Under the English CPR, the discretion to order security, once one or more of the pre-conditions are met, is a broad one, namely whether "having regard to all the circumstances of the case" it is "just" to make such an order. The same test applies in the BVI.

Among other things, Mr Azima had chosen not to provide evidence disclosing the location, nature and/or value of his assets, on the basis that he was under no obligation to do so. He submitted that where an applicant relied upon the gateway contained in CPR 25.13(2)(a) (the equivalent of our EC CPR 24.3(g)), a respondent was entitled to say nothing about their assets and could simply provide evidence that a costs order could be relatively easily enforced in the place of their residence. Moreover, he claimed that it would be discriminatory (and contrary to the Nasser principles) if he, as a non-resident, was obliged to provide such detail where there was no such obligation on a resident respondent.

Rejecting Mr Azima's submissions, the...