QB-2022-000681 - [2025] EWHC 2744 (KB)

(C)​ The Stacey J. Judgment

On 4 June 2025 Stacey J handed down her reserved judgment following a hearing that had taken place the previous month on 13 May 2025. It is necessary to set out the relevant findings of the Judge in some detail so as to assess whether or not there is a proper basis for the Judge’s order to be revoked.

At [6] – [10] of the judgment Stacey J set out the litigation history and chronology. At [10] the judge noted that disclosure by list had now taken place and that witnesses of fact statements as well as expert reports were due to be exchanged following her judgment.

At [14] Stacey J explained that the central issue raised by the Claimant in response to the application for security for costs was that it would stifle its ability to continue the case and thus security should not be ordered. The judge then considered the evidence on stifling in detail at [18]-[27]. At [18] she noted that in his first witness statement Mr Tchumtchoua accepted that he is the source of funding for this litigation. At [20] the Judge noted that Mr Tchumtchoua had been unable to find after the event insurance with an affordable premium.

The Judge’s conclusions on the central issue of stifling were set out at [28] – [34]. The Judge concluded that she was satisfied that Craft was not able to pay any legal costs that may be awarded against it and nor was Mr Tchumtchoua personally (see [28]-[31]). However, the Judge explained “that is not the end of the story. There are two difficulties with the evidence submitted by Mr Tchumtchoua. The first is that there is no explanation of how he intends to fund Craft’s costs of the continuing litigation and why his lawyers do not seem to be pressing him for funds, when he does not have means. He has not identified or named any others who are supporting the litigation and the evidence is that litigation funding from commercial providers is either exorbitant or unavailable. He seems to have been single handedly supporting the litigation on a wing and a prayer and by himself becoming increasingly indebted thus far. How then can Craft continue to pursue the case which requires service of lay and expert evidence in the coming months that will undoubtedly be costly?” [32]

The Judge said that “that, there may be an element of the Micawber principle involved in him hoping that something will turn up and he too is unsure what that “something” might be. But if that is the case, a further logical inference is that he would also be able to rustle up some security for costs.” ([32]).

The Judge’s second concern was “there is no evidence about the lack of possibility of other sources of funds. I bear in mind that it is very hard to prove a negative (see Brimko at [12]) and I did not expect Mr Tchumtchoua to name all his friends, relations and business associates, their assets, income and explanation for their lack of willingness to help him out. But instead there is more of a blanket denial. It is also a little puzzling when there is evidence of at least one person who has previously lent him money and helped him, (Ms Kamga), so I would have expected an explanation from her at least as to why she was unwilling to assist again” ([33].

Stacey J found that “that Craft has not established that its impecuniosity is caused by Actis. True it is that because the Promesse de Vente was assigned or transferred to Mr Kamdem’s company or companies, it meant that Craft did not have the opportunity to make a profit from Douala Mall, but there are many contingencies and ifs and buts as to whether or not Craft’s want of means are attributable to Actis. It is a very different factual scenario to a theft type case, such as Gresport, where, for example a defendant investment manager is alleged to have misappropriated client funds for his direct benefit where the amount of money can be clearly and easily traced, quantified and attribution is straightforward.” ([34]).

At [35] – [38] Stacey J set out the reasons for her conclusion that the Claimant had not established that there had been a delay by the Defendants and that it does not count against them as being a late and oppressive application.

At [39] – [45] the Judge addressed the merits of the claim. At the outset she noted:

The parties agreed that the authorities state and as reflected in the Commercial Court Guide Appendix 10, para 4, that the investigation of the merits of the case on an

application for security is strongly discouraged. It is usually only in those cases where it can be shown without detailed investigation of evidence or law that the claim is certain or almost certain to succeed or fail that the merits will be taken into account (Commercial Court Guide Appendix 10, para 4, and see Mountain Ash Portfolio Ltd v

Boris Tsibenovich Vasilyev [2022] EWHC 1867 (comm) [42]).

The test is whether a claimant’s case or a defendant’s defence is “highly likely to

succeed” (Al-Koronky). Furthermore, parties should not attempt to go into the merits of the case unless such high probability of failure can be clearly demonstrated one way or another (Chernukhin v Danilina [2018] EWCA Civ 1802 at [69]).”

The Defendants had changed their position in relation to the merits of the claim. In the Defendants’ initial submissions from counsel the Defendants had stated “that that the Court should not have regard to the merits of either the claim or the defence in an application of this nature”. Subsequently in submissions filed two days before the hearing the Defendants sought to rely “on what are said to be inherent fatal weaknesses in Craft’s case in support of the Application.” ([41]).

Stacey J considered it “telling that no application has been made to strike out the claim under CPR 3.4(2)(a) on grounds that the statement of case discloses no reasonable grounds for bringing the claim or for summary judgment under CPR 24 on grounds of no real prospect of success.” She reminded herself however that “that the authorities are clear that an application for security for costs is not intended as a weapon to obtain a speedy summary judgment without a trial or by the back door (see Prince Radu of Hohenzollern v Houston [2006] EWCA Civ 1575 at [18]) and see also Bailey v GlaxoSmithKline UK Ltd (2017) EWHC 3195 Foskett J at [75]).”

Significantly, the Defendants’ attempts to rely upon the merits of the claim was robustly rejected by the Judge:

“If it had seriously been intended for a proper analysis of the merits to have been undertaken the defendants should also have asked for a longer hearing and indicated that more reading time would be necessary. But the risk was that the case would turn into a mini-trial – blowing the case up into a large interlocutory hearing – which is exactly why investigation of the merits is deprecated except in the clearest of cases.

In spite of Ms O’Sullivan’s best efforts in the limited time available, I am not satisfied that she has shown the high probability of failure of Craft’s case as she has argued for. There are a number of difficulties with the points relied on by her. Her assertion that Cameroonian law would not apply to any aspect of the substantive claim and the interpretation of the LOI and the “Promesse de Vente” sat very uneasily with the agreed directions for expert evidence from both sides on Cameroonian law for which she had no explanation. The question of interpretation of whether the LOI was intended to be legally binding upon the fulfilment of certain conditions does not appear to be as straightforward as she suggested. She acknowledged that it would require detailed analysis and a finding as to whether there was a typographical error in a reference to clauses in the document which may not be straightforward and evidence about whether the conditions were fulfilled. Whether Craft’s interpretation of the LOI is eccentric, as Ms O’Sullivan suggested, will require detailed analysis and submissions to assist the court. Other aspects of the claim will depend on the evidence and disputed facts.

Actis has failed to demonstrate in the short hearing that this is a case where there is a high degree of probability of their success.”

At [46]- [47] Stacey J considered the Claimant’s arguments that a security for costs order was unnecessary because the Defendants would have alternative remedies to obtain their costs. The Judge then went on to set out her conclusion at [48]-[50]. At [48] she noted:

“For the reasons set out above, of all the issues raised by the parties as to factors the court should take into account in deciding whether to exercise the discretion to order

security for costs I have disregarded the merits of the claim and the defence and the possibility of alternative remedies. I do not consider that there has been an unreasonable delay by Actis in bringing the application. The sole consideration is stifling, but and I do not consider that it is sufficiently clear to say that Craft’s impecuniosity is caused by Actis”.

Stacey J was not satisfied that the Claimant had fully discharged its burden of proof, albeit that it was a “fairly closely run” conclusion:

“Whilst I appreciate that care must be taken and caution exercised where corporate entities with their distinct legal identities are involved (see Goldtrail Travel), this is a

case where I do not take Mr Tchumtchoua and Craft’s refutation of inability to pay entirely at face value because of the lacuna in the evidence of how Craft is going to fund its own costs of the ongoing litigation and the absence of information about lack

of source of funds from associates, such as Ms Kamga. I am therefore not satisfied that Craft has fully discharged its burden of proof. It seems to me that whether or not there has been full and candid disclosure is binary – there either has been or there has not. On the facts of this case it is fairly close run, but on balance I find that the gaps that I have identified mean that a little more was required of Mr Tchumtchoua to discharge the burden. I am thus satisfied that having regard to all the circumstances of the case it is just to make an order for security for costs.

Having said that, the picture is clear enough to see that Mr Tchumtchoua’s finances are hand to mouth and that an order for security for costs in the region claimed by Actis will stifle the litigation. I am satisfied that Craft and Mr Tchumtchoua will not be able to lay their hands on the £1.6 million sought and certainly not at the short notice required for the litigation timetable.” [49]-[50].

The Judge then went on to consider the amount of security to be provided and directed herself by reference to the principles to be applied to the exercise of that discretion by Henshaw J in Pisante v Logothetis [2020] EWHC 3332 (Comm); [2020] Costs L.R. 1815. At [53] the Judge said that the “court must use the middle way of setting an amount which represents the court’s best estimate of what the claimant (in this case Mr Tchumtchoua) can afford, despite his having been insufficiently candid. Since this was not a case of a complete absence of information from Mr Tchumtchoua and his disclosure was very much at the forthcoming end of the spectrum, although not quite as full as was required, I am in a reasonable position to make an estimate of what Craft and Mr Tchumtchoua can afford and have access to. It is clear that the order will have to be for considerably less than the amount claimed to avoid stifling the claim.”

The Judge determined that “[g]iven that I will have to order considerably less than the amount of costs that will be incurred by Actis, even on a robust basis and applying a broad brush, because to do otherwise will make continuation of the claim dependant on a condition which it will be impossible for Craft and Mr Tchumtchoua to fulfil, the fairest approach to both sides seems to be to be to limit the amount to be ordered to a proportion of future costs up to the end of the exchange of expert evidence, leaving open the opportunity for further costs to be sought by Actis at that stage.” (at [54]).

In setting the amount of the security for costs, the Judge expressly took into account that the Claimant’s costs from the application decided by Morris J were yet to be subject to a detailed assessment. At [55] Stacey J said:

“Doing the best I can and adopting a broad brush basis – balancing both parties’ respective rights - and cognisant that the hourly rate claimed by Actis is considerable

in excess of guideline hourly rates, and their costs and time claimed seems extravagant in what may not be the most complex litigation either factually or legally, I consider that security for costs should be set at £300,000 towards the costs of future litigation from now up to the completion of the directions ordered for service and exchange of lay and expert witness evidence set out in the two orders of Master Gidden with the agreed extension of time contained in the consent order of 14 May 2025 sealed on 22 May 2025. I assess this to be an amount that will not make compliance impossible, but it will be a very considerable stretch for Craft, which is justified given the extent of Actis’ exposure and costs risks. I find that it is the most that can be ordered without making compliance by Craft impossible. In arriving at the figure of £300,000 I have factored in that Craft’s costs of defending the strike out application decided by Morris J are yet to be subject to a detailed assessment, which was ordered to be undertaken at the end of the trial.”

The Judge expressed the hope that the parties could agree staged payment dates but, in the event, agreement was not reached. At [58] Stacey J determined that:

“After considering the parties respective written submissions I have ordered payment to be made in equal parts, broadly following the timetable for service of expert evidence. I have been a little more liberal than suggested by Actis to enable Craft and Mr Tchumtchoua a little more leeway to find funding so as not to stifle the claim. But they have been formally on notice of the security for costs application for nearly a year now and should have either been taking steps to find the funds or explain in evidence given to this court before the application hearing why more time is necessary to allay any fears that this may merely be a stalling tactic.”

The Judge ordered that the costs of the application should be costs in the case. Stacey J refused the application for permission to appeal and the application for a stay of the Order pending appeal. At the hearing, I was told that the Claimant did not seek permission to appeal from the Court of Appeal.