HT-2022-000132 - [2025] EWHC 1522 (TCC)

The IP Application is supported by two witness statements from Dominic Roughton of Quinn Emanuel, “Roughton 4” and “Roughton 7”. Although the draft Order attached to the IP Application seeks an order under CPR 25, alternatively CPR 3.1, Roughton 7 explains that Allwyn accepts that it has no “automatic entitlement” to seek an order for security for costs under CPR 25. Consistent with this concession, Mr Birdling, on behalf of Allwyn, realistically accepted during his oral submissions that CPR 25.26 expressly applies only to “a defendant” (defined in CPR 2.3(1) as “a person against whom a claim is made”) and that, accordingly, it could not apply to an interested party such as Allwyn.

Nevertheless, Mr Birdling submits that the court’s jurisdiction does extend to making orders for security for costs in favour of interested parties by reason of the provisions of CPR 3.1 and the court’s inherent jurisdiction. Specifically he relies upon the general case management powers of the court under CPR 3.1(2)(p) to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective…” save where the Rules provide otherwise. This provision, he submits, is broad enough to encompass the making of an order for security for costs in favour of an interested party, particularly where, as here, Allwyn has extensive rights of participation in the proceedings and the court can “be confident” that it is likely to be awarded its costs in the event that the claims are dismissed (see International Game Technology PLC v The Gambling Commission [2023] EWHC 2226 (TCC) per Coulson LJ at [24]-[26]).

Having carefully considered the authorities on which Mr Birdling relied, together with the opposing submissions of Mr Hossain KC, on behalf of the Claimants, I reject Allwyn’s case on jurisdiction. In my judgment, CPR 3.1(2)(p) does not empower the court to make an order for security for costs in favour of an interested party which would have the effect of circumventing the existing regime for security for costs in CPR 25. I set out my reasoning below.

It is common ground that the court has an inherent jurisdiction to make orders for security for costs (see GFN SA v Bancredit Cayman Ltd [2009] UKPC 39, per Lord Scott at [9]). However, as the Privy Council made clear in GFN (a case which involved the power of the Cayman Islands courts to make orders for security for costs, but which

As Lord Scott explained at [9], in a passage which could equally apply to the powers of the English court:

“the exercise of that jurisdiction is subject to what has become the settled practice of the court. For example, the rule that an order for security for costs will not be made against a defendant was part of that settled practice. The rule that such an order will not be made against an impecunious plaintiff was also part of that settled practice but was varied by statute in the case of impecunious corporate plaintiffs by section 24 of the 1857 Act, the statutory predecessor of section 74 of the Companies Act. Ord 23, r1, like its predecessors, specified particular circumstances in which the court may entertain an application for security for costs. The Rules of Court did not create or confer the power [to make an order for security for costs] but, rather, harnessed the power so as to control its exercise”.

In support of this proposition, Lord Scott referred to the judgment of Dillon LJ in CT Bowring & Co (Insurance) Ltd v Corsi & Partners Ltd [1994] BCC 713. When considering the court’s power to make security for costs orders at the time when section 24 of the 1857 Act was enacted, Dillon LJ referred in that case to: “the general rule of practice that a party who desires to litigate a claim shall not be prevented by the court from doing so, at any rate at first instance, on the grounds of poverty…”. Lord Scott observed at [10] that “[t]his was a recognition of an inherent jurisdiction in the court to make security for costs orders and to rules of practice, established by case law, as to circumstances in which that jurisdiction could properly be exercised”. He went on to say that this reading was reinforced by Dillon LJ’s remark (when considering the effect of the then RSC Ord 23, r 1) that:

“To add a new category, not covered by any enactment, to those listed in rule 1(1) in which a plaintiff can be ordered to give security would now be a matter for the Rules Committee, and not for the discretion, as a matter of inherent jurisdiction, of the individual judge in the individual case”.

In light of this analysis, Lord Scott went on to identify at [15] that the critical issue in the case before the Privy Council was not whether the court had jurisdiction to make the security for costs order sought by the liquidators in that case, but whether it would be proper to make such an order in connection with interlocutory applications made against the liquidators by debtors whose proofs of debt had been rejected by the liquidators. Specifically the question was whether such applications fell within the concept of “proceedings” (i.e. an originating process) as identified in the relevant statute and rules of court. Lord Scott held that they did, referring to a concession from

Lord Neuberger agreed, saying this at [30]:

“…the court has an inherent jurisdiction to order security for costs, and, while that jurisdiction is essentially discretionary, the discretion must be exercised not merely in a generally judicial manner, but in a manner which accords with the settled practice of the court, as circumscribed or extended by primary or secondary legislation”.

As Mr Hossain points out, the CPR contains specific rules of procedure which capture the settled practice of the court in relation to security for costs. These rules are contained in CPR 25.26 and CPR 25.27, referred to above. However, as I have said, Allwyn does not contend that it can bring itself within these provisions and does not seek to make a “substance not form” argument in relation to them – this would be difficult where an interested party which has applied to participate in proceedings is quite obviously not in the same position as a defendant. Instead Allwyn seeks to rely upon a number of authorities (Olatawura v Abiloye [2002] EWCA Civ 998, Lazari v London & Newcastle (Camden) Ltd [2013] EWHC 97 (TCC) and The Royal Bank of Scotland Plc v Thomas O. Hicks [2012] EWCA Civ 1665) which it contends acknowledge the existence of a very broad jurisdiction under CPR 3.1 and demonstrate that the court’s approach to orders for security for costs made outside the scope of CPR 25 is not to be hidebound by technical distinctions but is to be guided by the principles of the overriding objective.

In Olatawura, the Court of Appeal considered the scope of CPR 3.1 in connection with an appeal by a claimant from an order that his claim be dismissed unless he paid a specified sum of money into court. Simon Brown LJ identified the question under appeal as whether, if at all, the court should make orders for security for costs outside the provisions of CPR Part 25. Having considered the provisions of CPR 24 and CPR 3.1 he responded to this question (at [19]) in the affirmative, saying that the individual rules to which he had referred “admit of no other possible conclusion”. However, it is important to note that (aside from the provisions of CPR 24) he focussed for these purposes specifically on (i) CPR 3.1(3) which allows the court to make any order conditional upon (amongst other things) the payment of money into court; (ii) CPR 3.1(5) which empowers the court to order a non-compliant party to pay money into

Mr Birdling specifically drew my attention to a passage at [25] where Simon Brown LJ said this:

“a party only becomes amenable to an adverse order for security under rule 3.1(5) (or perhaps 3.1(2)(m) [the predecessor to rule 3.1(2)(p)]) once he can be seen either to be regularly flouting proper court procedures (which must inevitably inflate the costs of the proceedings) or otherwise to be demonstrating a want of good faith…”.

However, this is hardly a ringing endorsement for the use of CPR 3.1(2)(p) (as it now is) as a means of circumventing the provisions of CPR 25 and, what is clear, is that there was no analysis by the Court of Appeal of the powers exercisable under CPR 3.1(2)(p). The focus of Olatawura, in my judgment, was on the exercise of the powers in CPR 3.1(3) and CPR 3.1(5). I do not consider it to be authority for the exercise of a very general discretion to order security for costs under CPR 3.1(2)(p), even in circumstances (such as where an interested party is seeking such security) which existing rules of practice specifically directed at the procedure for making orders for security for costs would not permit.

In Lazari v London & Newcastle (Camden) Ltd [2013] EWHC 97 (TCC), the claimant was seeking a conditional order under CPR 3.1 that the defendant pay a sum into court, in default of which it be debarred from defending the claim. In considering this application, Akenhead J set out various provisions within CPR 3.1 (including CPR 3.1(2)(m) – now CPR 3.1(2)(p); CPR 3.1(3); CPR 3.1(5) and CPR (6A) which provides that where money is paid into court under paragraphs (3) or (5) it shall be security for any sum payable by that party to any other party in the proceedings). He also set out lengthy extracts from the decision in Olatawura and another decision of the Court of Appeal in Huscroft v P&O Ferries Ltd [2010] EWCA Civ 1483 in which Moore-Bick LJ expressed the view that the court in Olatawura was concentrating primarily on the court’s power to order a payment into court under rule 3.1(5) and observed at [18] that “[t]he court has ample powers under rules 3.1(2)(m) and 3.3 to make whatever orders are needed for the proper management of the proceedings”. Akenhead J concluded at [25] that:

“(a)

CPR r.3.1 gives the court very wide powers of case management which are additional to, albeit that they may complement or supplement, other powers given to the court elsewhere in the rules or within the inherent jurisdiction;

(b)

these are powers given to the court to secure the overriding objective…;

(c)

CPR 3.1 empowers the court to order either a claimant or a defendant to provide security for costs and this is in addition to CPR Pt 25…Security should generally only be ordered where a respondent party has regularly flouted proper court procedures…or otherwise is demonstrating a want of good faith…

(d)

there are no hard and fast rules, however. An order for payment in does not have to be classified as security for costs. An underlying consideration is the need for the court to exercise a degree of control over the future conduct of the litigation. However, r 3.1(3) is to be deployed to enable the court to grant relief on terms, and when the power is exercised the condition ought properly to be expressed as part of the order granting the specific relief to which it relates”.

Contrary to Mr Birdling’s submissions, I do not understand these passages to support his contention that CPR 3.1(2)(p) empowers the court to make an order for security for costs against an interested party. The first two paragraphs are very general. In [25(c) and (d)], I understand Akenhead J to be referring specifically to the powers in CPR 3.1(3), (5) and (6A) to which he had referred earlier in the judgment and his reference to there being “no hard and fast rules” must be seen in that context – i.e. once a case falls within those provisions, then there are no hard and fast rules as to the approach the court must take. It is not, as Mr Birdling submitted, a more general observation as to the powers of the court under CPR 3.1(2)(p) (as it now is).

In Royal Bank of Scotland, the court was faced with an application for security for costs in connection with an appeal, an application which would normally be covered by the provisions of CPR 25.29 (or CPR 25.15 as it was at the time of this case). However, the court had ordered that the application for permission to appeal should be heard with the appeal to follow if permission was granted and, in those circumstances, there was no appeal and CPR 25.15 did not apply. Lewison LJ instead looked to the general powers conferred upon the court by CPR Part 3.1, including specifically CPR 3.1(2)(m) (i.e. CPR 3.1(2)(p) as it now is) and said this at [13]-[14]:

“13.

…CPR 3.1(2)(m) is a perfectly general provision, which the court must exercise in order to further the overriding objective. The overriding objective is, by and large, hostile to highly technical points. In my judgment, the fact that, because of the way in which this court has dealt with the application for permission to appeal, CPR 25.15 is not engaged is a purely technical point.

14.

In my judgment the court does have jurisdiction to order security for costs in accordance with the decision of this court in Great Future International Limited v Sealand Housing Corp [2003] EWCA Civ 682. Had this been a full blown application under CPR 25.15, I have no doubt that I would have ordered security for costs. By analogy, I consider that it would be right to exercise the power under CPR 3.1 to order the provision of security”.

During the hearing I did not have access to the case of Great Future International on which Lewison LJ placed reliance in this passage, but it was provided to me by the parties to the IP Application after the hearing, together with very short additional

Mr Birdling contends that these two decisions confirm that the court has jurisdiction to make the order sought by Allwyn, notwithstanding that it is not a ‘defendant’. By analogy with the facts of these cases, he submits that the point taken by the Claimants in opposition to the IP Application is “purely technical” and that these cases illustrate that the court has power to make orders under CPR 3.1(2)(p) to fill a lacuna in the Rules. In these cases, he submits, there was a lacuna in the Rules as to the provision of security before an application for permission to appeal had been made; in the present case there is a lacuna because no express provisions are made in the Rules as to the ability of a party (other than a defendant) to obtain security.

To my mind, however, and consistent with the submissions of Mr Hossain, there is no analogy to be drawn between the cases of Royal Bank of Scotland and Great Future International and the facts of this case. Those cases were dealing with a lacuna in the Rules caused by a departure by the Court of Appeal from its standard appeal processes. CPR 25.29 (then CPR 25.15) is intended to provide cost protection to a respondent to an appeal, just as CPR 25.26 is intended to protect a ‘defendant’ to a claim. Owing to the approach to the appeal taken by the Court of Appeal, the respondents in those cases would, absent intervention, have been deprived of the protection of CPR 25.29. The court’s intervention was therefore purely a “technicality” in the sense that it involved no material extension to the beneficiaries of the underlying rule. Put another way, the court’s intervention was designed to address the fact that the substance of the proceedings was an appeal, involving a respondent to an appeal who would be at risk of costs; to borrow Lord Scott’s words, it might appear to be mere “pedantry” to take a different view.

By contrast, the application in this case is not dealing purely with a technicality – it certainly cannot be said that it is seeking to address a lacuna in the Rules created by an order of the court. On the contrary, CPR 25.26 expressly excludes non-defendants from its application (as Mr Birdling accepts) and I agree with the Claimants that an obviously deliberate exclusion cannot be characterised as creating a lacuna; just as overriding that exclusion in the circumstances of this case cannot be described as a “mere technicality”.

Finally, I also agree with the Claimants that it is important to have regard to the prefatory words of CPR 3.1(2) which make clear that the court may exercise its powers under CPR 3.1(2), “[e]xcept where these Rules provide otherwise”. In Royal Bank of Scotland and in Great Future International the rules are silent as to the procedure to be adopted where an application for permission to appeal is adjourned to an oral hearing and where the appeal is to follow, and accordingly silent as to applications for security in such a situation – there genuinely appears to be a lacuna. By contrast, it is to be

While CT Bowring was decided prior to the CPR and was not concerned with the question of whether an apparently general provision in the Rules was sufficient to empower the court to order security for costs in a novel case, and while Lord Scott indicated that he should not be taken as necessarily agreeing with the result in CT Bowring, the Privy Council nevertheless approved relevant extracts from the judgments of both Dillon LJ and Millett LJ, as referred to above. Neither of the parties to the IP Application has found any authority in which security for costs has previously been awarded in favour of an interested party and there can, in my judgment, be little doubt that the settled practice of the court (as exemplified by the Rules) is that security for costs under CPR 25 can only be awarded in favour of ‘a defendant’.

While an interested party might now be able to bring itself within the provisions of CPR 3.1(3) and/or 3.1(5) in appropriate circumstances, those provisions are not relied upon for the purposes of this application and in any event contemplate scenarios which are far removed from an application by an interested party for security for costs. The authorities which have considered the scope of these rules have not, in my judgment, contemplated the existence of more general powers in respect of the grant of security for costs which extend beyond their express provisions.

In all the circumstances, I can see nothing in the Rules or in the authorities to which I have been referred to support the proposition that it would be proper for me simply to ignore the longstanding practice of the court and make an order for security for costs in favour of Allwyn. Although in theory an inherent jurisdiction exists, as confirmed by the Privy Council in GFN, it is not unfettered and there is nothing in the Rules which provides the court with power to make such an order. I reject Allwyn’s case that the provisions of CPR 3.1(2)(p) have that effect. I respectfully adopt the position taken by the Court of Appeal in CT Bowring that, if there is to be an expansion of the Rules to cover applications for security for costs by interested parties, that must be a matter for the Rules Committee or for Parliament.

For all the reasons I have given, I reject the IP Application. By way of postscript, I observe that, in his skeleton argument, Mr Birdling sought to rely upon the recent Privy