HT-2022-000304 - [2025] EWHC 1771 (TCC)

On 24 April 2025 the defendants issued an application for an order that the claimants provide security for costs and/or third party funding information. The sum of the security sought is £23,417,072, representing 80% of the defendants’ incurred and estimated costs in respect of procedural steps required to be taken in respect of the Second Stage trial up to 31 December 2025.

The application is opposed by the claimants on the basis that it is premature, pending the Judgment on the First Stage trial and directions in the Second Stage trial.

Witness statements have been filed in respect of the application:

CPR 25.26 provides that a defendant to any claim may apply for security for their costs of the proceedings. CPR 25.27 provides that:

“The court may make an order for security for costs if –

(a)

it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(b)

… one or more of the following conditions apply -

(i)

the claimant is resident out of the jurisdiction;

(ii)

the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so …”

Thus, the court must consider the following matters:

The individual claimants are all residents of Brazil and the corporate or other entities would be unable to pay the costs if ordered to do so. In her third witness statement Ms Sandler has explained the difficulties of enforcing any costs award against the claimants in Brazil. In those circumstances, it is not disputed that the threshold test is satisfied; indeed in advance of the First Stage trial, the claimants obtained ATE insurance in the sum of £58 million to provide reassurance to the defendants that adverse costs liabilities could be satisfied. In those circumstances, Mr Sloboda KC, on behalf of the defendants, submits that the court should exercise its discretion and order security.

I have considered whether it would be just in all the circumstances to order security at this stage but decide that the application should be adjourned to the December 2025 CMC for the following reasons.

First, the scope and timing of the Second Stage trial is not yet clear. Although the court has made preliminary directions in this judgment, the full directions and timetable for any Second Stage trial have not been identified or discussed by the parties; it is clear from the CMC hearing that the parties have not advanced any firm proposals as to the factual and expert evidence that will be deployed at the Second Stage trial. As a result, the parties are not in a position to provide even preliminary estimates of costs for the same.

Second, by the December CMC, it is likely that the outcome of the First Stage trial will be known and the court will be in a position to assess the case in the round.

Third, the defendants have applied for, and the claimants have agreed to, costs budgeting and management orders, to be considered at a costs management hearing after the December CMC. Any costs management order will be made after the CMC, probably in January 2026, but the parties must exchange their initial costs budgets prior to the December CMC so that the court has oversight when ordering the directions for trial.

Fourth, the claimants have indicated that they would need time to investigate and obtain ATE insurance for the Second Stage trial. Although I agree with Mr Sloboda that it is unfortunate that the claimants have not been proactive in addressing this question, including alternative means of security by bank bond or payment into court, I accept that such exercise is likely to be easier once the scope of any trial has been agreed or determined by the court.

Finally, I recognise that the defendants are anxious that they are being required to take procedural steps, including amendments to their pleadings, in the absence of what they consider to be adequate security for their costs. However, that must be balanced against the fact that the claimants do have substantial ATE insurance in place and the costs that will be incurred in the coming months are relatively modest in comparison to the overall costs to date. In all the circumstances of the case, the just course of action is to consider the application for security at the next CMC.

However, the court will order that by 4pm on 25 July 2025 the claimants shall disclose to the defendants the identities, addresses and contact details of all individuals, companies or other entities that have provided funding to the claimants and/or for the pursuit of the claimants’ claims in these proceedings. That will ensure that all relevant information is available well in advance of the next CMC when the issue of security is considered.

There is no dispute as to the claimants’ applications: (a) for continuation of Ms Kässmayer’s appointment as litigation friend for the child claimants; and (b) for continuation of Ms Garrido’s appointment as litigation friend for the protected party claimants.

The parties have agreed that there should be a costs management hearing and that it should follow the CMC in December 2025. The parties shall liaise with the listing office to fix a date and time estimate for the same.

As indicated above, the parties should exchange initial costs budgets in advance of the December CMC so that the court can have regard to them when giving directions. Following that hearing, the parties will have an opportunity to revise their budgets to reflect the orders made at the CMC.

The parties are invited to draw up and agree the order.