Recovery Partners GB Limited and Another v Rukhadze and Others  EWHC 95 (Comm)
High Court considers whether deed of indemnity from ATE insurer is adequate security for costs.
The Claimants’ solicitors provided an undertakings to hold sums of money as security for certain costs, which the Defendants accepted. However, the Claimants subsequently sought to substitute those undertakings for a Deed of Indemnity provided by the Claimants’ ATE insurers. Two issues arose:
(1) Would the Deed of Indemnity provide adequate security in the sense of sufficient protection? The Judge held that, on the facts, it did provide adequate security.
(2) The right approach to an application to be released from an undertaking given in lieu of security for costs.
The Judge held that there must have been a “material change” in circumstances in order to trigger the Court’s discretion to exchange the security. The Judge was doubtful that there had been a material change here, however the Defendants were happy to proceed on the assumption that there had been a material change.
It was stated during the hearing that it was a general principle, applicable to security for costs applications, that security should be provided in the way least onerous to the provider. It was decided that the Deed was an adequate mode of providing security; that the Claimants would prefer to provide security by way of the ATE policy and the Deed; and that in all the circumstances, the proper exercise of discretion was to release the Claimant’s solicitors from their undertaking so that they could then “use the cash for other things”.
As a result, the application was dismissed.