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Danilina v (1) Chernukhin (2) Navigator Equities Ltd (3) Kargin [2018] EWCA Civ 1802.

Friday 14 September 2018

This was an appeal on quantum of security for costs. While the Third Defendant was granted security for costs, under CPR 25.13(2)(a) (claimant resident out of the jurisdiction), Iain Pester argued on appeal that the Judge adopted an incorrect approach when it came to fixing the quantum of the security awarded. The Judge held that, while there was in fact a real risk of non-enforcement of any eventual English judgment in the Third Defendant’s favour abroad, namely in Russia, that risk was “not high” (while still being “real”). The Judge then went on impermissibly to adopt a “sliding scale” as to what constitutes the risk of non-enforcement, and this is wrong as a matter of law, and led to an entirely arbitrary and unprincipled approach to fixing the quantum of security awarded.

The Court of Appeal reversed the Judge, and held that “once it has been established that there are “substantial obstacles” sufficient to create a real risk of non-enforcement, the starting point is that the defendant should have security for the entirety of the costs and there is no room for discounting the security figure by grading the risk using a sliding scale approach.” (at [64])

Iain successfully appeared for the Third Defendant in the appeal to the Court of Appeal.