William Sykes v Sumiki Limited

This is an application by the respondent pursuant to CPR 25.29 for an order for security for costs against the appellant. CPR 25.29 provides:

In very short summary, the appellant has lodged an appeal from the order of HHJ Saunders at the Central London County Court dated 5 July 2024, giving the respondent summary judgment on its claim against the appellant for enforcement of repayment of a loan and interest made to Sunburst Business Services Limited, for which the appellant stood as guarantor. Judgment was entered in the sum of £997,988.69 comprising the loan principal advanced by the respondent to the company and initial interest on the same in the sum of £95,160, together with default interest on the same to the date of judgment in the sum of £902,828.69.

HHJ Saunders also made an award of costs, ordering that the appellant should make an interim payment of £40,000 on account of the respondent's costs by 29 May 2024 and an additional payment in the sum of £74,899.45.

The chronology, very helpfully provided by Ms Sarah Clarke who appears on behalf of the applicant, gives greater detail on the prolonged history of this litigation since 2019.

On 7 May 2025 on the appellant's renewed application following refusal on the papers, Griffiths J gave permission to appeal to this court on two grounds. In giving permission, Griffiths J circumscribed the scope of those grounds in the reasons set out in paragraphs 1 to 4 of his order. He also gave directions for the hearing of the appeal early in Michaelmas term 2025. I was told today that the hearing of the substantive appeal has now been fixed for 8 October 2025.

In his appellant's notice, the appellant had applied for a stay on enforcement of the judgment and costs ordered against him by the Central London County Court pending the determination of his appeal. The grounds on which he sought that stay included the following:

On 11 June 2024, Sir Stephen Stewart granted the application for a stay and ordered that the relevant paragraphs of the order of HHJ Saunders of 8 May 2024 should be stayed pending determination of the substantive appeal or further order. That stay was maintained, albeit in amended terms, by Griffiths J in his order granting permission to appeal on 7 May 2025.

On 21 May 2025, the respondent filed their respondent's notice seeking to uphold the order of HHJ Saunders for the reasons given in his judgment and for further reasons as stated in their notice. On the same date, the respondent applied for security for costs pursuant to CPR 25.29. They also applied to strike out two paragraphs of the grounds of appeal, those paragraphs being identified as paragraphs 15 and 16 in that application notice, but subsequently corrected to paragraphs 14 and 15 by Ms Clarke.

The application for security for costs was in the following terms:

The application was supported by a witness statement dated 21 May 2025 and made by the respondent's solicitor, Gabriel Rodriguez-Cleary, who is a partner in the firm of Carbon Law Partners. In paragraph 11 of his statement, Mr Rodriguez-Cleary states the following:

He then went on to give a figure of some £99,826.72 exclusive of VAT as the costs incurred by the respondent to date, supported by invoices and remittance advices which were exhibited to his statement. He also provided information as to the respondent's projected costs of appeal, broken down between counsel's fees with a total estimate of £25,150 plus VAT and solicitor's fees with a total estimate of £15,500 plus VAT. The aggregate sum for costs incurred thus far and those projected during the determination of the appeal was stated to be £140,476.72. As I have indicated, the application is for an award of security for costs in that sum.

On 28 May 2025, Sir Stephen Stewart made an order for directions on that application. He directed that the appellant should file a witness statement in response to the application by no later than 4.00 pm on 20 June 2025. In the event, the appellant did not file evidence in response to the application.

Before me today, the respondent was represented by Ms Clarke and the appellant by Mr Ian Rees Phillips. I am grateful to both of them for their skeleton arguments and their oral submissions.

It is not in dispute that the appellant is resident outside the jurisdiction. He last gave a verified statement as to his place of residence in his appellant's notice, verified by a statement of truth. He stated that he was resident in Kenya. I was told that an email address as which he had been contacted hitherto by the respondent no longer seemed to function. It was not known at which address he was living in Kenya or, indeed, elsewhere. It may be that he remains in Kenya. It may be that he has moved to another jurisdiction, but as I said, the most recent verifiable evidence as to his place of address is that he is resident in Kenya.

It is not in dispute that the mere fact of residence outside the jurisdiction does not of itself justify making an order for security for costs in accordance with CPR 25.27. There must be some objectively justifiable grounds before the court relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. Authority for that proposition is to be found in Nasser v United Bank of Kuwait [2002] 1 WLR 1868 ("Nasser") at [61] (Mance LJ). At [63] – [64] Mance LJ said:

In Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099 at [77], Gloster LJ referred to those passages in the judgment of Mance LJ in the Nasser case and said:

I was shown other authorities where those principles have been applied to the manifold differing circumstances which arise from case to case.

In the present case, the respondent relies upon an extract from an article entitled "Enforcement of Judgments 2024" which was published on the Chambers and Partners website, as I understand it, on 19 July 2024. That article contained information about the practicalities of enforcement of judgments in Kenya. It refers to the Foreign Judgment Reciprocal Enforcement Act which it describes as "the Act". The Act is said to provide for the enforcement of judgments given in countries outside Kenya that afford reciprocal treatment to judgments given in Kenya. The countries to which that Act applies include the United Kingdom.

Paragraph 3.3 of the article is headed "Categories of Foreign Judgments Not Enforced" and states:

At 3.4 under the heading "Process of Enforcing Foreign Judgments" and a subheading "Foreign Judgments and Reciprocating Countries" the article states:

Finally, under the heading "3.5 Costs and Time Taken to Enforce a Foreign Judgment" the following advice is given:

The article goes on to point out that there is power in the Kenyan courts to order a foreign plaintiff to provide security for the defendant's costs in the event that the defendant succeeds in opposing enforcement.

The appellant's response to that article is to question whether it is sufficiently substantial for the court to draw any meaningful conclusions as to the real risk of obstacles arising or delays occurring in enforcing the judgment debt against the appellant, in the event that his appeal were to fail; and a judgment debt, either in the sum ordered by the County Court or if some other sum, were to become enforceable against him in the United Kingdom courts.

Mr Rees Phillips made the further submission that even if that is incorrect, at worst on the basis of the evidence provided by the article, the risk faced by the respondent is of a modest additional cost burden incurred in the procedure for enforcing the judgment debt in Kenya. But that was not in any sense a real or objective risk of any obstacle to ultimate recovery. Any security should accordingly be limited to a modest sum. He suggested that £5,000 would be the limit of the security which would be justified on the basis of that article.

In my judgment, the article placed before the court is sufficient to constitute material upon which I can properly form a judgment in applying the principles stated by Mance LJ in Nasser. In Rajabieslami v Tariverdi & Ors [2023] EWHC 455 (Comm) at [63], Richard Salter KC sitting as a Deputy Judge of the High Court placed reliance on what appears to have been a similar article of similar provenance, in relation to arrangements for the enforcement of foreign judgments in Dubai. The article upon which Ms Clarke relies is sufficient to provide a proper basis for this court to act in the present case.

On the basis of that article and the passages that I have read out, having regard to the circumstances of this case I am satisfied that the respondent has made good its contention that, in the event that the appeal fails before this court, in order to enforce the judgment debt and the costs awarded, they will face a significant additional burden of costs in the Kenyan judicial system. I am also satisfied that it has been demonstrated that there is a real risk of further litigation delay. Opportunities for further applications will also be available under the Kenyan Act, notwithstanding the reciprocal arrangements which are briefly summarised in the article, which could lead to quite significant additional costs and costs risks being incurred.

I accept Mr Rees Phillips's point that it is reasonable to assume, and there is no basis in evidence to find otherwise, that eventually the respondent would succeed in enforcing judgment in the Kenyan jurisdiction, in the event that the appellant's current appeal fails.

I therefore conclude that the condition in CPR 25.27(b)(i) is met in this case. The question then is whether it is just to make an order for security for costs. Given, as I have said, the existence of a likely additional cost burden and the risk of delay and the costs which would flow from that in successful enforcement in Kenya, it is prima facie just to make an order in this case. It was for the appellant to put forward reasons why I should not do so. It was faintly suggested that to order security for costs might have a stifling effect on the appeal, but it seems to me that for that argument to prevail against any security for costs being ordered at this stage, it would be necessary to have some idea as to the financial standing of the appellant. Sir Stephen Stewart's directions gave the appellant the opportunity to put forward evidence as to that in response to the application. For whatever reason, he has chosen not to put in evidence of that kind.

I am satisfied that it is just for the court to exercise its power under CPR 25.29 to make an order for security for costs in the appeal against the appellant.

However, I am not satisfied that it is appropriate to extend that order to cover costs already incurred in the proceedings at first instance. In my view, Mr Rees Phillips is correct that such an order would require exceptional circumstances to be shown. There is no authority before me which lends any clear support to an order of that kind being made. The position is reinforced by the fact that the effect of such an order would be to undermine the terms of the stay granted by Sir Stephen Stewart and maintained by Griffiths J in granting permission to appeal.

I understand, from the submissions made by Ms Clarke, that the respondent is deeply unhappy about the fact that that stay is in place and the impact it has had on the ability to recover any of the sums due to them as a result of the judgment of the court below. But their remedy in that respect was to make an application to set aside the stay or to appeal to the Court of Appeal against the imposition of the stay. It is not procedurally appropriate or justified to seek to achieve that result, as it were, by a sidewind, through this application. I decline to include any sum by reference to the costs incurred thus far in the proceedings at first instance.

I turn then to the question of the proper sum which ought to be ordered by way of security for costs for the appeal. I have the estimates of the respondent's projected costs of appeal from the evidence provided in support of the application. However, in the light of the guidance given by Mance LJ in Nasser I ought to guide my consideration of what is the appropriate sum principally by reference to the likely additional cost of litigation and delay in enforcing a judgment through the Kenyan courts, in the event that the appeal fails.

Doing the best I can, it seems to me that a sum of £15,000 is appropriate in order to reflect that additional cost, on the basis of the material before the court. Accordingly, the order will be that the appellant shall give the respondent security for costs of the appeal in the sum of £15,000.

Finally, I am not prepared to impose an unless provision in relation to that order. The correct course to take is to make an order for security for costs in the sum that I have stated; to order that that security be given within 14 days of today; and to give liberty to the respondent to apply to strike out the appeal. in the event of default in making that payment within that timescale.

I indicated at the outset of this hearing that it would not be appropriate for me to make any order on the second part of the application, in relation to striking out certain paragraphs in the grounds of appeal. It would be more appropriate and convenient for that question to be considered by the judge who hears the substantive appeal in early October 2025, particularly given that Griffiths J has very carefully circumscribed the scope of the two grounds of appeal by reference to particular paragraphs in HHJ Saunders's judgment. I shall simply direct that the strike out application be adjourned for consideration at the same time as the hearing of the substantive appeal.