Ackerman v Ackerman & Ors

Factual and Procedural Background

This case concerns an application for security for costs arising from acrimonious litigation between two factions of the Ackerman family. The dispute originates from the management and division of a successful property investment and development business, referred to as "the Group," which was built up by two brothers, one of whom died, passing his interests to his widow. Over time, the surviving brother managed the Group, a charity with subsidiaries, and a holding group established for their children, but relations deteriorated, leading to a formal agreement ("the Agreement") to divide their respective interests, administered by a tax barrister appointed as an arbiter.

The Agreement empowered the arbiter to allocate assets and make adjustments, culminating in a Provisional Adjustment Report which substantially transferred assets to the widow's side, provoking the surviving brother to commence proceedings alleging breaches of the Agreement by the arbiter and others. The claimant seeks to have the Agreement discharged and for accounting of profits resulting from the transfers.

The defendants deny the breaches and assert the arbiter acted impartially. The court ordered an expedited trial focusing on the construction of the Agreement and the arbiter’s conduct, not a full re-examination of all historical asset management disputes.

Legal Issues Presented

1. Whether the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him, justifying an order for security for costs under CPR 25.12 and 25.13(2)(g).
2. Whether it is just in all the circumstances to order security for costs and, if so, the appropriate amount and form of such security.

Arguments of the Parties

Appellant's Arguments (Claimant)

• The claimant contends that the transfer of assets, including his interest in the matrimonial home and substantial funds received from a third party, are not intended to put assets beyond reach but are for tax planning and legitimate business purposes.
• The claimant asserts he does not have significant assets or income beyond limited funds and a loan from a son-in-law, and that his family is considering assisting with funding.
• The claimant disputes the suggestion that he has undisclosed assets or other financial support and argues that ordering security beyond a charge on the matrimonial home would stifle a genuine claim.

Appellees' Arguments (BLP Defendants)

• The defendants rely on CPR 25.13(2)(g), asserting the claimant has taken steps with his assets that would hinder enforcement of a costs order, including transfers of the matrimonial home and funds to a Gibraltar trust.
• They argue the claimant has not made full and frank disclosure of his assets and financial arrangements and infer the existence of undisclosed assets or other financial support.
• The defendants submit that the security offered by a charge on half the matrimonial home is inadequate given the estimated trial costs and seek security for costs up to a substantial amount.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chandler v Brown [2001] CP Rep 103	Requirement that claimant's steps with assets must make costs order difficult to enforce; conduct must relate to assets, not merely dishonest behaviour.	Confirmed that the condition for security for costs requires objective evidence of asset-related steps affecting enforcement.
Aoun v Bahri [2002] EWHC 29 (Comm), [2002] CLC 776	The test for steps taken is objective; motive is irrelevant but relevant to discretion.	Applied the objective test to determine whether claimant's asset transfers justified security for costs.
Dubai Islamic Bank v PSI Energy Holding Co [2011] EWCA Civ 761	Failure to disclose assets may infer assets have been put beyond creditors' reach.	Considered claimant's disclosure and inferred possible undisclosed assets affecting security order.
Harris v Wallis [2006] EWHC 630 (Ch)	No temporal limitation on when steps were taken; motive relevant to discretion.	Recognised that asset transfers before proceedings may justify security for costs.
Sir Lindsay Parkinson & Co v Triplan [1973] QB 609	Court may consider whether defendant’s conduct contributed to claimant’s impecuniosity.	Accounted for the defendants’ role in claimant's lack of means when exercising discretion.
Keary Developments Ltd v Tarmac Construction [1995] 3 All ER 534	Security for costs should not stifle genuine claims; affordability principle applies.	Balanced security amount against risk of stifling claimant’s genuine claim.
Al-Koronky v Time-Life Entertainment [2006] CP Rep 47	Principle of affordability; claimant must be candid about means; adverse inferences may be drawn.	Scrutinised claimant’s financial evidence critically in deciding security amount.
Brimko Holdings Ltd v Eastman Kodak Co [2004] EWHC 1343 (Ch)	Difficulty of proving negative in relation to third party funding; court evaluates evidence accordingly.	Considered claimant’s evidence of third party funding with recognition of evidential challenges.

Court's Reasoning and Analysis

The court accepted that the claimant had taken steps in relation to his assets that satisfy the condition under CPR 25.13(2)(g) for ordering security for costs, specifically transfers of his interest in the matrimonial home and funds to a Gibraltar trust. The claimant’s explanations for these transfers—tax planning and business purposes—were viewed with scepticism, particularly given timing and incomplete disclosure.

The court critically examined the claimant’s financial evidence, noting the claimant’s substantial estimated legal costs appeared disproportionate to the scope of the trial and that the claimant had access to some funds, including a loan from a son-in-law and potential support from his children and wife. The court found the claimant’s disclosure insufficiently frank and inferred the possibility of undisclosed assets or financial support.

In exercising its discretion, the court considered principles that security for costs should not stifle genuine claims and must be proportionate and affordable. It also acknowledged that the claimant’s lack of means was partly attributable to the defendants’ conduct central to the dispute.

Balancing these factors, the court concluded that a security for costs order was justified but that the amount should reflect a realistic estimate of the claimant’s ability to fund the litigation, including anticipated family assistance, rather than the full amount sought by the defendants.

Holding and Implications

The court ORDERED the claimant to provide security for costs in the sum of £600,000. This sum may be partly satisfied by a first charge on half the claimant’s interest in the matrimonial home, valued at approximately £375,000. The court reserved further directions as to timing and form of the balance of the security.

This decision directly affects the parties by requiring the claimant to secure costs before continuing the litigation, ensuring defendants’ costs risks are mitigated. The court’s approach reflects established principles balancing the need to protect defendants against costs risk with the avoidance of stifling genuine claims. No new legal precedent was established.