Tyndaris v MMWWVWM Ltd

Factual and Procedural Background

The claim arises from a contract dated 29 November 2017 under which the Plaintiff provided investment management services to the Defendant. The Plaintiff managed a trading account for the Defendant from December 2017 until trading was suspended by the Defendant on 14 February 2018. In May 2018, the Plaintiff issued proceedings claiming management fees of approximately $2.8 million, while the Defendant counterclaimed for damages of about $22 million for breach of contract or misrepresentation.

Both parties applied for security for costs. By an order dated 22 March 2019 (the "March Order"), the court ordered the Plaintiff to pay $750,000 in four staged payments as security for costs. The Plaintiff paid the first three instalments totaling $487,500 but failed to pay the final instalment of $262,500 due on 19 February 2020, notifying the Defendant that it was unable to make the payment.

Consequently, the Defendant applied on 25 February 2020 for an "Unless Order" that the claim be struck out unless the Plaintiff paid the final instalment within seven days. The Plaintiff applied on 6 March 2020 to vary the March Order to reduce the security amount to the sum already paid. The hearing of both applications was conducted remotely with full submissions.

Legal Issues Presented

1. Whether the March Order for security for costs should be varied to reduce the amount payable by the Plaintiff.
2. Whether, in light of the Plaintiff's failure to pay the final instalment of security for costs, an Unless Order should be granted striking out the claim unless payment is made within seven days.
3. Whether the Plaintiff has demonstrated that payment of the security would stifle the claim.
4. Whether the sanction of striking out the claim is proportionate in the circumstances.

Arguments of the Parties

Appellant's Arguments (Plaintiff)

• There has been a material change in circumstances since the March Order, notably regarding the extent of the Defendant's counterclaim and the Plaintiff's financial position.
• The Plaintiff contends that the financial situation at the time of the March Order was different and that the court will not order security that a claimant cannot comply with or that would stifle a good claim.
• The Plaintiff argued that the Application for an Unless Order is effectively an application for strike out and that such a sanction would be disproportionate, referencing the case of Walsham Chalet Park v Tallington Lakes.

Appellee's Arguments (Defendant)

• The Plaintiff has not established inability to provide the security for costs, relying on the Plaintiff's accounts showing cash at bank of approximately $509,000 as of 31 December 2018, though acknowledging depletion since then.
• The Defendant challenged the Plaintiff's evidence as lacking detail about current cash resources and noted the Plaintiff's controlling individual's apparent wealth, including ownership of a high-value superyacht and residence in Monte Carlo.
• The Defendant submitted that the Plaintiff's failure to pay the final instalment justified the Unless Order, especially given the proximity of the trial.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Goldtrail Travel v Aydin [2017] 1 WLR	Claimant bears the burden to prove on balance of probabilities that payment would stifle the claim. The court must respect the company's separate legal personality when considering funding from shareholders. The court should assess the claimant's financial position and relationship with owners when evaluating fund availability.	The court applied these principles to assess whether the Plaintiff's inability to pay was credible and whether the claim would be stifled by enforcing the March Order.
BJ Crabtree (Insulation) Ltd v GPT Communication Systems Ltd	Consideration of counterclaim's impact on security for costs.	The court found that the counterclaim's evolution did not justify varying the security for costs ordered against the Plaintiff.
Walsham Chalet Park v Tallington Lakes [2014] EWCA Civ 1607	Proportionality of strike-out sanctions and application of Mitchell and Denton principles.	The court considered the proportionality of striking out the claim and referenced this authority for guidance on sanctions and relief from sanctions.
Meldex International v Trevillion [2010] EWHC 1342 (Ch)	Scenario of complete failure to comply with security for costs order and related sanctions.	The court noted that this was not a case of complete failure, differentiating the present circumstances from those in Meldex.
HRH Prince Abdulaziz Bin Mishal Bin Abdulaziz Al Saud v Apex Global Management Ltd [2014] UKSC 64	Importance and gravity of strike-out sanctions as a case management tool.	The court endorsed the principle that strike-out is a powerful sanction that should only be used when justified by consequences.

Court's Reasoning and Analysis

The court first examined whether there had been a material change in circumstances justifying variation of the March Order. Applying the principles from Goldtrail Travel v Aydin, the burden was on the Plaintiff to prove that payment of the security would stifle the claim. The court found the Plaintiff's evidence insufficient and unconvincing, noting the lack of detailed financial information and inconsistent statements regarding available funding. The Plaintiff failed to demonstrate that it could not raise the required sum or that enforcement of the March Order would stifle the claim.

Regarding the Defendant's counterclaim, the court found no material change justifying variation. The judge who made the original March Order had considered the counterclaim and its costs, and subsequent increases in the counterclaim's scope did not affect the appropriateness of the security ordered.

The court then considered the proportionality of the sanction of striking out the claim if the Plaintiff failed to comply with the Unless Order. While acknowledging that the breach was serious and that the Plaintiff apologised, the court accepted the Plaintiff's explanation for the missed payment but concluded that the sanction was not disproportionate. The outstanding amount was significant relative to the total security ordered and the approved costs budget. The court rejected the argument that the trial proceeding regardless of the security amount justified reducing the security.

Holding and Implications

The court granted the Defendant's Application for an Unless Order and refused the Plaintiff's Variation Application.

The direct effect is that the Plaintiff must pay the final instalment of security for costs within seven days or face the claim being struck out and judgment entered for the Defendant. The decision enforces the original March Order and maintains the security level fixed by the court, reinforcing the principle that security for costs orders should be complied with unless a claimant convincingly demonstrates that such payment would stifle the claim. No new legal precedent was established; the ruling applies established principles to the facts of this case.