Security against added party

Compagnie Noga d’Importation et d’Exportation SA v Australia and New Zealand Banking Group Ltd and others [2004] EWHC 2601 (Comm)

The defendants applied for an order for security of costs against the claimant company. One of the claimant’s shareholders applied to be joined as a claimant on the basis of an assignment from the company of its cause of action. The company had commenced various proceedings for the payment of debts arising out of bills of exchange that were the subject of agreements between the company and the defendants. During the course of those proceedings the company had been ordered to provide security for the defendants’ costs but had failed to comply. The company had then executed a deed of assignment of its equitable interests in the claims to the shareholder. The defendants submitted that the deed of assignment was not valid or effective and it was not desirable for the shareholder to be joined as a party; but if he was joined he should be subject to a condition that he provide security for costs or at least that he should assume the existing obligations of the company as regards security. The company submitted that there were good prospects that it would have recovered sums under certain arbitration awards before any substantial costs exposure might arise in the instant proceedings, and an order for security for costs would stifle its claim.