Isle of Man: Security For Costs – An Update

Last Updated: 28 October 2015
Article by   Simcocks


In the recent decision of Prest ("Mr Prest") v Pretrodel Resources Limited (in Liquidation) ("Petrodel")1 His Honour Deemster Corlett reviewed the Manx law on Security for Costs, where an application was brought before the court under Rule 7.28 of the Rules of Court of Justice of the Isle of Man. 

The Court Rule and the Court's Discretion

The court has a wide discretion to grant a defendant security for costs under Rule 7.28(1)2. It may grant an order for Security for Costs if:

(a) it is satisfied, having regard to all the circumstances of the case that it is just to make such an order and

(b) either;

i. one or more of the conditions in paragraph (2) of Rule 7.28 applies, or

ii. or an enactment permits the court to require Security for Costs. 

2. The conditions are-

(a) the claimant is ordinarily resident out of the jurisdiction;

(b) the claimant is a company or other body (whether incorporated in or outside the Island) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;

(c) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;

(d) the claimant failed to give his address in the claim form, or gave an incorrect address in that form;

(e) the claimant is acting as a nominal claimant, other than as a representative claimant under Chapter 6 of Part 3, and there is reason to believe that he will be unable to pay the defendant's costs if ordered to do so;

(f) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.

The wording in of Rule 7.28(2) is similar to the equivalent rule under the UK Civil Procedure Rules3 save that a defendant can be granted security for costs under Rule 25.12 if the claimant is (i) resident out of the jurisdiction; but (ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982. The Lugano Convention does not apply to the Isle of Man nor is it a Regulation State.

Deemster Corlett determined that the pre-requisite, in Rule 7.28(2)(a), was satisfied as Mr Prest was ordinarily a resident out of the jurisdiction of the Isle of Man. At the time of this judgment, Mr Prest was resident in Sienna (Italy) but he also appeared to have addresses in Abuja (Nigeria), in Nevis, and Monaco and also London.

The underlying case which Mr Prest brought before the Manx court was a claim that assets were his, which he said the Liquidator held on trust for him.

Deemster Corlett cited and relied upon Akhavan v Quinn Legal Advocates Limited 20134  as the leading case in the Isle of Man on security for costs5.

The Relevant Law

Deemster Corlett referred to two English decisions in Nasser v United Bank of Kuwait6 and De Beer v Kannar& Co7. These cases examine the courts approach when assessing the amount of costs to be awarded in an order for Security for Costs.

The White Book8 refers to Nasser9 and says that:

"... a reasonable estimate of the applicant's likely costs in Nasser up to the end of the proceedings was £10,000. However, there was no obstacle to or difficulty about the enforcement of an order for costs other than impecuniosity. Therefore, it was appropriate to limit the amount of security to the amount needed to protect the applicant from the extra burden in terms of costs and delay which was likely to be involved in seeking to enforce an order for costs in the country in which the claimant resided (the USA)."

Costs in the Nasser case were assessed in the sum of £5,000 and an order for security was made for that amount.

At paragraphs 189 and 190 of Nasser, Walker J in stated that:

"... the court should consider tailoring the order to the particular circumstances: if there is likely to be no difficulty about enforcement, but simply an extra burden in the form of costs or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden."

In contrast, the White Book comments that in the Court of Appeal decision of De Beer v Kannar& Co10 (the "de Beer case"):

"... a reasonable estimate of the applicant's costs up to the end of the proceedings in question was £130,000. There was evidence that the claimant had sufficient assets out of which he could pay such costs not only in Switzerland but also in the USA. However, the court was satisfied that (i) there was a lack of probity on the part of the claimant in these proceedings (ii) the claimant's assets in Switzerland were assets which could easily be moved, and (iii) there was a risk that an order for costs against them would be difficult or even impossible to enforce in the USA. In the circumstances, the amount of security which it was appropriate to award was £130,000."

Deemster Corlett11 stated that in Kazakhstan Kagazyplc v Zhunus12 it was emphasised that "the Court should not make orders which are discriminatory to Articles 6 and 14 of the European Convention on Human Rights".

Thus, in light of these two contrasting cases there is clearly a need for the courts to assess the amount of costs to be awarded in an order for security based on the individual merits of each case.


In determing whether to grant security for costs to Petrodel, Deemster Corlett considered, in particular, the followings factors:

  1. Mr Prest was alleging in Nigerian proceedings that the assets of the companies were held on trust for his siblings.
  2. Mr Prest had not paid an earlier costs order in related proceedings and faced the potential of imprisonment because of non-payment of maintenance to Mrs Prest.
  3. The Liquidator was acting essentially for the creditors of Pretrodel and their interests needed to be in the forefront of the Court's mind.
  4. The company was wound up on August 1 2013. It was a substantial insolvency and the assets should be available prima facie to pay the creditors.
  5. Mr Prest claimed that as a result of the English Supreme Court ruling on June 12 201313 the assets of Petrodel were in fact held on trust for him. If that was the case, the creditors would lose out substantially as there would have been no assets available to pay them.
  6. The security should not be limited to the costs of enforcement in the five relevant jurisdictions, but should instead reflect the amount of the Liquidator's assessed costs if he were to be successful.
  7. The whole point of security for costs is to protect a defendant who is obliged to litigate at the election of a claimant.
  8. Mr Prest seemed likely to do all within his power to avoid paying the Liquidator's assessed costs from any available assets.

This concluded with Deemster Corlett ordered Mr Prest to pay into court the sum of £125,000 plus VAT, i.e. £150,000.


Where a claimant opposes the making of an order for security for costs or seeks to limit the amount of security, the onus is on them to put forward sufficient evidence before the court, and in doing so, to make full and frank disclosure of their financial resources. 

If a claimant gives an incomplete account of their financial resources, the court may, in exercising its discretion, set an amount which represents the court's best estimate of what the claimant can reasonably afford. 


1  Prest v. Pretrodel Resources (unreported) Deemster Corlett's Judgment, Chancery Division, August 13 2015 

2  Steele v. Paz Limited (in liquidation) and Others 1993 - 95 MLR 102 (CHD)


4  MLR 310

5  Prest v. Pretrodel Resources (unreported) DeemsterCorlett's Judgment, Chancery Division,  August 13 2015

6  [2002] 1 WLR

7  (No.1) [2001] EWCA Civ 1318

8  On Civil Procedure  of the Supreme Court of England and Wales 2015, Paragraph 25.13.6 "No discrimination against claimants resident in other States"

9  Nasser v. United Bank of Kuwait [2002] 1 WLR

10  (No. 1) [2001] EWCA Civ 1318

11  Paragraph 13,Prest v. Pretrodel Resources (unreported) DeemsterCorlett's Judgment, Chancery Division, August 132015  

12  [2015] EWHC 996 (Comm)

13  Prest v Petrodel Resources Limited [2013] UKSC 34

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions