Brewer Management Corporation v Christie Manson & Woods Limited

MASTER PESTER: Introduction

1. This is an application dated 25 July 2025 by the Defendant for security for costs (“the Application”). The Application is brought on two bases: the Claimant is resident out of the jurisdiction (see CPR r. 25.27(b)(i)) and/or that the Claimant is a company and there is reason to believe that it will be unable to pay the Defendant’s costs if ordered to do so (CPR r. 25.27(b)(ii)), and in either case it is just to make an order for security for costs.

2. The Claimant (“BMC”) is incorporated in the British Virgin Islands, with its registered office in Tortola. The Defendant (“Christie’s”) is the well-known auction house.

3. For the reasons set out in this judgment, I have decided that it is not just to order security, having regard to all the circumstances of the case. Background

4. The proceedings are at an early stage. BMC issued its claim on 9 May 2025. At the time of the hearing of the Application, no case management conference had been listed and statements of case had not yet closed. BMC had yet to file its Reply and Defence to Counterclaim. Christie’s has issued a Part 20 claim, but no Defence to the Part 20 Claim had yet been filed (by agreement between the parties).

5. I can take the background details from the brief details of claim on the Claim Form, as follows. On 23 January 2025, the parties entered into a written agreement (“the Agreement”) whereby: (1) Christie’s intended to guarantee to a consignor of a painting for sale at public auction on 28 February 2023 that the consignor would receive a guaranteed minimum amount in respect of the painting, whether the painting sold or not (the painting is a work by Pablo Picasso, “Femme dans un rocking-chair” – hereafter “the Picasso”). (2) BMC agreed with Christie’s that Christie’s would submit on behalf of BMC an irrevocable written bid in respect of the Picasso for £14,500,000 at the auction (“the Bid”). (3) If the Bid was successful, BMC would pay to Christie’s the hammer price, plus the applicable buyer’s premium, taxes and artist’s resale royalty (if applicable) in respect of the Picasso.

6. It turned out that there was no interest in the Picasso. Therefore the Picasso was sold to BMC for the total sum of £16,010,962.63, comprising the Bid, plus buyer’s premium plus artist’s resale royalty less a financing fee.

7. BMC now says that it was induced to enter into the Agreement by various misrepresentations, relating to the level of interest in the Picasso and its provenance, as well as implicit representations. There is also a claim for breach of fiduciary duty, tortious duty of care, and a duty to disclose material facts to BMC.

8. BMC claims rescission of the Agreement, and any other ancillary agreements, repayment of a sum of £4,819,629.28 paid in April 2023 by way of part payment under the Agreement, plus damages or equitable compensation, interest and costs.

9. Christie’s denies making any misrepresentations, and denies being in breach of any duty owed to BMC. Christie’s counterclaims for BMC’s failure to make the entirety of the purchase sum due under the Agreement, plus contractual interest at 16%, for a total of £16,131,691.02.

10. Christie’s is also bringing a Part 20 claim against Sasan Ghandehari (“Mr Ghandehari”) for the sum claimed against BMC. Mr Ghandehari is a guarantor of BMC’s obligations under the Agreement, and is also a party to the Agreement. In Christie’s Part 20 claim, Mr Ghandehari (together with his wife, Yassmin Ghandehari) is described as being a well-known and experienced art collector with a particular interest in contemporary and modern art. The Application

11. The Application was issued on 25 July 2025, supported by a witness statement of Timothy Crockford, Christie’s solicitor, seeking security for costs in the sum of £1,410,677.14. On 8 October 2025 (before BMC’s responsive evidence was due) Christie’s served a second witness statement from Mr Crockford, to correct a formula error in the costs schedule forming part of the Application and to provide an updated costs estimate, following the service of the Defence and Counterclaim. The updated estimate of Christie’s costs up to and including trial but excluding the costs of the Application was £2,078,104.14 (excluding VAT), of which it sought 70%, or about £1.45 million.

12. BMC served its evidence in response to the Application on 10 October 2025, in the form of a witness statement of Timothy Maxwell, BMC’s solicitor. The Application is resisted on various grounds. Mr Maxwell asserts that Mr Ghandehari’s ability to satisfy any costs order made against BMC cannot “be seriously questioned” by Christie’s and therefore Mr Ghandehari is a “good mark” for Christie’s costs. Mr Maxwell stated that Mr Ghandehari was “well-known to be an extremely wealthy man – as is evident from just a brief internet search”.

13. On 17 October 2025 Wedlake Bell on behalf of BMC sent a letter to Christie’s solicitors, providing some limited information as to BMC’s assets. Specifically, the letter identified a single asset, apparently owned by BMC and located in the jurisdiction (although its precise location has not been disclosed). It was asserted that this asset would be more than sufficient to meet Christie’s costs. The asset is a painting by Flora Yukhnovich titled “ I’ll have what she’s having” (“the Yukhnovich”) . BMC had purchased the Yukhnovich at auction at Sotheby’s in October 2021. Wedlake Bell sought confirmation that Christie’s would now be withdrawing the Application, failing which BMC threatened to seek indemnity costs.

14. Ultimately, despite exchanging considerable correspondence relating to the Yukhnovich, the parties have failed to resolve their differences regarding the value of the Yukhnovich and the form which any security should take. The Application therefore remains live.

15. Christie’s has filed a further witness statement of Mr Crockford in reply. Although strictly speaking BMC required permission to do so, BMC then filed another, second statement of Mr Maxwell in response to the Application.

16. Christie’s was represented before me by Leading Counsel, and BMC was represented by both Leading and Junior Counsel. Security for costs: the legal test in CPR Part 25.27

17. The principles governing the award of security for costs are well-established. First, an applicant for security must satisfy the court that one or more of the conditions in r. 25.27(b) apply. These are sometimes described as “gateways”. Establishing that a relevant gateway is available is a matter of fact, and not discretion. The burden of proof lies on the applicant.

18. Second, the court must then determine that having regard to all the circumstances of the case it is “just” to make an order. This imports a discretionary component. For example, applications for security made shortly before trial may well lead the application to fail. Equally, while the court should not generally consider the merits of the claim on a security for costs application (see Chernukhin v Danilina [2018] EWCA Civ 1802 ), security may be refused if it appears that the claim is highly likely to succeed. Discussion and analysis (1) Are one or more gateways established?

19. Christie’s submits that two gateways are available in this case: (i) BMC is resident out of the jurisdiction and (ii) BMC is a company and there is “reason to believe” that it will be unable to pay Christie’s costs if ordered to do so. Christie’s submits that the two grounds relied upon are “to some extent overlapping”, because part of the enforcement difficulties of BMC being resident in the BVI arises from the absence of any information about its assets. Obviously, Christie’s need only establish the existence of a single gateway in order to found the court’s jurisdiction to order security.

20. With regard to the first gateway, Christie’s must show that there is a “real risk” of alleged additional substantial obstacles or substantial extra burdens (that is, costs) of enforcement that are significantly greater than would be the case if the party were resident in England: Nasser v United Bank of Kuwait [2002] 1 WLR 1868 (CA), at [61 - [62], [64]. A real risk is simply one which is not merely fanciful: PJSC Tatneft v Bogolyubov [2019] Costs LR 977 , at [9].

21. In terms of BVI law and practice, BMC relied on an opinion from John Carrington KC, a practising attorney in the BVI. Christie’s relied on what was described as various principles of BVI law as set out in the witness statements of its solicitor, Mr Crockford, based on what was communicated to him by Mourant Ozannes, a law firm registered in the BVI. Mr Crockford described the points of BVI law as being “uncontroversial”. BMC complained about Christie’s approach to adducing evidence of BVI law. However, there was little of substance in dispute between the parties as to the current state of BVI law. On the basis of the material before me, the following principles apply: (1) An order of the English court will be enforced in the BVI pursuant to the Reciprocal Enforcement of Judgments Act 1922 (being the counter part to the English Administration of Justice Act 1920 ). (2) Following registration, a costs order is enforceable in the BVI by similar means to those available in England. Christie’s suggest that the most likely method of enforcement would be liquidation of BMC, for which the procedure and costs appear to be broadly similar with those in England. (3) BVI companies are required to maintain financial accounts and records: s. 98(1) of the BVI Business Companies Act 2004 (as amended). Therefore, certain comments made by Henshaw J in Pisante v Logothetis [2020] EWHC 3332 (Comm) , at [72], which are commonly referred to on applications for security for costs as regards BVI incorporated companies, do not represent the current state of BVI law. In fact, s. 98A(1) of the BVI Business Companies Act (which was enacted after Pisante was decided) goes further and requires a BVI company to file an annual return with its registered agent. The BVI Business Companies (Financial Return) Order 2023 sets out the information which the financial return must contain, comprising a balance sheet and income statement, which is not audited. (4) The financial records of BVI companies are not publicly searchable. In the BVI the financial records are held by the registered agent, rather than by Companies House. In that regard, the position in BVI differs from that pertaining in England and Wales. (5) A judgment creditor seeking to enforce an order of the English court would be able to seek ancillary orders in the BVI, such as disclosure orders, in order to be able to identify assets, and could also apply for a freezing order: see Black Swan Investment SA v Harvest View Limited BVIHCV 2009/339 and UVW v XYZ BVIHComm2016/00108.

22. However, the evidence from Mr Carrington KC, BMC’s expert, agrees that the question whether assets may or may not be available for enforcement will be highly fact sensitive. In this case, BMC has failed to provide any information as to its assets at all, save for disclosing that it owns the Yukhnovich Painting. BMC has not disclosed, for example, what financial records are held by its registered agent. It might well be a company with no assets, or only very limited assets, for all that Christie’s or indeed the court is aware. If it does have assets, these might be illiquid, or secured in favour of other creditors, or held in far-flung jurisdictions where enforcement of an English judgment might indeed be difficult. It is simply unclear.

23. This failure to provide any information as to BMC’s assets can lead to the inference of impecuniosity: see Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120 , at [17]; see also Virgo Marine v Reed Smith LLP [2025] EWHC 1157 (Comm) , at [31]. It is also well established that the effect of impecuniosity is in fact relevant to CPR 25.27(b)(i), since the effect of impecuniosity would be “… either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad” (per Mance LJ in Nasser v United Bank of Kuwait at [62]).

24. It thus seems that there is a “real risk” of non-enforcement in this case, and not merely a real risk that enforcement would take longer or cost more than enforcement in a convention state. The delay, cost and expense in the execution phase of the proceedings arises directly from the opacity of the position regarding BMC’s assets and the potential need to take different proceedings in order to establish where any assets of BMC might be found and how to enforce against them.

25. While there is clearly an overlap with the other gateway relied upon, I will consider that separately. The principles relating to the impecunious company gateway were recently summarised by Joanna Smith J in The New Lottery Company Limited v The Gambling Commission [2025] EWHC 1522 (TCC) at [17], a summary which I gratefully adopt: i) The CPR 25.27(b)(ii) gateway, like all of the gateways in CPR 25.27, is not a question for the court’s discretion but raises an issue of fact on which the court needs to be satisfied. It is only once a case has passed through one of the gateways that the court’s discretion comes into play: Infinity Distribution Ltd (In Administration) v The Khan Partnership LLP [2021] EWCA Civ 565 , [2021] 1 WLR 4630 per Nugee LJ at [30]; ii) The burden falls on the defendant to show that the condition at CPR 25.27(b)(ii) is made out. It is not incumbent upon a claimant to prove that it has the means to pay: Phaestos Limited and others v Peter Ho and others [2012] EWHC 622 (TCC) per Akenhead J at [71(a)(iii)]; iii) However, the defendant does not have to show on the balance of probabilities that the claimant will be unable to pay costs ordered against it: Jirehouse Capital v Beller [2008] EWCA Civ 908 , [2009] 1 WLR 751 per Arden LJ at [26]-[29]. It need only show that “ there is reason to believe ” that the claimant will be unable to pay. The test is “will not be able to pay” and not “might not be able to pay” – that test is not watered down by the earlier words “reason to believe”: Eagle Ltd v Falcon Ltd [2012] EWHC 2261 (TCC) per Coulson J at [22(b)]; iv) If legitimate concerns about the claimants’ financial position are raised, and if the claimants “ choose to provide no or incomplete information in response, that in itself can lead to a court reaching the belief that the Claimants are unable to pay”: Phaestos Limited and others v Peter Ho and others [2012] EWHC 622 (TCC) at [71(a)(iv)]; v) The focus should be on the claimant’s net rather than gross assets: Pisante v Logothetis [2020] EWHC 3332 (Comm) , [2020] Costs LR 1815 , per Henshaw J at [53]-[56]. A claimant must therefore identify not only its liquid assets but also its current and long-term liabilities: Kompaktwerk GMBH v Liveperson Netherland [2019] EWHC 1762 (Comm) , per David Edwards QC at [35]; vi) Illiquid assets are not a good answer to an application: Wright v Coinbase Global Inc [2023] Costs LR 1403 , per Mellor J at [54(ii)]; vii) Whilst questions as to the claimant’s ability to pay must be decided at the time of the application, the court must consider whether there is reason to believe that a future event will occur, i.e. that the claimant will be unable to pay the defendant’s costs following trial. This calls for an assessment of what the claimant may be expected to have available for payment at that time: Thistle Hotels Ltd v Gamma Four Ltd [2004] EWHC 322 (Ch) , [2004] 2 BCLC 174 per Sonia Proudman QC at [11] and Longstaff International Ltd v Baker & McKenzie [2004] EWHC 1852 (Ch) , [2004] 1 WLR 2917 , at [17]-[18], both citing the decision of Sir Donald Nicholls V-C in In re Unisoft Group Ltd (No 2) [1993] BCLC 532 at 534; viii) Even if the impecuniosity condition is satisfied, the court’s power to award security for costs is discretionary; the overall question is whether the court is satisfied, having regard to all the circumstances.

26. As to the Yukhnovich, this is the only asset which BMC has revealed it owns. By a letter dated 17 October 2025, BMC’s solicitors indicated that the Yukhnovich was acquired by BMC at auction at Sotheby’s in 2021 for approximately £2.3 million, it was still held by BMC, it is unencumbered, and it remains “readily available” at an unspecified location in the United Kingdom.

27. The parties have engaged in negotiations regarding whether the Yukhnovich could be offered as valid security for Christie’s costs of this action. Those negotiations ultimately reached an impasse. I do not think it is necessary to set out all the proposals and the counter-proposals relating to BMC’s offer of the Yukhnovich as security. One sticking point in the negotiations turned on the value to be ascribed to the Yukhnovich (the other sticking point was the form any security should take). BMC relies on a report from Beaumont Nathan, which values the Yukhnovich at £2.1 - £2.3 million on a “fair market value”, and £2.4 - £2.6 million on a “best case scenario”.

28. Christie’s says that that this is not a realistic price. It suggests that the painting should be assumed for security purposes to be worth £1 million, and that Christie’s should be permitted to seek further security in the event that the Yukhnovich ceases to represent adequate security for all of Christie’s costs to the conclusion of proceedings.

29. On behalf of BMC, it was submitted that Christie’s position, namely that the Yukhnovich should be valued at only £1,000,000 is plainly self-serving. BMC also pointed to the undertakings which Mrs Ghandehari was offering, namely (i) confirming that the Yukhnovich Painting is unencumbered and to not move, sell, transfer or otherwise encumber it (ii) to disclose its current location (at a property in the UK) within one day of a costs order being made against BMC and (iii) to permit Christie’s to sell the Yukhnovich to discharge any costs order. Mrs Ghandehari is apparently the Ultimate Beneficial Owner of BMC.

30. BMC also relied on two authorities as authority for the proposition that if there is a “fund” in the jurisdiction and the court can ensure that it is not dissipated, then that “may” be a “complete answer” to a security for costs application: see Kevorkian v Burney (No. 2) [1937] 4 All ER 468 and De Bry v Fitzgerald [1990] 1 WLR 552 (CA). I note the following in relation to them: (1) Both cases were decided pre-CPR, although they are referred to in the notes in the White Book with apparent approval: see vol. 1, at para. 25.27.18. (2) The “editorial note” to Kevorkian v Burney (No. 2) describes it as being an “exceptional” case. The plaintiff, resident abroad, had purchased from the defendant for over £3,000 what was warranted to be an authentic Greek statue from the 6 th century BCE. The plaintiff brought an action for breach of warranty, alleging that the statue was valueless. The defendant applied for security for costs. The court held that, if the plaintiff ended up being unsuccessful in the action, the value of the statue must be more than any order for costs that could be made against him, and therefore there should be no order for security. It was plainly a case decided on its own individual facts. It is also noted that the court had made an order that the statue could not be removed from the jurisdiction without a court order. (3) In the De Bry case the relevant item was a statue (or a “ stucco modello ”), said to be by Michelangelo. That case seems to me to have been decided very much on its facts, with two of the judges (Lord Donaldson MR and Staughton LJ) finding that it could not be shown that the statue was valueless, and that it was potentially very valuable. (4) As I read these cases, they are focussed on issues of the residency of the individual respondent to the application for security abroad, rather than being about impecunious companies.

31. The difficulty I have with accepting that the undertakings offered by Mrs Ghandehari are a complete answer to the Application is that the Yukhnovich is an illiquid asset, in the sense that it may take time to sell, at any rate for its full value. The Yukhnovich is not a “fund”. Illiquid assets are not usually a good answer to an application for security. The test in CPR r. 25.27(b)(ii) requires the court to consider the position following trial, and a defendant is entitled to payment of costs within a short period of time, normally between 14 and 28 days after the conclusion of trial (assuming that there has been costs budgeting, and an interim payment on account of costs is ordered at the end of trial). I accept that this usual time frame of 14 to 28 days is not an absolute limit. The court has a discretion: see Crane Bank v DFCU [2024] EWHC 2773. But, even in that case, the Deputy Judge indicated that the rule still imports the requirement of a “high degree of promptness” (this being relevant to both the existence of the gateway and the exercise of the discretion).

32. I am thus not persuaded that the existence of the Yukhnovich, and the willingness of BMC to offer it up for sale in the event that it is ordered to pay costs following trial, means that there is no longer “reason to believe” that BMC will be unable to pay Christie’s costs if called upon to do so. While the existence of the Yukhnovich is relevant to the issue of the exercise of the discretion, I do not find that it prevents there being jurisdiction to make an order for security for costs.

33. Therefore the existence of the gateways is established. I turn now to the separate question as to whether, as a matter of discretion, I should order security to be provided. (2) Is it just to make an order for security, having regard to all the circumstances of the case?

34. The main point taken by BMC (described as a “short cut answer to the application”) is that Christie’s counterclaim raises “precisely the same issues” as BMC’s claim on the same contract. BMC submitted that it would not be just and convenient to order security for costs because Christie’s is counterclaiming and the counterclaim raises the “same issues”. I was taken to a number of authorities.

35. The earliest is BJ Crabtree (Insulations) Ltd v GPT Communication Systems Ltd (1990) 59 BLR 43, CA. The Court of Appeal indicated that the court may, in its discretion, refuse to order security for costs in respect of a claim where the same issues arise on a counterclaim in the same proceedings. The Court of Appeal referred to the undesirability of creating one sided litigation: if security were ordered against a claimant in such a case and was not paid, the claim would be struck out but the same issues may be litigated anyway in respect of the counterclaim, therefore the order for security would serve no purpose other than to prevent the claimant obtaining compensation or other remedies, if any, which would otherwise be awarded to the claimant. I will refer to this as “the Crabtree principle”.

36. To similar effect is Anglo Irish Asset Finance plc v Flood [2011] EWCA Civ 799 (CA), where Moore-Bicke LJ reasoned as follows: “[20] If the claim and counterclaim raise the same issues it may well be a matter of chance which party is the claimant and which a counterclaiming defendant and in such a case it will not usually be just to make an order for security for costs in favour of the defendant, although the court must always have regard to the particular circumstances of the case …” [21] … In those circumstances, even if the court has power to order AIAF to provide security for costs in this case, it would not be just, in my view, to make an order in favour of the appellants because this is a case in which the claim and counterclaim raise the same issues. To order AIAF to give security for the costs of the claim would have the effect of giving the appellants security for the costs of their own counterclaim …”

37. See also Explosive Learning Solutions Ltd v Landmarc Support Services Ltd [2025] EWHC 1263 (Comm) at [21] – [24], where the Deputy Judge made the point that the rationale underlying the Crabtree principle is that the sanction for not complying with the security for costs order is that if security were ordered, and not provided, the claim might well be dismissed, but the same underlying factual issues would still be litigated in the trial of the counterclaim. There are also other decisions applying the Crabtree principle, such as Apex Global Management v FI Call Ltd [2014] EWHC 779 (Ch) at [38] – [43]; Abbottswood Shipping Corp v Air Pacific Ltd [2019] EWHC 1641 (Comm) .

38. In response, Counsel for Christie’s made the following points: (1) The existence of a counterclaim is a factor that may be taken into account at the discretionary stage, but is not an immutable principle: see per Bingham LJ in Crabtree itself, at p. 5. In this case, there was no suggestion that an order for security would have the effect of stifling BMC’s claim; nor could any point be taken on delay in making the Application. (2) BMC’s claim and Christie’s counterclaim cannot be characterised as two sides of the same coin. It was said that the two were entirely distinct. Christie’s claim was a simple debt claim for monies due under the Agreement which BMC has failed to pay. In contrast, BMC’s claim is a significant and serious claim for misrepresentation (including fraudulent misrepresentation), and also includes allegations in respect of Christie’s compliance with its obligations arising under the Anti-Money Laundering Regulations and the Proceeds of Crime Act 2002 . Christie’s defence will involve extensive factual enquiries, disclosure and evidence. In this context, Christie’s relies on its costs estimates, being £2,078,104.14 (exclusive of VAT) for its Defence, and only £35,917.89 (exclusive of VAT) in respect of the counterclaim and £119,434.43 (exclusive of VAT) in respect of the Part 20 claim. (3) The underlying policy for security for costs is that a defendant who is put to the cost of defending himself against a claim made by an impecunious corporate plaintiff should have a measure of protection: see per Bingham LJ in Crabtree again. (4) Christie’s rejects the characterisation that it was a “matter of chance” who would be the claimant in this case, and that it could just as easily have been Christie’s as BMC. (5) In any event, it is said that if the positions had been reversed, and Christie’s had started proceedings first, then Christie’s would have sought security for costs in respect of the defence of BMC’s counterclaim on the basis that such a counterclaim would have had an “independent vitality of its own”: see Hutchison Telephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307 ; Dawnuss Sierra Leone v Timis Mining Corporation [2016] EWCA Civ 1066 . The facts of the Hutchison case were as follows. The defendants in that case had pleaded what was described as a “very full defence” but had in addition issued a counterclaim in which the damages claimed exceeded “by a very substantial margin” those claimed by the plaintiff and had also issued additional substantial claims for malicious falsehood: see at pp. 318H – 319A. The counterclaim raised issues which were necessarily time-consuming and expensive to explore and it was just and equitable that the plaintiff should be secured against the costs of exploring those issues in the event of being successful. The Court of Appeal in that case stressed that it was a matter of general discretion as to whether security for costs should be ordered.

39. I accept that the starting point is that a defendant who has to defend himself against a claim made by an impecunious company should generally have a measure of protection when it comes to costs. However, it seems to me that the fact that Christie’s is making a counterclaim is a powerful and compelling reason why security should not be ordered on the facts of this particular case. I note the following: (1) The Crabtree principle is not a mere technical point. It is a point of substance. The fact that there is a counterclaim is a “powerful factor”, although it is not determinative: Autoweld Systems Ltd v Kito Enterprises LLC [2010] EWCA Civ 1469 , at [58]. However, in Autoweld the Court of Appeal pointed out that not only had the defendant not begun the litigation but that there was nothing to indicate that they were about to do so when the claimants brought their claim: at [59]. Even more importantly, perhaps, was the fact that the Court of Appeal considered that there might well be no litigation if the claim were to be dismissed in default of security for costs being provided: at [60]. (2) It does seem to me that it was a “matter of chance” which party in this case commenced proceedings first. Christie’s were obviously gearing up to issue proceedings to claim £16m odd from BMC, even before BMC launched its proceedings. By letter dated 28 April 2025, Clyde & Co wrote on behalf of Christie’s to ask whether Wedlake Bell was instructed to act on behalf of both Mr Ghandehari and BMC. (3) The Hutchison case (which is a case involving security for the costs of a substantial cross-claim) is distinguishable. While I accept that BMC is raising factual and legal issues which go beyond the debt claim raised by Christie’s, in substance a party who says it is entitled to rescind a contract for misrepresentation is defending itself. (4) The matter may be tested this way. If I were to order BMC to provide security, and security is not provided, then BMC’s claim would be struck out. I have no doubt that Christie’s would continue with its claim against BMC (and Mr Ghandehari) for an amount in excess of £16 million. Christie’s has offered no undertaking that if BMC’s claim is struck out it will discontinue its own claim. But on that hypothesis, BMC and Mr Ghandehari would still be entitled to defend themselves by raising a defence that the Agreement should be rescinded. Precisely the same issues would be in play. BMC and Mr Ghandehari would still be raising triable issues about whether a misrepresentation, fraudulent or otherwise, had been made, as well as the allegations of breach of duty on Christie’s part. But the effect of striking out BMC’s claim would be that BMC could no longer claim damages, even if its defence that it is entitled to rescind the contract proved successful. (5) It was submitted that the straightforward nature of Christie’s counterclaim against BMC (and its Part 20 claim against Mr Ghandehari) was reflected in Christie’s costs estimate for the counterclaim (put at £35,000 odd) and the Part 20 claim (put at just under £120,000). However, I agree with Counsel for BMC who submitted that allocating costs in the way which Christie’s has done is artificial. In order to succeed on its counterclaim, Christie’s will need to defeat at trial BMC’s claim to rescind the Agreement. I do not believe that the issues in the claim and counterclaim can be disentangled in the way Christie’s indicated they could be. (6) In so far as Christie’s submitted that, had the position been reversed, and Christie’s had started proceedings first, then Christie’s would have sought security for the costs of what would have been BMC’s counterclaim, I do not believe that Christie’s would have obtained such security. (7) At one point in her submissions Counsel for Christie’s appeared to suggest that the chances of BMC not providing security were, in fact, slim, so the court did not really need to be concerned about the hypothesis where BMC’s claim was struck out on a failure to provide security. In my view that submission rather undermines her starting point that Christie’s is entitled to rely on CPR r. 25.27(b)(ii).

40. There is a further point. I indicated above that the existence of the Yukhnovich was a factor which was relevant to the exercise of the discretion whether to order security for costs. In this case, the fact that Christie’s is not simply defending itself but bringing a substantial counterclaim, together with the existence of the Yukhnovich (and the undertakings which Mrs Ghandehari has offered to provide, summarised above) mean that I should not order any security for costs.

41. Taking into account all the circumstances, I refuse to grant security. That is sufficient to dispose of the Application, but as I heard significant submissions on a further issue, I consider it appropriate to say something more on one further point. BMC had another line of argument that Mr Ghandehari was a “good mark” and that he was willing to provide an undertaking not only to pay his own costs of the proceedings, but also BMC’s. It was submitted that security should be refused on that ground.

42. The difficulty I have with that submission is that no proper evidence has been provided as to Mr Ghandehari’s financial position. The evidential burden is on BMC to show that Mr Ghandehari owns net assets sufficient to meet a costs order, not for Christie’s to establish that he does not: see Holyoake v Candy [2016] 6 Costs LR 1157, at [57]; Wright v Coinbase Global Inc [2023] Costs LR 1403 , at [53]. In this case, BMC has failed to adduce adequate evidence that Mr Ghandehari is a “good mark”. BMC’s solicitor, Mr Maxwell, states that he has a letter from “a Partner in a leading accountancy firm” confirming that Mr Ghandehari is the principal beneficiary of HP Trust and the annual income figure that Mr Ghandehari has access to in that capacity, which is said to be a sum sufficient to pay Christie’s costs. However, the letter itself is redacted, and it was made clear following the hearing that BMC no longer wished to rely on the letter, given that BMC and Mr Ghandehari did not wish the information in the letter to enter the public domain. As such, I can place no reliance on it. Mr Maxwell suggests that the provision of such information is an “invasive exercise”. I do not accept that this is the case. In any event, if Mr Ghandehari and BMC wish to rely on evidence set out in a letter, then the letter must be produced.

43. BMC relies on a publication by the World Economic Forum, which states that “HP Trust is a leading venture capital and alternative investment house managing investments for Sasan Ghandehari and family … The trust has a collective investment value in excess of $10 billion …” However, without knowing the terms of the trust, and whether any creditor of Mr Ghandehari can compel the trustees to pay liabilities of Mr Ghandehari, I do not consider that statement to establish to the required standard that Mr Ghandehari is a “good mark”. In many cases, the point of putting assets in trust is to prevent them being available to creditors.

44. BMC also relied on Christie’s previous dealings with Mr Ghandehari. For example, in January 2023 Christie’s made him a guarantor of BMC’s obligations without asking for further information or evidence as to his financial means or any form of security. However, it is at least conceivable that Mr Ghandehari’s financial position has changed since that time for the worse. If a party wishes to defeat an application for security on the ground that another person is a “good mark”, then there has to be some evidence of that person’s current financial position. I do not consider this to be the case in the present proceedings. Conclusion

45. Accordingly, for the reasons set out above, I propose to dismiss the Application. I will however require Mrs Ghandehari to provide the undertakings to the Court which she has indicated she is willing to provide.