Chady Aero Developments Ltd v Aero Engine Finance LLP [2026] EWHC 1271 (Ch)

[2026] EWHC 1271 (Ch)Case No BL-2025-000115
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 5/6/2026
Before
MASTER CLARK
Between
CHADY AERO DEVELOPMENTS LTDClaimantAERO ENGINE FINANCE LLPDefendant
Hugo Page KC (instructed by Watling & Co) for ClaimantStephen Williams (of Williams Solicitors LLP) for DefendantHearing Hearing dates: 9 & 24 March 2026
Approved JudgmentThis judgment was handed down remotely at 10am on 5 June 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................Master Clark:Application
[1]This is my judgment on the defendant’s application dated 8 January 2026 for security for costs.

Parties and the claim

[2]The claimant, Chady Aero Development Ltd, is a Scottish incorporated company. Its 3 directors are Henry Page (resident in France), John Page (who plays no active part in the management of its business) and Diane Roth le Gentil (resident in Switzerland). Since 25 February 2020, Ms le Gentil has also been a 100% shareholder in the claimant.[3]The defendant, Aero Engine Finance LLP, was incorporated on 21 March 2012 under the Limited Liability Partnerships Act 2000. On incorporation it had 3 members: the claimant, Aero Engine Invest Limited (an English company owned by Michel de Maere (“Mr de Maere”) and Christophe Poppe (a friend of Mr de Maere). The defendant’s position is that the claimant was expelled from it on 28 November 2022, but this is disputed by the claimant.[4]The relationship between the members of the defendant is governed by a written partnership agreement dated 23 March 2012 (“the partnership agreement”).[5]The defendant was incorporated as vehicle for investment in variousprojects in the aviation sector. It is common ground that these projects included:(1) the SIM project: to buy, upgradeand rent out a flight simulator for Boeing 757/767 aircraft;(2) the AJ Walters project: to buy aircraft engines to be broken down into parts and resold;(3) the Engines project: to buy and lease out 2 aircraft engines. The defendant alleges that there was a further project, the Air Med project, involving a loan agreement with Air Méditerranée, which the claimant denies having had any involvement in.[6]It is common ground that it was agreed that the investors in each project would receive a share, proportionate toits investment, of the income to the defendant on that project less expenses and anagreed management fee.[7]The claimant accepts (in para 4 of the Amended Reply) that the partnership agreement provided for accounting across the 3 projects. Its case is that the members agreed that each investment project by the defendant would be treatedseparately. This is disputed by the defendant. The claimant’s case is based on an oral agreement in 2011 (i.e. before the partnership agreement) of which no particulars are given.[8]The claim was issued in the Kings Bench Division on 28 April 2023. It claims “£1,181,166, plus any monies found to be due following an account of all sums received and paid out”. This is expanded upon in the Particulars of Claim as being “ in relation to the SIM project and the AJ Walters project.” The liquidated amounts claimed are:(1) £769,002, equivalent to €871,532 – claimed to be due in respect of the SIM project;(2) £412,164, equivalent to USD 501,954 – claimed to be due in respect of the AJ Walters project.[9]In its Amended Defence dated 9 February 2024, the defendant:(1) denies that any sums are due in respect of the SIM project;(2) admits the sum claimed in respect of the AJ Walters project;(3) seeks to set off against that liability sums alleged to be due from the claimant in respect of the AirMed project.[10]On 8 October 2024, there was a CCMC before Deputy Master Grimshaw. He ordered:(1) the defendant to provide by 15 November 2024 an account (“the Account”) of all invested monies, receipts and payments including, but not limited to, those relating to the SIM project, the AJ Walters project and the Engines project;(2) disclosure and witness statements;(3) the transfer of the claim to the Chancery Division forthwith.[11]The defendant complied with this order and filed and served the Account. This is dated 15 November 2024, and is in the form of unaudited accounts prepared by a Chartered Accountant, Thomas Quinn.[12]For reasons that are not clear from the file, the transfer to the Chancery Division was not fully effective until 29 January 2025. The parties then agreed to extend the deadline for witness statements to April 2025. On 2 June 2025, the claimant issued an application for disclosure, but did not respond to the court’s listing directions for that application until the end of July 2025. The application was then listed on 4 November 2025, but the parties’ time estimate for the hearing was far too short. It was adjourned for a one day listing, together with the defendant’s application dated 30 October 2025 for case management directions for the taking of the account. I also directed that costs management should not apply. The case management conference (“CMC”) was listed for 24 March 2026.[13]The defendant’s application for security for costs was issued on 8 January 2026, and listed for 8 March 2026 (“the first hearing”). Again, the parties’ time estimates were inadequate, and it was adjourned part heard to 24 March 2026, with the CMC vacated and directed to be relisted. On 19 March 2026, Thomas Quinn prepared revised (and now audited) accounts, filed the same day. Since the claimant had not had time to consider them, these did not form part of the evidence in the security application. Legal principles Conditions to be satisfied

Legal principles

[14]The application is made under CPR 25.27, which relevantly provides:
“Conditions to be satisfied 25.27 The court may make an order for security for costs under rule 25.12 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) … one or more of the following conditions apply— (i) the claimant is resident out of the jurisdiction; (ii) the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; (iii) the claimant has changed their address since the claim was commenced with a view to evading the consequences of the litigation; (iv) the claimant failed to give their address in the claim form, or gave an incorrect address; (v) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that they will be unable to pay the defendant’s costs if ordered to do so; (vi) the claimant has taken steps in relation to their assets that would make it difficult to enforce an order for costs against them.” (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and (b) … one or more of the following conditions apply— (i) the claimant is resident out of the jurisdiction; (ii) the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; (iii) the claimant has changed their address since the claim was commenced with a view to evading the consequences of the litigation; (iv) the claimant failed to give their address in the claim form, or gave an incorrect address; (v) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that they will be unable to pay the defendant’s costs if ordered to do so; (vi) the claimant has taken steps in relation to their assets that would make it difficult to enforce an order for costs against them.”
[15]These conditions and the order in which the defendant relied upon them in its application notice can be conveniently summarised as:(1) the non-residence condition: CPR 25.27(b)(i);(2) the impecuniosity condition: CPR 25.27(b)(ii);(3) the nominal claimant condition: CPR 25.27(b)(v);(4) the enforcement avoidance condition: CPR 25.27(b)(vi).[16]The purpose of ordering security for costs is to protect the defendant (who is an involuntary party to litigation) against the risk that they may be unable to recover the costs of the claim brought against them: Bestfort v Ras Al Khaimah [2016] EWCA Civ 1099, [2016] 2 CLC 714 at [71].[17]At the first hearing, I determined that the non-residence condition was satisfied. It is unnecessary to say anything further about that. The defendant then decided not to pursue the nominal claimant and enforcement avoidance conditions. Impecuniosity condition Principles[18]The principles applicable to this condition can be summarised as follows:(1) The applicant must show that, on all the material presently available to the court, there is reason to believe that the claimant will be unable to pay the applicant's costs if ordered to do so: Chemistree Homecare Limited v Teva Pharmaceuticals Ltd [2011] EWHC 2979 (Ch) at [3];(2) Inability to pay means to pay when the costs fall due for payment: Re Unisoft Group (No 2) 1993 BCLC 532 at 534, approved in Jirehouse Capital v Beller [2008] EWCA Civ 908; [2009] 1 W.L.R. 751 at [23];(3) This calls for an assessment of what the claimant may be expected to have available for payment at the due date or dates in the form of cash or other readily realisable assets: Longstaff International v Baker and McKenzie [2004] 1 WLR 2917 at [17] and [18]); Autoweld Systems Ltd v Kito [2010] EWCA Civ 1469 at [20] and [29];(4) The opening words “there is reason to believe” have the effect of watering down the obligation which follows. The defendant does not have to show on a balance of probabilities that the claimant company “will be unable to pay”: 2021 White Book at 25.13.12; Jirehouse Capital;(5) The approach adopted should be simple and not “over-burdened by technical and semantic arguments relating to the construction of the ‘threshold’ test”: Bestfort at [48].

Discretion: whether it is just to make an order

[19]Where the impecuniosity condition applies, it will ordinarily be just to order security unless the claimant can show that do so will stifle the claim: Premier Motorauctions Ltd (in liquidation) v PricewaterhouseCoopers LLP [2017] EWCA Civ 1872, [2018] 1 W.L.R. 2955 at [37].[20]Similarly, the inability of the claimant company to pay the costs is a matter which not only opens the jurisdiction, but also provides a substantial factor in the decision whether to exercise it: Pearson v Naydler [1973] QB 609 at 906.

Delay as a factor in the exercise of discretion

[21]Although an application for security for costs can be made at any stage, the general principle is that an application for security should be made promptly as soon as the facts justifying the order are known: 2026 White Book at 25.26.10. As summarised in Hniazdzilau v Vajgel [2015] EWHC 1582 (Ch) at [28]:
“Delay in making the application is one of the circumstances to which the court will have regard when exercising its discretion to order security. The court may refuse to order security where delay has deprived the claimant of the time to collect the security, or led the claimant to act to his detriment or may cause hardship in the future costs of the action. The court may deprive a tardy applicant of security for some or all of his past costs or restrict the security to future costs (see CPR 25.12.6 [now 25.26.6]). The question of delay must be assessed at moment when the application is made, although of course the court must take into account the impact of an order at the time it is made. That is because, as the Court of Appeal said in Prince Radu of Hohernzollern v Houston [2006] EWCA Civ 1575 (cited at White Book p 823–4), the order for security for costs comes with a sanction which gives a claimant a choice whether to put up security and go on or to withdraw his claim; that choice is meant to be a proper choice, and the claimant is to have a generous time with which to comply with it. As Waller LJ pointed out (at [18]), the making of an order for security for costs is not intended to be a weapon whereby a defendant can obtain a speedy summary judgment without a trial.”

Merits of the claim as discretionary factor

[22]The well-established position as to the relevance of the merits of the claim is set out in the Commercial Court Guide (para.4, Appendix 10): “Investigation of the merits of the case on an application for security is strongly discouraged. It is usually only in those cases where it can be shown without detailed investigation of evidence or law that the claim is certain or almost certain to succeed or fail that the merits be taken into consideration.” (held to properly reflect the law in Mountain Ash Portfolio Ltd v Vasilyev [2022] EWHC 1867 (Comm))

Discretion where there is both a claim and a counterclaim: the “Crabtree” principle

[23]This principle (as stated in B.J. Crabtree v GPT Communication Systems (1990) 59 BLR 43, cited in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm); [2010] 2 CLC 661) is:
“As a general rule, the Court will not exercise its discretion under CPR Part 25 to make an order for security of the costs of the claim if the same issues arise on the claim and counterclaim and the costs incurred in defending that claim would also be incurred in prosecuting the counterclaim.”
[24]This was explained further by the Court of Appeal in HutchisonTelephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307, at 317 by Bingham LJ:
“The trend of authority makes it plain that, even though a counterclaiming defendant may technically be ordered to give security for costs of a plaintiff against whom he counterclaims, such order should not ordinarily be made if all the defendant is doing, in substance, is to defend himself. Such an approach is consistent with the general rule that security may not be ordered against a defendant. So the question may arise, as a question of substance, not formality or pleading: is the defendant simply defending himself, or is he going beyond mere self-defence and launching a cross-claim with an independent vitality of its own.”
[25]And, as explained in Hniazdzilau at [12]:
“Although, as Bingham LJ said, this principle operates in the “largely discretionary area”, nonetheless it is a principle which must be applied according to its terms; and as he went on to say, approving the decision of Field J in Mapleson v Masini (1879) 5 QBD 144 at 147, “the substantial position of the parties must always be looked at”
. There is of course no rule of thumb to determine what in every case is the substance, which will always turn on the particular facts of each case.”[26]In Dumrul, Hamblen J (as he was) held that if security would otherwise be refused because the Crabtree principle applied, it could be ordered if a defendant undertook to consent to the dismissal of the counterclaim the claim was dismissed for failure to put up security. This was followed in Cedar Mundi (Holding) SAL v Attieh [2025] EWHC 1930 (Comm). Issues in the application

Impecuniosity condition

[27]The application is supported by the 4th witness statement of the defendant’s solicitor, Stephen Williams. This exhibits a report dated 18 November 2025 by Ian Yerrill FIPA FABRP (also a Licensed Insolvency Practitioner) of the firm Yerrill Murphy as to the solvency of the claimant (“the Yerrill Murphy report”). The report’s summary concludes that:

Issues in the application

“1. [The claimant] is balance sheet insolvent. 2. [The claimant] is reliant upon the continued financial support of its Directors. 3. Its only notable asset is an investment in [Natterbox Limited (“Natterbox”)]. 4. Natterbox is balance sheet insolvent. 5. Natterbox is part of a Group of companies headed up by N2JB and it is reliant upon the financial support of that Group. 6. The Group is balance sheet insolvent. 7. Its only significant Group asset is capitalised development costs. Those capitalised costs are not a reflection of realisable value suggesting that the true financial position is less favourable than the insolvent position disclosed. 8. The Group is heavily indebted to the Bank who hold security over all Group concerns and have an entitlement to appoint Administrators over the Group if such be their want. 9. For the reasons disclosed in (4) to (8) above, the investment in Natterbox Limited is likely to be worthless and in consequence the insolvent position disclosed by [the claimant]’s last filed accounts is almost certainly substantially understated.”
[28]At the first hearing, the claimant did not challenge the reasoning of the Yerrill Murphy report, but sought, by the introduction of new evidence, to challenge the valuation of Natterbox Limited.[29]However, following the first hearing, the defendant obtained additional evidence showing (as the claimant accepts) that the claimant is not in fact a shareholder in Natterbox - so that its shares do not form part of its assets. On 16 March 2026, Mr Page made a 2nd witness statement in which he confirmed that “contrary to his recollection and the position appearing from the claimant’s accounts”, it was not in fact a shareholder in Natterbox. He provided no explanation as to how these highly regrettable misstatements of the position came about. He also set out a series of arrangements which, he said, resulted in the shares in N2JB Ltd (Natterbox’s holding company) being held on trust for the claimant. However, at the second hearing, the claimant’s counsel expressly withdrew any reliance on the value of NJB’s shares.[30]Finally, Mr Page’s second witness statement set out that Mr Neil Hammerton (the CEO of Natterbox) was personally indebted to the claimant in sum of £308,254.[31]Notwithstanding the Yerrill Murphy Report, the claimant maintained that the impecuniosity condition was not satisfied. It relied upon:(1) cash at bank – £56,000 in the most recent accounts (for the year ended 30 November 2025);(2) an undertaking by the directors not to require payment of their loan accounts;(3) the debt of £308,254 owed to it by Mr Hammerton;(4) sums held by the defendant in respect of the SIM project and the AJ Walters project said to be admitted to be due.[32]As to the cash at bank, this is insufficient of itself to meet the defendant’s costs and in any event has diminished by £24,000 since the previous year. It cannot be assumed that any significant amount of this will be available by the conclusion of the trial.[33]As to the directors’ undertakings, the sum due to the directors, as shown in the 2025 accounts, is £2,393,723. The undertakings, signed by all 3 directors and dated 25 February 2026 are in the following terms:
“We shall not require payment of our loan accounts in the Company until (i) the end of the Court proceedings in this matter and payment of any sums due thereunder, and (ii) until the cashflow of the company is such that a loan or part thereof can be paid without putting the Company in a situation unable to pay its liabilities as they fall due. In the event of the cost order and counterclaim being found in the defendants favour, they would waive a portion of their claim to ensure the Company remains balance sheet solvent.”
[34]However, as noted, Mr Henry Page and Ms Roth le Gentil are resident out of the jurisdiction.[35]As to Mr Henry Page, the claimant referred to a bilateral Treaty: 1934 UK–France Convention on Reciprocal Enforcement of Judgments in Civil and Commercial Matters (“the 1934 Convention”), which, it submitted, provides for the recognition and enforcement of final judgments delivered by competent courts of either state.[36]The defendant submitted that academic opinion was divided as to whether the 1934 Convention was implicitly abrogated or entirely replaced by the Brussels Regulation 44/2001 (later Regulation 1215/2012), which of course no longer governs enforcement following Brexit. The claimant did not respond on this point, and neither side put materials before me enabling me to decide it. In these circumstances, I am not satisfied that the defendant could enforce the undertaking given by Mr Henry Page if he were in breach of it.[37]As to Ms Roth Le Gentil, it was common ground that:(1) the UK is no longer (since Brexit) a party to the Lugano Convention;(2) the European enforcement regime ceased therefore to apply to enforcement of English judgments in Switzerland (as an EFTA state) on 30 December 2020;(3) the transitional provisions (for claims issued before that date) would not apply.[38]The claimant did not put before the court any provisions which would enable the defendant to enforce Ms Roth le Gentil’s undertaking, confining its submissions to the general statement that “English judgments are readily and easily enforced in Switzerland.” On the evidence before me, I am not satisfied that they are.[39]In any event, there are other reasons why the undertakings are not sufficient to prevent the impecuniosity condition from being satisfied. First, the undertakings could be circumvented by the assignment of the loans to a third party. Secondly, even if the undertakings could be enforced, the defendant might well not know that they had been breached until after payments had been made. Thirdly, and relatedly, there are no civil remedies for breach of an undertaking, so the defendant would have no means of recovering damages or compensation for a breach. Fourthly, if the directors were themselves subject to insolvency procedures, their trustee in bankruptcy (or equivalent in their jurisdiction) would not be bound by the undertaking; and the court has no evidence to enable it to assess the likelihood or otherwise of this occurring.

Debt owed by Mr Hammerton

[40]The claimant’s evidence as to this debt was first put forward in Mr Henry Page’s witness statement dated 16 March 2026. He set out that the claimant had made 2 loans to Mr Hammerton:(1) £550,000 in June 2018;(2) €350,000 (£293,575), pursuant to a written agreement dated 28 February 2019. He went on to say that the claimant was entitled as against Mr Hammerton personally, to be repaid, on demand, the sum of £293,575 plus 5% (i.e. £308,254).[41]None of this, however, is supported by the claimant’s accounts. Its accounts for the year ended 30 November 2022 show debtors totalling £237,310, comprising:(1) Amounts falling due within one year £17,315(2) Amounts falling due after more than one year £219,995[42]The claimant’s accounts for the year ended 30 November 2024 show debtors totalling £308,038 comprising:(1) VAT £1,094(2) “Deferred tax asset” £306,944 “Deferred tax asset” is not an apt description for the personal indebtedness of a debtor to the claimant; and Mr Page provides no explanation as to why it was used. I am not satisfied on this evidence that Mr Hammerton is indebted to the claimant.[43]In any event, there is no evidence as to whether a debt from Mr Hammerton would be a realisable asset in the defendant’s enforcement of a costs order. There is no evidence as to his financial position. N2JB Limited, of which he is a director and CEO, is balance sheet insolvent, with its most recent filed accounts showing a loss of £2.25 million.

Sums owed by the defendant to the claimant

[44]As to whether the claimant’s assets include sums owed to it by the defendant, this is disputed by the defendant, and for present purposes, I cannot conclude that they do, for the reasons set out in relation to the merits of the claim – see paragraphs 49-50 below. I therefore reject the claimant’s submission that any impecuniosity on its part is due to the defendant's failure to pay sums due to it. That submission could only succeed if the court rejected the Account on a summary basis, which it cannot and should not do in an application of this type.[45]For these reasons, in my judgment, the impecuniosity condition is satisfied.

Delay

[46]The claimant submitted that the defendant’s delay in making the application justified refusing it or confining the defendant to future costs. There was no reason, he said, why the defendant could not have made the application in the Kings Bench Division - there was nothing that the defendant knows now that it did not know in 2023.[47]I accept that there has been some delay on the part of the defendant, although 4 months of the time since the claim was issued is referable to the claim being in limbo while being transferred from the Kings Bench to the Chancery Division. However, the claim is still at a relatively early stage. The claimant has not responded to the Account, and although there was a CCMC before Deputy Master Grimshaw, the case management conference at which substantive directions for the account will be given has not yet taken place.[48]As to whether the claimant has been prejudiced by the delay, there was no suggestion by it that if security had been sought earlier, it would have allowed its claim to be struck out by not paying it. On the contrary, the claimant indicated in its counsel’s oral submissions that if security were ordered, it would pay it. I am not therefore satisfied that the delay by the defendant has caused any prejudice to the claimant which would justify refusing to grant security.

Merits of the claim

[49]The claimant made extensive detailed submissions as to the merits of its claim. These included that the defendant had admitted that certain amounts were due to it in respect of the SIM project and the AJ Walters project. These submissions were however premised on its case that the accounting for these projects was on an individual basis i.e. that the accounting is to be done on the basis of the 2011 oral agreement. This is, as explained, disputed by the defendant, which contends that the accounting is governed by the partnership agreement and is across all the projects. In my judgment, the defendant has the stronger case on that issue, and the claimant’s case is weak.[50]As matters now stand, the outcome of the claim will be determined by the Account ordered by Deputy Master Grimshaw, which encompasses all 4 projects. The defendant’s position, as set out in its reply dated 4 March 2026 to the claimant’s notice to admit, is that the overall outcome of the Account is that no sums are due to the claimant; and that there is an amount due from the claimant to the defendant in respect of the Air Med contract. To embark on a detailed analysis of the Account (let alone resolving some of the underlying factual issues) would be contrary to the case law as summarised in the passage from the Commercial Court Guide cited above.

Crabtree principle

[51]The claimant submitted that the defendant’s counterclaim fell within the Crabtree principle because, in order to show that the sum claimed by the defendant was due, it would be necessary to carry out the accounting which is sought in the claim.[52]There is some force in this submission. The defendant’s response was that if the claim were struck out, then it would have no commercial reason to pursue its counterclaim (given the claimant’s parlous financial state). In these circumstances, I propose to make the grant of security conditional upon the defendant undertaking to consent to the dismissal of its counterclaim if the claim is dismissed for failure to put up security.

Conclusion

[53]For the reasons set out above therefore, I will grant security for costs in the sum sought. I will hear the parties as to the method of security.