EVR Consulting Limited v Nathan Osbaldstone [2026] EWHC 1464 (Ch)

[2026] EWHC 1464 (Ch)Case No BL-2025-BRS-000031IN THE HIGH COURT OF JUSTICEVenue BUSINESS AND PROPERTY COURTS IN BRISTOLBUSINESS LIST (ChD)Venue Bristol Civil Justice Centre, 2 Redcliff Street, Bristol, BS1 6GRDate 15 June 2026
Before
HHJ PAUL MATTHEWS(sitting as a Judge of the High Court)
Between
EVR CONSULTING LIMITEDClaimantNATHAN OSBALDSTONEDefendantsTEL GROUP LIMITEDDefendant
John Churchill (instructed by Loney Stewart Holland LLP) for ClaimantLaura Adde (instructed by Battens Solicitors Limited) for First DefendantGwilym Harmbottle (instructed by Brown Jacobson LLP) for Second DefendantHearing Hearing date: 9 June 2026
This judgment was handed down remotely at 4.30 pm on 15 June 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.HHJ Paul Matthews :

Introduction

[1]This is my judgment on two applications for security for costs, one each made by the first and second defendants respectively against the claimants in this claim. The application of the second defendant was made first, by notice in form N244, issued on 28 April 2026. It was supported by a witness statement of Giles Parsons (the second defendant’s solicitor) dated the same day. It was opposed by a witness statement of Rhian Evans dated 29 May 2026. Further witness statements were made by Stacey Priddy and David Delaney, both on behalf of the second defendant, and both dated 3 June 2026. The application of the first defendant was subsequently made, by similar notice, issued on 3 June 2026. It was supported by a witness statement of the first defendant dated 2 June 2026. The first defendant expressly relied “on the analysis and evidence contained in” the statement of Mr Parsons. I record that there was no application for any of the makers of witness statements to be cross-examined, and no cross-examination took place.

Background

[2]The claimant and the second defendant are competitors in the provision of information and communications technology (“ICT”) consultancy services to building contractors in relation to tenders for work for the Department for Education, for example, in the construction of schools and colleges. There is a significant government budget for such construction work, but contractors must tender for it, and must submit a proposal demonstrating ability to comply with certain requirements. Accordingly, there is a highly competitive market for the supply of ICT services to contractors. The first defendant worked for the claimant before March 2022, but became a consultant for the second defendant in August 2023, and its employee in February 2024. The claimant alleges the first defendant wrongfully downloaded confidential information from the claimant’s server and provided it to the second defendant, which has used it. The defendants deny these allegations.[3]The claimant began proceedings against the first defendant in October 2025, when it obtained an interim injunction against him. In December 2025 the claimant amended the claim to join the second defendant, and to seek and obtain (in fact ultimately by consent) interim relief against the second defendant. In broad terms, the defendants dispute that the information alleged by the claimant to be protected as confidential information, as a trade secret or by copyright is so protected. But, in any event, the second defendant denies using or copying any of the alleged confidential information. For present purposes, I do not need to say any more about the substantive claims and defences.

The law

[4]The applications for security are made under CPR rule 25.27(b)(ii), which reads as follows:
“25.27. The court may make an order for security for costs if— [ … ] (b) either an enactment permits the court to require security for costs, or one or more of the following conditions apply— [ … ] (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 … ” [ … ] (b) either an enactment permits the court to require security for costs, or one or more of the following conditions apply— [ … ] (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 … ”
[5]In Qatar Investment and Projects Development Holding Co v Phoenix Ancient Art SA [2025] EWCA Civ 1300, [15], Zacaroli LJ (with whom Males LJ agreed) approved and applied the principles set out by Akenhead J in Phaestos Ltd v Ho [2012] EWHC 662 (TCC): “(a) As a threshold requirement, the Defendants must establish that there is reason to believe that the Claimants will be unable to meet any costs[6]I was also referred to statement made by Sales LJ (as he then was) giving the judgment of the court (Longmore and Sales LJJ, Baker J) in Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120:
“17. … If a company is given every opportunity to show that it can pay a defendant's costs and deliberately refuses to do so there is, in our view, every reason to believe that, if and when it is required to pay a defendant's costs, it will be unable to do so … 19. … even if deliberate reticence on the part of a respondent is not a breach of CPR Part 1.3 a court can and should take account of deliberate reticence as part of the overall picture. Any evaluation has to be made on the totality of the evidence before the court; part of that totality is the absence of relevant evidence from the only party who is able to provide it … ”

The claimant’s financial position

[7]The second defendant submitted that, if the claimant lost at a trial of liability only (which in fact was not what I ordered at the hearing), it would face liabilities of least £1.4 million, made up of(i) its own costs, budgeted at £255,908,(ii) the claimant’s liability under the cross-undertaking in damages in a sum estimated by the second defendant at not less than £500,000,(iii) the first defendant’s costs, budgeted at £173, 456, and(iv) the second defendant’s costs, budgeted at £629, 226 (but at the hearing I made a costs management order significantly reducing this sum),[8]On the other side, the claimant’s most recent filed accounts show net assets as at 31 October 2024 of £445,338, including £372,793 in cash. The filing date for the next set of accounts (presumably to October 2025) has not yet passed. On 24 March 2026, the second defendant’s solicitors asked the claimant’s solicitors how the claimant would have funds to pay an adverse costs order. On 10 April 2026, the claimant’s solicitors replied that:
“Our client continues to trade and, with projects being delivered between now and the Summer of 2027, it expects to have cash at bank in excess of £1 million.”

The evidence

[9]On 28 April 2026, as I have said, the second defendant issued its application for security for costs. The claimant subsequently filed the third witness statement of Ms Evans, dated 29 May 2025, in response to the second defendant’s application. I should say that there is no suggestion by the claimant that the claim would be stifled is an order for security for costs were made. In part, this witness statement said as follows (where EVR refers to the claimant, NO refers to the first defendant, and TEL refers to the second defendant); “6. My understanding from this is that TEL actively believes that EVR cannot pay its costs if TEL win. I seek to demonstrate during this statement why this is a clearly misconceived notion and should have been obvious to those working in the industry. [ … ] 20. On 10 April 2026, my solicitors wrote to BJ and confirmed my instructions that, with the expected projects at that time, EVR expects to have cash at bank in excess of £1 million. The parties to these proceedings are in competition with each other. This claim commended [sic] off the back of NO taking documents from EVR and using them to undercut EVR and try to win business from EVR’s existing clients. I did not want to give any information to TEL that would assist it and NO to try to win more work. I believed that, where TEL was seeking security of £595,682.91, a statement from me through my solicitors that EVR expected to have over £1 million to satisfy any adverse costs order would be adequate. [ … ] 38. For each contract signed in construction, EVR produces a bespoke invoicing milestone plan. This enables our construction clients to understand their cashflow position as it details what elements will be invoiced when. [ … ] 43. Invoices are issued to the construction company based on their valuation date (for works carried out that month), as defined in our contract. Payments are made no more than 28 days after that valuation date. [ … ] 45. For all schemes where we deliver and install ICT equipment, we have negotiated payment terms with our suppliers. 46. All equipment suppliers provide us with a 45-60 calendar day payment term; that is, they only issue an invoice to EVR following delivery of that equipment to the build site or to a vesting location, and then we have 45-60 calendar days to pay. In the meantime, we issue our invoice to our client, the build contractor, who agree to pay us as per the terms stated at [23], above. 47. This means we never have to use any “cash in bank” to pay for equipment in advance of receiving funds from the building contractor … 48. I attach to this statement a Financial Forecast spreadsheet, at RE5 [1-2]. This sets out EVR’s outgoings and incomings. 49. Rows [2] to [12] show EVR’s outgoings, totalled monthly in [14]. I attach a letter from my accountant confirming that the outgoings are accurate, at RE5 [3]. Any assumed costs, such as “sundries” have been excluded from this statement. [ … ] 53. EVR’s income is primarily derived from two sources:(1) consultancy services; and(2) the provision, installation and testing of ICT hardware, both across a range of schemes, sectors and programmes. 54. With regard to income on the Financial forecast: 54.1. [E20] shows current cash at bank; 54.2. [E21] shows the outstanding amount owed to EVR; 54.3. Row [22] provides the actual profit figures for the consultancy work; and 54.4. Rows [23] to [40] shows the delivery profit for each project, the names of which have been redacted, and in the month when the monies will be received, with the monthly totals in row [42]. [ … ] 59. As described in previous statements, EVR provides consultancy services to a wide range of clients, including construction companies undertaking works via the Department for Education’s School Rebuilding and Free School programmes. 60. The work involves providing ICT consultancy and technical design services during the Royal Institute of British Architects (“RIBA”) Stages 2 to 4 (24 to 30 weeks), and if the contractor is successful in the tendering stages, our work culminates in the submission of ICT Contractor’s Proposals (“CPs”) at the end of Stage 4. EVR invoices clients monthly for work completed during Stages 2 to 4. 61. Given the downturn in released projects, and the information EVR has received from clients about schemes coming to market from June 2026 onward, we anticipate that our consultancy services will reach those levels seen in 2024 which produced net profits of over £14,000 per month. 62. As described above, consultancy work is invoiced monthly, and an assumption has been made that this profit will rise steadily as the DfE’s CF25 framework becomes more active. What is represented here is a conservative estimate of profits based on previous years of trading. The figures stated represent the profit to EVR from consultancy services. 63. Cells [A24] to [A39] represent EVR’s active schemes in the construction stages (RIBA Stages 5 to 6). The names of the schemes have been redacted. 64. Cells [B24] to [B39] demonstrates whether we have signed a contract for these schemes with our building contractor partner, or when we anticipate these contracts will be signed … 65. Cells [C24] to [C39] details when the scheme will be delivered, that is the date for practical completion (PC). 66. Cells [D24] to [D39] show the anticipated pure profit from these schemes, that is the contract value of the scheme minus any costs required to deliver the scheme. [ … ] 69. The total income at the end of each calendar year is shown at cells [L44] and [X44], with the total funds available to EVR shown at cells [L46] and [X46] (income minus outgoings). 70. As outlined in the Financial Forecast, EVR expects to have the sum of £2,401,243.75 of cash in bank by December 2027. This is ample to cover any adverse costs award made in favour of TEL.” 54.1. [E20] shows current cash at bank; 54.2. [E21] shows the outstanding amount owed to EVR; 54.3. Row [22] provides the actual profit figures for the consultancy work; and 54.4. Rows [23] to [40] shows the delivery profit for each project, the names of which have been redacted, and in the month when the monies will be received, with the monthly totals in row [42].[10]For reasons of space, I have not set out the whole of the explanation given in the witness statement. But I have set out enough to show the way in which Ms Evans has reasoned the conclusion at which she arrives in paragraph 70, ie that by December 2027 the claimant would have £2,401,243.75 cash at bank. Nor have I reproduced here the Financial Forecast spreadsheet giving the figures for individual items. The defendants had sufficient opportunity to consider this in advance of the hearing, and indeed detailed submissions were made on it at the hearing. But what I have set out above is enough to show that the figure of £2,401,243.75 has not simply been plucked out of the air, but calculated on a certain basis.[11]The defendants infer that the spreadsheet was compiled by Ms Evans. They say that it “is based on a host of unevidenced assertions and assumptions”, which they particularise. They criticise the claimant for not disclosing any management accounts, nor any details of a “redress scheme” by which, if a builder fails, another will be brought in to complete the contract. The second defendant invites the court “to conclude that although MS Evans may have convinced herself as to the validity of her projections, they amount to no more than a desperate attempt to avoid an order for security for costs and as such should be disregarded”.[12]Stacey Priddy is the Head of Finance at the second defendant. In her witness statement of 3 June 2026, she criticises in some detail the Financial Forecast put forward by the claimant. She summarises her criticisms in this way:
“11. In my view, the Forecast does not provide reliable evidence of the Claimant's current ability to satisfy a substantial adverse costs order. It contains no verified accounts, no breakdown of existing liabilities, and the tax provision appears inadequate relative to the level of profit forecast.”
So, she says that the figures are internal only, are in insufficient detail, and provide too little for tax liability. But she does not deal with the main question, which is whether, in this industry, a large cash sum can be built up quickly.[13]David Delaney is the Managing Director of the second defendant, In his witness statement, also dated 3 June 2026, which runs to 15 paragraphs, he says this (inter alia):
“8. My understanding, based on my involvement in the industry, is that if a builder fails, the DfE will ensure the project is completed and another contractor may well be appointed to finish the works. However, that does not automatically mean all subcontractors are guaranteed payment for work already carried out. My understanding is that the new contractor is appointed to complete the remaining works, not necessarily to settle all outstanding debts of the previous contractor. Further, if a builder has already received payment from the DfE for a particular element of the works and then fails before paying EVR, I question whether EVR would ever receive that money from the DfE but I have not seen the underlying contract … [He then gives two examples to illustrate his doubt.] [ … ] 10. Ms Evans asks the Court to accept that the period from May 2025 to May 2026 is not a true reflection of the level of work that an ICT organisation would typically expect because of the CF21 to CF25 transition (I refer to paragraphs 30 - 34 of Evans 3). In particular, Ms Evans suggests that the DfE slows down the procurement of schemes when a new framework is to be released so that the new framework can proceed quickly and successfully … 11. Based on my experience, I agree that there can be a lull when a new framework is released. However, this is not what EVR’s accounts show. I have reviewed the assets less liabilities figures from EVR’s financial accounts from 2015 to 2025 … The CF21 framework was introduced in 2021. Net assets less liabilities do dip in 2021 but they also dip in 2023, which is not consistent with the introduction of a new DfE framework. 12 The forecast prepared by Ms Evans allocates income into specific months based on anticipated contract signing dates, practical completion dates and milestone payments. That assumes that the projects broadly proceed in accordance with programme. 13. However, in my experience, construction projects are frequently delayed for reasons outside the control of subcontractors. DfE approvals, planning issues, utilities, contractor delays, design changes, labour shortages and programme slippage are all common occurrences. These occurrences all have an impact on when the subcontractor is able to invoice and get paid. A six-month delay to practical completion can easily push milestone payments and final account payments back by six months or more. TEL assumes that if we are awarded the delivery element, a build will still take 2-4 years to complete. The delivery contract is normally awarded towards the end of a build as ICT is normally one of the later elements in a project. 14. There is also a cashflow point. Ms Evans suggests that EVR effectively receives payment before having to pay suppliers. In my experience, whilst that may happen on some projects it is not guaranteed. Equipment is often ordered or committed to well in advance. If a project slips, suppliers may still require payment under agreed terms.”
[14]Mr Delaney’s points concentrate largely on side-issues. He criticises the DfE’s redress scheme if a builder becomes insolvent, but accepts that he has not seen the claimant’s contracts. He also says that he interprets the claimant’s accounts differently from Ms Evans, and she has assumed that everything will go smoothly. Finally, he says that the claimant’s cash flow is not guaranteed. But he does not contest the central point of Ms Evans’ evidence as to how it is possible to build up a cash sum over a relatively short period of time.

Discussion

[15]The problem for the defendants is that the claimant was invited to explain how it would have enough funds to pay an adverse costs award, and it has done so. Ms Evans has not been cross-examined on her evidence. That means that there are limits on how far I can disbelieve that evidence. Although I am not obliged to accept all such evidence (eg because a witness may be mistaken), and I can weigh it up in the balance with other evidence, for present purposes I am not at liberty to disbelieve the witness, unless I consider that the evidence was manifestly incredible in light of all the circumstances: see Long v Farrer & Co [2004] BPIR 1218, [57], which the Court of Appeal applied in Coynev DRC Distribution Limited [2008] EWCA Civ 488, [58].[16]I do not consider that Ms Evans’ evidence was “manifestly incredible”. It was clearly and logically set out. Of course there were assumptions, but these too were set out and explained. I consider that, as a result, I cannot disbelieve Ms Evans when she says that she believes that the claimant will have the funds to pay an adverse costs order. The question for me is whether the defendants have satisfied me (and the burden is on them) that “there is reason to believe that [the claimant] will be unable to pay the defendant[s’] costs if ordered to do so”. As the authorities state, there must be evidence that the company ‘will be unable to pay’, which is more than mere doubt or concern about the future ability to pay. Ms Evans has put forward her explanation. She says that what the explanation she gives “should have been obvious to those working in the industry.”[17]I have set out extracts from the evidence of Ms Priddy and Mr Delaney, who both work in this industry. Ms Priddy takes issue with some technical matters, and Mr Delaney takes a different view from Ms Evans about certain aspects of the industry. He says she is being optimistic. In my judgment, the most that these witness statements go is to raise a doubt about whether the claimant will have the resources to meet an adverse costs order liability. But, as I have said, that is not enough. The defendants need to raise at least a legitimate concern about the claimant’s financial position. Then I would have to consider whether the claimant had failed to provide an adequate response. But I do not think that they have done that. On the material before me, the claimant is plainly solvent at present. Nor is it enough to show that the claimant does not have sufficient assets today to pay a future liability. There must be reason to believe that there will be a future deficiency. The defendants go on to pray in aid the statements of Sales LJ in Sarpd which I set out earlier. But this is not a case of deliberate refusal to explain how the claimant could meet such liability. On the contrary, the claimant has given a detailed explanation, and the defendants have tried to pick holes in it. That is quite different.

Conclusion

[18]In the result, the defendants have not satisfied me that the threshold condition in CPR rule 25.27(b)(ii) is met, that there is reason to believe that the claimant will be unable to pay the defendant’s costs if ordered to do so. These applications must therefore be dismissed.

order

see CPR Part 25.13(2)(c). Thus, it is not enough for the Defendants to show that the Claimants might not be able to repay. More must be done, namely justification for a reason to believe that the Claimants will not be able to pay. In that regard:(i) The Defendants do not need to demonstrate on a balance of probabilities that the Claimants will not be able to satisfy any costs order: see Jirehouse v Beller [2009] 1 WLR 751 at [26]. However, there must be evidence that the company ‘will be unable to pay’, which is more than mere doubt or concern about the future ability to pay: see Re Unisoft Group Limited [1993] BCLC 532 per Sir Donald Nicholls VC at 534e-i, as followed by Jirehouse at [24]. As stated by Sir Donald Nicholls VC in Unisoft, the test is not ‘watered down’ by the presence of the wording ‘reason to believe’.(ii) Similarly, in Texuna International Limited v Cairn Energy plc [2004] EWHC 1102 Gross J stated at [10]: ‘I emphasise that the inquiry is whether the Claimant “will be unable” to pay the Defendant's costs if ordered to do so – not whether it might be unable to pay them.’(iii) The burden is upon the Defendants. It is not incumbent upon the Claimants to prove that they have the means to pay: see Golden Grove Estates v Chancerygate Asset Management [2007] EWHC 968 per Lindsay J at [35].(iv) However, if legitimate concerns about the Claimants financial position are raised, 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. In Mbasago v Logo Limited [2006] EWCA Civ 608, Lord Justice Auld stated (at paragraph 12) that ‘where it arises as a result of the party against whom the order is sought either providing unsatisfactory financial information as to his or its affairs, or as in this case none at all, it is not a big step for the court to take to conclude that there is reason for such belief’. (b) Even if the threshold requirement in CPR Part 25.13(2)(c) is satisfied, the Court's power to award security for costs is discretionary: see Hutchinson Telephone (UK) Limited v Ultimate Response Limited [1993] BCLC 307 at 317 per Bingham J. That discretion will be exercised following a detailed assessment of all the relevant circumstances of the case: see CPR 25.13(1)(a). In short, the Court is to have regard to what is fair and just in all the circumstances: see Jones v Environcom Limited [2010] Lloyd"s Rep. IR. 190 at [12] per Gloster J.” (i) The Defendants do not need to demonstrate on a balance of probabilities that the Claimants will not be able to satisfy any costs order: see Jirehouse v Beller [2009] 1 WLR 751 at [26]. However, there must be evidence that the company ‘will be unable to pay’, which is more than mere doubt or concern about the future ability to pay: see Re Unisoft Group Limited [1993] BCLC 532 per Sir Donald Nicholls VC at 534e-i, as followed by Jirehouse at [24]. As stated by Sir Donald Nicholls VC in Unisoft, the test is not ‘watered down’ by the presence of the wording ‘reason to believe’. (ii) Similarly, in Texuna International Limited v Cairn Energy plc [2004] EWHC 1102 Gross J stated at [10]: ‘I emphasise that the inquiry is whether the Claimant “will be unable” to pay the Defendant's costs if ordered to do so – not whether it might be unable to pay them.’ (iii) The burden is upon the Defendants. It is not incumbent upon the Claimants to prove that they have the means to pay: see Golden Grove Estates v Chancerygate Asset Management [2007] EWHC 968 per Lindsay J at [35]. (iv) However, if legitimate concerns about the Claimants financial position are raised, 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. In Mbasago v Logo Limited [2006] EWCA Civ 608, Lord Justice Auld stated (at paragraph 12) that ‘where it arises as a result of the party against whom the order is sought either providing unsatisfactory financial information as to his or its affairs, or as in this case none at all, it is not a big step for the court to take to conclude that there is reason for such belief’.