The High Court has ruled that Safecharge Card Services Limited is entitled to security for its costs in a contract dispute brought by 3V Benelux BV. The court did not set the amount: it said counsel would be heard further on that issue.
The application concerned 3V Benelux’s claim for damages after Safecharge declared a services agreement frustrated and terminated it on 4 December 2015. The agreement covered prepaid card products distributed by 3V Benelux and supplied by Safecharge. Their operation depended on bank sponsorship services, which ABN Amro had previously said it intended to discontinue.
Justice Allen rejected frustration as a prima facie defence. He said the need to find an alternative sponsor was known when the parties made the 2014 agreement, and ABN Amro continued providing services after Safecharge’s termination letter. Because the agreement was discharged on 4 December 2015, Safecharge could not rely on a later event as frustrating it.
The judge did find a prima facie defence on other grounds. Safecharge had put forward credible evidence that it continued to provide services after termination and that it was not obliged to secure a replacement BIN sponsor. Whether the agreement required Safecharge to arrange a sponsor or modify products was for the trial judge to decide. These were preliminary findings for the security application, not a decision on the underlying claim.
The court also found reason to believe 3V Benelux would be unable to pay Safecharge’s costs if its action failed. It assessed those costs at about €394,700. The court considered projected litigation costs, uncertainty about future income and the importance of inactivity fees from dormant cards, which were expected to end after 2021. It did not decide that 3V Benelux would in fact be unable to pay.
3V Benelux argued that any inability to meet costs resulted from Safecharge’s alleged breach. The judge accepted on a prima facie basis that Safecharge had wrongfully terminated the agreement, but found insufficient evidence linking that termination to practical consequences or a specific recoverable loss. He noted disputes about what services and cards were supplied after termination and the basis for the claimed losses, which 3V Benelux had estimated at more than €7 million in 2018.
The order grants Safecharge’s application for security for costs. The amount of security was expressly left for a further hearing.