The High Court dismissed Mazda Motor Logistics Europe NV’s application for security for costs against Mike O’Dwyer Motors Ltd, finding that Mazda had not established a prima facie defence to the company’s claim for the purpose of that application. The judge also concluded that bringing the application shortly before trial weighed against ordering security.
The application was heard on 18 December 2012, with the linked proceedings listed for a three-day hearing from 16 January 2013. The court considered the request under section 390 of the Companies Act 1963. It found that Mazda had established the company would be unable to meet Mazda’s costs if Mazda successfully defended the claim, but said the law required Mazda also to establish a prima facie defence.
The dispute concerns two agreements made in July 2006. The company does not challenge the termination of its Mazda Dealer Agreement in March 2010. It alleges that Mazda wrongly treated its separate Authorised Repairer Agreement as terminated at the same time, without the written notice required by the agreement. It claims the agreement remained in force and alleges that Mazda’s conduct and communications to customers caused it loss and reputational damage. Mazda denies wrongdoing and disputes that the repairer agreement remained in force.
The judge stressed that the security application was not a trial of those claims and made no finding on which side was likely to succeed. But she said Mazda’s evidence did not objectively demonstrate admissible evidence that could support a defence to the company’s assertion that the repairer agreement had not been terminated. A denial that the company’s account was “incorrect” was insufficient to meet the threshold. On that basis, the application could be dismissed.
The judge also considered the company’s argument that special circumstances justified refusing security. She focused on delay and the related proceedings. The application had been brought when the company had taken the steps needed to prepare for the January hearing and had incurred substantial costs. The timing, including the intervening Christmas court vacation, meant the application was decided close to the trial date. The judge found the likely prejudice to the company from ordering security at that stage outweighed the likely prejudice to Mazda from refusing it.
The order dismissed Mazda’s application for security for costs. It did not determine the contract, damages or related trademark claims, which remained for the listed hearing.