Security For Costs Notes

SECURITY FOR COSTS (r25.12-13)

SUMMARY OF TEST

1. Is the Respondent in the position of a claimant?

2. Condition for the Order,

3. Having regard to all the circumstances of the case, would it be just to exercise discretion in favour of making the order?

4. How much should be provided?

WHO CAN AN ORDER FOR SECURITY FOR COSTS BE MADE AGAINST?

• only a party acting as a C

When does a party act as a claimant?

1. D who counterclaims against a C (except set off, as it is a defence)

2. D to main action issuing an additional claim (in relation to third party)

3. if D brings additional claim against a third party, C does NOT act as a claimant unless third party is joined as a D

4. if court satisfied: person who has assigned right to the claim to C in order to avoid possibility of costs order being made against him

5. if court satisfied: person who has agreed to contribute to C's costs in return for a share of what C may recover in proceedings

6. once permission to appeal granted: appellants to appeals, and respondents to cross-appeals

FULL PROCEDURE

1. D to any claim, including part 20 claims may apply for security for his costs of the proceedings only against party acting as C (r25.12(1))

2. D makes ASAP and without delay usually at first application for security at first case management conference, using usual part 23 'on notice' procedure

3. D's application notice must be supported by written evidence:

• state grounds on which security sought

• state factors relevant to court's discretion, such as practical difficulties in enforcing costs order

• attach estimate of D's costs of defending the claim

4. The court determines whether: N.B. D has burden of proof

• an enactment permits court to require security for costs; OR

• one or more of following conditions is satisfied:

  1. C resides outside the jurisdiction (i.e. outside Brussels Contracting State, a state bound by the Lugano Convention or a Regulation State [mainly in mainland Europe])

     • C = individual

       • residence = C's habitual or normal residence

     • C = company

       • residence = where central control and management are - real trade / business carried on

     • applies to joint Cs, one or more of whom is resident outside jurisdiction, unless Cs are jointly and severally liable and English Cs are likely to be able to pay costs

       • security likely to be awarded if English C joined for purpose of defeating application for security

  2. [repealed]

  3. C is a company (incorporated inside or outside GB) AND there is reason to believe it will be unable to pay D's costs if ordered to

     • proof that company is in liquidation = prima facie evidence

     • otherwise, need credible evidence of inability to pay (may be inferred)

  4. C has changed address since claim started to try to evade consequences of litigation

  5. C failed to provide / provided wrong address in claim form

  6. C is acting as a nominal C AND there is reason to believe C won't be able to pay D's costs if ordered to

     • no personal connection with claim, interest in outcome or role in funding litigation

     • does NOT apply to...

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