Security For Costs And Interim Payments Notes

Interim Applications (2): security for costs, interim payments, interim costs orders

NB, procedure:

• Security for costs normal part 23 procedure, issue an application notice supported by written evidence, serve 3 clear days before hearing etc.

• Interim payment 14/7/3 rule (like summary judgment).

Security for Costs

(Part 25, Interim Remedies and Security for Costs)

25.12, Security for Costs

• (1) A DEFENDANT to any claim (including a D to a counterclaim/additional claim) may apply under this section for security for his costs of the proceedings

  • (NB, Part 3 provides for court to order payment of sums into court in other circumstances.

  • R20.3 provides for this section to apply to Part 20 claims (counterclaims/additional claims) i.e. it also applies to Defendants to counterclaims and additional claims, such Ds can apply for security.

  • [[so a Claimant could apply for security for costs against a defendant who brings a counterclaim, or a 3^rd party may apply for security against a defendant who makes an additional claim against the 3^rd party]].

• (2) an application for security for costs must be supported by written evidence.

• (3) where court makes an order for security for costs, it will:

  • (a) determine the amount of security; and

  • (b) direct:

    • (i) the manner in which the security must be given; and

    • (ii) the time within which the security must be given.

25.13, Conditions to be satisfied, The court may make an order for security for costs under 25.12, IF:

• (1) is satisfied that, having regard to all circumstances, that it is JUST to make such an order; ( see commentary below)

• AND

• (2) either:

  • (i) one or more conditions in para (2) apply:

    • (a) the Claimant is: (i) resident out of the jurisdiction BUT (ii) NOT resident in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by 2005 Hague Convention, or a ‘Regulation State’ (as defined in s1(3) Civil Jurisdiction & Judgments Act 1982).

    • (b) – omitted

    • (c) C is an (incorporated) company or other body [not an individual] (whether incorporated inside or outside Great Britain) AND there is reason to believe that it will be unable to pay D’s costs if ordered to do so;

      • See commentary below

      • D must show that: there is reason to believe the company would not be able to meet its debts when an Order for Costs was made against it. Having regard to the nature and liquidity of the company’s assets.

      • See commentary the standard of proof is ‘reason to believe’ is lower threshold than balance of probabilities.

      • If C is an insolvent company: then an application for security for costs under this rule is the primary method of protection.

      • Adequate insurance may be adequate for C to avoid a security for costs order

    • (d) the Claimant has changed his address since claim was commenced with a view to evading the consequences of the litigation;

    • (e) C failed to give his address/gave an incorrect address in the claim form;

    • (f) C is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe he will be unable to pay D’s costs if ordered;

      • [[NB: “nominal claimant” someone who isn’t really the actual C, doesn’t have an interest in the claim, and doesn’t have any interest in the costs, is Claimant in name only]]. May have been done as a way to subvert costs, window-dressing.

    • (g) C has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.

      • see commentary below.

      • egs of such steps:

      • dissipation of assets;

      • transfer of assets overseas;

      • transfer of assets into names of 3^rd parties;

      • transfer/removal of assets into places unknown to D.

      • D need not show specific intent to avoid enforcement on behalf of C; but showing specific intent would increase the likelihood of an order for security.

  • OR (ii) an enactment permits court to require security for costs.

• (R3.4 allows court to strike out a statement of case; and Part 24 allows for summary judgment).

• [[NB so all the claimants above that you can seek an order for costs against are claimants who, for the above reasons, who are dodgy/might evade costs]]

• SO NOTE an order for security is DISCRETIONARY You need to show both (a) that a condition listed in (2) is satisfied AND (b) court must also be satisfied that an order is ‘just’ given all the circumstances

Procedure for making an application = the GENERAL PART 23 PROCEDURE for interim applications

• Should follow general Part 23 procedure (serve application notice at least 3 DAYS before court is to deal with application).

• The application notice should state which of the grounds inr.25.13applies and, if the order is sought under an enactment, should state the enactment authorising the Court to make the Order.

• Rule 25.12(2)states that the application must be supported by written evidence.

• The written evidence relied on may be set out (1) in the applicant’s Statement of Case, or (2) in the application notice, or (3) in a witness statement.

Commentary, 25.13.1, Discretionary power to order security for costs

• 2 pre-requisites for an order for security for costs (see above), r25.13:

  • (1) it is JUST to make an order having regard to all circumstances;

  • AND

  • (2) one or more of the conditions in r25.13(2) applies OR an enactment permits the court to require security for costs.

• So you need BOTH these conditions: i.e. not sufficient only if 1+ condition in 25.13(2) applies, it must ALSO be just having regard to all circumstances.

Re ‘having regard to all the circumstances’ (in deciding whether an order is just). Some circumstances to consider:

• (1) One circumstance of increasing important = ability of respondent (i.e. claimant) to comply with any Order made/whether order is oppressive in stifling a good claim:

  • A requirement to raise funds which they are unable to raise (and thus the Order stifles C’s claim) may breach Art 6(1) ECHR (right of access to trial/court).

  • Re whether an order for security for costs may infringe Art 6(1) ECHR...

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