Security Of Costs PDF

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SECURITY OF COSTS (CPR 25.12-25.15) What is security of costs? Security of costs is a court order ordering the claimant to provide security for the defendant’s costs (but not damages) in order to cover the possibility of the claimant losing at trial – only the defendant can apply for this. What is the purpose of security of costs? The aim of this type of application is to protect the defendant (who has not brought the claim) from being out of pocket from a claimant later ordered to pay the defendant’s costs of the proceedings. An order for security of costs provides a pot of money from which a costs order in favour of the defendant can be paid. What are the grounds for applying for security of costs? The defendant must show that one of the stipulated grounds applies to the claimant (these are sometimes known as ‘gateway grounds’. Step 1: The main grounds being: a) The claimant is resident out of the jurisdiction:  Resident means where an individual normally resides or, if the claimant is a company, where that company has its place of “central management and control.”  “Out of jurisdiction” means that the court must be satisfied that it is a foreign jurisdiction where enforcement would not be possible or would not be possible or would be more difficult. b) The claimant is an impecunious company:  The applicant must show what the likely costs of the case will be and demonstrate that there is reason to believe that the company will be unable to pay them if ordered to do so.  This is judged according to its financial position now, although evidence of future financial prospects can be taken into account. A reasonable belief in the company’s impecuniosity is not enough – the court has to be persuaded that it will be unable to pay. Step 2: Is it just in all the circumstances?  Security of costs is a discretionary remedy. Therefore, even if one of the above grounds is met, the defendant must still show that it is ‘just in all the circumstances’ to grant an order (CRP 25.13(1)(a)). The main consideration is the claimant’s ability to comply with the order.  A poor claimant means that the defendant is more likely to need security but granting it might seriously affect the claimant and his access to court or otherwise affect his right to a fair trial.  Other consideration to make include:  That the claimant’s claim is bona fide and not a sham – which means that the claimant has reasonably good prospects for success here. Take into account any admissions made by the defendant and whether the defendant has already made substantial payments into court – these factors point not to awarding security of costs.  Whether the defendant Is applying in order to simply oppress or stifle a genuine claim.  Whether the defendant has delayed in making his application.

Whether the claimant’s want of means (lack of money) was brought about my the defendant’s conduct in the first place.  The overriding objective.  The amount of security is at the discretion of the court (CPR 25.12(3)) – what it thinks is just, taking into account what the respondent is likely to be able to raise. When does the court expect the money? The court will generally order a payment immediately or by a set date. If the claimant goes on to win at trial, then the money will be returned to them with interest. What is the procedure for an on notice application for security of costs? Step 1: Submit o Bundle of documents o Evidence (witness statements) o Application notice o Draft order o Skeleton arguments 

Step 2: Serve on the respondent (3 clear days before the hearing) - Witness statement - Application notice - Draft order Step 3:  The respondent submits evidence in reply. Step 4:  The applicant may submit further evidence in reply. Step 5:  Statement of costs is submitted. Step 6:  Hearing takes place. Step 7:  Order is given by the court....