16. Interim Payments and Security for Costs Flashcards
At what point can a claimant apply for an order for an interim payment?
Not before the expiry of the period for filing an acknowledgment of service.
How many applications can be made for an interim payment?
More than one
By when must an application notice for an interim payment be made? What should accompany it?
At least 14 days before and be supported by evidence
What should the respondent to an application for interim payment do if he wishes to rely on written evidence? And by when?
He must:
a. File the written evidence; and
b. Serve copies on every other party
at least 7 days before the application
except where it has already been filed or served on that party
If the applicant for an interim payment wishes to rely on written evidence, what must he do?
a. File it and
b. Serve copies on every other party
at least 3 days before the hearing
except where it has already been filed or served on a party
In what structure should a court order an interim payment?
Either as a lump sum or in instalments
Where can the court order an interim payment?
Only if one of the following conditions are satisfied:
a. The defendant who the order is sought has admitted liability for some damages or other money to the claimant
b. The claimant has obtained judgment and is awaiting damages or another sum of money to be assessed (not taking into account costs)
c. If satisfied that, if at trial, the claimant would obtain judgment for a substantial amount of money against the defendant whether or not there are multiple defendants
d. The following conditions are satisfied:
a. The claimant is seeking an order for possession of land (notwithstanding any other orders)
b. The court is satisfied that, if at trial, the defendant would be held liable (even if the claim for possession fails) for a sum of money for the defendant’s occupation and use of the land
e. In a claim of two or more defendants and the order is sought against any one or more of those defendants, the following conditions are satisfied:
a. The claimant would obtain judgment for a substantial amount of money against at least one defendant (BUT THE COURT CANNOT DETERMINE WHICH); and
b. All defendants are either
i. A defendant insured
ii. A defendant whose liability will be met by an insurer under the RTA; or
iii. A defendant that is a public body
How much should the court order as an interim payment?
Not more than a reasonable proportion of the likely amount of final judgment
The court should take into account:
a. Contrib neg
b. Set-off
What should the court take into account when ordering interim payment?
a. Contrib neg
b. Set-off
What orders can a court make in respect of the interim payment?
a. To vary/discharge it
b. To order all or part of it repaid
c. To order a defendant to reimburse, wholly or partly, another defendant who has made such a payment, only if:
a. The defendant to be reimbursed made the interim payment in respect of a claim to which he has made a claim against the other defendant for contribution, indemnity or other remedy; and
b. Where the claim or part of which the interim payment relates to has not been discontinued or disposed of, the circumstances are such that the court could make an order for interim payment under 25.7
Can the court make an order for interim payment without an application?
Yes, if it makes the order when it disposes of the claim or any party of it.
What can the court do where the defendant has made an interim payment over the total liability of the final judgment or order?
Order him interest on the overpaid amount from the date when he made the interim payment.
Can the fact of an interim payment having been made be disclosed?
Not to the trial judge until all questions of liability and amount to be awarded have been decided, UNLESS the defendant agrees.
What should the evidence accompanying the application for an interim payment deal with?
- The sum of money sought by way of interim payment
- The items or matters in respect of which the interim payment is sought
- The sum of money for which final judgment is likely to be given
- the reasons for believing that the conditions set out in rule 25.7 are satisfied,
- any other relevant matters,
- in claims for personal injuries, details of special damages and past and future loss, and
- in a claim under the Fatal Accidents Act 1976, details of the person(s) on whose behalf the claim is made and the nature of the claim.
How should any documents be included in an application for interim payment?
They should be exhibited, including a medical report if it is PI.
What document should be exhibited in an application for an interim payment for a PI claim?
Any medical reports
Must either party comply with the requirements about notice for them to rely on written documents for an interim payment?
YES, they must do so
Who may apply for security for costs?
Any defendant to a claim
What should accompany an application for security for costs?
Written evidence
What will the court do where it makes an order for security for costs?
a. Determine the amount of security; and
b. Direct:
a. The matter in which; and
b. The time within which
the security must be given
when can a court make an order for security for costs?
It may if:
a. Satisfied, considering all circumstances, that it is just to make such an order; and
b. Either
a. One or more of the following below conditions apply; or
b. An enactment permits the court to require security for costs
CONDITIONS:
a. The claimant is:
i. Resident out of jurisdiction; but
ii. Is not resident in a state bound by the 2005 Hague convention
c. the claimant is a company or other body and there is reason to believe it would be unable to pay the defendant’s costs if ordered to do so;
d. the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation
e. the claimant failed to give his address in the claim form or gave an incorrect address
f. the claimant is acting as a nominal claimant (suing for the benefit of someone else), other than as a representative in a GLO, and there is reason to believe he will not be able to pay the defendant’s costs if ordered to
g. the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him
are the pre-conditions for the grant of security for costs a matter of discretion?
No, they are matters of fact for the person seeking security to establish. The discretion comes from the fact that, when deciding the amount of security, the court is required to have regard to all the circumstances of the case.
Thus, the conditions are pre-conditions, for the court to later consider whether it is just to make such an order.
Should the security be ordered where it would prevent the respondent from continuing its claim?
No, but the burden to show this stifling effect is on the respondent. It would need to show it cannot provide security and cannot obtain appropriate assistance to do so. The court expects full and frankness.
Corporate claimants will likewise have shareholders and others potentially willing to support.
For an application for security for costs, how relevant is the merits of the claim?
Should not go into it unless it can clearly be demonstrated one way or another without detailed investigation that there is a high degree of probability of success or failure.
No security will be required where there is a high likelihood of the claimant succeeding.
What is the guidance on ordering security for costs against insolvent/impecunious companies?
Merely have to show there is reason to believe that they will not pay when the costs fall due. – however, giving reason to believe they ‘may’ not is insufficient.
Not ordered as a matter of course. Has to have regard to the full circumstances.
Have to think about what the company will have at the time the payment becomes due, in the form of cash or other realisable assets
This rule on believing they will be unable applies to all companies, unlimited, limited, registered elsewhere e.c.t.
The fact defendants may have had the benefit of a performance bond and company guarantee which guaranteed the claims company’s solvency and obligations is irrelevant to the application for security to costs.
In respect of a costs order made at the end of a two-week trial, where there is no possibility of summary assessment, the relevant due dates, are (a) the payment date of any order made by the trial judge for payment on account, and (b) the date when an order for the balance is made upon completion of detailed assessment.”
Where a liquidator/receiver is bringing proceedings in the name of an insolvent company, are they under any duty as regards costs?
No, they are not under a duty to ensure that there is sufficient money for costs. That is why an application for security for costs would be made.
A defendant who fails to make such an application will not normally be entitled to an order or costs payable by the liquidator or receiver personally.
May the court order a claimant company in liquidation to give security even where it is one of two or more claimants?
Yes, especially where there is comparatively small overlap between its own claims and those of the others
May security for costs be ordered against a local action group which is incorporated?
Yes, where it is incorporated but supported by well-resourced people with an interest in the proceedings.
What, in relation to security for costs, may be given in judicial review proceedings?
A protective costs order (allowing a person to pursue claims in the public interest where they are of limited means) may be sought in public interest proceedings. The guidelines on this are relevant to where a claimant should be ordered to provide security for costs in judicial review proceedings
Does the rule on whether the court believes a company will fail to pay costs have any application to an unincorporated association?
No
Can security for costs be awarded against a part 20 claimant (who is the defendant) where they have taken steps as to assets which hinder costs enforcement?
Yes
What are the principles to be taken on security for costs where a claimant has taken steps as to assets which hinder costs enforcement?
- i) The requirement is that the claimant has taken in relation to his assets steps which, if he loses the case and a costs order is made against him, will make that order difficult to enforce. It is not sufficient that the claimant has engaged in other conduct that may be dishonest or reprehensible: Chandler v Brown [2001] CP Rep 103 at [19]-[20];
- ii)The test in that regard is objective: it is not concerned with the claimant’s motivation but with the effect of steps which he has taken in relation to his assets: Aoun v Bahri [2002] EWHC 29 (Comm), [2002] CLC 776, at [25]-[26];
- iii)If it is reasonable to infer on all the evidence that a claimant has undisclosed assets, then his failure to disclose them could itself, although it might not necessarily, lead to the inference that he had put them out of reach of his creditors, including a potential creditor for costs: Dubai Islamic Bank v PSI Energy Holding Co [2011] EWCA Civ 761 at [26];
- iv)There is no temporal limitation as to when the steps were taken: they may have been taken before proceedings had been commenced or were in contemplation: Harris v Wallis [2006] EWHC 630 (Ch) at [24]-[25];
- v)However, motive, intention and the time when steps were taken are all relevant to the exercise of the court’s discretion: Aoun v Bahri, ibid; Harris v Wallis, ibid;
- vi)In the exercise of its discretion, the court may take into account whether the claimant’s want of means has been brought about by any conduct of the defendant: Sir Lindsay Parkinson & Co v Triplan [1973] QB 609 per Lord Denning MR at 626; Spy Academy Ltd v Sakar International Inc [2009] EWCA Civ 985 at [14];
- vii)Impecuniosity is not a ground for ordering security; on the contrary, security should not be ordered where the court is satisfied that, in all the circumstances, this would probably have the effect of stifling a genuine claim: Keary Developments Ltd v Tarmac Construction [1995] 3 All ER 534 at 540, para 6. Thus the court must not order security in a sum which it knows the claimant cannot afford: Al-Koronky v Time-Life Entertainment [2006] CP Rep 47 at [25]-[26] (where this was referred to as ‘the principle of affordability’);
- viii)The court can order any amount (other than a simply nominal amount) by way of security up to the full amount claimed: it is not bound to order a substantial amount: Keary at 540, para 5;
- ix)The burden is on the claimant to show that he is unable to provide security not only from his own resources but by way of raising the amount needed from others who could assist him in pursuing his claim, such as relatives and friends: Keary at 540, para 6. However, the court should evaluate the evidence as regards third party funders with recognition of the difficulty for the claimant in proving a negative: Brimko Holdings Ltd v Eastman Kodak Co [2004] EWHC 1343 (Ch) at [12];
- (x)When a party seeks to ensure that any security that may be required is within his resources, he must be full and candid as to his means: the court should scrutinise what it is told with a critical eye and may draw adverse inferences from any unexplained gaps in the evidence: Al-Koronky at [27].”
It has also been held that it can also be important to note the extent of the effect of the steps taken by the respondent upon the ability of the applicant to enforce the following or subsequent cost judgment, because that effect is relevant to the exercise of the discretion. For example, if the steps taken have a minimal effect on the ability of the applicant subsequently to enforce a judgment, then the court is much less likely to make an order.
If all or most of the claimant’s assets are put beyond the defendant’s reach, the injustice to the defendant if no security is given may be just as great as it would be if it was the claimant who had transferred overseas or disappeared.
That said, the proof of a specific intent to stultify future orders for costs will generally increase the likelihood that an order for security will be made.
The applicant may seek to prove a specific intent to stultify future orders for costs in a variety of ways, e.g. evidence of dishonest behaviour by the claimant, unreliability in the past, evasiveness in these proceedings and statements of intent by the claimant.
The fact that an application under r.25.13(2)(g) will involve confidential financial information is not, by itself a sufficient reason to persuade the court to make a direction under r.39.2(3) for the application to be heard in private
