4.1 Security for costs Flashcards
Which Rule gives the court its power to order for security for costs?
CPR 25.12
What is security for costs?
Commentary - 25.12.2
The purpose of an order for security for costs is to protect a party in whose favour it is made against the risk of being unable to enforce any costs order they may later obtain.
The order, if complied with, will provide the party … with a fund normally held by the court against which he can enforce any award of costs they may later obtain.
Who can an application for security for costs be made against?
- Against the claimant (see CPR 25.12(1) “a defendant may apply…”);
- Against the defendant where there is a counter claim (see above);
- Against a third party - CPR 25.14
What conditions must be satisfied for the court to award security for costs?
CPR 25.13
(1)
The court may make an order for security for costs under rule 25.12 if -
(a)
it is satisfied, having regard to all the circumstances of the case, that it is just to make an order; and
(b)
(i)
one or more of the conditions in paragraph (2) applies; or
(ii)
an enactment permits the court to require security for costs.
(2)
The conditions are—
(a)
the claimant is—
(i) resident out of the jurisdiction;
…
(c)
[company cannot pay];
(d)
[C changed address to avoid paying];
(e)
[C failed to put correct address on claim form];
(f)
the claimant is acting as a nominal claimant… and there is reason to believe that he will be unable to pay …;
(g)
C has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.
What is the burden for D to prove that C is a company and there is reason to believe it will be unable to pay D’s costs? (CPR 25.14(2)(c))
Reason to believe
C will be unable
When does the rationale for ordering security for costs not apply to claimants resident outside of the jurisdiction?
CPR 25.13(2)(a)(ii)
[The rationale does not apply where C resides in a state with reciprocal enforcement arrangements]
…in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982.
What is the standard of proof for the defendant to show that the claimant company will be unable to pay if a costs order is made?
Jirehouse Capital v Beller [2008] EWCA Civ 908
“Reason to believe” is a lower threshold than balance of probabilities.
CPR 25.13(2)(c)
the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so;
What factors may the court consider in exercising its discretion to order security for costs?
Sir Lindsay Parkinson & Co v Triplan Ltd [1973] Q.B. 609 (CA)
(1)
whether the claimant’s claim is bona fide and not a sham;
(2)
whether the claimant has a reasonably good prospect of success;
(3)
whether there is an admission by the defendants in their defence or elsewhere that money is due;
(4)
whether there is a substantial payment into court or an “open offer” of a substantial amount;
(5)
whether the application for security was being used oppressively, e.g. so as to stifle a genuine claim;
(6)
whether the claimant’s want of means has been brought about by any conduct by the defendant, such as delay in payment or in doing their part of any work;
(7)
whether the application for security is made at a late stage of the proceedings.
Which Rule deals with the conditions to be satisfied in order for the court to order security for costs?
CPR 25.13
Does D need to show dishonesty by C in order to invoke CPR 25.13(2)(g)?
No - although it may increase the likelihood that the application for security for costs will succeed.
Which provision sets out the general criterion which applies to all applications for security for costs?
CPR 25.13(1)(a)
Which criterion applies to all applications for security for costs?
CPR 25.13(1)(a)
[If the court] is satisfied, having regard to all the circumstances of the case, that it is just to make such an order.
What must the court balance in deciding whether to order security for costs?
Olatawura v Abiloye [2002] EWCA 998
C’s right of access to the court (if stifled by a security order) vs injustice to D if C cannot meet a later costs order because of impecuniosity.
Sir Lindsay Parkinson v Triplan [1973] Q.B. 609
Sir Lindsay Parkinson v Triplan [1973] Q.B. 609
In deciding whether it is just to exercise it would be just to exercise its discretion to order security for costs, the court must have regard to:
(1) [sham]
whether the plaintiff’s case is bona fide and not a sham
(2) [prospect of success]
whether the plaintiff has a reasonably good prospect of success on his part of the claim
(3) [admission]
whether there has been an admission, formal or informal, in the course of the proceedings, of some part of the plaintiff’s claim;
(4) [payment into court]
whether there has been a payment into court, or its equivalent in arbitration proceedings, of a substantial sum which indicates that the plaintiff’s claim is not merely a nuisance value claim;
(5) [oppression]
whether there are any grounds for thinking that the defendants are using the application to stifle a valid claim;
(6) [D’s fault]
whether an order for security might enable a defendant to defeat a claim on the ground of the plaintiff’s impecuniosity which the defendant himself has caused; and
(7) [delay]
whether the defendant applicant for security has been guilty of delay in making the application.
Which provision sets out what the court must do when it decides to order security for costs?
CPR 25.12(3)
