Interim Payments & Security for Costs

Question 1

At what point in proceedings can a claimant apply for an interim payment?

Answer 1

The claimant may not apply for an interim payment before the end of the period for filing an acknowledgment of service applicable to the defendant against whom the application is made.

(In other words: the time for the defendant to have filed an acknowledgment of service must have expired before the claimant can apply for an interim payment)

Question 2

A claimant can only apply for an interim payment once during proceedings

True/false (give explanation)

Answer 2

False

The claimant can make more than one application for an order for an interim payment.

Question 3

What must occur in relation to an application for an order for an interim payment?

Answer 3

The application notice must be served on each respondent within 14 days of the hearing

The application must be supported by evidence

Question 4

What should the respondent do if he wishes to rely on written evidence in response to the claimant’s application for an interim payment?

Answer 4

If the respondent to an application wishes to rely on written evidence in response to the application, they must file that evidence and serve it upon each party within 7 days of the hearing.

Question 5

What should the applicant do if the respondent files written evidence in response to their application, and the applicant wishes to rely on further evidence in response to this?

Answer 5

If the applicant wishes to rely on written evidence in response to the respondent’s written evidence, they must file the evidence and serve it upon the respondent within 3 days of the hearing.

Question 6

If an interim payment is granted, how must it be paid?

Answer 6

The court may order that an interim payment be paid in one sum or in installments.

Question 7

What are the conditions for ordering an interim payment?

Answer 7

An interim payment may only be ordered where any of the following conditions are satisfied:

• the defendant has admitted liability to pay damages or some other sum of money to the claimant
• the claimant has obtained judgment against the defendant for a sum of money to be assessed
• it is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money against the defendant, whether or not that is the only defendant or a number of defendant’s to the claim
• the claimant is seeking an order for possession of land and the court is satisfied that, if the case went to trial, the defendant would be held liable to pay the claimant a sum of money for the occupation or use of the land

Question 8

What amount is the court able to order the defendant to pay as an interim payment?

Answer 8

The court must not order an interim payment for more than a reasonable proportion of the likely amount of the final judgment.

Question 9

What factors will the court take into account when determining how much to order as an interim payment?

Answer 9

the court must take into account contributory negligence and any relevant set-off or counterclaim.

Question 10

What are the court’s powers in relation to an interim payment when it has already been ordered or voluntarily paid?

Answer 10

Where the defendant has been ordered to make an interim payment (or has made one voluntarily_the court may make an order to adjust the interim payment.

The court may in particular order:

• the whole or part of the interim payment to be repaid
• vary or discharge the order
• order a defendant to reimburse another defendant who has made an interim payment.

Question 11

When can the court order a defendant to reimburse another defendant who has made an interim payment?

Answer 11

When the defendant who is to be reimbursed has made a claim against the other defendant for contribution, indemnity, or another remedy.

Question 12

Does a party need to apply to the court for an order adjusting an order for interim payment?

Answer 12

The court may make such an order without the application of a party when it is making the order while disposing of the claim.

Question 13

What may happen if the defendant makes an interim payment for an amount which is more than the claimant is awarded in the final judgment?

Answer 13

Where the defendant makes an interim payment and the amount of the payment is more than his total liability under the final judgment, the court may award him interest on the overpaid amount from the date when he made the interim payment.

Question 14

Are there any restrictions on the disclosure of an interim payment?

Answer 14

The fact that an interim payment has been made, whether voluntarily or by court order, shall not be disclosed to the trial judge until all questions of liability and quantum have been decided.

Unless the defendant agrees.

Question 15

Who may apply for security for costs?

Answer 15

A defendant to any claim

Question 16

Is an application needed for an order for security for costs?

Answer 16

Yes, the defendant must apply for such an order, and the application must be supported by evidence

Question 17

What will the court determine/direct when making an order for security for costs?

Answer 17

The court will determine the amount of security and direct the manner in which and the time within which any security must be given.

Question 18

When will the court make an order for security for costs?

Answer 18

The court must be satisfied, having regard to all the circumstances of the case that it is just to make such an order and at least one of the following conditions are satisfied:

• the claimant is resident outside of the jurisdiction
• the claimant is a company or other body and there is reason to believe they would be unable to pay the defendant’s costs if ordered to do so
• the claimant has changed his address since proceedings started with the view to evading the consequences of litigation
• the claimant failed to give his address or gave the incorrect address on the claim form
• the claimant is acting as a nominal claimant, other than a representative claimant, and there is reason to believe he will be unable to pay the defendant’s costs if ordered to do so
• the claimant has taken steps in relation to his assets which would make it difficult to enforce an order for costs against him

Question 19

When will the claimant not be required to provide security for costs, even if the conditions are satisfied?

Answer 19

When, at the time of the application for security for costs, the claim appears highly likely to succeed.

Question 20

What will the court take into account when considering an application for security for costs?

Answer 20

the court must take into account

• the claimant’s prospects of success
• admissions by the defendant
• open offers and payments into court

but a defendant should not be adversely affected in seeking security merely because they have attempted to reach a settlement.

Question 21

When will security for costs be awarded to a defendant when they are bringing a counterclaim?

Answer 21

Only when the counterclaim has an independent vitality of its own and is not a mere matter of defence.

E.g. if the defendant would have brought a claim against the claimant even if the claimant had not brought a claim against the defendant in the first place.

Where a claim and counterclaim both have independent vitality and each side can establish grounds for security against the other, the court will normally make orders for security against both sides or neither side.

Question 22

How is it determined whether there is ‘reason to believe that the claimant will be unable to pay the defendant’s costs?

Answer 22

The words “there is reason to believe” have the effect of watering down the obligation. The defendant does not have to show on the balance of probabilities that the claimant company will be unable to pay.

Applicants will fail to establish this ground if they cannot adduce sufficient evidence to give the court reason to believe that the claimant will be unable to pay. Evidence giving the court reason to believe that the claimant company ‘may be unable’ etc is not enough.

Is there reason to believe that a future event will occur which will leave the claimant unable to pay the defendant’s costs if ordered to do so?

Question 23

To make an order for security for costs, the court must have regard to all of the circumstances of the case. Give some circumstances the court might take into account.

Answer 23

whether the claimant’s case is bona fide and not a sham

whether the claimant has a reasonably good prospect of success

whether there is an admission by the defendants in their defence or elsewhere that money is due

whether there is a substantial payment into court or an “open offer” of a substantial amount

whether the application for security was being used oppressively, e.g. the claimant company would be forced to abandon a claim which has a reasonable prospect of success

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

whether the application for security is made at a late stage in the proceedings.

Question 24

What actions might a claimant take on their assets with the view to evade the consequences of litigation?

Answer 24

• dissipation of assets (quickly ‘spending’ all of the
  assets)
• transfer of assets overseas
• transfer of assets into the names of third parties
• transfer of the assets to places unknown by the
  defendant.

Question 25

If the claimant has taken action on their assets with the view to evading the consequences of litigation, is the defendant required to prove that the claimant did this with the specific intention of defeating enforcement?

Answer 25

No, the defendant is not required to show that the steps were taken with the specific intention of defeating enforcement or that those steps were taken during the litigation or in contemplation of it.