Security for Costs Flashcards
What is the purpose of a security for costs application?
A. To secure a deposit for any damages owed to the claimant
B. To compel the claimant to disclose their financial assets
C. To protect the defendant in case the claimant cannot pay their legal costs
D. To prevent the claimant from withdrawing their claim without paying a penalty
C. To protect the defendant in case the claimant cannot pay their legal costs
Explanation: Security for costs is designed to ensure the defendant can recover their legal costs if they win the case and the claimant cannot pay.
Which of the following is NOT a prescribed condition for ordering security for costs under CPR 25.13(2)?
A. The claimant has taken steps to move assets out of reach
B. The claimant is a company unable to pay costs
C. The claimant is resident outside the jurisdiction
D. The claimant has no legal representation
D. The claimant has no legal representation
Explanation: Having no lawyer is not a condition for ordering security. Relevant conditions include being outside the jurisdiction or financially unable to pay costs.
Which of the following factors would the court consider when deciding whether it is ‘just’ to order security for costs?
A. The defendant’s settlement offers
B. Whether the claimant is based in the UK
C. The number of defendants
D. The length of the claim form
A. The defendant’s settlement offers
Explanation: If the defendant has made substantial offers or admitted liability, that weighs against ordering security.
Jem Ltd, a claimant company, sues a UK-based supplier. The defendant believes Jem Ltd will not be able to pay costs if it loses. What must the defendant prove to satisfy CPR 25.13(2)(c)?
A. Jem Ltd has admitted that it cannot pay
B. There is reason to believe Jem Ltd will be unable to pay the defendant’s costs if ordered
C. Jem Ltd failed to file a defence
D. Jem Ltd is not registered in the UK
B. There is reason to believe Jem Ltd will be unable to pay the defendant’s costs if ordered
Explanation: Under CPR 25.13(2)(c), the applicant must show there is reason to believe the company will be unable to pay future costs.
A claimant based in Singapore issues a claim in England. The defendant seeks security for costs. Which of the following is most likely to prevent the application from succeeding?
A. The claimant has substantial assets
B. Singapore is a Hague Convention country
C. The claim is about unpaid invoices
D. The defendant is also outside the jurisdiction
B. Singapore is a Hague Convention country
Explanation: If the claimant is based in a state covered by the 2005 Hague Convention, the court may refuse to order security under CPR 25.13(2)(a).
The defendant applies for security for costs against a claimant who has no address listed in the claim form. Which of the following is the most relevant prescribed condition?
A. The claimant is resident outside the jurisdiction
B. The claimant failed to give an address in the claim form
C. The claimant is acting as a nominal party
D. The claimant company’s accounts show losses
B. The claimant failed to give an address in the claim form
Explanation: Failing to give an address in the claim form is one of the specific prescribed grounds under CPR 25.13(2)(e).
Which of the following best describes the court’s discretion when deciding whether to grant an order for security for costs?
A. It must grant an order if the claimant is a company in financial difficulty
B. It must refuse an order if the claimant is bringing a public interest claim
C. It must consider all the circumstances and decide if it is just to make the order
D. It may only grant an order if the claim appears fraudulent
C. It must consider all the circumstances and decide if it is just to make the order
Explanation: The court must balance fairness and assess whether it is just to grant the order, even if a prescribed condition is satisfied.
What is the most common form of security ordered by the court in a security for costs application?
A. A payment into court
B. A written promise by the claimant’s solicitor
C. A charge over the claimant’s property
C. A bond guaranteed by a third party
A. A payment into court
Explanation: The most frequent form is a cash payment into court. It ensures that money is held securely and can be accessed if a costs order is made.
Which of the following factors is most likely to reduce the chances of a successful security for costs application?
A. The claimant changed address without explanation
B. The claimant has transferred assets abroad
C. The claimant’s case has a strong prospect of success
D. The claimant is a limited company with no financial records
C. The claimant’s case has a strong prospect of success
Explanation: A strong case makes it less likely the court will see it as just to impose a financial barrier to continuing the claim.
The defendant makes a late security for costs application just before trial. The claimant is a company that recently moved assets overseas. What will the court likely consider in deciding the application?
A. Whether the company has changed solicitors
B. Whether the application was made promptly
C. Whether the claimant is an individual
D. Whether the claim form was issued within time
B. Whether the application was made promptly
Explanation: Delay weakens the defendant’s position. The court expects security applications to be made as soon as the risk is known.
