SFC Flashcards
What is it?
An application made by party on receiving end of the claim (e.g. defendant) if
it is concerned the party making the claim (e.g. claimant) does not have sufficient funds to meet the costs of the action should the claim be successfully defended
why made?
To make sure D will get its costs (NOT DAMAGES) back if it wins
who applies?
D against person in position of C
so can be against:
- C
- D by C for counterclai,
nature of SFC
A means of protecting the defendant OR someone in the shoes of a defendant
(Used if D has a reason to believe C does not have sufficient funds to meet costs of the action should claim be successfully defended)
DISCRETIONARY - even if requirements met, court might not make order
EFECT of SFC
Court will make an order:
- Determine the amount of security (discretionary)
- Direct the manner and time within which security is given
amount of security - how much?
Court will fix a sum it thinks just. Court will consider these factors:
- D’s likely costs
- security for whole action or to a point in time
- cover future costs and costs incurred?
- has applicant delayed?
- What is R likely to raise?
- does it impair C’s right to justice
manner of SFC
types of security:
- Payment into court by required date (most frequent)
- Payment to applicant’s solicitor
- Bank guarantee
- Undertaking to pay costs
timing of SFC
Immediately OR by specified date (normal)
Or for payment to be made in stages (e.g. by reference to particular steps in proceedings)
If C cannot pay security within X days of order = the claim is stayed until security is given.
Basis of SFC application
- grounds for application against C
- C is company and reason to believe unable to pay d’s costs
- C is resident out of jurisdiction + enforcement would not be possible/more difficult
2. exercise of discretion
3. which ground under CPR 25.14(2), which way court may sway in factors (cPR 25.13(1))?
C is company + impecunious
Applicant must show (to satisfy this ground):
C is unable to pay the amount of the likely costs
evidence:
- annual accounts at CH
- any evidence you can find to suggest C is in financial difficulties (e.g. article in industry magazine)
Jirehouse Capital v Beller
CA interpreted Re: Unisoft Group to mean that
- D may show there is “reason to believe” that C will not be able to pay, even if C company can adduce substantial evidence to the contrary
- MUST show D would not (rather than may not) be able to pay its debts when order is made against it
resident
Individual
- habitual or normal residence (apart from temporary or occasional absences)
- Q of fact
- BOP is on the applicant (usually the defendant)
Companies
- where the company’s central management and control is exercised
- Usually, but not necessarily, where it is incorporated
out of jurisdiction (and out of jurisdiction where Brussels, Lugano or Regulation state)
bc D would have difficult enforcing any costs order
Corfu Navigation v Mobil Shipping
prima facie unjust for foreign plaintiff to be allowed to proceed without making funds available (because practically it is immune from enforcement of any costs order)
exercise of discretion
CPR 25.13(1) – SECURITY will only be granted if the court “is satisfied, having regard to all the circumstances of the case, that it is just to make such an order”
Main consideration: ability of respondent to comply with any order for security for costs
also consider:
- access to courts
- amount R likely to raise
- balancing act (Olatawura v Abiloye)
- o.o.
- sir lindsay parkinson considerations
