Training: Security for Costs

Question 1

When can you make SFC app?

Answer 1

1. When you are the Defendant; and
2. One of the CPR 25.13(2) conditions apply; and
3. It is just to make an order.

CPR 25.13(2) key conditions:
a) The claimant is resident outside the jurisdiction (but not Hague convention state)
b) The claimant is a company and there is reason to believe it will be unable to pay Ds’ costs if ordered
f) The claimant has taken steps in relation to his assets that would make it difficult to enforce an Order for costs

Question 2

Security for costs application: general administrative points

Answer 2

• Must be supported by written evidence
• Commercial Court Guide states listing time of 1 hour
• Best to raise in advance of CMC (minimises costs risk from having a separate hearing entirely about it)

Question 3

Security for costs: amount and form of costs

Answer 3

• 60-70% of costs is the rule of thumb
• generally best to set out via precedent H
• most common forms of security include: (i) payment into Court, (ii) payment into account with undertaking; (iii) parent company guarantee; or (iv) ATE with anti-avoidance clause.
• court and opponent management: whenever you set out a costs estimate, set out your assumptions. That lets you amend your estimate when the assumptions change.
• client management: be clear to the client that the sfc budget =/= your budget, including because it’s 70%. Likewise it’s not guaranteed you’ll recover these costs: costs are discretionary and will be determined at the end of the trial.
• best to take the time to make an accurate assessment.

Question 4

Preparatory work whenever taking a major procedural step (e.g. pleadings, application, etc.)

Answer 4

Review the relevant Court Guide.