Unit 16 - Security for Costs and Interim Payments

Question 1

TRUE or FALSE. When the court determines a summary judgment application it may give directions as to the filing and service of a defence.

Answer 1

TRUE. CPR 24.6

Question 2

TRUE or FALSE. When the court determines a summary judgment application it may give further directions about the management of the case.

Answer 2

TRUE. CPR 24.6

Question 3

When will a court make a conditional order in respect of a claim/issue in defence?

Answer 3

Where it is possible that it will succeed but improbabe.

Question 4

24PD defines conditional order as orders requiring parties to

Answer 4

Pay a sum of money into court;

Take a specified step in relation to his claim/defence as the case may be, and which provides that it will be dismissed/struck out if he does not comply.

Question 5

What is the purpose of conditional orders for payment in summary judgment applications

Answer 5

To provide security in respect of a particularly weak defence.

Question 6

Gama Aviation establishes five principles for considerations of conditional orders for payment into court in summary judgments:

Answer 6

1. Do not impose conditions which are likely impossible for D to comply with.
2. BoP is on D to show that he is unable to comply
3. To discharge burden, D must show a lack of funds and that no such funds could be accessible.
4. Not incumbent on D to adduce evidence of resources, especially where there is no prior notice of a conditional order
5. Court not limitedto case where defence is improbable to suceed. Can also apply for historic failures to comply, doubts about good faith.

Question 7

C cannot apply for an order for interim payment before…

Answer 7

…th end of the period for filing an AoS applicable to the defendant.

Question 8

How many applications can C make for orders for interim payments.

Answer 8

More than one.

Question 9

How long before hearing must copies of notices for interim payment orders be made?

What must they be supported by?

Answer 9

At least 14 days.

Evidence

Question 10

If respondent to interim payment order app wants to rely on written evidence, he must:

Answer 10

File the written evidence;

Serve copies on every other party at least 7 days before hearing.

Question 11

If applicant for interim payment order wants to rely on written evidence in reply to R, he must:

Answer 11

File the written evidence;

Serve a copy on R at least 3 days before the hearing.

Question 12

TRUE or FALSE. Interim payments can only be ordered in lump sums.

Answer 12

FALSE. Can be in lump sums or instalments.

Question 13

What are the conditions, of which one must be present, for the court to make an order for interim payment?

Answer 13

D admits liability to pay damages or some sum of money to C;

C has obtained judgment against D for damages/sum of money to be assessed;

Satisfied that, if it goes to trial, C would obtain judgment for a substantial amount against D

C is seeking order for possession of land and court is satisfied that, at trial, D would be liable to pay C a sum of money for their occupation/use of land while claim was pending;

Where there are two or more D and order is against any one or more, court is satisfied that C would obtain judgment for substantial amount of money against one or more and all Ds are insured or covered by insurer under s151 RTA/Motor Insurers Bureau or D is a public body.

Question 14

TRUE or FALSE. courts can order interim payments that are an unreasonable proportion of the likely amount of final judgment.

Answer 14

FALSE. Must be reasonable proportion at most.

Question 15

TRUE or FALSE. Court must take into account contributory negligence re interim payment orders.

Answer 15

TRUE.

Question 16

TRUE or FALSE. Court must take into account any relevant set-off or counterclaim in interm payment orders.

Answer 16

TRUE.

Question 17

What orders can court make to adjust interim payments?

Answer 17

Order all/part to be repaid;

Vary or discharge the order

Order D to reimburse another D who made an interim payment, but only if D has a claim for contribution/indemnity and the circumstances are suhc that court could make an order for interim payment under 25.7

Question 18

TRUE or FALSE. Courts can make orders to adjust without applications IF it makes the order when it disposes of the claim or any part of it.

Answer 18

TRUE.

Question 19

Where D makes an interim payment and the amount of payment is more than his total liability under the final judgment, the court may…

Answer 19

…award him interest on the overpaid amount from the date when he made the interim payment.

Question 20

TRUE or FALSE. The fact that D has made an interim payment must be disclosed to the trial judge before all questions of liability/money owed have been agreed.

Answer 20

No - it must NOT be disclosed unless D agrees.

Question 21

TRUE or FALSE. Applications for security of costs must be supported by written evidence.

Answer 21

TRUE.

Question 22

When the court makes an order for security of costs, it will…

Answer 22

Determine the amount of security;

Direct the manner in which and the time within which the security must be given.

Question 23

The court can make orders for security for costs if

Answer 23

Satisfied that it is just to make such an order AND an enactment permits them to do so OR one of the following conditions applies:

1. C is resident out of jurisdiction but not residing in Brussels Contracting State/Lugano Convention state/Hague Convention or Regulation State
2. C is a company or other body and there is a reason to believe that it will be unable to pay D’s costs if ordered to do so;
3. C has changed address sine claim was commenced with a view to evading consequences of litigation
4. C is acting as a nominal claimant(other than rep C undewr Part 19) and there is reason to believe that he will be unable to pay D’s costs if ordered to do so.
5. C has taken steps in relation to his assets that would make it difficult to enforce an order for costs agaisnt him.

Question 24

TRUE or FALSE. Security for costs can be ordered if one of the conditions in r25.13(2) applies.

Answer 24

FALSE. Must also have regard to all the circumstances of the case, such that it is just to make the order.

Question 25

TRUE or FALSE. A defendant should not be adversely affected in seeking security merely because they ahve attempted to reach a settlement previously.

Answer 25

TRUE.

Question 26

Where C claims that an order for security will stifle the claim, who bears burden of proof?

Answer 26

C bears burden of proof of showing this to be the case, on the balance of probabilities.

C must show that it cannot provide security and cannot obtain appropriate assistance to do so.

Question 27

TRUE or FALSE. D must show, on the balance of probabilities, that the claimant company will be unable to pay, as a basis for ordering security for costs.

Answer 27

FALSE. The opening words are “there is reason to believe” which waters down the obligation.

Question 28

When considering the insolvency of a company as a basis to order costs, must the court consider future events?

Answer 28

Yes - the question is an assessment of what the company may be expected to have available for payment at that time.

Question 29

TRUE or FALSE. A liquidator bringing proceedings in the name of an insolvent company is under a duty to ensure that the company has sufficient funds to pay any costs awarded to the defendant.

Answer 29

FALSE.

Question 30

What factors must court consider re ordering security for costs against insolvent company? (7)

Answer 30

Is C’s claim in good faith?

Does C have a reasonably good prospect of success?

Is there an admission by D in their defence that money is due?

Is there a substantial payment into court?

Is the application for security being used oppressively?

Has C’s want of means been brought about by the conduct of D?

Was the application for security made at a late stage in proceedings?

Question 31

Where an order for security of costs against C company might force them to abandon a claim that had a reasonable chance of success, what is the court entitled to do?

Answer 31

Refuse to make the order.

Question 32

TRUE or FALSE. Buren lies on claimant company to show that the company’s own means are insufficient to meet an order for security, and that it is probable that no funds will be available from an outside source.

Answer 32

TRUE.

Question 33

When can the court pierce the corporate veil to deprive a company of an advantage that they would obtain in a company’s separate legal personaltiy?

Answer 33

Where a person was under a legal obligation, which he evaded, by interposing a company under his control.

Question 34

Should merits be considered in detail re C’s prospects of success?

Answer 34

Not unless there is a high degree of probability of success or failure which is evident at the time of the application.

Question 35

TRUE or FALSE.An applicant for security for costs has to show that there is a reasonable belief that the company will not be able to pay costs.

Answer 35

FALSE. More than that, but less than BoP.

Question 36

Ackerman v Ackerman lists the principles for security of costs where X moves their assets to hinder access to them:

Answer 36

C has taken steps making any order difficult to enforce.

Objective test., Not about C’s motivation, but the steps taken;

A failure to disclose assets may infer that C has put assets out of reach;

No temporal limitation as to when steps were taken;

Motive, intention and time are all relevant to the exercise of discretion;

Consider if C’s want of means has been brought about by D’s conduct;

Impecuniosity is not a ground for ordering security.

Security should not be ordered where court is satisfied that it would stifle a genuine claim.

Court can order any amount for security up to full amount claimed;

Burden is one claimant to show that he is unable to provide security, from own funds or from raising them.

Party must be candid when explaining his financial means. Inferences can be drawn.

Question 37

Applications for interim payment of damages must be supported by the following evidence:

Answer 37

(1) the sum of money sought by way of an interim payment,
(2) the items or matters in respect of which the interim payment is sought,
(3) the sum of money for which final judgment is likely to be given,
(4) the reasons for believing that the conditions set out in rule 25.7 are satisfied,
(5) any other relevant matters,
(6) in claims for personal injuries, details of special damages and past and future loss, and
(7) in a claim under the Fatal Accidents Act 1976, details of the person(s) on whose behalf the claim is made and the nature of the claim.

Question 38

A defendant cannot apply for have notice of discontinuance set aside more than…

Answer 38

…28 days after the date when the notice of discontinuance was served on him.

Question 39

Discontinuance against any D takes effect on the date when…

Answer 39

…notice of discontinuance is served on him.

Question 40

TRUE or FALSE. A claimant who discontinues is liable for costs which D incurs on or before the date of discontinuance.

What about if proceedings are only partly discontinued?

Answer 40

TRUE, unless court orders otherwise.

C only liable for costs relating to part of proceedings being discontinued and, the costs he is liable for must not be assessed until the conclusion of the rest of the proceedings, unless court orders otherwise.

Question 41

TRUE or FALSE. Liability for costs rule applies in small claims track.

Answer 41

False.

Question 42

For the purposes of Limitation Act, any new claim made in the course of an action shall be deemed to be a sparate action and to have commenced:

Answer 42

(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
(b) in the case of any other new claim, on the same date as the original action.

Question 43

In section 35 LA, a new claims means any claim by way of set-off or counterclaim, and any claim involving either

Answer 43

(a) the addition or substitution of a new cause of action; or
(b) the addition or substitution of a new party;

Question 44

An application for an interim payment of damages must be supported by evidence dealing with four key points:

Answer 44

(1) the sum of money sought by way of an interim payment,
(2) the items or matters in respect of which interim payment is sought
(3) the sum of money for which final judgment is likely to be given,
(4) reasons for believing that the conditions in rule 25.7 are satisfied

Question 45

How much can the court order by way of an interim payment and what factors must the court take into account?

Answer 45

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

The court must take into account:

(a) contributory negligence; and
(b) any relevant set-off or counterclaim.

Question 46

If the applicant wishes to rely on written evidence in reply, what must he do?

How long does he have to do it?

Answer 46

(a) file the written evidence; and
(b) serve a copy on the respondent,

at least __3__ days before the hearing of the application.

Question 47

TRUE or FALSE. An order for security of costs can only be made against a company.

Answer 47

FALSE.

Question 48

TRUE or FALSE. An order for security of costs can only be made by a claimant against a defendant if the defendant is a company.

Answer 48

FALSE. Only defendants can order security for costs.

Question 49

TRUE or FALSE. An order for security for costs can only be made against a claimant who is resident outside the jurisdiction if the defendant can also show that the claimant is impecunious.

Answer 49

FALSE.

Question 50

TRUE or FALSE. An order for security for costs can be made against a claimant who is not a company if the claimant failed to give his address on the claim form.

Answer 50

TRUE.

Question 51

TRUE or FALSE. In deciding whether an order for security for costs would stifle the Claimant’s claim, the court should not only take into account the assets of the company but should also consider funds that might be available to the Claimant from outside sources in order for the litigation to proceed.

Answer 51

TRUE.

Question 52

TRUE or FALSE. The court must make an order if the Defendant can prove that the Claimant, if unsuccessful, will be unable to pay the Defendant’s costs.

Answer 52

FALSE. It is a discretion.

Question 53

TRUE or FALSE. The court will only refuse to make an order against an impecunious claimant if it is certain that doing so would stifle the Claimant’s claim, and that claim had a good prospect of success.

Answer 53

FALSE. That is just one basis.

Question 54

TRUE or FALSE. The court can only take into account the fact that the application would stifle the Claimant’s claim if the Claimant can show that the Defendant is using the application oppressively in a deliberate attempt to prevent the Claimant from proceeding with its claim.

Answer 54

FALSE. They are separate considerations.

Question 55

When might a court order a defendant to pay a sum of money into court in respect of a claimant’s costs?

Answer 55

A conditional order made in respect of a summary judgment application brought by the Claimant.

Question 56

What is the earliest oportunity to apply for interim payment?

Answer 56

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

Question 57

When can an interim payment be sought against defendant(s) where there are two or more?

Answer 57

the following conditions are satisfied—

(i) the court is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against at least one of the defendants (but the court cannot determine which); and

(ii) all the defendants are either—
(a) a defendant that is insured in respect of the claim;
(b) a defendant whose liability will be met by an insurer under section 151 of the Road Traffic Act 1988 or an insurer acting under the Motor Insurers Bureau Agreement, or the Motor Insurers Bureau where it is acting itself; or
(c) a defendant that is a public body.

Question 58

TRUE or FALSE. An interim payment is an amount of money paid, either under a court order or voluntarily, by a defendant to a claimant, on account of any debt or damages that the defendant may be ordered to pay to the claimant.

Answer 58

TRUE.

The court may order interim payments to be made on account of any damages, debt or other sum, but not costs: r.25.1(1)(k), r25.8(1) and r25.9 make it clear that interim payments on account can be made voluntarily.

Question 59

What is the rationale for ordering interim payments?

Answer 59

It reduces the hardship the claimant may suffer by reason of any significant delay between commencement of proceedings and the assessment of damages.

Question 60

TRUE or FALSE. Interim payments can be made in small claims track cases.

Answer 60

FALSE.

Question 61

TRUE or FALSE. The court may order an interim payment on the ground that the court is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant from whom he is seeking the order.

Answer 61

TRUE.

Question 62

TRUE or FALSE. The court may order an interim payment on the ground that the claimant has obtained judgment against that defendant for damages to be assessed or for a sum of money (other than costs) to be assessed.

Answer 62

TRUE.

Question 63

TRUE or FALSE. The court may order an interim payment on the ground that the defendant is insured in respect of that claim.

Answer 63

FALSE. Being insured is neither a necessary nor sufficient ground for an interim payment.

Question 64

TRUE or FALSE. The court may order an interim payment on the ground that the defendant against whom the order is sought has admitted liability to pay damages or some other sum of money to the claimant.

Answer 64

TRUE.

Question 65

TRUE or FALSE. A court will only make an interim payment order if the claimant can show a need for the payment.

Answer 65

FALSE. No requirement for “need” is outlined in Rule 25 as a ground for an interim payment. No doubt “need” may be taken into account in deciding the amount of any interim payment which the court may order a defendant to pay; although even then the court may not order an interim payment of more than “a reasonable proportion of the likely amount of the final judgment” (CPR 25.7(4)).

Question 66

TRUE or FALSE. The reasons for believing that a ground for an interim payment being ordered exists should be included on support of an application for an interim payment of damages.

Answer 66

TRUE.

Question 67

TRUE or FALSE. The sum of money for which final judgment is likely to be given should be given in support of an application for an interim payment of damages.

Answer 67

TRUE.

Question 68

TRUE or FALSE. The amount of interim payment sought should be given in support of an application.

Answer 68

TRUE.

Question 69

Should documents in support an interim payments application be exhibited to the witness statement?

Answer 69

Yes.

Question 70

TRUE or FALSE. For interim payments, The court will order any reasonable amount that meets the claimant’s immediate needs.

Answer 70

FALSE.

Question 71

TRUE or FALSE. For interim payments, The court will order an interim payment of no more than a reasonable proportion of the likely amount of the final judgment.

Answer 71

TRUE.

Question 72

TRUE or FALSE. For interim payments, The court will order any reasonable amount that meets the claimant’s immediate needs but reduced by the amount of any counterclaim.

Answer 72

FALSE.

Question 73

TRUE or FALSE. For interim payments, The court will order an interim payment that represents the maximum realistic amount of the final judgment, ignoring any contributory negligence or counterclaim.

Answer 73

FALSE.

Question 74

TRUE or FALSE. The court must not take into account contributory negligence/counterclaims in assessing the likely amount of final judgment re interim payments orders.

Answer 74

FALSE. They must take them into account!

Question 75

TRUE or FALSE. as a general rule, a barrister may mention in her opening speech the fact that an interim payment has already been made under an earlier court order?

Answer 75

FALSE.

Question 76

TRUE or FALSE. A Claimant may not discontinue his claim if he has received an interim payment in relation to that claim.

Answer 76

FALSE.

Question 77

TRUE or FALSE. Where the Claimant has received an interim payment in relation to a claim he may only discontinue that claim only if the defendant consents and the court gives permission.

Answer 77

FALSE.

Question 78

TRUE or FALSE. Where the Claimant has received an interim payment in relation to a claim he may only discontinue that claim with the permission of the court.

Answer 78

FALSE.

Question 79

TRUE or FALSE. Where the Claimant has received an interim payment in relation to a claim he may discontinue that claim only if the defendant who made the interim payment consents in writing or the court gives permission.

Answer 79

TRUE.

Question 80

TRUE or FALSE. A party can make more than one application for interim payment.

Answer 80

TRUE, but repeat apps should not be made against the same defendant unless there is a material change in circumstances.

Question 81

What form should be used for interim payment applications?

Answer 81

N244

Question 82

TRUE or FALSE. Applications for interim payments must be accompanied by witness statements.

Answer 82

FAlse. can be affidavit or reference to statement of case.