Grounds for applying for Security for Costs – Part 3 of 3

The Court has an extremely wide discretion to order security for costs, which is principally governed by Part 25 of the Civil Procedure Rules. The below are examples of situations where the Court has been satisfied in awarding security for costs:

  • Where the Claimant has taken steps in relation to his assets that would make it difficult to enforce an Order for costs against it by, for example, dissipation of assets or the transfer of assets overseas or to places unknown to the Defendant (CPR 25.13(2)(g)).
  • Where there is reason to believe that the Claimant company will be unable to pay the Defendant’s costs if ordered to do so, whether the company is incorporated inside or outside Great Britain (CPR 25.13(2)(c)).
  • Where the Claimant is resident out of the jurisdiction and outside the states covered by the Brussels or Lugano Conventions or the EU’s Jurisdiction and Judgments Regulation.
  • Where the Claimant has failed to give its address in the Claim Form, has given an incorrect address (CPR 25.13(2)(e)) or has changed its address since the claim was commenced with a view to evading the consequences of the litigation (CPR 25.13(2)(d)). Note that a plausible explanation may exist to justify the Claimant’s actions and establishing an evasive desire is often difficult to prove.
  • Where the Claimant is acting as a nominal Claimant (i.e. rather than as a representative under CPR 19), and there is reason to believe that it will be unable to pay the Defendant’s costs if ordered to do so (CPR 25.13(2)(f)).
  • Where a Solicitor’s client applies for assessment of the Solicitor’s bill of costs (section 70(3), Part III, Solicitors’ Act 1974), the Solicitor can obtain an order for security for the costs of the assessment. If the client then fails to comply with the order for security, he can be debarred from contesting the assessment.

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