Who and against whom can Security for Costs Applications be made? Part 2 of 3

More often than not, it is those defending litigation who will apply for security for costs, however, security may be granted to a Claimant that is faced with a counterclaim (and is therefore a Defendant in respect of the counterclaim) or a Claimant who becomes a Respondent on an appeal.

As a general assumption in this and our subsequent legal updates, it is the Defendant that is the party bringing security for costs application and the Claimant that is the Respondent to the application.

There are three main types of application for security for costs:

  1. Applications against Claimants and Appellants;
  2. Applications by Defendants against someone other than the Claimant (i.e. a third party); or
  3. Applications against any party who has failed to comply with a rule, practice direction or relevant pre-action protocol. These applications may be initiated by the Court or by application by a party in the litigation.

Note that security for costs can only be sought in respect of actual litigation or arbitration proceedings and is not available pre-action. Unfortunately, it remains that there is little protection for Defendants in respect of pre-action costs, other than to tactically down tools and invite the Claimant to issue or back away.

Note also that, for fear of restricting access to justice in respect of lower value or straighforward claims, security for costs is not available for claims which has been allocated to the small claims track (i.e. under £10,000).

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