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Summary Civil Litigation - Interim Payments and Security of Costs
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Civil Litigation Syllabus Notes on Interim Payments and Security of Costs, used in conjunction with The White Book 2020 from BPTC 2019/2020.
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Syllabus 14 Interim Payments and Security for Costs1. Security for Costs who pays for costs of a claim is not determined until the claim is
finally disposed of because usual rule; successful party recovers costs from the loser. BUT:
exceptions where there is a significant risk for Ds suffering injustice of having to defend
proceedings with no real prospect of being able to recover costs, if they are successful. An
order for security of costs can be made only against a claimant.
Usually requires a C to pay money into court as security for the payment of any costs order
that may eventually be made in favour of the D and staying the claim until security is
provided.
CPR: 25
25.12 Security for Costs
A D any claim may apply for security for his costs of the proceedings. The application must
be supported by written evidence. When the court makes such order for security, it will (a)
determine the amount of security and (b) direct the manner in which and time within
which the security must be given.
25.13 Conditions to be satisfied
The court may make an order for security for costs if—
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make
such an order; and
(b) one or more of the conditions in para (2) applies, or an enactment permits the court to
require security for costs.
The conditions are—
(a) C is— resident out of the jurisdiction but not resident in a Brussels Contracting State (a
State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or
a Regulation State, as defined in s.1(3) of the Civil Jurisdiction and Judgments Act 1982);
(b) The C is a company or other body (whether incorporated inside or outside Great Britain)
and there is reason to believe that it will be unable to pay the D’s costs if ordered to do
so;
(c) C has changed his address since the claim was commenced with a view to evading the
consequences of the litigation;
(d) C failed to give his address in the CF, or gave an incorrect address in that form;
(e) C is acting as a nominal claimant, other than as a representative claimant under Part 19,
and there is reason to believe that he will be unable to pay the D’s costs if ordered to do
so;
(f) C has taken steps in relation to his assets that would make it difficult to enforce an
order for costs against him.
25.13.1 Discretionary power to order security for costs
Two pre-requisites = just & conditions. Matters of importance:
Design of the rules is to protect a D or C placed in similar position by a CC who is forced
into litigation at the election of someone else against adverse cost consequences of that
litigation
, Syllabus 14 Interim Payments and Security for Costs
The ability of the respondent to comply with any order made. A requirement to raise
funds which they are unable to raise may amount to a breach of art.6(1) ECHR.
The likelihood of the respondent’s claim succeeding. The purpose of security is to
prevent injustice to the applicant but also need to avoid injustice to a respondent who
has a meritorious claim who would be prevented from pursuing it if required to provide
security for costs. Although it is important to try avoid a situation in which the merits
have to be considered, the overall result requires that the Order should be just.
Parties should not attempt to go into the merits of the case unless it can be clearly
demonstrated one that there is a high degree of probability of success or failure. BUT: a
C will not be required to provide security where the claim appears highly likely to
succeed.
Take into account C’s prospects of success, admissions by the D, open offers and
payments into court; but a D should not be adversely affected in seeking security
merely because they have attempted to reach a settlement.
Order is unlikely to be refused on the basis that the Ds are wealthy enough to survive
without such protection, or are protected by some other means e.g. a right of indemnity
against a third person
A c who alleges that an order for security will stifle the claim must adduce satisfactory
evidence that they do not have the means to provide security and that they cannot obtain
appropriate assistance to do so from any third party, such as a relative or friend, who might
reasonably be expected to provide such assistance if they could.
25.13.12 Condition (c): insolvent or impecunious company
The applicant must show “there is reason to believe that it [i.e. the C company] will be
unable to pay the defendant’s costs if ordered to do so”. This means D does not have to
show on a BOP that the C company will be unable to pay- “reason to believe” waters down
obligation. BUT: applicants will fail if they cannot adduce sufficient evidence to give court
reason to believe e.g. ‘may be unable’ is not enough. Ability to pay decided at the time BUT
court considers whether a future event will occur aka C company being unable to pay after
trial. So- calls for assessment of what the C company may be expected to have available for
payment at that time in the form of cash or other readily realisable assets.
A liquidator or receiver bringing proceedings in the name of an insolvent company is not
under any duty to ensure that the company has sufficient funds. If D fails to get security for
costs, the D will not normally be entitled to an order for costs payable by the liquidator or
receiver personally.
Applies to all companies, whether limited or unlimited and whether incorporated in E+W or
elsewhere – but no provision against an unincorporated association.
25.13.13 Particular discretionary factors where condition (c) relied on
Among the circumstances which the court might take into account are the following:
(1) Whether C’s claim is bona fide and not a sham- whether the claim is likely to succeed is
not a relevant factor here;
(2) Whether C has a reasonably good prospect of success;
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