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Summary SGS 9 Civil Litigation LPC (Injunctions) Lecture, SGS and Solution Notes and Exam Structure (High Distinction)
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SGS 9- Civil: Applications for- Security for Costs, IMI, IPI, FIApplication for Security for Costs CPR 25
- This is a court order for the claimant to provide security for the defendant’s costs to cover the cost of they lose at trial.
Who can apply
- Generally only made by a defendant against a claimant 25.12(1)
Who against
- A claimant
- A defendant in the case of a counter claim
- A defendant in respect of a Part 20 claim made by the defendant against the third party
- The claimant will then be ordered to pay a sum to the court or provide security (bank guarantee) or payment to
defence solicitor or undertaking to respondent to pay their costs in the proceedings
Grounds
- Largely contained in CPR 25 Par II
- Court can also award for failing to comply with a rule or PD or protocol 3.1(3) and (5)
- Court may also award by making a conditional order CPR 24
1. The applicant must establish it is just to make the order CPR 25.13(1), and
2. The applicant must establish one of 6 grounds set out in CPR 25.13(2): and
Ground under 25.13(2)(a) (for claims issued after 31-12-2020 EU transition)
i) Claimant is resident out of the jurisdiction; but
ii) Not resident in a state bound by the 2005 Hague convention
- Resident means where the individual normally resides or where the a company’s central management and control is
exercised.
- Out of jurisdiction- the court will need to be satisfied that enforcement would not be possible or would be more difficult as
the person is located in a country outside of the Hague Convention.
Ground under 25.13(2)(c)
- The claimant is a company or other body (incorporated inside or outside GB) and there is reason to believe that it will be
unable to pay the defendant’s costs if ordered to do so
i) Impecunious individual vs Impecunious company, it is only possible to bring against a company under this limb not an
individual
- Security also cannot be obtained against an unincorporated association.
ii) The applicant must show that the company is unable to pay and the amount of likely costs
Ground for application against a person who isn’t the claimant under 25.14(2)
Possible if:
i) The person has assigned the right to the claim to the claimant; or
ii) That person has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or
property which the claimant may recover in the proceedings and that person is a person against whom a costs order
may be made.
Ground for application under an enactment
- It is possible to apply for SfC if an enactment permits this CPR 25.13(1)(b)(ii) such as s.70(6) Arbitration Act 1996.
Exercise of discretion
- The court is not obliged to give security of costs as it is an equitable and discretionary remedy.
- Court must take into account how much the respondent (claimant) is likely able to raise.
- Security will only be granted if the court “is satisfied, having regard to all the circumstances of the case, that it is just to make
such an order” CPR 25.13(1)(a)
- However, the court cannot deny a claimant’s right of access to justice which could breach Article 6 ECHR:
1
, SGS 9- Civil: Applications for- Security for Costs, IMI, IPI, FI
Olatawura v Abiloye 2002- the court must carry out a balancing act between the claimant and defendant, the
harder it is for the respondent to raise the money; the more compelling an application for security of costs.
3. The applicant must then establish further grounds in the Parkinson case:
Sir Lindsay Parkinson v Triplan 1973 factors:
1. Whether the claimant’s claim is bonda fide and not a sham
- Has the claimant a reasonably good prospects of success? If yes then likely no security for costs awarded.
- Has the defendant made any admissions with regard to liability? If yes then likely no security for costs awarded
2. Whether the defendant is using the application oppressively eg to stifle a genuine claim
- If a claim is genuine, the court will be reluctant to make an order which prevents the claimant pursuing the claim
- It is for the claimant to show he would probably be stifled
- Can the claimant raise money from other sources?
3. Delay in making the application
- An application should be made promptly and as soon after the facts that justify the order are known.
- Equitable maxim: delay defeats equity
4. Whether the claimant’s want of means has been brought about by D’s conduct
- Has D been responsible for C’s financial difficulties?
- Equitable maxim: come to equity with clean hands.
5. Whether the court would be dealing with the case justly and at proportionate cost to make the order CPR 1
Amount and type of security CPR 25.12(3)
When the court makes an order for SfC, it will:
- Determine the amount of security; and
- Direct:
- The manner in which; and
- The time within which security is given.
Amount (discretionary)
- (typically around 75%-80% of what d would be expected to recover at trial Sweetman v Shepherd)
- The amount is entirely discretionary and the court will fix a sum it thinks fit CPR 25.12(3)
- The court will consider:
The amount of D’s likely costs;
The security may be given for the whole action/to a certain point in time
If the amount can cover costs incurred and future costs
Whether a deduction may be made for detailed assessment or the possibility of settling
Equitable maxims such as delay which may reduce the security costs.
Type
- Payment to the court
- Payment to the applicant’s solicitors
- Bank guarantee
- Undertaking to pay costs
Time
- Usual for security to be ordered to be paid immediately or by a specified date or in instalments throughout the claim.
Procedure for an on notice application for security for costs
- Application for security of costs can be made at any time but it should be made promptly as soon after the issue arises and is known
to avoid delay defeating equity
1. Submit - Bundle of documents, Draft order, Skeleton arguments;
- Evidence- cover grounds for application, Lindsey factors, likely cost of trial, amount of security, factors
in the exercise of discretion; and
2
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