Nath Solicitors looks at what security for costs means, and when someone can apply for it.
In civil litigation, the general rule is that the unsuccessful party is required to pay the successful party’s costs. However, defendants may face circumstances where, if they are successful, the claimant is unable or unwilling to pay the costs, raising real concerns.
Security for costs is a procedural tool that protects defendants in these circumstances. A defendant may apply for security for costs where they believe the claimant lacks the financial resources to discharge a future costs order or is taking steps to evade such liability.
When will the court grant security for costs
The court may order security for costs pursuant to CPR 25.27 only if both of the following conditions are met:
- It is just to make the order; and
- At least one of the specific statutory grounds applies
The recognised statutory grounds
The recognised grounds include:
- Claimant is resident outside the jurisdiction: The claimant resides outside the jurisdiction and is not a resident of a state that is a party to the 2005 Hague Convention.
- Claimant company is impecunious or insolvent: The claimant is a company (or other corporate entity) with insufficient assets to meet a potential costs award.
- Claimant is evading the consequences of litigation: This includes situations where the claimant has:
- Changed address since the claim was commenced
- Failed to provide an address in the claim form, or
- Provided an incorrect address.
- Claimant is a nominal claimant: The claimant is bringing proceedings on behalf of someone else and is unlikely to be able to pay the defendant’s costs.
- Enforcement against the claimant is likely to be difficult: This may be due to the claimant hiding, dissipating, or otherwise putting assets beyond reach.
Why Nath Solicitors
Nath Solicitors offers clear guidance to defendants considering an application for security for costs. We assess whether the statutory grounds under CPR 25.27 apply, evaluate the claimant’s financial position, and advise on the evidence needed to demonstrate risk of non-payment. If you need advice or assistance, please contact us on 0203 983 8278 or get in touch with the firm online.