Security For Costs
It is possible in some civil claims for a defendant (or possibly a defendant to a counterclaim) to be met with a claim made by a company in circumstances where the defendant has a real concern that if it is successful (either in its defence or in any counterclaim), and the usual rule that the successful party pays the losing party’s costs applies, the claimant will not be able to pay its costs.
This can cause real concerns for a defendant and may place undue pressure on the defendant to pay the claimant or settle the claimant’s claim as the only alternative may be to defend the claim which may result in costly litigation with little prospect of recovering costs even if successful.
The court’s rules on security for costs including the criteria that the court will apply to any application for security for costs are set out in rule 25 of the Civil Procedure Rules 1998.
Security for costs may be a consideration if:
a) You are met with a claim by a company and you suspect that the company would not be able to pay your costs if it were ordered to do so;
b) You are the claimant in a civil claim and are met with a counterclaim by a defendant that introduces issues that go beyond the claim and you consider that the counterclaimant would be unable to pay your costs if ordered to do so; or
c) You are a company intending to take proceedings (or to pursue a counterclaim) and you may face difficulties in paying any adverse costs order.
For further information or to discuss this matter please contact Philip Vickers.