Governed by Part 25.12 of the Civil Procedure Rules, this rule allows the defendant to make an application to the court against the claimant, requiring the claimant to pay a sum of money into court. The application is generally made at the first case management conference, and is supported by a witness statement. A late application may be grounds to refuse the order.
The amount of the order is “such as the court thinks just in all the circumstances.” However in order to assist the court, the defendant is advised to submit a statement of costs. The court may order either security for all costs related to the action or payment up to a certain milestone in the case.
While a discretionary relief, the defendant must satisfy a two-part test:
Rule 25.13(1)(a) provides that the court can make an order under rule 25.12 if satisfied, having regard to all the circumstances of the case, that it’s just to make the order.
One or more the conditions in Rule 25.13(2)(b) are met or that an enactment permits the court to require security for costs.
The conditions are
a)(i) –(ii) The claimant is resident out of the jurisdiction; but not resident in a Brussels Contracting State, a Lugano Contracting State or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982;
(b) The claimant 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 defendant’s costs if ordered to do so;
c) The claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;
(d) The claimant failed to give his address in the claim form, or gave an incorrect address in that form;
(e) The claimant 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 defendant’s costs if ordered to do so;
(f) the claimant has taken steps in relation to his assets that would make it difficult to
enforce an order for costs against him.
The impecunious company, defined in (b) above, places the burden on the defendant to prove that the Claimant will be unable to pay the defendant’s costs. This is achieved by comparing the company’s assets against the potential legal costs should the claimant lose.
It is a must consideration for any Defendant.