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Defending a claim - Security for costs


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8 July 2012

Matters to consider when being sued.

If a claim has been issued against you its important to consider the financials of the Claimant in particular whether or not the Claimant can pay any award for costs agaisnt you if it loses.

The rules governing applications for security for costs are contained within CPR 25.12 to 25.15. You ordinarily will seek security under CPR 25.15(2)(c) that there is, it is said, reason to believe that the Claimant will be unable to meet an order to pay the Defendant's costs if ordered to do so and such an order is just.

An application for security must be supported by written evidence: CPR 25.12(2). That evidence must satisfy the court that: (1) having regard to all the circumstances of the case, it is just to make an Order; and (2) one or more of the conditions in CPR 25.13(2) applies; or (3) an enactment permits the court to Order security. The amount of security should also be addressed. It is settled by high authority that the following factors are considered by a court before making an order for security for costs: (1) the merits of the claim and the likelihood of success (without holding a mini trial); (2) whether the claim is bona fide and not a sham; (3) whether the application for security was being used oppressively so as to stifle a genuine claim; (4) whether the defendant's want of means was brought about by the claimant's actions and or inactions; and (5) whether the application was made late: (6) whether an order for security will stifle a genuine claim: Fernhill Mining Limited -v- Kier Construction Limited [2000] L.T.L. January 27, 2000; Porzelack KG -v- Prozelack (UK) Limited [1987] 1 WLR 420; Swain -v- Hillman [2001] 1 All ER 91; Sir Lindsay Parkinson & Co -v- Triplan Limited [1973] Q.B. 609 CA; and Spy Acadamy Limited -v-Sakar International Inc [2009] Civ 985.

It is also settled by high authority that security will not be ordered in favour of a Defendant where: (a) it is highly likely that the claim will succeed at the time of the application: Keary Developments Limited -v- Tarmac Construction Limited [1995] 3 All ER 534; Al-Koronky -v- Time Life Entertainment Group Limited [2006] EWCA Civ 1123; (b) it may not be just to order security against a company which has no assets but which can meet the costs out of income: Kim Barker Limited -v- Aegon Insurance Co.(UK) Limited (1989) The Times, 09 October 1989. (c) such an order would deprive the claimant of his right to access to court (and infringe his rights under the ECHR); Al-Koronky -v- Time Life Entertainment Group Limited [2006] EWCA Civ 1123; Person -v- Naydler [1977] 1 WLR 899. (d) Delay in filing an application for security can of itself be a reason for refusing an order for security: PR Records Limited -v- Vinyl 2000 Limited [2002] EWHC 2860.

If you are being sued, security is a must tactic. If you are successful then it will bring the claim to an end. Its worth the risk.

Michael Coyle is a Solicitor Advocate and can be contacted at

Lawdit Solicitors is a commercial law firm based in Southampton

About the Author

Lawdit Solicitors offer services and advice for litigation, commercial contracts, Intellectual Property and IT legal agreements. We are experts in commercial law with a heavy emphasis on Intellectual Property, Internet and e-commerce law. Lawdit is a member of the International Trademark Association, the Solicitors' Association of Higher Court Advocates and we are the appointed Solicitors to the largest webdesign association in the world, the United Kingdom Website Designers Association.

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Article Published/Sorted/Amended on Scopulus 2012-08-15 12:47:36 in Legal Articles

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