Security For Costs
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23 July 2009
Generally, the question of who pays for the costs of a claim is not
determined until the claim is finally disposed of, whether by consent,
interim process or trial. This is because the usual rule is that the
successful party recovers costs from the loser and the outcome on the
merits is only known when judgment is obtained. It is for this reason
that the parties are not generally allowed to anticipate the eventual
costs order by asking for interim orders that their opponents provide
funds as security to pay for the costs of the action. Despite this, it
is accepted that there have to be exceptions for cases where there is a
significant risk of defendants suffering the injustice of having to
defend proceedings with no real prospect of being able to recover costs
if they are ultimately successful.
An order for security for costs can only be made: (a) before judgment,
or (b) for the costs of an appellant, or of a respondent to an appeal
who also appeals. Once security is given it may be retained, subject to
the court’s discretion, pending an appeal. An order for security for
costs usually requires the claimant to pay money into court as security
for the payment of any costs order that may eventually be made in
favour of the defendant, and staying the claim until the security is
provided. On the application three matters arise:
(a) whether there are grounds for ordering security for costs;
(b) if so, whether the court's discretion should be exercised in favour of making the order; and
(c) if so, how much security should be provided.
Each of these three matters will be considered after first looking at
the procedure for making the application and the capacity of the
respondent to the application.
Riyaz Jariwalla is a solicitor who specialises in intellectual property law and commercial litigation.
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Article Published/Sorted/Amended on Scopulus 2009-08-13 00:33:47 in Legal Articles