Generally, the question of who pays for the costs of a claim is not determined until the claim is finally settled, by trial or other means. This is because usually, the winner recovers costs from the loser, so the outcome is not known until the end of the process. But sometimes there have to be exceptions, in which case an order can be made for ‘security of costs’. Litigation partner Paul Gordon explains how a recent decision may mean this procedure is more widely available.
If a defendant is concerned that the claimant, should he lose, would not be able to pay, he can apply for an order that the claimant provides security for his costs. If the order is made, the claimant must pay a percentage of the other side’s estimated costs into court before his case can proceed.
Security cannot be applied for in every case: strict criteria have to be met and even then it is by no means automatic. The financial status of the claimant is often subject to dispute and may involve a detailed analysis of his accounts.
Applications for security tend to be relatively expensive, and also fairly uncertain in all but the clearest-cut cases because of the level of judicial discretion applied. They are more usual in high-value cases where the defendant will have to invest considerable sums in defending the claim.
Security is an application that only a defendant can make. However, the courts have now affirmed (in Nicholas G Jones v Environcom Ltd and others 2009) that a claimant can apply in respect of a counterclaim made against him where he is technically a defendant to that claim.
In the present economy, parties are more likely to consider security applications, which will become more significant in any litigation.
Partner Paul Gordon worked for a number of London firms and joined us from the City office of a top Scottish law firm. As a specialist litigator, Paul has acted for major clients including Kohler Mira, American Express, Morgan Stanley, GE Capital, and PizzaExpress. He has wide experience in financial services and banking disputes as well as shareholder and partnership matters, commercial supply, agency distribution and franchise contracts. He frequently acts in construction disputes and advises on intellectual property issues. paul.gordon@willans.co.uk
If you need clear and pragmatic legal advice, we’re here to help so please get in touch.
Our legal experts have been busy sharing valuable expertise in their first series of free webinars for employers, and businesses across the county who missed the live events can now…
The Coronavirus Business Interruption Loan Scheme (CBILS) has thrown a much-needed lifeline to businesses experiencing cashflow difficulties as a result of the coronavirus outbreak. 17 December 2020 Today, Rishi Sunak…
The global outbreak of coronavirus (COVID-19) and the government’s resulting emergency measures have had severe implications for many businesses. Read on for answers to some frequently-asked questions on corporate &…
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL cookies.
This website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
We use performance cookies such as Google Analytics to help us count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The cookies collect information in a way that does not directly identify anyone. For more information on how these cookies work, please see our cookie policy.