GENERAL REGIME CONCERNING SECURITY FOR COSTS

Defendants can seek an order for security for costs against claimants. The purpose of such an order is to protect the defendant against the risk that the claimant might not pay the defendant's costs if the claimant eventually becomes liable, or agrees as a term of a settlement, to pay the defendant's costs (as for security for costs in the context of appeals, see discussion in the chapter on appeals at 15.41).

In fact, security for costs is aimed at meeting one of three problems: that the claimant lacks sufficient funds; that he is a shift y litigant manifestly disposed to avoid liability for costs; that the procedural chase against the claimant might be difficult because the foreign jurisdiction where he resides does not provide a dependable or straightforward system for enforcing an English costs order.

The security might take the form of a payment into court, or a banker's guarantee, a charge over property, or some other undertaking.

In Michael Phillips Architects v. Riklin (2010) Akenhead J held that the claimant's legal expenses insurance policy could not be used as security for costs because that policy might be cancelled and the payee was not the opponent but the insured, the claimant.

A claimant who fails to comply with an order for provision of security for costs will find that the action is stayed until security is given, or even that the action is struck out.

There is no general right to security for costs; grant of security for costs order is discretionary: it is never available automatically. CPR 25.13(1) states: The court may make an order for security for costs… if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order.

An impecunious claimant resident in England or in one of the EU Member States or Lugano Convention States cannot be made to provide such security simply on the basis of his inability to pay costs.