Security for costs

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Security for costs

Summary

This post aims to provide a broad overview of the main issues to consider when applying for, or resisting, a security for costs application.

While a plaintiff has the choice to assume the risk of not recovering costs in a proceeding, a defendant is usually an involuntary party and does not have the choice of assuming the risks.

A defendant served with a commercial proceeding issued by a corporate plaintiff should immediately consider applying for security for their costs of defending the proceeding. Such an application may provide protection from a costs award being made in the defendant’s favor which is not recoverable because the plaintiff has no assets in its name.

The court has an unfettered discretion to order or refuse security for costs. The skill of running or opposing an application, which are often 'line-ball', lies in analyzing and addressing the numerous discretionary factors to persuade the judge that your application should succeed.

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The full article (4355 words) considers:

  • Jurisdiction

  • Before applying for security

  • Can only a defendant obtain an order for security?

  • Question 1: Threshold test to enliven jurisdiction

  • Question 2: Discretionary factors

  • Plaintiff’s prospects of success

  • Impecuniosity as a ground for security

  • Plaintiff’s impecuniosity caused by defendant

  • Whether the Plaintiff occupies the position of a Defendant

  • Stultification of the proceeding

  • Delay in applying for security

  • Whether security would be oppressive

  • Injustice to the Plaintiff

  • Means of those who stand behind the litigation

  • Corporate plaintiffs

  • Seeking security from a natural person

  • Quantum of security

  • Warnings about costs quantification

  • Alternatives to security

  • Opposing a security for costs application

  • Release of security held in court fund 

  • Other useful resources regarding security for costs