What is Security for Costs?

Security for costs is a court order requiring a party – usually the one starting a claim or legal action – to either pay money into court or provide a guarantee via a bond or insurance policy for the other side’s possible legal costs in the dispute.

The idea behind this order is that sometimes, a respondent in a claim has no choice but to defend an action that could be spurious or without basis. Defending a claim is expensive, and the process of security for costs reassures the defendant that their expenses will be met if they are successful.

In specific circumstances, such as where the Claimant is resident abroad or does not appear to have much, if any, financial resources behind it in England and Wales, an application for security for costs can be made by the Defendant to ensure that if the Defendant successfully defeats the claim, they can recover their legal costs. An application for Security for Costs must comply with CPR Part 25.12 of the Civil Procedure Rules, and the court will consider each application on its own merits.

A Defendant applying for security for costs must meet one of the six grounds set out in Rule 25.12, and the court must also be satisfied that, given all the facts and circumstances of the case, ordering security is just. The defendant cannot use this type of application to prevent a genuine claim from proceeding, and the court, when considering this type of application, is always conscious to balance the Defendant’s position but also to not prevent a Claimant from having access to justice.