Impecunious Plaintiffs And Security For Costs – A New Leg To The Test

INTRODUCTION

A successful security for costs application may be strategically beneficial for defendants. The rationale behind the regime is to provide protection to a defendant from the risk of an impecunious opponent being unable to meet a costs order if the claim against the defendant is unsuccessful. As summarised in our recent briefing here, security for costs applications are carefully scrutinised by the court because of the potential interference with the parties right of access to the courts.

The approach to corporate security for costs is well established. It is a discretionary relief which requires the defendant to establish that it has (i) a prima facie defence; and (ii) that the plaintiff will be unable to pay the defendant's costs if successful in its defence. In turn, a plaintiff, in defence of an application for security, may demonstrate "special circumstances" which could permit the court to exercise its discretion to refuse the application.