Corporate Litigation And Security For Costs: Confusion Resolved

Unlike its predecessors, the Companies Act 71 of 2008 does not contain a specific provision to the effect that whenever an incorporated company is plaintiff in litigation, any defendant can demand that that the plaintiff company put up security for costs (provided that there is reason to believe that the plaintiff company is unable to pay the defendant's costs, if successful).

We mentioned in our update of January 2015 that besides the commercial value of being able to recover some of the costs of litigation, bringing an application for security for costs against a plaintiff company can also be a powerful strategic tool as it often has the effect of frustrating the litigation.