Security For Costs: Is Attack The Best Form Of Defence?

There are a host of tactical considerations to weigh up when a defendant wants to do more than merely defend a claim and decides to add counterclaims to his defence. One of the biggest considerations may be the risk of a successful security for costs application by the claimant.

The purpose of the security for costs regime is well known: to ensure that a party which is on the offensive makes provision to the court’s satisfaction for any costs order if he is unsuccessful at the end of the case. The regime applies particularly to companies under s726 of the Companies Act 1995 and under the Civil Procedure Rules (CPR).

Typically orders for security for costs are made against claimants. However defendants are not immune and a claimant faced by a counterclaim made by a defendant who might struggle to pay costs if the counterclaim fails, will give careful consideration to the possibility of forcing the counterclaiming defendant to provide security for costs in the form of a payment into