SFC

Question 1

What is it?

Answer 1

An application made by party on receiving end of the claim (e.g. defendant) if

it is concerned the party making the claim (e.g. claimant) does not have sufficient funds to meet the costs of the action should the claim be successfully defended

Question 2

why made?

Answer 2

To make sure D will get its costs (NOT DAMAGES) back if it wins

Question 3

who applies?

Answer 3

D against person in position of C

so can be against:

• C
• D by C for counterclai,

Question 4

nature of SFC

Answer 4

A means of protecting the defendant OR someone in the shoes of a defendant

(Used if D has a reason to believe C does not have sufficient funds to meet costs of the action should claim be successfully defended)

DISCRETIONARY - even if requirements met, court might not make order

Question 5

EFECT of SFC

Answer 5

Court will make an order:

1. Determine the amount of security (discretionary)
2. Direct the manner and time within which security is given

Question 6

amount of security - how much?

Answer 6

Court will fix a sum it thinks just. Court will consider these factors:

• D’s likely costs
• security for whole action or to a point in time
• cover future costs and costs incurred?
• has applicant delayed?
• What is R likely to raise?
• does it impair C’s right to justice

Question 7

manner of SFC

Answer 7

types of security:

• Payment into court by required date (most frequent)
• Payment to applicant’s solicitor
• Bank guarantee
• Undertaking to pay costs

Question 8

timing of SFC

Answer 8

Immediately OR by specified date (normal)

Or for payment to be made in stages (e.g. by reference to particular steps in proceedings)

If C cannot pay security within X days of order = the claim is stayed until security is given.

Question 9

Basis of SFC application

Answer 9

1. grounds for application against C
   - C is company and reason to believe unable to pay d’s costs

• C is resident out of jurisdiction + enforcement would not be possible/more difficult
  2. exercise of discretion
  3. which ground under CPR 25.14(2), which way court may sway in factors (cPR 25.13(1))?

Question 10

C is company + impecunious

Answer 10

Applicant must show (to satisfy this ground):
C is unable to pay the amount of the likely costs

evidence:

• annual accounts at CH
• any evidence you can find to suggest C is in financial difficulties (e.g. article in industry magazine)

Question 11

Jirehouse Capital v Beller

CA interpreted Re: Unisoft Group to mean that

Answer 11

• D may show there is “reason to believe” that C will not be able to pay, even if C company can adduce substantial evidence to the contrary
• MUST show D would not (rather than may not) be able to pay its debts when order is made against it

Question 12

resident

Answer 12

Individual

• habitual or normal residence (apart from temporary or occasional absences)
• Q of fact
• BOP is on the applicant (usually the defendant)

Companies

• where the company’s central management and control is exercised
• Usually, but not necessarily, where it is incorporated

Question 13

out of jurisdiction (and out of jurisdiction where Brussels, Lugano or Regulation state)

Answer 13

bc D would have difficult enforcing any costs order

Question 14

Corfu Navigation v Mobil Shipping

Answer 14

prima facie unjust for foreign plaintiff to be allowed to proceed without making funds available (because practically it is immune from enforcement of any costs order)

Question 15

exercise of discretion

Answer 15

CPR 25.13(1) – SECURITY will only be granted if the court “is satisfied, having regard to all the circumstances of the case, that it is just to make such an order”

Main consideration: ability of respondent to comply with any order for security for costs

also consider:

• access to courts
• amount R likely to raise
• balancing act (Olatawura v Abiloye)
• o.o.
• sir lindsay parkinson considerations

Question 16

Olatawura v Abiloye

Answer 16

court must perform a balancing act

Injustice to the claimant (from being prevented from carrying on with claim if it cannot put up security)

Injustice to defendant (in being at risk of costs of no security is provided)

Question 17

Sir Lindsay Parkinson v Triplan

Answer 17

Lord Denning - court will consider all circumstnaces of the case with particular regard to these factors:

• bona fide claim? not a sham?
• D using application oppressively (e.g. to stifle genuine claim) - for C to show this
• delay in making app
• C’s wants of means brought by D’s conduct?

Question 18

procedure for SFC

Answer 18

same as other interim apps BUT

AN - should state which grounds/enactment applies

evidence - WS should cover:

• ground
• if impecunious, exhibit statement of likely costs for trial, accounts to show C cannot pay
• factors in exercise of discretion
• amount of security required

TIMING - any time as soon as facts justifying order are known (if delay - sir lindsay parkinson)