Expert Witness Journal Issue 63 October 2025 - Flipbook - Page 65
Security For Costs In Civil Litigation:
Principles, Recent Developments, and
Strategic Considerations
by Giles Tagg & Gus Palmann
The basics
Key principles established by case law
Security for costs is a valuable procedural tool that
ensures that defendants are not unfairly burdened
by the costs of defending speculative or weak claims.
If utilised correctly, it can also provide a strategic
advantage. This article gives a general overview
of the mechanisms, principles and developments
concerning security for costs applications, as well as
their strategic use.
Several landmark cases have shaped the principles
governing security for costs:
1.
The courts must avoid using security for costs
oppressively and should consider whether
the claimant’s 昀椀nancial di昀케culties were
caused by the defendant. Although prospects
of success are relevant, a court should not,
however, consider the merits of the case in
any detail when deciding whether to grant
security for costs, unless either party can
demonstrate a strong probability of success.
(Keary Developments Ltd v Tarmac Construction
Ltd (1995)).
2.
Residence outside the jurisdiction alone is
insu昀케cient to justify a security for costs order;
there must be a real risk of enforcement
di昀케culties. Proportionality and access to
justice must be balanced against protection
of defendants. (Nasser v United Bank of Kuwait
(2001)).
3.
An ATE insurance policy may provide adequate
security. The Court of Appeal has held that
ATE policies can satisfy security requirements
particularly if they contain anti-avoidance
provisions and o昀昀er su昀케cient protection. This
is very much a developing area of law, with
an increasing maturation of the ATE policy
market. (Premier Motorauctions Ltd v PwC LLP
(2017)).
Why does security for costs exist?
4.
The rationale behind security for costs is rooted
in fairness and risk mitigation. Defendants, unlike
claimants, do not choose to be involved in litigation.
If they are forced to defend a claim, they should not
be left exposed to the possibility of winning but
being unable to recover their costs. It is designed to
protect defendants from the risk of non-payment of
costs, especially where the claimant is impecunious,
resides outside the jurisdiction, or has taken (or
would otherwise be likely to take) steps to frustrate
enforcement.
If there is a reasonable possibility of indemnity
costs being awarded, the amount of security
should re昀氀ect that. The courts have also
reinforced the importance of full and frank
disclosure by claimants opposing security
applications. (Danilina v Chernukhin (2018)).
Recent developments
What is “security for costs”?
An application for a security for costs order is a
procedural device in civil litigation designed to
protect defendants from the risk of incurring
irrecoverable legal costs. It allows a defendant to
request that a claimant provide 昀椀nancial security
(typically a payment into court or a guarantee, or
increasingly an after the event (ATE) insurance
policy) ensuring that if the defendant successfully
defends the claim, it can recover its legal costs. This
tool is particularly relevant when there are concerns
about the claimant’s 昀椀nancial standing or its ability
to satisfy a costs order.
How will the court decide the application?
The court will exercise its discretion, considering
factors such as the claimant’s 昀椀nancial position,
residence, conduct, and potentially the merits of the
case. If granted, the proceedings may be stayed until
the security is provided.
EXPERT WITNESS JOURNAL
ATE insurance and litigation funding Courts have
become more critical of ATE policies, scrutinizing
their terms, exclusions, and enforceability. Recent
cases emphasize the need for anti-avoidance clauses
63
OCTOBER/NOVEMBER 2025
