Security for Costs Appeal in UK Law

Alternatively, if the funds brought into court are to continue to be treated as those of the third party, there is no point in the exercise at all, because it will not benefit the respondent/judgment creditor.

It would be both discriminatory and unjustifiable if the mere fact of residence outside any Brussels/Lugano member state could justify the exercise of discretion to make orders for security for costs with the purpose or effect of protecting defendants or respondents to appeals against risks, to which they would equally be subject and in relation to which they would have no protection if the claim or appeal were being brought by a resident of a Brussels or Lugano state.

Returning to Part 25.15(1) and 25.13(1) and (2)(a) and (b), if the discretion to order security is to be exercised, it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. Insolvent or impecunious companies present a different situation, since the power under CPR Part 25.13(2)(c) applies to companies wherever incorporated and resident, and is not discriminatory.

Where such proceedings are bought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for costs could be made against a director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be eroded and the principle that such orders should be exceptional would be nullified.

12 but whether the evidence is sufficient in any particular case to satisfy the judge that there is a real risk of serious obstacles to enforcement, will depend on the circumstances of the case.

Delay in making the application is one of the circumstances to which the court will have regard when exercising its discretion to order security. The court may refuse to order security where delay has deprived the claimant of the time to collect the security, or led the claimant to act to his detriment or may cause hardship in the future costs of the action.

What the Master of the Rolls was saying was that there is a discretion to award security for costs even in cases which arise out of the same subjectmatter. But if the counterclaim is a defence and nothing more then normally the discretion should not be exercised in favour of ordering security.