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5th September 2018
To counterweight the risk arising in situations where a defending party in proceedings (whether a defendant or a claimant if there is a counterclaim) may not be able to recover its costs even if it is successful, a party may apply for an order for security for costs.
Security for costs is particularly important for defendants. Unlike claimants, who have a choice about whether they will get involved in proceedings and incur the costs involved, defendants have no such choice. Unless a defendant admits a claim, or the claim is discontinued, or the defendant can get the action determined or settled early, he is forced to defend the claim and incur the costs of doing so.
This mechanism offers protection to such parties as it usually requires the opposing party to pay an amount of money into court, which corresponds to the amount of costs expected to be incurred in the action.
Security for costs should also be considered as a tactical weapon. The warning of an application for security for costs, followed by an application, can turn a claimant's attention on the merits and cost of his case.
In order for the Court to grand an order for security for costs, the following conditions must be satisfied:
The decision to grant or refuse such an order rests at the discretion of the Court.