Written by Civil procedure – costs – litigants in person
A defendant who wants a claimant to pay money into court as the price of continuing a claim must apply to the court and clear a two-stage test. Yet demands for “security for costs” are sometimes brandished in correspondence to frighten unrepresented claimants into dropping viable claims. The rules draw a hard line between a genuine application and an empty threat – and for an individual claimant, being poor is not, on its own, a ground at all.
Snapshot
Security for costs is money a claimant can be ordered to pay into court, or otherwise secure, as a condition of pursuing a claim, so that a successful defendant is not left with an empty costs order. Only a defendant can apply, and the court must be satisfied both that the order is just and that one of a closed list of conditions applies. For an individual claimant, poverty alone is not a condition. A solicitor’s letter demanding money is not an application; only a formal application supported by written evidence is. And if security is ordered and not given, the claim is exposed to a stay or strike-out – which is why the response, not the threat, is where a litigant in person should concentrate.
Reader note: this article is public-interest commentary and practical legal education. References to the tactical use of costs demands are criticism and analysis of litigation practice in general. They should not be read as findings of misconduct or professional wrongdoing by any named person, firm or public body unless established by a competent court, tribunal, regulator, ombudsman or official decision.
What security for costs actually is
Security for costs is a court order that requires a claimant to put up money – usually by paying it into court – as a condition of continuing the claim. If the claim later fails and the claimant is ordered to pay the defendant’s costs, the fund is there to meet that liability. An order for security for costs is one of the interim remedies listed in the Civil Procedure Rules, and it is the defendant to a claim who may apply for one; a defendant who brings a counterclaim is treated as a claimant for these purposes and can face the same kind of application on the counterclaim.
The rationale is the costs rule that sits underneath almost everything in English civil litigation: if the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. A defendant forced to spend money defeating a claim, against a claimant who could never pay that bill, is exposed in a way the rules consider unfair. Security is the compromise: the claim may proceed, but the costs risk is covered in advance.
“Pay into court or stop your claim” captures the practical effect, but two features matter. The money is not a fine or a fee: it remains the claimant’s unless a costs order is later made against them. Nor does the order decide the claim – a claimant who gives security and wins recovers both.
The two-stage test and the closed list
The court may make an order for security for costs only if two things are true: first, that having regard to all the circumstances of the case it is just to make the order; and second, that an enactment permits the court to require security, or one or more of a list of conditions set out in the rule applies. Both stages matter. A defendant who cannot point to a condition fails at the gateway, however sympathetic the court might be to the costs risk.
The conditions are six: the claimant is resident out of the jurisdiction; the claimant is a company or other body, wherever incorporated, and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so; the claimant has changed address since the claim was commenced with a view to evading the consequences of the litigation; the claimant failed to give an address in the claim form, or gave an incorrect one; the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe they will be unable to pay; or the claimant has taken steps in relation to their assets that would make it difficult to enforce a costs order against them.
These provisions now sit in Section VI of the restated Part 25, rules 25.26 to 25.29; older correspondence and judgments quote the same regime under its previous numbering, rules 25.12 and 25.13. A demand that cites the old numbers is not necessarily bogus for that reason alone. Check the substance against the current rule, not the citation.
Key distinction. Meeting a condition is only the gateway. The court must still be persuaded that the order is just in all the circumstances – and that discretion is where most genuine applications are really fought.
Why an individual claimant’s poverty is not a ground
Read the six conditions again and notice who they catch. Only two of them are about inability to pay, and each is confined: one applies to a company or other body, the other to a nominal claimant suing for someone else’s benefit. No condition makes an individual claimant’s lack of means, standing on its own, a ground for ordering security. An impecunious individual who lives in England and Wales, gave a correct address in the claim form and has not shuffled assets out of reach does not meet any of the six conditions, however little money they have.
That is a deliberate feature of the scheme: the impecuniosity of a corporate vehicle is treated as a risk choice its controllers made; the poverty of a human being is not. A solicitor who tells an unrepresented claimant that being unable to pay costs “will” lead to a security order is overstating the rule, and a claimant who knows the closed list can say so, calmly and in writing.
Residence out of the jurisdiction is different: it is a condition, and it catches individuals too. But it still only opens the gateway – the court must be satisfied, having regard to all the circumstances of the case, that the order is just. There is also a wider protection built into case management: when exercising its case management powers, the court must have regard to the fact that at least one party is unrepresented.
The threats a litigant in person can ignore
A letter is not an application. Until a court orders security, no money is payable and the claim continues exactly as before. A demand to pay a five-figure sum within fourteen days, “failing which our client will apply”, is positioning. It may precede a genuine application, and it may simply be pressure. Either way, the letter itself changes nothing; treating it as an order is the mistake it is designed to produce.
The genuine article has a recognisable shape. An application for security for costs must be supported by written evidence. It is made by filing an application notice that states what order is sought and briefly why; the notice, with the supporting evidence, must be served as soon as practicable and at least three days before the court deals with it; and if the respondent does not attend, the court may proceed in their absence. Anything without that shape – no sealed application notice, no evidence, no hearing date – is correspondence, and can be answered as correspondence.
Key distinction. Ignore the bluff; never the application. A real application with a hearing date must be answered, because the court can decide it on the defendant’s evidence alone.
The demands that can be met with a measured reply, then, are the vague reservation of rights, the demand pitched at a condition that cannot apply to you, and the suggestion that paying up voluntarily is the only alternative to dropping the claim. None of those is a court order; none obliges you to do anything except keep litigating properly.
Amount, discretion and the stifling argument
Where the court does make an order, it must determine the amount of security and direct the manner and the time within which it must be given. Payment into court is the manner the rules expressly provide for, and money paid into court following such an order stands as security for any sum payable by the paying party to any other party in the proceedings. The amount is not the defendant’s whole budget as of right: it is a judicial assessment, and where the parties’ costs budgets have been approved or agreed, the Court of Appeal has treated those budgets as the appropriate reference point for fixing the figure.
Against a company, the gateway test is evaluation, not proof. The court needs only “reason to believe” that the company will be unable to pay – not satisfaction on the balance of probabilities – and the Court of Appeal in Sarpd Oil International Ltd v Addax Energy SA held that a company which refuses to say anything about its finances hands the court that reason: deliberate reticence is itself evidence. For the cooperative claimant the lesson cuts the other way: a candid, evidenced picture of your position is usually more protective than silence.
The discretion stage is where the justice of the order is argued: the strength of the claim, the conduct of the parties, and whether the application is itself a tactical device. One argument has particular force for the genuinely impecunious, and it is the stifling argument: that ordering security in the sum sought would kill a genuine claim that the claimant cannot otherwise fund. But the stifling case must be proved, not asserted – in Sarpd the Court of Appeal ordered security expressly “in the absence of any evidence that the claim would be stifled”, which places the burden squarely on the claimant to show, with documents, that the money cannot be raised.
One more protection matters in a large class of cases. In personal injury claims and the related claims to which qualified one-way costs shifting applies, costs orders against a claimant can generally be enforced only up to the aggregate of the damages, costs and interest recovered – so the defendant’s realistic enforcement exposure is limited by rule, and that is a point to put squarely before the court on any security application.
If security is not given, and how to respond
If security is ordered and not given within the time directed, the claim cannot simply carry on: the court has power to stay the whole or part of proceedings, the court may strike out a statement of case for failure to comply with a court order, and a sanction imposed for non-compliance has effect unless the defaulting party applies for and obtains relief, on an application that must be supported by evidence. The order is therefore the beginning of a problem, not the end of one: a claimant who cannot pay must engage with it immediately, by applying to vary the amount, offering security in a different form, or seeking more time – before the deadline, not after it.
Work through the six conditions against your own position. If none applies, your evidence should say so in terms, condition by condition.
File a witness statement addressing your means, the merits and the amount sought. Silence is the one response that always helps the other side.
If paying would kill a genuine claim, prove it: bank statements, accounts, and what you have actually tried to raise and from whom.
Above all, diarise the hearing and attend it. An application answered with organised evidence gives the court material on which it can refuse the order or cut it down; one met with silence leaves the defendant’s evidence unanswered – and silence, as Sarpd shows, is itself treated as part of the picture the court assesses.
Source anchors
These anchors support the procedural framework described in this article. They do not, on their own, prove any contested allegation about conduct in an individual case.
The security for costs regime: who may apply, the two-stage test and the six conditions.
The court’s case management powers, including conditional orders, payment into court, stays and strike-out.
How applications are made: the application notice, supporting evidence, service and hearings.
The general rule that the unsuccessful party pays costs, and qualified one-way costs shifting.
The closing point
Security for costs is a gateway with a lock, not a wall. For most individual litigants in person the lock does not even fit: poverty is not a condition. Where a condition genuinely applies, the real fight is over discretion, amount and evidence – and the claimant who answers with evidence, not fear, is the one the rules protect.
Security for costs decision point
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