Claim No: CL-2023-000687 - [2025] EWHC 1157 (Comm)

The court has jurisdiction to order security for costs under CPR 25.27(b)(ii) if the claimant is a body corporate and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so. This requires more than the court or the defendant being left in doubt as to a claimant’s ability to pay, but it does not require a finding on the balance of probabilities (Jirehouse Capital v Beller [2008] EWCA Civ 908).

In Chemistree Homecare Ltd v Teva Pharmaceuticals [2011] EWHC 2979 (Ch), [3], Briggs J said:

“Inability to pay means to pay when the costs fall due for payment… This calls for an assessment of what the claimants may be expected to have available for payment at the due date or dates in the form of cash or other readily realisable assets…”

In that regard, it has been held that where the claimant has illiquid assets, such that it could pay in the end but not with any degree of promptness, the jurisdictional threshold for awarding security will be satisfied: Longstaff International Ltd v Baker & McKenzie [2004] EWHC 1852 (Ch), [17]-[18]. The significance of the nature and liquidity of the claimant’s assets when determining if the “reason to believe” test is satisfied was also emphasized in Thistle Hotels Ltd v Gamma Four Ltd [2004] EWHC 322 (Ch). In this regard, there is a significant difference in approach to the position for natural persons, where difficulty in enforcement of the costs order where enforcement will ultimately succeed is dealt with by giving security for the additional costs of enforcement and possibly for any loss flowing from the delay in the form of increased cost or interest burden (Danilina v Chernukhin [2018] EWCA Civ 758, [51(7)]-[51(8)]-[52].