Company Law – Security for Costs 

November, 2005 -

Rayan Restaurant Limited v Julies Company Restaurant Limited and others, High Court, 18 April 2005, reported at Firstlaw, reference FL10920 This case concerns an application for security for costs, which is an application made to court by a defendant. The defendant asks the court to order the plaintiff to lodge money into court, assurance that the plaintiff will be able to discharge at least some of its costs, if the defendant succeeds in the trial and is awarded its costs. The court has discretion in awarding security for costs to the defendant. The court may find that the defendant does have a good chance at succeeding at the trial, but may find exceptional reasons for not granting the security. In this case, the court did not find any exceptional circumstances and so granted the order. Facts: The plaintiff failed in its action in the Circuit Court and appealed to the High Court. The second and third defendants then applied for an order for security of costs against the plaintiff, on the basis that the plaintiff could not pay any future award of costs, which would probably be made in relation to the appeal. The defendants further argued that the plaintiff had not produced evidence of any special circumstances which would persuade the court to exercise its discretion not to so order the security for costs. The plaintiff resisted the application, asserting that the perilous financial situation of the company was caused by the wrongful activity of the defendants. Held: Mr Justice Budd found that: -there was an arguable case on the part of the defendants; and -there was no evidence, other than a bald assertion, to show that the perilous financial situation of the plaintiff was due to any activity of the defendants, which would allow the court to exercise its discretion to refuse the order for security for costs sought. The security for costs was therefore granted to the defendants.



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