Security for Costs: Making the Other Side Put Money Up Front

If you are defending a claim brought by an offshore shell company, an insolvent business, or a claimant whose only address is a postbox abroad, you face a particular risk: you might win, secure a costs order in your favour, and still never see a penny. A costs order is only as good as the assets behind it. Security for costs is the tool that closes that gap — an order that the claimant pay money into court, or provide a bank guarantee, before the case goes any further, so there is a fund to draw on if the defence succeeds.

The power exists in every common law jurisdiction, but the rule numbers and statutory hooks differ — and in England the rules were renumbered on 6 April 2025, so older guides now point to the wrong provision. This guide explains the purpose, the standard grounds and the mechanics across three jurisdictions: Hong Kong, Singapore and England & Wales. It covers how much security a court will order, how after-the-event (ATE) insurance and litigation funding change the picture, and why timing matters.

What security for costs does — and who it bites

Security for costs protects a defendant's ability to recover its costs where there is a real risk the claimant will not pay an adverse costs order. It does not test whether the claim is good or bad; it asks a narrower question about the claimant's ability to satisfy a costs order if the claim fails.

Two points are easy to get wrong. First, the order is generally available against a claimant, not against a defendant who is simply defending. A defendant has been dragged to court and is not putting the claimant to the expense of bringing a claim. Second, the exception proves the rule: a defendant who brings a counterclaim steps into the shoes of a claimant on that counterclaim and can be exposed to a security application in turn. In England, the power also reaches certain non-parties — for example a commercial funder, or someone who has assigned the claim — under a separate rule discussed below.

The standard grounds

Across all three jurisdictions the recurring gateways look similar:

The claimant is ordinarily resident out of the jurisdiction. The concern is the practical difficulty and expense of enforcing a costs order abroad.
The claimant is a nominal claimant — suing for someone else's benefit — and there is reason to believe it will be unable to pay the defendant's costs if ordered to.
The claimant is a company (or other body) that there is reason to believe will be unable to pay the defendant's costs if the defence succeeds.

Meeting a gateway is necessary but not sufficient. In each jurisdiction the court then exercises a discretion: even where a ground is made out, it must be satisfied that, in all the circumstances, it is just to order security. That two-stage structure — gateway first, discretion second — is the heart of the topic.

England & Wales

The conditions for security for costs are set out in CPR 25.27 ("Conditions to be satisfied"). Note the renumbering: until 6 April 2025 this was the well-known CPR 25.13, but the restructure of Part 25 moved it — textbooks and templates that still say "25.13" are describing the same conditions under the old number. The companion practice directions (PD 25A and 25B) were revoked and folded into the body of Part 25.

The gateways in CPR 25.27 include:

CPR 25.27(b)(i) — the claimant is resident out of the jurisdiction. Residence abroad is the gateway, but it is not enough on its own: the court will only order security where there is a real risk of a substantial obstacle to, or extra burden of, enforcing a costs order against the claimant in its home state (Nasser v United Bank of Kuwait [2001] EWCA Civ 556, [2002] 1 WLR 1868). That is why claimants based in a reciprocal-enforcement or Hague Convention state are usually safe from an order on this ground alone.
CPR 25.27(b)(ii) — the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe it will be unable to pay the defendant's costs if ordered to do so.
Nominal-claimant and address-related gateways within the same rule.

Even when a gateway is satisfied, the court must be satisfied — having regard to all the circumstances of the case — that it is just to make the order. The discretion is genuinely open; meeting a condition does not make security automatic.

The discretion and the risk of stifling a genuine claim

The leading authority on how that discretion is exercised against an impecunious company is Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534, in the Court of Appeal. The case sets out principles that still govern:

The discretion is complete; the court weighs all the circumstances.
Security must not be used as an instrument of oppression to stifle a genuine claim by a company that is short of money.
But the possibility that an order might stifle the claim is only one factor — it is not decisive on its own.
The burden is on the claimant company to show that it would in fact be prevented from continuing, and that money is not available from those who stand behind it, such as shareholders or backers.

In practice this means a claimant resisting security cannot simply assert poverty. It must put credible evidence before the court about its own finances and the means of those who would benefit from the claim. A bare statement that an order would end the case rarely succeeds without that financial picture.

Security against someone other than the claimant

England also allows security against a non-party under CPR 25.28 ("Security for costs other than from the claimant") — formerly CPR 25.14. This is the route used where, for example, a commercial third-party funder is bankrolling the claim, or someone has assigned the claim to a worthless named claimant to keep the real actor out of the firing line. The court can require the person who stands to benefit from the litigation to stand behind the costs as well.

Hong Kong

Hong Kong has two overlapping routes, and a defendant will often rely on both.

The statutory company route is section 905 of the Companies Ordinance (Cap. 622). This is the current provision; it re-enacts the former section 357 of the old Companies Ordinance (Cap. 32), so judgments and articles that refer to "section 357" are describing the same power under its previous number. Section 905 lets the court act where a company is the plaintiff and there is credible testimony giving reason to believe it will be unable to pay the defendant's costs if the defence succeeds.

In substance, the statutory test — common to both Hong Kong's section 905 and Singapore's section 388 below — asks the court to consider:

Where a company (or corporation) is the plaintiff and it appears, by credible testimony, that there is reason to believe the company will be unable to pay the defendant's costs if the defence succeeds, the court may require sufficient security to be given and may stay the proceedings until that security is provided.

The rules-of-court route is Order 23 of the Rules of the High Court (Cap. 4A). The operative provision is RHC O.23 r.1; for example, O.23 r.1(1)(a) covers a plaintiff who is ordinarily resident out of the jurisdiction. Order 23 sits alongside the statutory route in section 905, and the same two-stage analysis applies: the defendant must bring the case within a ground, after which the court decides, in its discretion, whether ordering security is just.

Singapore

Singapore also splits the power between the rules of court and the companies legislation.

Under the Rules of Court 2021, security for costs is governed by Order 9 rule 12. The 2021 Rules replaced the Rules of Court 2014, but O.9 r.12 is materially the same in substance as the former Order 23, so the established case law continues to apply. The gateways mirror the others: a claimant ordinarily resident out of the jurisdiction; a nominal or funded claimant who may be unable to meet a costs order; and address-related grounds. The court applies the same two-stage approach — is a gateway enlivened, and if so, is it just to order security?

The companies route is section 388 of the Companies Act 1967 (formerly the Companies Act (Cap. 50), section 388), headed "Security for costs". It uses the same "credible testimony … reason to believe … unable to pay" formulation as Hong Kong's section 905, and likewise allows the court to require security and to stay the proceedings until it is given.

How much security: quantum

Security is not a full indemnity. A court does not order the claimant to put up every penny the defendant might spend. The usual approach is to estimate the costs the defendant would realistically recover on a later assessment or taxation, and then order a proportion of that figure. Courts frequently order security in stages or tranches tied to the phases of the litigation — for example, an amount to cover costs up to the close of pleadings or disclosure, with liberty to apply for more as the case approaches trial.

This staging serves two purposes: it keeps the sum proportionate to the work actually in prospect, and it avoids tying up a large amount of the claimant's money years before trial. The precise proportion is a matter for the court's discretion and the evidence — there is no fixed percentage, and you should treat any rule-of-thumb figure with caution. What carries the application is a well-evidenced costs estimate. For how costs are assessed once a case ends, see our guide to how costs orders work.

ATE insurance and third-party funding

Modern claims are often backed by after-the-event (ATE) insurance or a commercial litigation funder, and both affect a security application — though neither is decisive.

In England, a suitable ATE policy may answer or reduce a security application, but it does not automatically defeat one. Courts scrutinise whether the policy actually responds to an adverse costs order, whether the insurer can avoid it, and whether anti-avoidance endorsements are in place. A thin or easily-cancelled policy carries little weight. Conversely, the presence of a commercial funder standing to profit from the claim can support an application — in England, an order against the funder directly under CPR 25.28. Hong Kong and Singapore treat ATE and funding arrangements as discretionary factors in the same way: relevant, sometimes powerful, but not an automatic bar to, or guarantee of, security.

Timing and mechanics: apply early

Security for costs rewards promptness. Delay is a discretionary factor that can defeat an otherwise good application: a defendant who waits until the eve of trial, after the claimant has already incurred the very costs it now says it cannot afford to risk, invites the answer that the application is tactical. Raise the issue as soon as the grounds are apparent — often once you have seen the claimant's accounts, registered office or place of residence.

The mechanics are broadly the same in each jurisdiction. The defendant makes an interim application to the court (by application notice in England, by summons in Hong Kong and Singapore), supported by evidence — a witness statement or affidavit — that sets out the gateway relied on, the basis for believing the claimant cannot pay, and a costs estimate justifying the sum sought. A court fee applies to the application; check the current fee order for your court, as these change. If the order is granted and the claimant fails to provide the security by the deadline, the usual consequence is that the claim is stayed, and ultimately it can be struck out.

Security for costs also sits within a wider toolkit of defensive and asset-protection steps. Where you are worried an opponent will dissipate assets, the parallel remedy is a freezing order; where a claim is so weak it should not proceed at all, consider strike-out or summary judgment; and where a debt is genuinely undisputed, a statutory demand may be a faster route than litigation.

Whether you are weighing an application for security or trying to resist one, the gateway, the evidence and the timing all turn on the specific rule and the facts of your case. Ask CommonBench's Legal Chat to identify the governing provision in your jurisdiction, the leading authority on the discretion, and the evidence you will need to put before the court.

This guide covers general principles and was current when written. Procedure, rule numbers, fees and authority differ between courts and change over time — England's Part 25 was itself renumbered in April 2025. Check the current rules for your specific court before applying for, or responding to, an application for security for costs.