Litigation should always be a last resort. Parties are expected to negotiate to try to settle their differences before and during court proceedings. Those who ignore this are often penalised by the courts. This was recently demonstrated in the High Court case of Gresport Finance Limited v Battaglia. In that case, the Court refused to grant the defendant, Battaglia, an order for security for costs because of his conduct.
Where a defendant is concerned that a claimant may be unable to pay his costs in the event it successfully defends the claim, he can apply for an order that the claimant be required to pay a sum of money into court as security for those costs before the claim is allowed to continue. This is known as an order for security for costs and, if granted, can provide a defendant with a considerable tactical advantage in the litigation.
This type of order will only be made if:
a) the Court is satisfied that it is fair to make such an order; and
b) the claimant:-
- resides out of the jurisdiction; or
- is a company and there is reason to believe that it will be unable to pay the Defendant’s costs; or
- has changed his address since the claim was commenced with a view to evading the consequences of the litigation; or
- has failed to give his address on the Claim Form or gave an incorrect address; or
- has taken steps which would make it difficult to enforce an order for costs against him.
In deciding whether or not to grant an order, the Court has a general discretion and can take into account numerous factors including the strength of the claimant’s claim, whether making an order would stifle that claim, and the parties’ conduct in the proceedings.
Battaglia’s application was refused. The Court was satisfied that Gresport was likely to succeed with its claim and recover substantial sums from him. The Judge considered Battaglia’s conduct had been a crucial factor. He had initially ignored the claim, had provided misleading information in a witness statement, had delayed in making his application without giving any reasons for that delay and had failed to attend an agreed mediation without providing reasons for his absence. Of particular note was the fact that the Judge said that Battaglia’s misconduct in failing to attend an agreed mediation would, in itself, have been sufficient to allow the Court to dismiss his application.
If you are involved in any litigation, no matter how strong you believe your case is and even if you have very good prospects of succeeding at trial, the Court will still expect you to make a genuine effort to try to settle the case and would take a very dim view of any refusal to do so.