Security for costs: Rakesh Kapila reports on the forensic accountant's role
- A defendant can ask the court to order a claimant company to pay funds into court by way of security for the defendant’s costs if there are doubts on the claimant’s ability to fund litigation.
- Since sworn financial evidence often needs to support applications for security for costs, forensic accountants can play a crucial role in the process.
Litigation may be undertaken on a tactical basis or may be ‘frivolous’ without the claimant having the objective of an ultimate hearing in court. The courses of action open to defendants in these instances include relatively expensive proceedings as a defence to any claim. It is also important for defendants to consider the ability of claimant companies to fund litigation in which they are involved. It may be useful in these circumstances for a defendant to consider asking the court to order a claimant to pay funds into court by way of security for the defendant’s costs, primarily as protection if the claimant is unable to satisfy a costs order
