Security for Costs

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Created: Tuesday, September 16 2025 14:23

Unfortunately, you cannot prevent a person or entity from taking proceedings against you.

Generally, in Irish law “costs follow the event” which means that a successful party will be awarded its costs against the unsuccessful party. However, this can be of small comfort if the Plaintiff’s financial position is poor and there is a real risk that the costs of the proceedings cannot be recovered from the Defendant. There is however a procedure open to Defendants which can provide some protection, and this is known as an order for security for costs.

An order for security for costs requires the Plaintiff to put up security by way of cash or a bond before the case can move forward. If the court makes an order for security for costs, the proceedings are suspended until the Plaintiff lodges the security in Court and, ultimately, you can bring an application to dismiss the Plaintiff’s claim if the security is not lodged. 

 There are two avenues open to a Defendant when applying for security for costs namely under statute, Section 52 of the Companies Act 2014 ( “Section 52”)  or under the Rules of Court namely Order 29 of the Rules of the Superior Courts (“Order 29”) and Order 16 of the Circuit Court Rules ( “Order 16”). 

Section 52 only applies to companies registered in the state and does not apply to unlimited companies incorporated in Ireland. Under Section 52, a Defendant seeking security for costs must show the Court that it has a prima faciedefence to the claim and that the Plaintiff will not be able to pay the Defendant’s costs if the Defendant is successful. If both these conditions can be satisfied the Court will generally make an order for security for costs against a Defendant company unless there are some special circumstances that can persuade it not to do so.

It is not sufficient to demonstrate that there is a mere risk of the Plaintiff being unable to pay the Defendant’s costs and there must be a reason to believe that the Plaintiff will not be able to pay.  In this regard the Plaintiff’s accounts or financial statements will be very relevant. However, the Court must consider all available evidence and this was highlighted in the High Court decision of Coolbrook Developments Limited v Lington Development Ltd and Another. In that case the Court stated inter aliathe following: -

1. a positive net asset position in the accounts or financial statements may not be sufficient to defeat the application for security for costs; 

2. the date of the accounts or financial statements actually provided is relevant. Where they are out of date, it is for the Plaintiff company to explain why that is so; 

3. the Court can draw inferences from any unexplained gaps or uncertainties in the accounts or in the evidence before the court;

An alternative basis for seeking security for costs arises under the Rules of Court namely Order 29 of the Rules of the Superior Courts and Order 16 of the Circuit Court Rules.

These rules apply to corporate Plaintiff’s not covered by Section 52 and so would form the basis of an application against a Plaintiff who resides outside the jurisdiction. However, it is important to note that whilst it may be difficult to enforce a costs order against a Plaintiff residing outside the jurisdiction a Defendant is not entitled to an order for security for costs solely on that basis. Again, one of the principal criteria that must be satisfied is that a Defendant has a prima faciedefence on the merits. 

The power to award security for costs under Section 52 and Statute is not mandatory and the Court retains a discretion not to award security for costs in “special circumstances”. The following has been accepted in various caselaw as constituting “special circumstances”;-

1. the Plaintiff’s poor financial position derives from the conduct of the Defendant

2. there has been undue delay by the Defendant

3.  the case involves a point of law significant public importance

The above list is not exhaustive and the Court has discretion to look at other factors. 

Generally, security for costs orders are not granted against personal Plaintiff’s. However, in the High Court Case of Ulster Bank DAC & Ors v. McDonagh [2024] IEHC 609, Mr. Justice Michael Twomey stated whilst making an order for security for costs against the Plaintiffs who ordinarily resided in the jurisdiction that “the most effective deterrent against hopeless and vexatious claims is the actual payment, upfront in security for costs…” . Watch this space…..

In conclusion, security for costs is a welcome procedure available to Defendants. By requiring Plaintiffs to “put their money where their mouth is” it serves as a deterrent to unmerited and frivolous proceedings.