22 Jan Security for the costs of an appeal
Security for the costs of an appeal
by George Coucounis
“Under special circumstances the appellant may be ordered to give security for the costs of the appeal”
A litigant who files an action or uses any other legal procedure before the Court, including an appeal before the Supreme Court, when it appears from credible evidence that he is unable to pay the other litigant’s costs if he succeeds in his defence, he may be ordered to give adequate security for these costs and the procedure is suspended until the security is granted; if there is no compliance, the procedure will be considered abandoned and will be dismissed. The Court has the discretion to order a litigant to provide security for costs, after taking into account his financial position and the corresponding reasonable concern of the other party to have his costs covered, as well as the right of the litigant to access to Court. These factors may justify the exercise of the discretion of the Court in favour of issuing an order for security for costs.
The Court does not act ex officio but after an application by a party requesting the issue of an order, ordering the other party within a specified time period to deposit a certain amount in Court as satisfactory guarantee or security for costs. At the same time, an order must be requested to suspend the proceedings until the guarantee is deposited and in case of expiration of the deadline set by the Court without the guarantee being deposited, then the lawsuit or appeal will be considered dismissed. The amount of the costs must be reasonable, so it is appropriate to estimate the costs that the party is expected to incur in his defence by attaching and submitting a list of costs, in order to enable the Court to decide accordingly on the amount.
Under special circumstances, it is possible to apply for security for costs for the appeal, in order to ensure that the successful party will not be deprived of the costs that will be awarded to him. The Supreme Court considered such an application by the respondent, owner of a property, in an appeal by the former tenant, against whom an eviction order had been issued and a judgment for rents in arrear and costs. He was ordered to pay the judgment debt in monthly instalments of €500 each and appealed against the order, alleging miscalculations of income and expenses by the Court of first instance. He objected to the application of the landlord, claiming that he failed to show what was expected and necessary for the application to be approved, let alone special circumstances. He even suggested that any success of the application would be a denial of justice and unequal treatment towards him.
The Supreme Court in its judgment issued on 15.1.2021 stated that the substance of the matter is whether the facts reveal special circumstances under the relevant provisions of the Civil Procedure Rules, O.35 R.2, in order to justify the exercise of the discretion of the Court in favour of the application, adding that the burden of proof lies with the applicant. The Court emphasized that the appellant – former tenant had not yet paid his debt nor the costs, a fact that was important to be taken into account. It should not be overlooked that the respondent landlord had already registered a memo on the immovable property of the appellant former tenant, which was essentially not available to be disposed to cover the amount of the security for the costs of the appeal.
The Court stated that the non-payment by the appellant of any amount against the judgment debt or costs of the proceedings before the Court of first instance and him filing an appeal only against the monthly instalments order, and that the memo on his immovable property could not cover the amount of the security sought or any other lower amount, constituted special circumstances in accordance with the provisions of O.35 R.2. Therefore, the requested security for costs was objectively justified and could not in any way be regarded as prohibiting the appellant from accessing the Court of Appeal. Bearing in mind the amount of the preliminary list of the costs of the appeal, the nature of the appeal and the time it is expected to be completed, the Supreme Court determined the amount of the security for costs and ordered the appellant to deposit it with the Court within 40 days and suspended the appeal. In case of non – compliance with the order, the appeal will be considered abandoned and dismissed.