Tracey McDermott on deficiencies in the security for costs regime. Tracey McDermott is a solicitor at Titmuss Sainer Dechert.

Two recent decisions have highlighted the deficiencies in the current security for costs regime.

In Abraham v Thompson the defendants believed the litigation was being funded by a third party and that, following the trial, they would be unable to recover their costs from the plaintiff or the third party.

They sought disclosure of the funder's identity with a view to obtaining some comfort as to the ultimate payment of their costs.

The Court of Appeal refused to make the order because there was no power to make any order in relation to costs against a third party until the trial had been concluded. Security could not be ordered against the funder and therefore disclosure would serve no purpose.

In Norglen v Reeds Rain Prudential the House of Lords allowed an insolvent company (against whom security had previously been ordered but not provided) to assign a cause of action to individuals who qualified for legal aid.

The court refused to impose a condition that security be provided and took the view that order 23 was a complete code which it had no power to extend, notwithstanding that this left the defendant completely unprotected as to costs.

The court in these cases distinguished between the right of an individual plaintiff, even if impecunious, to pursue an action and the interest of the defendant in being protected as to costs. Public policy dictated that the former should take precedence over the latter.

In itself this is uncontroversial access to justice should not be the preserve of the wealthy. Defendants could, however, be forgiven for wondering what public interest is served by protecting an assignor or a funder from the security for costs regime and the consequences of an adverse costs order particularly where the action is then prosecuted with the benefit of legal aid which would otherwise have been unavailable.

The latest consultation paper on security for costs (December 1997) suggests amendments to the rules to allow proposals to an order for security to be ordered against a non-party where that party has assigned the right to claim or is funding the litigation.

It remains to be seen whether such proposals will be adopted and, if so, whether the courts will be prepared to use their new powers to address the problems highlighted above.