Security For Costs – Guarantee

The Court has held that a guarantee provided by a parent company is an acceptable form of security for costs to be provided by a claimant.

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Security For Costs – Guarantee

In the recent case of E A Chiverton Limited the Maugham [2020] 10 WL UK 376, it was decided by HHJ Kramer that it was sufficient for the claimant (a non-trading, dormant company) to provide a parent company guarantee, with the defendant’s submission that a bank guarantee should be provided, being rejected.

It was recognised that it was important to consider the strengths of any security being provided, however, a “copper-bottomed” guarantee would, in effect, put the Defendant in a preferential position when compared to a defendant faced with a claim by a trading company, as in those circumstances there would inevitably be some element of risk that the claimant would be unable to satisfy any costs order.

It was found that the parent company was in a sound financial position and Brexit and Covid-19 considerations did not result in a departure from this analysis.  Interestingly, it was noted that this should be decided on a case by case basis and that Covid-19 and Brexit considerations should not simply be cited across the board as a reason for uncertainty regarding the security of finances of a claimant.

If you have any questions about any topics discussed above, please contact Andrew on or call 0114 252 1416.

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