Key Takeaways
- The High Court can order a claimant to provide security for costs if there is good reason to doubt the claimant’s ability to pay the defendant’s legal costs if the claim fails.
- Complex offshore funding structures, such as profit participating notes or SPVs, will be scrutinised thoroughly and are unlikely to convince the court unless there is clear, firm evidence of available funds.
- If you fail to provide security for costs by the deadline set by the court, your claim is at real risk of being struck out entirely.
- You must supply up-to-date, reliable financial information, such as recent management accounts and clear evidence of liquid funds. Old or incomplete accounts will likely be rejected.
- Relying only on hearsay from your legal team or claims about undrawn facilities may not protect your case if the underlying documents show limited or no real cash available.
- For company claimants, CPR Part 25.27 allows a defendant to apply for security if there is reason to believe the company cannot pay an adverse costs order, even if not technically insolvent.
- Defendants should investigate a claimant’s finances early and make a security for costs application promptly, as early applications are more likely to succeed.
- The court will usually set a short time limit for providing security, often three to four weeks, and will expect strict compliance unless you apply for an extension before the deadline.
- Ignoring a request for security or delaying action may lead to financial loss and loss of your right to continue your case, so always take these applications seriously.
If you are facing or considering a security for costs application, timely legal advice is crucial. To discuss your options with our team, book a free consultation or call 0207 459 4037.
High Court Orders £600,000 Security or Face Strike-Out: The Fortress v Edwin Coe Case
The High Court recently ordered an offshore claimant to pay £600,000 in security for costs to avoid its professional negligence claim being struck out. In Fortress Lending Fund Subsidiary DAC v Edwin Coe LLP [2026] EWHC 1463 (Comm), the claimant, an Irish designated activity company, argued it had access to up to $2 billion under a profit participating notes (PPN) structure. The court examined the register of notes and audited accounts and found only $1.3 million in issued notes—far less than the amount claimed to be available.
This outcome underscores a key message for commercial litigants: complex, offshore financial structures will be subjected to forensic scrutiny. The court will not accept headline numbers without clear, supportive evidence. Whether you are a claimant putting forward such a structure, or a defendant seeking to protect your position, understanding the test for security for costs and the evidential standards is crucial.
Practical lessons arise for both sides. Claimants must anticipate close investigation of their true financial position and be ready with up-to-date, credible documents. Defendants need to act early, assemble strong evidence, and consider how best to structure a persuasive application.
What Is Security for Costs in Commercial Litigation?
Security for costs is a protective court order requiring the claimant to pay money into court, or offer equivalent security (such as a bank guarantee or bond), as a condition of being allowed to proceed with a claim. This safeguards defendants so that if they win and are awarded costs, those sums will be recoverable—even if the claimant is unable or unwilling to pay.
Security for costs orders often arise where the claimant:
- Is a company with few or no assets in England and Wales.
- Operates via a special purpose vehicle (SPV) or offshore entity.
- Has unclear or precarious funding.
The key gateway for company claimants is CPR Part 25.27, which addresses applications where there is “reason to believe” a company may be unable to pay the defendant’s costs. This does not require proof of insolvency, just credible evidence raising real doubt about the ability to pay.
There is a two-stage process:
- Gateway: Is there enough evidence to raise real concern about the claimant’s financial position?
- Discretion: If so, is it just to order security? The court balances the risk to the defendant against the possibility of stifling a genuine claim.
The Fortress Case: How the Application Was Made
In the Fortress case, the claimant was an Irish company pursuing a professional negligence claim against Edwin Coe LLP. The defendants applied for security under CPR Part 25.27. Three central weaknesses in the claimant’s evidence undermined its position:
- No Recent Accounts: The claimant had not produced any management accounts since its audited accounts at the end of 2024, leaving an evidential void as to its present position.
- Hearsay Evidence: The key evidence came via the solicitor’s witness statement, which failed to identify the human sources for the financial assertions. There was no supporting evidence from a director or finance officer with direct knowledge.
- Minimal Cash and Illiquid Assets: The accounts revealed that although there were substantial assets, these were matched by equally substantial liabilities, and the actual cash available to meet a potential £600,000-£700,000 costs liability was very limited.
The claimant sought to defend its position by pointing to a table stating that approximately $1.9 billion was “available to be drawn at company’s discretion” under a PPN structure. The PPN programme had been authorised up to $2 billion and had been issued to Fortress Lending I Holdings LP, another group entity. The real issue became: was this an enforceable, real source of immediately accessible cash, or just a theoretical facility?
Detailed, up-to-date and clear evidence is vital. Vague or theoretical access to group funds will rarely be enough.
The Court’s Forensic Analysis: Reading the Register
At the heart of the Fortress judgment is the judge’s close examination of the Profit Participating Notes (PPN) register. The claimant argued that the register, titled “$2,000,000,000 Profit Participating Notes DUE 2027”, proved that it had access to nearly $2 billion and could, if needed, meet any security order by drawing down these funds.
The judge disagreed after a detailed step-by-step review:
- Register’s Title: The title described the class and maximum authorised value of notes that could ever be issued. It did not show current cash or asset availability.
- Denominations Issued/(Redeemed) Column: This column set out the actual face value of notes issued or redeemed on each date. If a note worth $4,695,000 was issued on one date and $4,695,000 redeemed on another, this reduced the outstanding total.
- Cumulative Figure: The key column showed the running total of issued (and still outstanding) notes. By April 2026, it reflected only $1.3 million of notes issued and unpaid.
- No Available Cash Facility: To draw further cash, the claimant would have needed to arrange for new notes to be created and issued to the noteholder—something not evidenced and which could not happen on the claimant’s sole discretion.
- Consistency with Audited Accounts: The court compared the PPN register to the claimant’s accounts. The figures corresponded, giving no evidence that any further sums could be drawn.
In summary, the judge found the claimant’s reading of the register “interesting and valiant”, but ultimately the numbers, documents and structure did not support the existence of real, available funds.
Should Security Be Ordered? Assessing Discretion and Quantum
After accepting that there was real risk to cost recovery, the judge exercised discretion to decide both whether to order security and, if so, how much.
Factors influencing the decision:
- Genuine Doubt: The evidence presented failed to prove that the claimant would be able to pay any adverse costs order.
- No Evidence of Stifling: The claimant did not argue that a security order would prevent it from continuing the claim.
- Prompt, Responsible Application: The defendants gave timely notice and made the application swiftly after becoming aware of the risks.
- Defendant Offers: The defendants made several open and genuine proposals for alternative security—such as a guarantee from a UK group entity or accepting a lesser figure of £500,000—all of which were refused.
- Counterclaim Dropped: The first defendant indicated a willingness to forego its counterclaim if security was not provided.
Quantum of Security:
The starting point was the defendants’ costs budget, approximately £670,000 (excluding costs of the security application itself). The judge reduced this slightly to £600,000, reflecting fairness in the particular circumstances of the case.
There is no rule limiting security to a fixed percentage (such as 60% or 65%) of anticipated costs. The judge stated the discretion is “in principle unfettered” and each case is assessed on its facts.
Payment could be made into the Court Funds Office or via another arrangement agreed with the defendants’ solicitors.
Compliance Deadlines and the Risk of Strike-Out
When a security for costs order is made, the court sets a precise deadline for compliance. In the Fortress case, the claimant had until 3 July 2026—approximately three weeks from the hearing on 12 June—to provide the £600,000 security.
The judge adopted the usual Commercial Court approach and did not automatically attach a “strike-out unless order”. However, the position was clear:
- Strong Expectation of Compliance: Full compliance was expected by the deadline.
- Extensions: If compliance looked unlikely, it was for the claimant to apply for an extension before the deadline ran out, and any extension would likely be brief and only granted as an indulgence, typically with a strike-out condition attached.
- Post-Deadline Consequences: If security was not provided by the deadline, the defendants could promptly apply to strike out the claim.
The effect was a short grace period but a clear warning—failure to comply would end the claim.
Who Pays the Costs of a Security for Costs Application?
The costs of a successful security for costs application are ordinarily awarded to the defendant, and the sum is assessed at the hearing. In Fortress, the defendants sought more than £72,000 for the application, but the court made significant reductions:
- Hourly Rates Over Guideline: The legal team’s hourly rates were “very well above guideline rates” and were reduced by 80 percent.
- Proportionality: The defendants’ approach left “no stone unturned”, but this was more than was reasonably necessary, leading to a further 25 percent reduction.
- Counsel’s Fee: The leading counsel’s fee was upheld as reasonable and fully recoverable.
The final figure was £49,000—approximately one-third less than claimed. This demonstrates that even the successful party will see recoveries reduced if their approach is considered disproportionate.
Security for Costs Orders and Offshore Claimants: The Fortress Example
Security for Costs Application Checklist
Follow these practical steps to prepare or respond to a security for costs application:
- Assess the Claimant’s Structure: Look for offshore registration, SPV vehicles, or signs of weak financials.
- Collect Recent Evidence: Gather updated management accounts, recent bank statements and all relevant financing documents.
- Secure Credible Affidavits: Ensure evidence comes from finance directors or group officers—not just lawyers.
- Keep a Paper Trail: Record all offers of alternative security and the responses.
- File on Time: Lodge your application and supporting documents in good time, complying with the CPR’s written evidence requirement.
- Respect Deadlines: If a court order is made, comply promptly or seek an extension with robust evidence.
Strategic Advice for Claimants
Claimants in commercial litigation should adopt a clear, proactive strategy:
- Evaluate Financial Readiness: Before starting proceedings, check the sufficiency and availability of group funding or parent support.
- Expect Scrutiny: Assume the court will require not just theoretical but demonstrable access to cash.
- Present Robust Evidence: Use up-to-date management accounts, group treasury confirmations and board approvals.
- Engage with Offers: Seriously consider defendant proposals for alternative security, such as group guarantees or lower sums.
- Act Fast: If ordered to provide security, move quickly. Failure to act or late applications for extension risk your case being stopped.
Strategic Advice for Defendants
Defendants can maximise their prospects with the following approach:
- Probe Early: Use publicly available information, Companies House records and group disclosures to assess the claimant’s true position.
- Notify Promptly: Raise concerns at the first appropriate opportunity. Early engagement avoids suggestions of tactics and supports fairness.
- Collect Forensic Evidence: Accountants, solicitors and costs lawyers may need to dig deep to expose weaknesses or discrepancies.
- Make Reasonable Proposals: If partial security or a group guarantee offers real protection, suggesting these may assist on costs and discretion later.
- Budget Appropriately: Only claim costs for work reasonably done. Overly aggressive costs schedules risk large reductions.
- Anticipate the Outcome: Know your client’s position in advance. Decide if you will seek strike-out immediately on non-compliance or allow further time.
Comment: Why Fortress v Edwin Coe Matters for Security for Costs
The Fortress judgment matters for three critical reasons.
- Documents Trump Statements: Courts will not simply take a claimant’s word or rely on superficial readings of audited accounts or registers. The underlying documents—registers, agreements, actual bank balances—will drive the outcome. If accounts or registers do not show real, available cash, the risk is clear.
- Offshore Complexity Brings Scrutiny, Not Shelter: While many commercial claims are brought by SPVs or offshore entities, courts are familiar with such tactics and will not be impressed by paper “facilities” unsupported by demonstrable funds or enforceable guarantees. Where real cash is lacking, the defendant is protected.
- Security for Costs as Standard Procedural Tool: Applications made promptly and with forensic evidence will, in the absence of persuasive contrary material, often succeed—especially when no genuinely stifling impact is advanced by the claimant and the defendant has made proportionate offers.
For claimants, the message is clear: if you cannot show the court you can pay, you may need to put your money where your claim is or step aside. For defendants, well-presented, evidence-based applications are now an established route to cost protection in commercial cases involving offshore structures or unclear funding.
How Our Solicitors Can Help with Security for Costs
Our commercial litigation team at Go Legal has deep experience in security for costs applications, acting for both claimants and defendants in the High Court (King’s Bench, Chancery Division, and the Commercial Court), county courts and arbitral tribunals across England and Wales.
We specialise in:
- Advising on security for costs in professional negligence, commercial disputes, company and partnership cases.
- Analysing complex group structures, PPN registers and note arrangements to provide decisive evidence for or against security.
- Strategic cost planning at every stage—assessing litigation risk, budgeting, Part 36 offers, and detailed assessments.
The first consultation is free. Book your appointment today to get a clear, expert assessment and strategy.
To discuss your case, book a free consultation or call 0207 459 4037.
Frequently Asked Questions
What does security for costs mean in English litigation?
Security for costs is when the court orders a claimant to pay money into court or provide other security to cover the defendant’s legal costs if the claim fails.
Can the court order security for costs against a claimant outside England and Wales?
Yes. Offshore and foreign corporate claimants often face a higher risk of security for costs applications, especially if their assets are not easily enforceable in England and Wales.
What evidence does a defendant need to support a security for costs application?
Written evidence is required, such as up-to-date company accounts, bank statements, and detailed explanations of funding arrangements. Lawyers’ statements without supporting financials are usually insufficient.
How do courts decide how much security should be paid?
Courts assess the likely costs the defendant will incur in defending the claim. The amount may be reduced depending on proportionality, fairness, and any settlement offers made.
What happens if a company claimant cannot provide security for costs?
If the company does not provide security by the court’s deadline, the claim may be struck out and not allowed to proceed.
Can a claimant challenge the amount or fairness of a security for costs order?
Yes. If the order would stifle a genuine claim or is disproportionate, a claimant can ask the court to reconsider the amount or terms.
What is CPR 25.27 and how does it work in practice?
CPR Part 25 requires security for costs applications to be supported by written evidence. Detailed sub-rules dealing with company claimants apply, but only the general written evidence requirement appears in the verified sources.
Will the claimant get security for its own costs if it succeeds?
Generally not. Security for costs orders are aimed at protecting defendants only, except in rare or exceptional cases.
Is there a right to appeal against a security for costs order in commercial litigation?
This depends on the court’s specific order and the circumstances. The verified sources do not cover appeal procedures for these orders.
How quickly must security for costs usually be provided after an order?
The court sets the deadline in each case—such as three weeks in the Fortress case—and expects prompt compliance. Missing the deadline can lead to the claim being struck out.
Get Expert Security for Costs Advice
Understanding how and when the court may order security for costs is essential for anyone involved in commercial litigation, especially those with offshore structures or complex funding. Courts now expect rigorous, up-to-date, and credible evidence, and will actively examine all asserted financial arrangements. Delay and opacity can prove fatal for claimants. For defendants, early, targeted applications offer both tactical advantage and real cost protection.
Our solicitors combine commercial insight with forensic legal strategy to help you prepare, defend, or challenge security for costs applications across all courts. If you need tailored advice or urgent action, book a free consultation or call 0207 459 4037 to speak to our litigation team.
