Knowledge

The standard approach to costs in civil litigation in Guernsey is that the loser pays. Of course, as in the ABBA classic, everyone wants to be the winner who takes it all – the winner who takes judgment and obtains a costs award, and the loser standing, with a costs award to pay. 

What good is a decisive victory if the losing party cannot pay the winner's costs? Even a decisive victory can ring hollow if there are concerns about the losing party's ability to pay. For defendants facing claims from financially precarious plaintiffs, or where there are enforcement concerns, security for costs is often the difference between a meaningful win and a Pyrrhic victory. 

Legal basis in Guernsey

Security for costs is a discretionary procedural mechanism, allowing a defendant in civil litigation proceedings to seek protection against the risk of being unable to recover its legal costs if the plaintiff's claim fails. It is secured by way of an application with supporting evidence to the Royal Court (the "Court"). 

Guernsey does not have a single codified regime governing security for costs. Instead, the jurisdiction derives from the Court's inherent jurisdiction and the Royal Court Civil Rules 2007 which confer broad case management powers to assess the merits of any application for security for costs. The jurisdiction is therefore characterised by flexibility and judicial discretion, with the Court adopting a fact-sensitive approach grounded in fairness rather than rigid statutory criteria. This has been confirmed recently in the case of BX v T Limited [2024] GRC 066. In terms of additional authorities, the Court may look to authorities from England & Wales and other offshore jurisdictions to inform the exercise of that discretion. Such authorities are not binding but are persuasive. 

The Court, by virtue of its inherent jurisdiction, has the power to make such orders "as it thinks just", reflecting a wide discretion in relation to costs (and other procedural matters). 

If a security for costs application is successful, the Court may award a blanket costs order, which entitles the defendant to its costs generally for the proceedings. The Court may also elect to award security in line with certain and specific milestones in the litigation, e.g. costs up to and including a certain procedural step, such as disclosure. If the latter is awarded, the defendant (subject to having liberty to apply) may apply for further security for costs orders as and if the litigation progresses. 

Procedure and forms of security

Applications are typically made early in proceedings, consistent with the principle that defendants should not be exposed to unrecoverable costs risk unnecessarily (see Brainbox Digital Ltd v Backboard Media GmbH [2017] EWHC 2465 (QB), for example, noting that this authority is persuasive but not binding on the Court). The Court has flexibility as to the form of security ordered, including:

• payment into court;
• bank guarantees; or
• other appropriate financial arrangements.

Grounds for security for costs

Although there is no exhaustive list, the circumstances in which the Court may order security broadly mirror those recognised in jurisprudence from England & Wales, and other offshore jurisdictions. These include:

• Foreign or non-resident plaintiff
  While residence outside the jurisdiction is relevant, it is not determinative. This reflects the principle that there must be a real risk of enforcement difficulty, not merely foreign residence – a principle established under the law of England & Wales and adopted in Guernsey.

• Impecuniosity or solvency concerns
  Where there is reason to believe the plaintiff cannot meet an adverse costs order. This is similar to the "reason to believe" test set out by Part 25.12(2)(c) of the Civil Procedure Rules of England & Wales.

• Corporate plaintiffs with limited assets
  Particularly where the company appears thinly capitalised or litigation-funded.

• Risk of abuse of process
  Including speculative or opportunistic claims.

These factors are applied flexibly, with no presumption that any one factor automatically justifies an order, or that they will be rigidly applied. In Café de Lecq v Rossborough Insurance Brokers Ltd [2011] JRC 31, the Jersey Royal Court confirmed that its jurisdiction to order security for costs is very wide and is not subject to rigid presumptions. Although this authority is not binding in Guernsey, it would be persuasive in assisting the Court to determine whether the grounds for security for costs are made out.

The Court’s approach: discretion and balancing exercise

When considering a security for costs application, the Court will undertake a balancing exercise, weighing competing considerations. Key factors include:

• the merits of the claim (to a limited extent);
• the risk of injustice to the defendant if no security is ordered;
• the risk of stifling a genuine claim;
• the conduct of the parties; and
• the practical enforceability of a costs order (persuasive, though not binding, authority from England & Wales on this point includes the case of Nasser v United Bank of Kuwait [2001] EWCA Civ 556 and the case of Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099).

Security for costs in practice

The recent case of William Sykes v Sumiki Limited [2025] EWHC 2157 (KB) outlines that, in England & Wales, the courts will tailor the quantum of security to the specific risk identified, such as additional enforcement costs or delay, rather than awarding full or blanket security for all projected costs. Where enforcement is ultimately likely to succeed but with additional burden, security may be limited to that incremental risk. Although not binding, such authority would be persuasive in Guernsey, as it reinforces the requirement for the Court to consider proportionality and fairness when assessing an application for security for costs at each stage of the litigation. 

Indeed, we have recently acted for a defendant in civil litigation where the circumstances dictated that a security for costs order be sought from the plaintiff and, accordingly, incremental security for costs orders were applied for as the case progressed. The applications were successful, providing the client with a vital layer of protection as the proceedings progressed. Although this instruction pre-dated William Sykes v Sumiki Limited, the similarities demonstrate that the Court's approach to security for costs applications is underpinned by principles of fairness and procedural justice.

Practical points

• Defendants should consider applying for security at an early stage, particularly where financial or enforcement risks are evident.
• Plaintiffs, especially non-resident or corporate entities, should anticipate such applications and be prepared to demonstrate their financial standing and ability to satisfy potential adverse costs orders.

Other than the above, a key takeaway is that the Court remains highly sensitive to the risk of stifling legitimate claims, which is a central limiting principle of the way in which applications for security for costs are assessed and determined. The Court also remains focussed on the need for costs to be reasonably incurred and reasonable in amount. 

Conclusion

Guernsey's regime for security for costs is defined by broad judicial discretion, flexibility, and an emphasis on fairness. While the Court draws heavily on persuasive authority from England & Wales and other offshore jurisdictions, it is not constrained by a codified framework (such as the Civil Procedure Rules). This means that the regime in Guernsey is both flexible, yet predictable and well structured. 

Security for costs is a reminder that civil litigation is not simply about who wins and who loses, but whether a successful outcome can be translated into a meaningful recovery. Where there are legitimate concerns about the plaintiff's ability to pay, an application can shift the balance from uncertainty to protection. After all, in civil litigation, as in the song, the winner may take it all, but only if there is something left to take. 

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.