Applications for Security for Costs Under Rule 47 of the Uniform Rules of Court

Applications for Security for Costs Under Rule 47 of the Uniform Rules of Court

Security for costs is a procedural safeguard available to litigants under Rule 47 of the Uniform Rules of Court. It enables a party (typically a defendant or respondent) to request that the opposing party furnish financial security to cover potential adverse costs, particularly where there is concern about the opposing party’s ability to satisfy a costs order.

Rule 47 outlines the process but does not prescribe the grounds for such applications. These are derived from common law, which recognises three primary scenarios:

• The plaintiff/applicant is a peregrinus (a party domiciled outside the court’s jurisdiction),
• The plaintiff/applicant is insolvent or of uncertain financial standing,
• The litigation is vexatious, reckless, or amounts to an abuse of process.

The applicant must first deliver a notice in terms of Rule 47(1), calling upon the opposing party to furnish security. If the notice is ignored or refused, the applicant may proceed with a formal application under Rule 47(3), supported by affidavit.

In BP Southern Africa (Pty) Ltd v Trade Rose Investments (Pvt) Ltd (13662/22) [2023] ZAGPJHC 1206, the court considered an application for security for costs against a peregrinus plaintiff with no immovable property in South Africa and facing financial instability. The plaintiff argued that it could meet any adverse costs order and that its claim had merit.

The court emphasised the need to balance two competing interests:

• Whether the peregrinus could realistically satisfy a costs order if unsuccessful.
• Whether requiring security would unjustly hinder access to the courts.

Ultimately, the court granted the application, citing three key factors:

• The plaintiff’s status as a peregrinus,
• Absence of immovable property in South Africa,
• Financial vulnerability.

This case reaffirms the discretionary nature of Rule 47 applications and the importance of fairness and equity in their adjudication.