An Order for security for costs is to help ensure that unsuccessful proceedings commenced by a Plaintiff do not disadvantage the Defendant. Such applications are more usually made in relation to an appeal rather than an original matter.
A security for costs order generally requires a Plaintiff to pay a certain amount of money into Court (or a solicitor’s trust account) before their proceedings can continue – that is the proceedings are in effect stayed pending the security being provided.
The Court has several sources of power to make an order for security for costs, including:
- the Court’s inherent power to stay proceedings to ensure the proper and effective administration of justice
- the relevant Court rules (eg, Rule 42.21 of the Uniform Civil Procedure Rules 2005);
- s.1335 of the Corporations Act 2001 (Cth).
Due to the weight an order for security for costs may carry, Courts must weigh the rights and interests of all parties to the proceedings. The Court has a broad discretion as to whether to grant such an order and will usually look to factors including (in no specific order):
- the inherent legal right of a Plaintiff to bring legal proceedings;
- the strengths and bona fides of the Plaintiff’s case
- where the Plaintiff ordinarily is resident;
- the financial standing and asset position of the Plaintiff in the jurisdiction in which the claim has been commenced (including where the Plaintiff may have divested itself of assets);
- whether there is reason to believe that the Plaintiff can satisfy an order for costs not only from its own resources, but from other resources including those who will benefit from the litigation; the public importance of the case;
- delay of bringing the application for the order;
- if the Plaintiff hasn’t disclosed an address or has moved and not updated it, particularly if there is reason to believe that it was done to to avoid the consequences of the proceedings;
- whether such an order will frustrate the litigation;
- the justice of the case.
It is uncommon for such an order to be made against an individual Plaintiff (as opposed to a company, partnership or trustee) but not impossible, depending in the circumstances of the particular case and Plaintiff.
FURTHER INFORMATION
For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.