Security for costs Flashcards
What is security for costs?
Security for costs is about the defendant obtaining an order that the plaintiff pay into Court some sum that can be used to pay the defendant’s (prospective) legal costs if the plaintiff loses.
Who can apply for security for costs?
The Court may, on the application of a defendant, order that the plaintiff give security for the costs of the defendant and that the proceeding against that defendant be stayed until the security is given (r 62.02).
What will happen if P does not comply with an order to pay security for costs?
When the court orders security for costs, it can stay proceedings until the security is given (r.62.02)
– If P doesn’t give security the court can dismiss its claim (r 62.04)
When can security for costs be ordered?
Security for costs will be ordered when (r 62.02):
* P doesn’t reside in Vic
* P is a corporation
* P is conducting a proceeding elsewhere for the same claim
* P hasn’t given an address or gave an incorrect one
* P has changed address to avoid consequences of proceeding
* Another act provides for this
If the circumstances of a plaintiff do not fall under one of the categories in Order 26, then the defendant will need to apply under the Supreme Court’s inherent jurisdiction for an order for security for costs (Lines v Tana Pty Ltd [1987]). Circumstances where a natural person has been ordered to pay security include:
- Impecuniosity (lack of money) and residence outside Australia;
- Impecuniosity and lack of prospects of success;
- Impecuniosity and brining a claim for a significant extent on behalf of others.
What factors should the court consider when dealing with an application by D for security for costs?
In considering whether to grant security for costs, factors commonly taken into account include (Trillity v Ancon Drilling [2013]):
* Merits of the claim;
* Whether the orders sought would frustrate the claim;
* Whether D caused P’s impecuniosity;
* Delay on the part of the applicant;
* Whether there are persons standing behind P who are likely to benefit from the litigation and are willing to provide the necessary security, and any undertakings offered;
* Whether the person is in substance a plaintiff, as an order ought not be made against defendant who are being forced to litigate;
* Whether a litigation funder is supporting the plaintiff.
How is security for costs calculated?
It is for the defendant to establish its probable costs on a party-party basis. It may do this by having a solicitor or costs consultant set out the contemplated work and likely costs. The Court will then fix an amount it considers adequate and order that the security be given in any form it thinks fit (r 62.03) and if the security is not given, it may dismiss the plaintiff’s claim (r 62.04).
What factors should the court consider re the amount of security for costs?
In determining the amount of security, relevant factors include (Raventhorpe [2017]):
o The amount of security is within the court’s discretion;
o The amount is that which the Court thinks just, having regard to all of the circumstances;
o In ordering security, the Court does not set out to give D a complete and certain indemnity for costs;
o The Court’s task is not related to a taxation of D’s probable costs
