Security for Costs:

Security for costs can arise in a building and construction claim. The concept of security for costs is based on the premise that a party who is involved in litigation shows that it is capable of paying any liability that falls on it as a result of an adverse court order. An application for security for costs may therefore be made by a party who has reason to believe that the other side is impecunious, and may not be able to pay any monies (damages, court costs etc) resulting from a judge’s decision that that party is liable for certain payments.

Be that as it may, the common law has developed rules of the years in relation to security for costs matters, and these rules are also relevant to building and construction disputes and matters. The interests of justice require that a poor individual who wishes to pursue his rights before the Courts should not be barred from doing so based purely on his poverty. This is the general rule that security for costs matters will rest upon. However, there are qualifications to this general position, and these depend on the circumstances of each case. It is therefore not possible to ascertain a general formula through which each matter’s security for costs issue can or might be determined.

The court or tribunal in which a building and construction claim is being heard may have a discretionary power to order or decline to order security for costs against any or all parties. Where the litigant is a corporation, that power derives from section 1335 of the Corporations Act 2001 (Cth). Otherwise, the power will issue from the legislation relevant to the court or tribunal itself. To exercise the discretion, all facts of the particular case must be considered, but only those facts that are relevant to the issue at hand. Some of those relevant factors may include the following:

• Impecuniosity of the litigant;
• Whether the claim is bona fide;
• The claim’s prospects of success;
• Whether or not the order for security for costs will stultify the proceedings;
• Whether or not the impecuniocity is the result of the respondent’s action which are the subject of the litigation;
• Whether the litigant is suing on behalf of or for the benefit of, some third party;
• Delay;
• Public interest;
• Timing of the application for security for costs;
• Whether there are multiple parties; and
• Justice issues in ordering security against a defendant.

Other considerations may also be relevant, and the law quote explicitly states that these considerations are not exhaustive. A unique case may require that all of the above should be taken under consideration by a Court or Tribunal, or perhaps just a few. The amount of security that the court or tribunal will likely consider awarding is part of its discretion. Failure to put security into court may result in the court dismissing or staying the proceedings.

If you require assistance in relation to a security for costs claim or dispute, you may wish to contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au and make an appointment to see one of our solicitors. 

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.