Authors: Michael Bath, Partner & Kate Martin, Associate
In the usual course of litigation, 'costs follow the event', meaning that upon a determination, payment of the successful party’s costs are ordered against the unsuccessful party. However where there is a question as to whether a party can meet an adverse costs order, security for costs may be awarded.
Security for costs is a measure designed to ensure justice – that a party being sued should not be forced to incur costs in defending itself if the claimant does not have the means to pay any costs order if the claim is unsuccessful. In such situations, where an order for security for costs is made, the security is held by the Court pending determination of the proceedings or the proceedings are stayed until security is provided.
While in funded litigation the reality has been that orders for security for costs made against a representative applicant have been paid by the funder, until now the orders themselves have only been available as against the party to the proceedings. However, on 8 October 2019, his Honour Justice Lee of the Federal Court broke new ground when he made orders for payment of security directly against a non-party funder in a class action proceeding.
