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An order for security for costs — what does it mean?

By April 29, 2020February 23rd, 2024No Comments

What happens if you feel the judge made a mistake in your family law matter and you decide to launch an appeal, but your ex then applies to the court to force you to put forward a large sum of money in advance to cover your ex’s potential costs if you lose—but you can’t afford it. That’s called an application for security for costs. Does that ruin your chance of appealing your matter?

On the other hand, if the court doesn’t make such an order to put funds forward to cover your ex’s costs in fighting the appeal, your ex may decide not to proceed if their costs will be too high for them. It’s a difficult situation for the courts and involves assessment of a range of factors. Let’s take a look.

Courts can make an order for security for costs at their discretion, and always when it’s in the interests of justice being served.  These orders are dealt with under section 117(2) of the Family Law Act and rule 19.05(2) of the Family Law Rules.

An appeal recently heard in the appellate division of the family court in Sydney (pseudonymised as Millson & Halbert) dealt with precisely this matter.

An order for security for costs: A brief case summary

An unrepresented mother was appealing against final parenting orders which had changed her two children’s residence from her to the father. The mother was ordered not to have contact with the kids at all for three months, followed by a supervised time regime. The primary judge also made orders for the mother to obtain psychiatric assistance for herself and for the children to attend family therapy.

The father then sought an order that the mother provide security for his costs of the appeal. He asked the court to order the mother to lodge $20,000 with the family courts to be held against any potential costs awarded to him if she failed in the appeal. The mother, asserting she was impecunious (broke), opposed the application.

However, being impecunious is not a sufficient reason for the courts not to make the order for security for costs. This is because the courts have to balance the fact that making an order for security for costs may prevent an impecunious person from bringing their appeal against the fact that not making the order might leave the respondent to the appeal with the burden of the costs of successfully resisting the appeal.

So while courts do consider the financial circumstances of the parties, they also have to look at the following factors, according to the Family Law Act:

  • the prospect of success of the litigation;
  • whether the claim for security is made bona fide (as opposed to strategically);
  • whether or not an order for security would stifle the litigation;
  • whether or not the litigation may involve a matter of public importance;
  • whether or not there has been a delay in bringing the application for security; and
  • whether there would be difficulty in enforcing an order for costs.

The Family Law Rules also add the provision that courts may have regard to “whether an order for security for costs would be oppressive or would stifle the case”.

In this case, both the court and the father accepted that making an order for security for costs would probably stifle the appeal, because the mother could not afford the payment. However, the father tried to argue that the mother’s appeal was “hopeless” and therefore should not be permitted to run, and that therefore stifling the appeal in this way would in fact serve the interests of justice.

But the court disagreed and said the issues in this complex matter were in its opinion arguable and ruled the appeal case had merit. Therefore, the father’s application for security for costs was dismissed.

Bringing an appeal is every litigant’s right in this country. Appeals are an important part of the checks and balances of our system of law and are therefore not to be “fettered” unless there is a good reason. The principles relating to applications for security for costs have been established to be that the court is required to form the opinion that there are circumstances that justify the order being made, and that the court finds it just. As this case demonstrates, the courts are careful to ensure that parties are not prevented from being able to exercise their right to appeal by an order for security for costs being made, unless there is a very good reason.

You can read the whole case here and you can read the family court’s guidance on the appeals process here.

If you need family law help, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.

You may also like to read our previous blog: Can you appeal against an order made by consent?

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