An often misunderstood and occasionally strategically abused right between litigants is the right to receive (or obligation to provide) security for another party’s costs of conducting the litigation.
Although not exclusively, security for costs is often the province of appellate Courts because a possibly impecunious corporate party seeking the indulgence (appellant) is obliged to ensure that the other party is not left in a worse position by undertaking a course that may or may not alter the outcome already obtained.
The circumstances which will allow an application for security for costs and the basis upon which it will be granted are subject to some procedural variation between jurisdictions, however there are some long standing principles of law that remain. In determining the requirement for one party to provide security, the Court must undertake an enquiry as to the financial resources of the party. That is because, security for costs is only designed to protect a successful party from an unsuccessful party’s inability to meet an adverse costs order from its own resources.