Maher v Official Trustee in Bankruptcy

The case before the Federal Court of Australia concerns an application for security for costs by the Commonwealth Bank of Australia ("the Bank") in a proceeding brought by Dennis Maher ("the Applicant") seeking the annulment of his bankruptcy. The Bank's application was made pursuant to r 19.01 of the Federal Court Rules 2011 (Cth), and it is common ground that the Applicant will be unable to pay the Bank's costs if ordered, and that the Applicant is impecunious. The primary legal issue the court needed to decide was whether the requirements of justice would be satisfied by ordering the Applicant to provide security for the Bank's costs.

The court considered the principle that the purpose of ordering security for costs is to provide protection to a party brought into litigation by a party who is unable to meet the costs of that other party, should the litigation be unsuccessful. Given the Applicant's extensive history of litigation, and the fact that his bankruptcy was based on his failure to pay costs, the court was reluctant to stultify the Applicant's access to justice by ordering him to provide security. However, the court also considered that the policy consideration informing that practice was muted in this case, as the Applicant's need to have access to justice would have been satisfied by the hearing at first instance.

The court found that the making of an order for security in favour of the Bank would satisfy the requirements of justice in providing some protection for the Bank in the eventuality that it succeeds in the proceeding; and is unlikely to be the source of any apparent injustice to the Applicant, even if it should be the case that his inability to raise the amount required would stand in the way of him further prosecuting the proceeding.

The court ordered that the Applicant provide security for the Bank's costs in the sum of $50,000 within 21 days, and that the proceeding be stayed pending the provision of security. The court also ordered that the Applicant pay the Bank's costs of its Interlocutory Application filed on 2 November 2012.