In a costs appeal, Frigger v Computer Accounting & Tax Pty Ltd [2023] WASCA 152, the Western Australian Court of Appeal considered principles relating to applications for security for costs in detail.

The case has its origins in a long-running dispute involving the winding up of Computer Accounting & Tax Pty Ltd (CAT) over a decade ago. Mr and Mrs Frigger brought a substantive claim in the original winding up proceedings against CAT's liquidator, Mr Kitay, regarding certain land assets they alleged should have been transferred to their self-managed superannuation fund. They also claimed damages for lost opportunities due to Mr Kitay's delay in transferring the assets.

That substantive claim was very similar to an earlier claim brought by Mrs Frigger alone against Mr Kitay, which was struck out for lack of standing. Importantly, by the time the new claim was filed, the costs order made against Mrs Frigger personally in the earlier proceedings stood at over $28,000 and remained unpaid.

The primary judge made orders staying the new Frigger claim until they paid into court both the unpaid costs from the previous claim, and $30,000 as security for costs in anticipation of Mr Kitay's strike-out application in their latest claim. The Friggers appealed those orders. Mr Kitay and CAT applied to the appeal court for security for their costs of defending the appeal.

Examining the application, the Court of Appeal set out key established principles, referring to George 218 Pty Ltd v Bank of Queensland Limited [2016] WASCA 56 [41]–[48]:

The discretion to order security for costs serves the interests of justice and is unfettered, provided it is exercised judicially. 'Special circumstances' do not have to be shown.
An appellant's inability to pay a costs order if their appeal fails will generally favour ordering security. However, if the respondent caused the impecuniosity, that may weigh against requiring security.
Impecuniosity alone does not necessarily justify ordering security if it would, overall, be contrary to the interests of justice.
Other relevant factors the court will consider include the strength of the appellant's prospects of success, whether ordering security would effectively shut them out of prosecuting the appeal, and any delay by the respondent in applying for security.
Each case is dependent on its own particular factual circumstances. The amount of security set for an impecunious appellant should not be more than what is reasonably necessary.

The decision illustrates the wide variety of factors courts may consider with respect to ordering security for costs.

It shows that while a proven inability to pay is significant, the overarching consideration remains serving the interests of justice.

Determining what those interests require in a given case depends very much on the context.