See Fair Work Act 2009 s.404 and Fair Work Commission Rules rule 55
Security for costs is when the Fair Work Commission orders that one party pay an amount to be held in trust before a matter proceeds to a hearing. Until the amount ordered is paid, the matter will be adjourned.
Section 404 of the Fair Work Act allows the Commission, through its Rules, to provide for security of costs. Rule 55 sets out the relevant rules.
There is no absolute rule as to when the Commission will exercise the discretion to order security for costs.[1] Whether an order should be made depends on the circumstances of the case and 'what is required by the justice of the matter'.[2]
In Zornada v St John Ambulance Australia (Western Australia) Inc. the Full Bench stated that:
...costs orders in this jurisdiction are extraordinary, and security for costs orders even more so. This is because the Act reflects the longstanding principle that costs will not be awarded against parties in industrial proceedings, other than in exceptional circumstances.
...
Accordingly the Commission should award security for costs only in the rarest of circumstances, once the Commission has balanced the merits of the application, the financial position of the parties, and what is just in the circumstances.[3]
The financial position of the party against whom the order is sought may be relevant in the circumstances.[4] There is no absolute rule that security for costs should be ordered against a party who is suffering financial hardship.[5] There is a general rule, however, that poverty should not prevent a party from having their matter determined by the Commission.[6]
Simply because an applicant is able to satisfy a security for costs order does not mean that an order is justified.[7]
The strength of the case of the party against whom the order is sought may also be relevant.[8] This may require a tentative evaluation of the party's prospects of success.[9] A case which is hopeless and bound to fail may be a reason to order security for costs.[10]
Whether the case raises issues of general public importance may also be relevant to whether security for costs are ordered.[11]
Repeated non-compliance of, or disregard to, practices, procedures and rulings may be indicative of vexatiousness.[12] This could result in the Commission dismissing the application for security of costs.
[1] Merribee Pastoral v ANZ Banking Group(1998) 193 CLR 502, 513; cited in Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 7.
[2] ibid.
[3] Zornada v St John Ambulance Australia (Western Australia) Inc. (2013) 237 IR 48 [35].
[4] Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 8.
[5] Merribee Pastoral v ANZ Banking Group (1998) 193 CLR 502, 513; cited in Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 8.
[6] ibid.
[7] Zornada v St John Ambulance Australia (Western Australia) Inc. (2013) 237 IR 48 [39].
[8] Merribee Pastoral v ANZ Banking Group (1998) 193 CLR 502, 513; cited in Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 10.
[9] ibid.
[10] ibid.
[11] Devenish v Jewel Food Stores Pty Ltd [1990] HCA 35 (15 August 1990); cited in Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 12.
[12] Harris v Home Theatre Group Pty Ltd T/A Home Theatre Group [2011] FWA 2910 (Asbury C, 12 May 2011) at para. 21.