Security For Costs Applications In Federal Court Class Actions

Its Eco Pty Ltd v BPS Financial Limited [2022] FCA 842¹

Security for costs (SFC) orders cannot usually be made against individuals, unlike corporations, in class actions in the Federal Court of Australia (the general rule).²

However, builders and/or their insurers should be relieved as the Federal Court of Australia (FCA) has recently confirmed that SFC can be ordered against lead applicants in class actions who are individuals. This overcomes the problem created by the general rule: that previously, respondents could not seek SFC from lead applicants of class actions if they were individual owners of residential complexes.

The general rule revised

In Eco v BPS, Justice Derrington held that in class actions, SFC can be ordered against lead applicants who are individuals because under the general rule it is unfair that: