The opponent asks for security for costs before your invoice case proceeds
Assess an opponent request for security for costs as a separate litigation funding exposure, distinguishing correspondence, application and order without assuming security is automatic.
Corporate Recovery Partners
01 / 06
The recovery budget has another question
Your business starts an invoice claim, then receives correspondence asking it to provide security for the opponent's costs. Send it to the lawyer promptly. This is a different issue from paying your own solicitor or proving the unpaid invoice. Establish what has actually been requested and what response is required before treating the amount as either an immediate debt or an empty threat.
Keep the letter, any filed application, supporting evidence and court orders clearly distinguished. Record the relevant proceeding and dates. Ask the lawyer what jurisdiction and rules apply. An opponent's preferred amount is not itself an order, while an order already made needs attention according to its actual terms. Do not put every document into the same pending-negotiation category.
The Judicial Commission of NSW's civil guidance explains that security for costs is discretionary and not automatic. Ask the lawyer to assess the actual grounds, evidence and possible response in your case. This article does not predict an order, identify a universal eligibility test or say financial difficulty by itself settles the issue. Other courts and proceedings need their own assessment.
Imagine a company budgeting for its lawyer's next stage while the opponent seeks security that would require a separate funding commitment. Obtain advice about the actual proposal and possible forms of security. Show the potential cash effect separately from ordinary legal expenses. Do not assume money potentially tied up as security can simultaneously fund the business's operating payments.
Give the lawyer current financial information and any other material requested for the advised response. Explain missing records and uncertainties. Do not move assets or manufacture an appearance of financial strength to influence the application. Ask how the security issue affects the proceeding's timetable and the commercial comparison of continuing, negotiating or considering another advised course.
Retain the response, any agreement or order, and evidence of required steps. Have the lawyer explain what happens next, including the treatment of any security provided. Do not assume providing security means the opponent has won the invoice dispute or that the amount must be returned on your preferred date. A sound recovery budget accounts for this separate procedural exposure without confusing it with liability on the underlying claim.
