In Tayeh v Vorchheimer [2026] VSCA 244, the Victorian Court of Appeal ordered an undischarged bankrupt to provide $45,000 as security for the costs of an application for leave to appeal. Mr Tayeh had previously raised substantial funds from the public to meet his legal fees.

The decision shows that a bankrupt’s access to funding may extend beyond their personal balance sheet. Where public, political or community support has funded the litigation, that support may also be relevant to whether security can be raised.

Hasheam Tayeh sought leave to appeal from a decision of the Victorian Civil and Administrative Tribunal. VCAT found that he had breached the Racial and Religious Tolerance Act 2001 (Vic). It ordered him to pay Mr Vorchheimer $10,000 in compensation and publish a statement about the finding on social media.

Between the liability decision and final orders, Mr Tayeh was made bankrupt on a petition by the Deputy Commissioner of Taxation. He remained an undischarged bankrupt when he commenced the appeal.

The appeal concerned findings and orders directed personally to Mr Tayeh, rather than property vested in his trustee. His bankruptcy was therefore unlikely to affect his standing. Mr Vorchheimer did not challenge his standing and the appeal proceeded.

The bankruptcy instead created a costs problem. Mr Vorchheimer faced defending the appeal with no realistic prospect of recovering his costs if successful. Mr Tayeh acknowledged that risk. He argued that security would end the appeal and that the proceeding raised issues of public importance.

Security for costs on appeal balances two risks. The respondent may incur costs with no meaningful prospect of recovery. The appellant may be prevented from pursuing an arguable appeal.

Bankruptcy provides solid evidence of the first risk, but it is not determinative. The Court must consider all relevant circumstances, including the merits, the risk of non-payment, whether security would stultify the appeal by preventing it from continuing and any public interest.

The balance shifts on appeal. The appellant has already received an adverse determination. The successful party should not ordinarily be required to defend that result without a meaningful prospect of recovering its further costs. 

That risk was clear in circumstances where Mr Tayeh was bankrupted following a default judgment exceeding $1 million in favour of the Deputy Commissioner of Taxation. His prospect of satisfying a further costs order was described as “virtually nil.”

The central issue was whether an order for security would stultify the appeal by preventing it from continuing. This required more than showing that Mr Tayeh could not provide the security himself. The Court could also consider whether funding was realistically available from supporters or other third parties.

The practical lesson is that the inquiry extends beyond the litigant’s balance sheet. It may include how the proceeding is funded and whether others are prepared to support it.

The Court accepted that the grounds of appeal were arguable and involved some legal complexity. It also recognised that security could prevent Mr Tayeh from accessing the Court.

However, it was not clear that security would end the appeal.

From March 2025, Mr Tayeh had used a GoFundMe campaign to raise money for legal fees. By 27 August 2026, it had raised $56,811. Those funds had been spent. More recent fundraising attempts were less successful.

Even so, the earlier campaign demonstrated a capacity to obtain external support. The possibility of further crowdfunding was not remote. Mr Tayeh had therefore not shown that security would necessarily stultify the appeal.

The Court ordered security of $45,000. That was substantially less than the $150,000 originally sought and the $90,000 sought during oral submissions. The reduced amount reflected the Court’s balancing exercise. It provided some protection to the respondent without giving a complete indemnity for the anticipated costs.

Public prominence, political support or fame is not, of itself, a basis for ordering security. Its relevance is that, although a bankrupt may have no personal assets, they may nevertheless be able to raise funds from supporters. If those supporters are funding the lawyers, the Court may ask why they cannot also fund the security.

Earlier fundraising may remain relevant even where the funds have been spent. It may demonstrate an available funding channel and undermine an argument that security would end the proceeding.

For lawyers seeking security, the lesson is to investigate the full funding picture. That may include prior fundraising, crowdfunding pages, third-party payment of legal fees, the legal team retained and any organised group supporting the litigation. Proof of bankruptcy or an empty balance sheet may only be the starting point.

To discuss the implications of this decision, including security costs for applications, litigation funding and the relevance of crowdfunding or third-party support, contact our Restructuring & Insolvency team.