The Victorian Supreme Court recently handed down its decision in DIF III Global Co-Investment Fund LP & Anor v BBLP LLC & Ors which considered whether an After-The-Event (ATE) insurer, based overseas, could provide security for costs by way of a deed of indemnity.


The matter concerned an application for security for costs in circumstances where the plaintiffs were not registered in, and had no assets in, Australia.

The parties agreed that the plaintiffs were to provide security however a dispute arose as to the form the security ought to take. The defendants sought security in the usual form, that is, that the plaintiffs either provide a bank guarantee or pay funds into court.

By contrast, the plaintiffs’ ATE insurer offered security for costs by way of a deed of indemnity, together with a bank guarantee in a sum sufficient to cover the costs of enforcement of the deed in the United Kingdom (UK).


Landsdowne AsJ concluded that security for costs should be provided in the usual form and not by the ATE insurer by way of a deed of indemnity. In coming to this decision, her Honour emphasised that the judgment was based on the circumstances presently before the court, and made it clear that such an arrangement may be acceptable in some circumstances.


Unlike other cases regarding security for costs, this decision focussed on the form of security, rather than whether it should in fact be granted.

Landsdowne AsJ concluded that the principles which apply to the court’s discretion in respect of whether security should be granted also apply to the court’s discretion as to the form the security should take.

The overarching principle is that the court must determine how justice will be best served. This requires an analysis of all the relevant circumstances.

In the absence of countervailing considerations, the fact that the party offering security has no assets in Australia is to be given significant weight. The countervailing considerations include whether the ‘moving party’ has assets in an overseas jurisdiction against which a costs judgment may be enforced and the cost and complexity of such enforcement.


In applying the principles above to the present case, Landsdowne AsJ concluded that justice was not best served by security being provided by the ATE insurer by way of a deed of indemnity.

In coming to this decision, her Honour found that the fact that the ATE insurer did not have assets in the jurisdiction was not fatal. That is because the court may consider that assets within the jurisdiction are not necessary if there are sufficient assets overseas or, alternatively, limit security to the costs of enforcement overseas.

In this case, the plaintiff had proposed a bank guarantee to the value of enforcing the deed of indemnity in the UK. However this was ultimately insufficient to overcome the countervailing considerations in favour of security being provided in the usual manner.

These considerations included the fact that there was no direct evidence adduced by the ATE insurer as to its creditworthiness. Such evidence is critical where third party security is proposed. This lack of direct evidence, in addition to the limited information provided by the plaintiffs, left the defendants with considerable uncertainty as to the nature of the plaintiffs’ proposal, exactly what the ATE insurer had agreed to provide, the amount of security and the underlying relationship between the plaintiffs and the ATE insurer.

Other factors her Honour considered included the costs and delays of enforcing a judgment in the UK and there being no evidence that the plaintiffs were unable to obtain a bank guarantee, or of prejudice to them in doing so.


This decision does not rule out the possibility that an ATE insurer may provide security for costs by way of a deed of indemnity.

In Australian Property Custodian Holdings Ltd (in liq) v Pitcher Partners (APCH), a Victorian Supreme Court decision handed down on 24 September 2015, a plaintiff was successful with the court finding that a deed of indemnity from an ATE insurer was adequate security. What was critical in APCH was direct evidence from the ATE insurer, the proposed deed was executed and there was agreement on its terms.

Clearly, the adequacy of this form of security, will depend on the circumstances before the court and how justice will best be served. However, for the court to accept security in the form of a deed of indemnity from an ATE insurer, direct evidence from that insurer going to the sufficiency of the security will be essential.