Two appeal decisions were handed down in the Supreme Court of Victoria on Tuesday1 which have significant implications for the forms of security which be can used to satisfy an order for security for costs in funded litigation matters.
The decisions broaden the manner in which insurers and litigation funders can put up forms of security e.g. by way of deed of indemnity, so they do not tie up significant funds until a case is resolved, even where the entity giving security is based in a foreign jurisdiction. The original decision was reported in our November edition of Acumen.
Johnson Winter & Slattery acted for the successful party.
The two appeal decisions on security for costs applications in effect allowed a deed of indemnity from the same overseas insurer, Am Trust Europe Limited, as an acceptable form of security.
In deciding the appeals, the Court found that a deed of indemnity was an acceptable form of security in circumstances, relevantly, where:
- the claimant was in Victoria;
- the parties had agreed on the terms of the deed of indemnity which were irrevocable and unconditional;
- the deeds were directly enforceable against Am Trust which was based in the UK
- the deeds were governed by the laws of Victoria and enforceable in the courts of Victoria;
- Am Trust had significant assets in the United Kingdom;
- as a large, regulated insurer and being involved in the business of underwriting legal expense risk, it was unlikely that Am Trust would default on the deed;
- there were clear and straightforward arrangements for the enforcement of Victorian judgments in the UK; and
- extra security in the form of a $20 bank guarantee was provided to cover the cost of any enforcement in the United Kingdom.
In reaching this decision, the Court noted a defendant was not necessarily entitled to the most advantageous security available. Rather, the security must offer the defendant “sufficient protection”, whilst minimising the disadvantage suffered by the plaintiff.