The liquidators of a group of companies related to property investor, David Henderson, have recently been ordered to pay a substantial sum for security for costs to the former directors and auditors of the group. In Walker & Ors v Forbes & Ors the plaintiffs sue the former directors and auditors of the group for alleged breaches of duties. The proceedings have been allocated a trial of 12 weeks commencing in February 2018. We reported on disputes over the litigation funding arrangement in this proceeding in an earlier update.
The defendants sought additional security for costs to cover the stages up to and including the trial. In total the defendants sought security of approximately $3.642m.
The liquidators acknowledged that the proceeding was funded with the assistance of a litigation funder. The Court held that the existence of a litigation funder was an important factor that influenced the exercise of the discretion to grant security. Overall, the Court assessed the merits of the claims against the defendants as largely neutral although made a small adjustment to reflect the merits in some areas. In total the Court ordered that the plaintiffs are to provide security for the costs and expert witnesses of the defendants (excluding Mr Henderson) in the global sum of $2.63m together with security for Mr Henderson's costs in the sum of $150,000.
See the Court's full decision here.