Litigation funding means security for costs are ordered.

A recent judgment of the Supreme Court of South Australia, the Court gave significant weight to the existence of litigation funding, in ordering security for costs.

The defendant applied for security for costs, in circumstances where the plaintiff was an individual of some financial means and was using litigation funding. The defendant didn’t even compellingly show that the plaintiff was likely to fail to pay an adverse cost order. Evidence about the plaintiff’s financial resources was “less than comprehensive”.

But the Court considered the overall context, in particular that the plaintiff had entered a litigation funding agreement. The details of the funding arrangement weren’t disclosed but the Court considered that there was a party behind the litigation who stood to derive major benefit from the plaintiff’s success.

Giving weight to the litigation funding circumstances, the court ordered the provision of security for costs (by the plaintiff, not the litigation funder). Technically, as the matter was an appeal from a Master’s decision, the Court dismissed the plaintiff's appeal, declining to hold that the Master's discretion had been improperly exercised. In fact, independent of judicial review grounds, the Court stated that security for costs should be ordered in the interests of justice.

It is important to note that the Court’s decision involves the exercise of discretion under South Australian rules and legislation, and each State has its own code and judgments on security for costs (as does the Federal Court system).

David Burstyner would be pleased to provide further analysis of this decision, how it might be relevant to other states and the Federal Court system, as well as potential strategies for managing or trying to minimise the impact of the approach taken in this judgment.

Read the full decision here.

To discuss this article, or for further information please contact:

David Burstyner
Principal
Sladen Legal
T +61 3 9611 0190| M +61411 072 743
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: dburstyner@sladen.com.au