Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd

The appeal concerned an application for security for costs brought by CGU Insurance Ltd, the sole remaining defendant, against the liquidator of Arimco Mining Pty Ltd. The liquidator had already expended over $1 million on the proceedings. The primary judge had ordered the liquidator to provide security for costs, and the liquidator sought leave to appeal this decision.

The central legal issue before the Court of Appeal was whether the primary judge had erred in exercising their discretion to order security for costs against the liquidator, particularly in light of the involvement of a litigation funder. The court was required to consider the general principles governing security for costs orders against liquidators and the relevance of third-party litigation funding to the exercise of that discretion.

The Court of Appeal affirmed the principles applied by the primary judge, which established that courts possess an inherent power to order security for costs against plaintiffs, including liquidators, to ensure the efficacy of cost awards and prevent injustice. The discretion to order security is broad, requiring a balance between protecting defendants and avoiding undue prejudice to impecunious plaintiffs. Crucially, the court held that the existence of a litigation funder who stands to benefit from the proceedings is a significant factor. If such a funder is unable to provide security, the proceedings may be considered stultified. However, the court emphasised that it is unrealistic to disregard the financial capacity of those who stand to benefit from litigation when assessing whether an order for security would stultify the proceedings.

The Court of Appeal granted leave to appeal and cross-appeal but ultimately dismissed both, upholding the primary judge's decision. Each party was ordered to bear its own costs of the appeal and cross-appeal.