Jin Lian Group Pty Ltd (in liq) v ACapital Finance Pty Ltd (No 2)

Jin Lian Group Pty Ltd, in liquidation, brought an action against ACapital Finance Pty Ltd. The plaintiff sought recovery of sums paid under a loan agreement, alleging misrepresentations and breaches of statutory duty. The matter was heard in the Supreme Court of New South Wales. The primary legal issues centred on the rejection of two offers of compromise, the entitlement to indemnity costs, and the liability of a litigation funder for the defendant's costs. The court had to determine whether the plaintiff's failure to accept the second offer of compromise was reasonable, and if so, whether this justified the defendant's entitlement to indemnity costs. Furthermore, the court examined whether the litigation funder was liable for the defendant's costs and if the funds in court should be paid to the defendant pending the assessment of its costs.

The court found that the plaintiff's acceptance of its failure to accept the second offer of compromise was unreasonable, thereby entitling the defendant to indemnity costs. The court concluded that the rejection was unreasonable due to the plaintiff's failure to provide a valid reason for the rejection and its subsequent acceptance of liability. Regarding the litigation funder, the court held that there was no direct contractual relationship between the funder and the defendant, thus absolving the funder from liability for the defendant's costs. Lastly, the court ruled that the funds in court should be paid to the defendant pending the assessment of its costs, considering the defendant's entitlement to indemnity costs.

In conclusion, the court ordered that the plaintiff pay the defendant's indemnity costs. The litigation funder was relieved from liability for the defendant's costs, and the funds in court were to be paid to the defendant pending the assessment of its costs. The court's decision emphasised the importance of the reasonableness of rejecting offers of compromise and the limited scope of liability for litigation funders.