Les & Zelda Investments Pty Ltd v Whitehaven Coal Ltd

Les & Zelda Investments Pty Ltd, represented by a shareholder, initiated proceedings against Whitehaven Coal Ltd, alleging breaches of statutory duty and misleading and deceptive conduct. The matter was heard in the Federal Court of Australia. The central issue before the Court was the method by which the quantum of security for costs should be assessed in cases where security has been provided in tranches. The Court was also required to consider whether a discount from the estimated party-party costs was appropriate in the context of a shareholder class action funded by a litigation funder.

The Court held that the method of assessing security for costs should focus on the estimated party-party costs, as this was the most reliable indicator of the likely costs of the litigation. It determined that a discount from these estimated costs was not appropriate in this case, given the nature of the shareholder class action and the involvement of a litigation funder. The Court emphasised the importance of considering the overall context of the litigation, including the interests of all parties involved, when determining the quantum of security for costs.

As a result of the Court's reasoning, the assessment of security for costs in shareholder class actions funded by litigation funders should be based on the estimated party-party costs, without applying a discount. This approach ensures that the assessment is fair and takes into account the unique circumstances of such litigation.

The Court ordered that the security provided for costs should be assessed based on the estimated party-party costs, without any discount, and that the parties should bear their own costs of the appeal.