The
First instance decision
The Senior Assistant Registrar ordered the Plaintiff to furnish security for the Defendant's costs for the period until the filing and/or exchange of affidavits of evidence-in-chief by way of (a) the provision of a costs undertaking jointly by the litigation funders on terms satisfactory to the Defendant ("the Undertaking"); (b) or a banker's guarantee on terms satisfactory to the defendant; (c) or a solicitor's undertaking on terms satisfactory to the defendant; or (d) if the parties are unable to agree on the terms of the costs undertaking, banker's guarantee, or solicitor's undertaking, then the security shall be provided by way of payment into court. The Plaintiff appealed against the order of the Senior Assistant Registrar's decision as to the form of security. Specifically, the Plaintiff sought to restrict the form of the security to the Undertaking only.
The SGHC decision
The Court held that the Plaintiff was not restricted to any fixed form of security and it was the Plaintiff's burden to demonstrate that the proposed form of security was adequate2.
The Undertaking was found to be adequate because:
-
it was irrevocable and unconditional;
- there was public information available to confirm the litigation funder had sufficient assets to satisfy the security;
- there was little to no risk of the litigation funder not honouring the Undertaking; and
- it contained provisions that narrowed the scope of points the funders could rely upon in seeking to resist enforcement.
- Once the court can be satisfied that the litigation funder can prove it has the means to pay, will honour the payment without the need for enforcement and has sufficient assets to secure the undertaking, it is likely to be considered adequate.
The Singapore High Court's judgment provides useful guidance for parties who are considering providing alternative forms of security for costs.
Litigation Funding Landscape in the
The litigation funding landscape in the
Since the introduction of the Cayman Act, the court has not handed down a decision detailing the circumstances (if any) in which the costs of litigation may be secured by a funder as a matter of
Conclusion
The decision and reasoning in
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So long as a plaintiff's proposed security is adequate, the purpose of the defendant's security for costs application has been met.
It is trite law that the Court has a discretionary power to order, at any stage of the proceedings, a person in the position of a plaintiff to give security for his or her opponent's costs.
This decision is important for funded parties and litigation funders, as the ability to provide security by way of a costs undertaking, rather than an upfront payment of funds, is obviously helpful from a cashflow perspective. There will be commercial risks in taking this approach, but it is likely that more parties with cases funded by litigation funders will seek to put forward similar undertakings as a recognised and legitimate form of security.
Footnotes
1 In relation to form of security, Hargrave J in the
2 The court found that there will be some forms of security that are more readily characterised as being adequate either due to their inherent advantages or historical usage. It may be easier for a plaintiff to establish adequacy in respect of these forms of security. However, this does not mean that forms of security outside of these traditional ones can never be adequate; it all depends on their characteristics and how they apply to the facts of the case at hand [para 26].
3 https://www.conyers.com/publications/view/a-company-v-a-funder-unreported-23-november-2017/
https://www.conyers.com/publications/view/application-granted-for-sanction-to-enter-into-a-litigation-funding-agreement/
https://www.conyers.com/publications/view/non-party-cost-orders-an-inevitable-consequence-of-funding-litigation/
https://www.conyers.com/publications/view/funding-the-costs-of-litigation-a-comparative-analysis/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Conyers
Clarendon House
Hamilton
HM 11
Tel: 2951422
Fax: 2924720
E-mail: Gena.smith@codanci.com
URL: www.conyers.com
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