It is increasingly common for insurers to be faced with the
prospect of defending legal proceedings, which are commenced by an
insolvent plaintiff, but are financed by litigation funders. The
advent of litigation funding presents legal and strategic
challenges for insurers that wish to obtain security for any
adverse cost order that might be made in a proceeding against the
plaintiff. A recent decision of the Supreme Court of Queensland has
positive implications for defendants seeking security for costs in
proceedings which are financed by litigation funders.
Background
Gainspace, a developer, entered in two contracts with Suncare to
construct 35 townhouses in Mackay. As the project approached
completion, the parties fell into dispute and Gainspace ultimately
terminated the contracts. Suncare then commenced proceedings
against Gainspace claiming damages arising from Gainspace's
wrongful termination of the contract, while Gainspace brought a
counterclaim based on
