Trent Hancock will have to divulge details of a litigation funding agreement after a Federal Court judge ruled that Shadd Danesi was entitled to see aspects of the agreement in respect of proceedings Hancock has commenced to recover $6.4 million from the bar baron.
Hancock – in his capacity as liquidator of South Townsville Developments – is trying to recover the funds from two Danesi controlled entities – Lauvan Pty Limited and Mittabell Pty Limited.
The Danesi entities purportedly loaned the money to South Townsville Developments Pty Ltd to fund construction of residential apartments in the North Queensland town.
Bar baron Danesi, who has owned the Empire Hotel at Erskineville and the premises housing ARQ nightclub on Oxford Street, claims to be secured creditor though that’s disputed.
His companies Lauvan and Mittabell have also lodged proofs of debt with Hancock totalling an additional $600,000.
Hancock commenced the recovery proceedings late in 2018 and then made an ex-parte application in January this year for approval to enter into the funding agreement.
He obtained confidentiality orders preserving in secret the details of the agreement, including the identity of the funder and the circumstances in which that funding would be provided.
Lauvan and Mittabell were not given notice of that application and subsequently applied to have the confidentiality orders varied or set aside.
As is revealed in Hancock liquidator of South Townsville Developments Pty Ltd (in liq) (No 2) [2019] FCA 622 they succeeded, though they were rebuffed on an application for an order that Hancock pay the costs of their application personally.
“I consider that the applicants should have access to portions of the funding agreement which are relevant to their assessment of how they should conduct their security for costs application,” Justice John Griffiths concluded.
“Their forensic decisions concerning security for costs ought to be made on an informed basis.
“It may well be, for example, that having regard to the relevant terms of the funding agreement they may not press for a separate order providing security for costs.”
The security for costs application was heard in the Federal Court yesterday. Judgment was reserved.
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