High Court Orders Disclosure of Litigation Funding Agreement

The controversial issue of litigation funding is continuing to tax the Irish Courts. In Persona Digital Telephony Ltd & anor v Minister for Public Enterprise & ors [2015] IEHC 457 the Court dealt with an application by the defendants for disclosure of a litigation funding agreement between the plaintiffs and a litigation funder (Harbour). This was in the context of an application by the plaintiffs seeking a declaration that the funding arrangement did not contravene the rules on maintenance and champerty.

Maintenance was described by Hogan J in Greenclean Waste Management Ltd. v. Leahy (No. 2) [2014] IEHC 314 “as the improper provision of support to litigation in which the supporter has no direct or legitimate interest” while champerty was described as “a particular kind of maintenance, namely maintenance of an action in consideration of a promise to give the maintainer a share in the proceeds or subject matter of the action.”

Facts
In considering this application the Court emphasised the unique, novel and unusual set of circumstances in the case and noted that the plaintiffs were impecunious and would not be in a position to proceed with the action without third party funding. The Court also noted that the plaintiffs were asserting rights of access to the courts for the purpose of vindicating their rights.

The plaintiffs argued that the funding agreement was confidential and privileged and if disclosed to the defendants, it would provide them with an unnecessary, unfair and disproportionate litigation advantage in the proceedings.

Decision
The Court reviewed authorities from a number of jurisdictions and considered the plaintiffs' argument that the funding application was really an issue between the plaintiffs and the Court and that the participation of the defendants was not necessary for the purposes of the application. The plaintiffs were relying upon that argument in part to justify their position that there was no requirement for the funding agreement to be disclosed to the defendants however, the Court rejected this contention, taking the view that the adversarial system in which litigation is conducted gives each side the right to participate in matters which affect or potentially affect the other side.

The Court did not accept that full details of funding agreements relating to non-interested third party funders had to be revealed but in the circumstances of the present case where the application was novel, it was appropriate that both the Court and the other parties to the proceedings should have sight, in general terms at least, of the third party funding agreement.

The Court also did not accept that the simple averment that Harbour would act in accordance with the UK Code of Conduct for Litigation Funders was sufficient comfort for the Court. Instead the Court ordered that it should have sight of the wording of particular commitments given by Harbour, namely that Harbour was entitled to information but could not interfere with the litigation, that Harbour could not withhold consent to the change in the plaintiffs’ lawyers, and that decisions whether to prosecute, compromise, continue or discontinue the proceedings were at all times within the exclusive control of the plaintiffs.

The Court was mindful that its decision should not destroy the possibility of vindicating the plaintiffs rights and ordered that the plaintiffs could redact (for the moment) those elements of the funding agreement that made reference to details of the funding budget, details of the timeline, details of the terms and circumstances on which the funder would release funding from time to time, details of the funder’s remuneration and the precise circumstances in which the funder could terminate funding as otherwise it could give the defendants a disproportionate litigation advantage. The Court did say that it was possible that a point might be reached during the hearing of the funding application where those details might be regarded as relevant to the issues before the Court. If this were to occur there could be further argument on this point.

The substantive application as to whether the funding agreement offends against the law on maintenance and champerty is due to be heard in November.

For further information please contact Paula Mullooly at pmullooly@algoodbody.com.

Date published: 13 October 2015