This case confirms the enforceability of commercial litigation funding agreements in class actions conducted under Part 13A of the Civil Proceedings Act 2011 (Qld).
The case concerned a class action commenced by a number of commercial fishing businesses who claim to have suffered loss as a result of pollution caused by certain works at the Port of Gladstone. The plaintiffs and group members in the proceeding had entered into typical commercial litigation funding agreements which provided for the funder to pay the plaintiffs’ legal costs in exchange for a right to receive a proportion of any recoveries in the proceeding. The issue was whether those funding agreements were unenforceable by reason of maintenance, champerty or public policy considerations. The defendant argued that the agreements were unenforceable because they gave the funder an undue level of control over the proceeding which, combined with the entitlement to a proportion of any recoveries arising from the litigation, gave rise to a risk of distorting the litigation process.
In the course of confirming the enforceability of the agreements, Crow J considered the history of maintenance and champerty, and arguments concerning whether they remain as torts in jurisdictions such as Queensland (where they have not been expressly abolished by statute). His Honour declined an invitation to give the torts a ‘decent common law burial’, but nonetheless confirmed that the requirements of public policy, particularly in light of the High Court’s decision in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd, do not make standard litigation funding agreements in class actions under Part 13A unenforceable. In this regard, his Honour referred to more modern developments in the Court’s powers to protect abuses of process, as well as statutory developments such as the enactment of the Criminal Code without crimes of maintenance or champerty, and the enactment of section 103K(2)(b) of the Civil Proceedings Act 2011 (Qld) which contemplates group members in a class action being grouped together in a ‘litigation funding arrangement’.
Michael May (led by L Armstrong QC) appeared for the applicants, instructed by Clyde & Co.
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