Neutral Citation: [2016] IEHC 187
THE HIGH COURT
[2001 No. 9223 P]
BETWEEN
PERSONA DIGITAL TELEPHONY LTD. AND SIGMA WIRELESS NETWORKS LTD.
PLAINTIFFS
AND
THE MINISTER FOR PUBLIC ENTERPRISE, IRELAND, AND THE ATTORNEY GENERAL
DEFENDANTS
AND
BY ORDER DENIS O’BRIEN
DEFENDANT
THIRD PARTY
JUDGMENT of Ms. Justice Donnelly delivered the 20th day of April 2016.
1. This application comes before the court by way of notice of motion dated the 25th March, 2015, whereby the plaintiffs seek, inter alia, the following relief:-
“An Order, by way of a Declaration or otherwise, pursuant to the inherent jurisdiction of this Honourable Court and/or Order 34 of the Rules of the Superior Courts, that in entering into this litigation funding arrangement with Harbour Fund III, L.P., the Plaintiffs are not engaging in an abuse of process and/or are not contravening rules on maintenance and champerty.”
2. The relevant facts and background to this application are set out in detail in a previous judgment of this Court, Persona Digital Telephony Ltd. v. Minister for Public Enterprise (No. 1) [2015] IEHC 457, on a preliminary issue to this motion, which resulted in the defendants being granted disclosure of the litigation funding agreement between the plaintiff and Harbour III L.P. subject to certain limitations. As was observed by the Supreme Court in the decision of Comcast International Holdings Inc. and Ors. v. Minister for Public Enterprise and Ors.; Persona Digital Telephony Ltd. and Anor. v. Minister for Public Enterprise and Ors. [2012] IESC 50, and indeed this Court in the preliminary judgment, this is a unique case. Apart from the factors set out by the Supreme Court, this case is also noteworthy as it is the first case to come before the courts in Ireland directly concerning the acceptability of professional third party litigation funding.
3. In contesting the plaintiffs’ application, the defendants, including the State defendants, submitted that maintenance and champerty are criminal offences as well as torts in Ireland. Maintenance and champerty, they submit, are generally described as common law offences which have had statutory recognition for hundreds of years. The State defendants relied upon the Maintenance and Embracery Act 1634, which applied certain Acts of the English Parliament then in operation to Ireland. The Statute Law Revision Act 2007, which repealed all public Acts enacted prior to 1922 save for a “white list” of statutes specifically reserved, retained three statutes concerned with maintenance and champerty. These statutes are the Maintenance and Embracery Act 1540; the Maintenance and Embracery Act 1634; and, the Statute of Conspiracy (Maintenance and Champerty) of unknown date.
4. According to the State defendants, s. 1 of the Maintenance and Embracery Act, 1634 adopted four such statutes as passed in the English Parliament, namely:
(i) the Maintenance and Champerty Act 1275;
(ii) the Champerty and Embracery Act 1300;
(iii) the Statute of Conspiracy (Maintenance and Champerty) of unknown date
(iv) the Maintenance Act 1326.
The Court is satisfied that at least one more then extant statute was also adopted by the Act of 1634; namely, the Ordinance Concerning Conspirators 1305 which provided a statutory definition of champertors.
5. The defendants also relied upon the fact that maintenance and champerty are recognised torts in this jurisdiction. The State’s submissions recognised that “it is also difficult to discover the origin of the torts of maintenance and/or champerty.” Reference was made to a submission of counsel in argument in British Cash and Parcel Conveyors Ltd v. Lamson Store Service Company Ltd. [1908] 1 KB 1006, decided over one hundred years ago, to the effect that “maintenance was a common law wrong giving rise to a civil action before it was made by statute a criminal offence.” According to the State defendants:-
“[w]hile the accuracy of the foregoing is difficult to affirm it is nonetheless clear that the torts at issue have been part of the infrastructure of our litigation system since in or around the time of its foundation.”
6. A very brief synopsis of the plaintiffs’ arguments is that the doctrines of maintenance and champerty operate to prevent any undermining of the administration of justice and they submitted that the doctrines should be applied in light of modern conceptions of propriety. The plaintiffs submitted that, despite juridical statements that maintenance is the support of litigation by a stranger without just cause and that champerty is an aggravated form of maintenance where the litigation is supported in return for a share of the proceeds, these features do not set the limits of what the doctrines mean. The plaintiffs submitted that the professional third party funding scheme must be considered in context and the question should be asked whether in the round and on the whole the transaction amounts to unlawful maintenance/champerty or whether it will enable a claim of great public importance to proceed and ensure the attainment of the constitutional guarantee of access to justice.
7. With equal brevity, the defendants submitted that the torts of maintenance and champerty are still extant and that the courts, including the Supreme Court, have defined maintenance and champerty in terms that clearly encompass the funding agreement at issue in these herein proceedings. According to the defendants’ submissions, on long settled principles, the funding agreement is void for illegality. The defendants submitted that the plaintiffs were asking the court to vary the scope of the offences and torts of maintenance and champerty; an action which is beyond the jurisdiction of the court.
PRELIMINARY OBJECTION
8. A preliminary objection was raised by the defendants regarding the jurisdiction of the court to make the declaration set out in para. 1 above. Order 34 of the Rules of the Superior Courts governs the procedures to be adopted when making an application regarding a special case. The defendants argued that the application did not comply with the procedural requirements of O. 34; one of those requirements being that both parties concur in the statement of a question of law to the court. There is no concurrence between the parties here; therefore, this Court cannot proceed under O. 34.
9. Cognisant of the restrictions placed upon the Court in this regard, the plaintiffs submitted that O. 34 is merely illustrative of the fact that the court has a jurisdiction to grant declaratory orders. Counsel relied upon the inherent jurisdiction of the court to grant such declaratory orders, such jurisdiction said to be evidenced under O. 19 r. 29 which enables the court to make declarations as to rights, both in relation to civil and criminal law. Order 19 is derived from s. 155 of the Courts of Chancery (Ireland) Act 1867 and was repeated in the Rules of the Superior Courts in 1905, 1963 and again in their present edition.
10. The plaintiffs relied upon the decision of Clarke J. in Omega Leisure Ltd. v. Superintendent Charles Barry and Ors. [2012] IEHC 23 which examined whether the plaintiff, who sought to establish a bingo hall, was entitled to conduct gaming and lotteries in circumstances where it did not hold such a licence but acted as an agent for those who did. The defendants in Omega contested whether Omega Leisure Ltd. had standing to raise the issues by way of seeking declaratory relief. Clarke J. stated, at para. 2.3:-
“The State argued that the court could not give, as it were, a carte blanche clearance to Omega certifying, in effect, that its activities were lawful. That point was accepted in part by Omega but nonetheless the principal aspect of the dispute between the parties under this heading was as to whether there was anything, in principle, unlawful about a company such as Omega conducting, on a large scale and on an agency basis, regular bingo sessions on behalf of charitable organisations who had the benefit of an appropriate licence under the 1956 Act.”
Clarke J. quoted from Henchy J., speaking on behalf of the Supreme Court, in Tormey v. Ireland [1985] I.R. 289 as he considered the full original jurisdiction of the High Court when a jurisdiction had been granted to another court, the final sentence of which is particularly apposite:-
“Save to the extent required by the terms of the Constitution itself, no justiciable matter or question may be excluded from the range of the original jurisdiction of the High Court.”
11. Clarke J. observed that the inherent jurisdiction of the court flows from Art. 34.3.1˚ of the Constitution and he cited from Walsh J., speaking for the Supreme Court, in Transport Salaried Staffs’ Association and Ors. v. Córas Iompair Éireann [1965] I.R. 180 at 202-203 regarding the nature of declaratory relief in such proceedings:-
“In modern times the virtues of the declaratory action are more fully recognised than they formerly were and English decisions and dicta in recent years have indicated a departure from the conservative approach to the question of judicial discretion in awarding declarations. A discretion which was formerly exercised ‘sparingly’ and ‘with great care and jealousy’ and ‘with extreme caution’ can now, in the words of Lord Denning in the Pyx Granite Co. Ltd. Case [1958] 1 QB 554, at p. 571, be exercised ‘if there is good reason for so doing,’ provided, of course, that there is a substantial question which one person has a real interest to raise and the other to oppose. In Vine v. The National Dock Labour Board [1957] 2 WLR 106, Viscount Kilmuir L.C., at p. 112, cites with approval the Scottish tests set out by Lord Dunedin in Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd. [1921] 2 AC 438, who said, at p. 448:-
‘The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.’
It is also to be observed that the fact that the declaration is needed for a present interest has always been a consideration of great weight.”
12. Clarke J. identified four elements as requiring to be satisfied where an application is before the court for declaratory relief. The elements are as follows, at para. 4.4. thereof:-
“In approaching claims for declaratory relief, the court must first be satisfied that there is a good reason for so doing. Second, there must be a real and substantial, and not merely a theoretical, question to be tried. Third, the party with carriage of the proceedings must have sufficient interest to raise that question and finally, that party must be opposed by a proper contradictor. It should, of course, be borne in mind that, by its very nature, a declaration is a discretionary relief and involves a jurisdiction which must, therefore, be circumspectly exercised and in accordance with the circumstances of the case.”
13. The State defendants submitted to the court that the plaintiffs have attempted to seek the opinion of the court, by way of declaratory relief, in a matter which is not in dispute in these herein proceedings. They submitted that the enforceability of the third party funding agreement was not pleaded in these proceedings as evidenced by the fact that no relief by way of declaration or otherwise was sought in the plenary summons. The fourth named defendant submitted to the court that the plaintiffs have failed to set out the basis upon which they seek to invoke the inherent jurisdiction of the court. They accepted that the court derived such authority from the Art. 34.3.1˚ of the Constitution and indeed from the common law yet relied upon the limitation of the jurisdiction of the court in view of Art. 15.2.1˚ which vests the sole and exclusive power of making laws for the State in the Oireachtas. They observed that it would be wholly inappropriate for the court to create an inherent jurisdiction to give an advisory or consultative opinion in this context.
14. On the evidence, the Court is satisfied that the plaintiffs have raised substantive issues about their ability to pursue these cases in the absence of such funding. Mr. James Boyle, the major shareholder of the plaintiff companies, has sworn an affidavit in which he states that the plaintiffs are impecunious. Issue is taken with that proposition in particular by the fourth defendant on whose behalf an affidavit has been filed to which Mr. Boyle responded by way of further affidavit. It is the view of the Court that, in the absence of reasons to the contrary, what has been stated therein is correct. Mr. Boyle has sworn that the combined resources of himself and Mr. McGinley, the other director, are nowhere near the estimated €10 million required to finance the proposed litigation. Such circumstances would give rise to a good reason for the plaintiff to seek the declaratory orders herein sought.
15. The fourth defendant also argued that the plaintiffs were special purpose vehicles which never traded and incurred no loss (as distinct from made no gain) by reason of the complaints made. He submitted that these, and other factors, such as the fact that the third party funder is not represented, renders the issue of maintenance and champerty moot. In essence all defendants submitted that this is not a real and substantial issue but merely a theoretical question to be tried.
16. The application comes before the Court in unusual circumstances whereby the plaintiffs have sought to bring before the court, for the first time, the direct issue of professional third party litigation funding in Ireland. The plaintiffs’ lawyers have raised these issues before the High Court in light of the existence of maintenance and champerty as torts and offences in this jurisdiction. The issue as to whether professional third party funding is per se a breach of maintenance or champerty raises substantive issues of law. These factors, combined with those above identified, also establish good reason for the court to examine the legitimacy of this third party funding in the absence of contemporaneous authority in the jurisdiction. The Court accepts that there is a real and substantial question to be tried and not merely a theoretical one. It is not a moot question in light of the reality of the circumstances that exist in the context of the impecuniosity of the plaintiffs. In that regard, the Court notes, that the comment contained at para 62 of the Court’s preliminary judgment dated 30th June 2015, (i.e. that “success on this motion will bring an end to the proceedings”) is a reference to the de facto end to proceedings rather than an ending de jure. Mr. Boyle has confirmed on affidavit that, if the funding arrangement with the third party funder is not approved, he will have no other means of prosecuting his case.
17. Having entered into a third party funding agreement with respect to these proceedings, it is also accepted that the plaintiffs have sufficient interest to raise this question before the court. Finally, it has been evidenced in submissions, both oral and written, that the plaintiffs are opposed by a proper contradictor and that the issue has been adequately examined in the documents and material available before this Court.
18. As regards the claim that the Court should not grant relief due to the fact that the enforcement of the third party agreement is not at issue in these proceedings, the third party funding agreement only arose as an issue in the course of the proceedings. The third party funder has, through its Head of Litigation Funding, Ms. Susan Dunn, sworn an affidavit in these proceedings on behalf of the plaintiffs. Neither the plaintiffs nor the third party funder have raised any issue about the court making this determination in advance of an application for enforceability and indeed the opposite is the case; it is in their particular interests to have this matter determined.
19. Having considered the evidence before the Court and the submissions made, and in view of the satisfaction of the elements required for the grant of declaratory relief, as identified by Clarke J., this Court, pursuant to its inherent jurisdiction, will examine whether the plaintiffs, having entered into a litigation funding arrangement with a third party not before this court, are engaged in an abuse of process and/or will contravene the rules on maintenance and champerty.
A PROHIBITION ON MAINTAINING AN ACTION FOR PROFIT: AN ISSUE ALREADY DETERMINED?
20. In Thema International Fund plc. v. HSBC Institutional Trust Services (Ireland) Ltd. [2011] IEHC 654, Clarke J., when commenting on case law from other jurisdictions, stated: “…the situation in this jurisdiction is different in that professional third party funding is not permitted.” The defendants, and the State defendants in particular, submitted that this is the orthodox position, having been established by the Supreme Court in a series of authorities culminating in O’Keeffe v. Scales [1998] 1 I.R. 290.
21. Although those cases concerned different issues, the defendants submitted that the principles stated therein, in particular in O’Keeffe v. Scales, apply. Answering the question of whether this is an issue already determined by the Irish Courts, requires engagement with (i) the history of maintenance and champerty; (ii) the ingredients of the torts and offences of maintenance and champerty; and, (iii) the consideration of the authorities relied upon and the submissions made in order to lead this Court to its conclusion
HISTORY OF MAINTENANCE AND CHAMPERTY
22. Maintenance and champerty are offences and torts of considerable vintage in this jurisdiction but of even greater vintage in the jurisdiction of England and Wales. Most of the judicial commentary appears to accept that the torts of maintenance and champerty are common law in nature but were made criminal offences by statute.
23. There is some agreement between the parties that these Statutes may be declaratory of the law, or at least there is a concession by the State that this could be so. It is relevant to cite the observation of the High Court of Australia in Campbells Cash and Carry Pty. Ltd. v. Fostif Pty. Ltd. [2006] HCA 41, at para. 68, wherein their learned Justices sought to ascertain the origin of these longstanding torts and offences:-
“The law of maintenance and champerty has been traced to the Statute of Westminster the First (3 Edw I c 25) of 1275. Some trace it back to Greek law and Roman law. Be this as it may, Coke identified maintenance as an offence at common law and champerty was a particular species of maintenance. Although traditionally identified as a common law offence, several early statutes are understood as affirming or declaring that common law.”
24. There was no agreement as to what effect, if any, being declaratory of the common law has on the nature of the torts and offences. The State defendants submitted that a statute which declares the common law position, is a codification of the tort and offence resulting in the matter becoming a statutory tort and offence without its ingredients being changed. The plaintiffs, on the other hand, argued that the meaning of the tort and offences of maintenance and champerty has undergone change over the centuries at common law rendering it impossible to ascertain any consistent constituent ingredients of the torts and offences. There is, however, general agreement that the rules of maintenance and champerty were derived from a time when the justice system lacked the strength and impartiality, in the words of Lord Mustill in the decision of Giles v. Thompson [1994] 1 AC 142, to “resist the oppression of private individuals through suits fomented and sustained by unscrupulous men of power.” It was the submission of the plaintiff that the evolution of the legal system now makes this stringent protection unwarranted. The defendants on the other hand submitted that the Court is limited at common law and under the Constitution from changing what are established ingredients of the torts and offences of maintenance and champerty.
25. Although the State defendants relied on the fact that maintenance and champerty are both torts and criminal offences, they have not indicated any difference between the ingredients of the torts of maintenance and champerty and the ingredients of the offences of maintenance and champerty. In that regard, this Court is in agreement with the observation of Hodson L.J. in Martell v. Consett Iron Co. Ltd. [1995] Ch. 363, wherein he stated that “there [is]…..no decision showing any distinction between the elements of the crime and of the tort…”
26. The State defendants laid emphasis on the retention of maintenance and champerty as an offence under the Statute Law Revision Act 2007. The State argued that the fact that the Oireachtas has recently determined that such activity continues to constitute a criminal offence must be considered as a compelling, perhaps the most compelling, indicator that the Oireachtas was of the view - in 2007 - that the activity constituting the offences - as was then understood - was contrary to public policy to the extent that it ought to remain criminalised.
27. It should be observed that there has been no indication of any criminal prosecution occurring for maintenance or champerty in this jurisdiction since the foundation of the State, and indeed no reference to any such prosecution in the immediately preceding century. Virtually all of the modern authorities from other common law jurisdictions (save for an authority from Hong Kong; see, Winnie Lo v. HKSAR [2012] HKCFA 23) concern civil cases in which both tortuous and criminal liability has been discussed. The retention by the Statute Law Revision Act 2007 of the torts and offences is a marked difference between the approach in this jurisdiction and that of England and Wales. Under ss. 13 and 14 of the UK Criminal Law Act 1967, the crimes and torts of maintenance and champerty were abolished; however, s. 14(2) states that:-
“the abolition of criminal and civil liability under the law of England and Wales for maintenance and champerty shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal.”
28. The effect, if any, of that Act, and that subsection in particular, is a matter of dispute between the parties and will be indicated where relevant below. The Court will now turn to the ingredients of the torts and offences of maintenance and champerty.
THE INGREDIENTS OF THE TORTS AND OFFENCES OF MAINTENANCE AND CHAMPERTY
29. In Thema International Fund plc. v. HSBC Institutional Trust Services (Ireland) Ltd. Clarke J. cited with approval the definition of maintenance, as derived from Halsbury’s Laws of England, in the following terms:-
“…the giving of assistance or encouragement to one of the parties to an action by a person who has neither an interest in the action nor any other motive recognised by law as justifying his interference.”
In Greenclean Waste Management Ltd. v. Maurice Leahy & Co. Solicitor (No. 2) [2014] IEHC 314, Hogan J. somewhat condensed the definition to “the improper provision of support to litigation which the supporter has no direct or legitimate interest.” Hogan J. continued to define champerty in accordance with the definition of Lord Hobhouse in the decision of Camdex International Ltd. v. Bank of Zambia [1998] Q.B. 22 at 29 as “an aggravated form of maintenance and occurs when a person maintaining another’s litigation stipulates for a share of the proceeds of the action or suit.” Such definition being consistent with the definition on Clarke J. in Thema International Fund plc. as:-
“…a particular form of maintenance whereby the person concerned obtains a share in the subject matter or proceeds of litigation in return for assisting with finding the litigation concerned.”
30. The State defendants submitted that, to alter what they say is the generally understood position, as articulated by Clarke J. in Thema, i.e. that professional third party funding agreements constituted champerty, would be to fundamentally and unconstitutionally amend a statutorily recognised offence; however, they did accept that a funder may have an interest in an action or some other motive recognised by law as justifying his or her interference to take it outside the ambit of the tort and the offences. Moreover, the State defendants specifically accepted that the range of interests, motives and relationships which may justify the position of funding is not closed and has been, and remains, properly the subject of development by the common law. Nonetheless, their position was that the applicable law in Ireland does not permit this type of funding agreement and that only legislative change could bring this about.
31. The plaintiffs have submitted that maintenance and champerty, as common law doctrines, are rules of public policy: they must be understood in accordance with the purposes and policies from which these prohibitions arose. They submitted that the ambit of the torts and offences must be viewed in light of modern public policy and in light of the development of the doctrines by the common law over time, as well as in light of constitutional rights.
32. As part of their submission, the plaintiffs placed emphasis upon the decision of the English Court of Appeal in Giles v. Thompson which, they argued, illustrates the evolution of the law surrounding maintenance and champerty in the jurisdiction of England and Wales. In that case, Steyn L.J. stated that the courts can still determine that an agreement is void where it may be found to have breached public policy; thus the plaintiffs submitted that the authorities of England and Wales subsequent to 1967 (as well as those from other foreign jurisdictions) remain relevant to the question of public policy which is at the heart of maintenance/champerty. The plaintiffs acknowledged the different statutory position between this jurisdiction and that of England and Wales but, in relying on the case law, they placed emphasis on the spirit of the prohibitions rather than upon any significance in the legislative abolition.
33. The plaintiffs further relied upon the decision of the Court of Appeal in the matter of Sibthorpe and Morris v. London Borough of Southwark [2011] EWCA Civ 25 where Neuberger L.J. stated as follows, at paras. 35-36 thereof:-
“The first argument to be addressed is that, even if such an indemnity would have been held to be champertous in the past, it no longer should be so regarded today. Relying on statements and principles laid down in Factortame (No. 8) [2003] QB 381; [2002] 3 Costs LR 467, applying Giles [1994] 1 AC 142, it is said on behalf of Ms. Morris that there is no longer a strict principle such as Lord Esher laid down in Pittman 13 TLR 110 and the Court of Appeal affirmed in Wallersteiner (No. 2) [1975] QB 373; it is further said that the correct approach is now to look at the CFA [Conditional Fee Agreement] in the round, and decide whether is would undermine the purity of justice, or would corrupt public justice, a question to be decided on a case by case basis.
There is, at least at first sight, much to be said for this argument. Indeed, I consider that it represents the modern approach where there is an allegation of champerty in relation to an agreement to which a person conducting the litigation (or providing advocacy services) is not a party…”
34. Whilst the law of maintenance and champerty is rooted in the origins of the common law and the principles of which have been used to protect against the abuse of court practice in both this jurisdiction and that of England and Wales, there is an accepted contrast between both respective jurisdictions by virtue of the abolition of the offences and torts of maintenance and champerty in England and Wales. It is appropriate therefore, that this judgment should consider the position which the Irish courts have taken in relation to maintenance and champerty while recalling the way in which the common law has been interpreted since the coming into force of the Constitution of 1937. As Hogan J. in Healy v. Stepstone Mortgage Funding Ltd. [2014] IEHC 134 stated:-
“The common law as it existed immediately prior to the coming into force of the Constitution was carried over into our law by Article 50.1, save to the extent that such law was unconstitutional. While the common law is not frozen as of the date of the coming into force of the Constitution (29th December, 1937), in the case of the common law torts, the courts are, broadly speaking, confined to the general parameters of the law of torts as then existed as of that date. Entirely different considerations naturally apply where aspects of those common law rules are later found to be unconstitutional (as in McKinley v. Minister for Defence [1992] 2 IR 333) or where these common law torts have subsequently been modified, re-stated or even abolished by legislative enactments. Yet whatever might have been the case in the early days of the common law, the courts certainly do not have any authority now to invent entirely new categories of torts, as this is a matter which is reserved to the Oireachtas by Article 15.2.1 of the Constitution.
Leaving aside the incremental change and development which are standard features of the common law method, the courts can generally only develop or supplement the law of torts where this corpus of law has been shown to be ‘basically ineffective’ to protect constitutional rights in a particular case…”
That passage applies a fortiori to a common law offence.
35. A series of cases came before the Irish courts in the 1990s dealing with maintenance and champerty. In McElroy v. Flynn [1991] I.L.R.M. 294, the High Court had recourse to examine the status of an agreement whereby the plaintiff, who specialised in finding next-of-kin for persons who died intestate, contracted with the defendant cousins of the deceased for a 25% share in an estate to which they were entitled in order to assist them in the realisation of that benefit. The plaintiff, trading as “Irish Genealogical Services”, approached the defendants indicating that he thought that they were entitled to a share in the estate of an intestate whose name he purported not to know and contracted with them to assist in the recovery of the said estate. Having discovered that the intestate in question was the cousin of the defendants, the defendants sought to repudiate the agreement. Blarney J. stated that, where a person undertook to actively assist in the recovery of shares in an estate to which other persons are entitled, an agreement whereby the former will receive a percentage of the shares of the latter savours of champerty and is void.
36. The plaintiffs relied upon the statement of Blarney J. at p. 297 where he observed “…in the case before me I think the true agreement made by the defendants was one contrary to the policy of the law” to assert that the agreement was found to be void on the basis of public policy as opposed to any strict application of the rules of maintenance and champerty. The defendants, however, placed reliance upon the continuation of that same paragraph in the judgment of Blarney J. at pp. 297-298 as follows:-
“I agree that a contract by a person to communicate information on terms of getting a share of any property that may thereby be recovered by the person to whom the information is to be given, and nothing more, is not champerty or void: see Sprye v. Porter 7 E & B 58. But if the arrangement come to is not merely that information shall be given, but also that the person who gives it and who is to share in what may be recovered shall himself recover the property or actively assist in the recovery of it by procuring evidence or similar means, then I think the arrangement is contrary to the policy of the law and void: see Sprye v. Porter and also Stanley v. Jones 7 Bing 369…”
37. The State defendants pointed to McElroy v. Flynn as authority for the proposition that, even if something does not fall within the definition of champerty or maintenance so as to amount to a criminal offence, it nonetheless is contrary to public policy if it has a taint of champerty. The plaintiffs viewed it as confirmation that the assessment for the court is whether, as a matter of public policy, the agreement was void.
38. The decision in McElroy v. Flynn was approved by the Supreme Court in the subsequent decision of Fraser v. Buckle [1996] 1 I.R. 1, which also concerned heir-location services. The plaintiff, a firm of genealogists trading in London, informed the defendants that they were entitled to benefit from the estate of an intestate who was resident in the State of New Jersey in the USA. An agreement was entered into, pursuant to the laws of England, whereby the plaintiff was entitled to one-third of any net proceeds realised from the estate of the intestate. Following the disbursement of the proceeds from the estate, the defendants alleged that the agreement was unenforceable on the basis of champerty.
39. In the High Court in Fraser v. Buckle [1994] 1 I.R. 1, Costello J., in defining maintenance and champerty in the manner later reflected by Clarke J., in Thema, cited with approval the judgment of Lord Denning M.R. in In re Trepca Mines Ltd. (No. 2) [1963] Ch. 199 at pp. 219-220 thereof:-
“Maintenance may, I think, nowadays be defined as improperly stirring up litigation and strife by giving aid to one party to bring or defend a claim without just cause or excuse. At one time, the limits of ‘just cause or excuse’ were very narrowly defined. But the law has broadened very much of late (see Martell v. Consett Iron Co. Ltd. [1995] Ch. 363) and I hope that will never again be placed in a strait waistcoat. But there is one species of maintenance for which the common law rarely admits of any just cause or excuse, and that is champerty. Champerty is derived from campi partition (division of the field). It occurs when the person maintaining another stipulates for a share of the proceeds: see the definitions collected by Scrutton L.J. in Haseldine v. Hosken [1933] 1 K.B. 811, 833. The reasons why the common law condemn champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses. These fears may be exaggerated; but, be that so or not, the law for centuries had declared champerty to be unlawful and we cannot do otherwise than enforce the law; and I may observe that it had received statutory support, in the case of solicitors, in section 65 of the Solicitors Act, 1957.”
40. The plaintiffs placed emphasis on the statement of O’Flaherty J., in the decision of the Supreme Court in dismissing the plaintiff’s appeal as against the judgment and order of the High Court, where he stated:-
“[it] is true that the law can, and, indeed, on occasion should develop so as to ameliorate the strictness of an existing precept of the common law or, indeed, extend its advantages…”
41. The State defendants relied upon the same authority and in particular the observation of O’Flaherty J. where he noted that “I would uphold the trial judge’s findings that the agreements were champertous and unenforceable in Irish law.” They submitted that the decision of the court identified statutory intervention as a prime factor in the development of the law in this area. The fourth named defendant separately brought to the attention of this Court the significance which any agreement will subjectively have upon the determination of the court as regards any agreement being found void as being champertous and contrary to public policy. They cited the observation of the learned High Court judge where he noted, at p. 19, the following:-
“…it is well established that the interest which the maintainer enjoys in a suit which he is maintaining must exist independently of the agreement which gives him a share in the proceeds of the suit…”
42. Finally, the defendants submitted that, while the Supreme Court recognised that the law should “develop so as to ameliorate the strictness” of any rule, it further observed, at p. 40:-
“…the law on maintenance and champerty has not undergone any sea change in this jurisdiction since the last century and, indeed, s. 68(2) of the Solicitors (Amendment) Act 1994, makes it clear that solicitors are not entitled to charge percentage or contingency fees except in very restricted circumstances.”
43. The parties collectively referred the court to the decision of the Supreme Court in O’Keeffe v. Scales [1998] 1 I.R. 290, wherein the defendant sought to stay proceedings having claimed that the plaintiff’s case was being conducted in a champertous manner. It was alleged that the plaintiff’s solicitor had an inappropriate interest in the outcome of proceedings on the basis that the plaintiff had included the solicitor’s fee within their claim for special damages. In dismissing the appeal against the refusal of the High Court judge to stay proceedings, the Supreme Court made probative observations in relation to maintenance and champerty.
44. The plaintiffs drew the attention of the Court to the following observation of Lynch J. at p. 295:-
“It is clear from these authorities that the law relating to maintenance and champerty still exists in this State. A person who assists another to maintain or defend proceedings without having a bona fide interest independent of that other person in the prosecution or defence of those proceedings acts unlawfully and contrary to public policy and cannot enforce an agreement with that other person for any form of benefit, whether it be a share of the proceeds of the litigation or a promise of remuneration, such as money or a transfer of property if the claim is successfully defended.”
The plaintiffs placed particular reliance upon the continuation of the above where Lynch J. went on to observe, at p. 295:-
“While the law relating to maintenance and champerty therefore undoubtedly still subsists in this jurisdiction, it must not be extended in such a way as to deprive people of their constitutional right of access to the courts to litigate reasonably stateable claims. In the present case, unlike Fraser v. Buckle or McElroy v. Flynn, the appellant seeks to stifle the respondents’ action before any plenary hearing and consequently she would have to make out a clear case if she were to succeed, analogous to the onus on a party bringing a motion to dismiss an action on the basis that the statement of claim discloses no cause of action or that the proceedings are frivolous and/or vexatious.”
45. The plaintiffs emphasised the significance which the Supreme Court attributed to the ability of an action to be determined as opposed to enabling an allegation of champerty and maintenance consequently to stifle the determination of any claim. The plaintiffs also note the following by Lynch J. at 296:-
“I do not see that it would be a valid ground for stifling their cause of action before a plenary hearing, even if their cause of action could be said to be maintained in a champertous fashion.”
…
If at the plenary trial, however, the appellant were successful in her defence and it was established, notwithstanding this judgment on the motion to dismiss or stay in advance of the plenary trial, that these proceedings had been maintained in a champertous manner by Mr. Murnaghan, then it would be open to the appellant to sue Mr. Murnaghan for all the damage suffered by her, including any costs awarded to her and not recovered or recoverable from the respondents owing to their want of means.”
46. The State defendants accepted the proposition, as emphasised by the plaintiffs, that an allegation of champerty does not amount to a defence to an action brought by a party which is being funded; however, they place reliance upon the observation of Lynch J. that the “law relating to maintenance and champerty…must not be extended.” In the State’s submission, the decision supports the view that the torts and offences still subsist, but prohibits the development of the torts in such a way as to deprive people of their constitutional right of access to the court. They did not accept that O’Keeffe is an authority for developing or expanding the law of maintenance or champerty so as to permit third party litigation funding. In their submission, the finding by the Supreme Court, that “[a] person who assists another to maintain or defend proceedings without having a bona fide interest independent of that other person in the prosecution or defence of those proceedings acts unlawfully and contrary to public policy and cannot enforce an agreement with that other person for any form of benefit…”, is an authoritative statement that the law does not permit a third party to fund litigation in return for portion of the proceeds of that litigation. The State submitted that this prohibition applies even if the third party funder has a bona fide interest independent of the funder, but they submitted that, in the instant case, there is no bona fide independent interest. The State strongly submitted that to hold that a bona fide interest independent of the funded party is no longer a requirement imposed by our law would be inconsistent with the basic principle of law set out in O’Keeffe.
47. The parties to the within application placed emphasis on the decision, of Clarke J. in Thema International Fund plc., previously mentioned. In that case the plaintiff made a claim in respect of losses sustained by it in a fund of which the defendant was custodian. The defendant sought disclosure of information regarding an alleged third party funding maintainer to the plaintiff’s cause. It is worth setting out the context in which Clarke J. made his observations regarding third party funding. At paras. 20-22 he stated:-
“In a jurisdiction where it is accepted that third parties may fund litigation in return for obtaining an agreed share of the proceeds, then it is hardly surprising that the courts have taken the view that such parties who have, in substance, become the litigants should have their identity disclosed and be amenable to orders for security for costs. However, the situation in this jurisdiction is different in that professional third party funding is not permitted.
The defendant also places reliance on a line of recent United Kingdom authorities culminating in Merchantbridge & Co. Ltd. v. Safron General Partner I. Ltd. [2011] EWHC 1542 (Comm.), (Unreported, High Court of England and Wales, Judge Mackie QC, 15th June, 2011) where an order for disclosure of the identities of funding parties was made. However the Merchantbridge & Co. Ltd. v. Safron General Partner I. Ltd. [2011] EWHC 1524 (Comm) and previous cases need to be seen against the background of the fact that both the criminal offence and civil tort of maintenance and champerty have been abolished in the United Kingdom by statute (ss 13(1)(a) and 14(1) respectively of the Criminal Law Act 1967). Again, in the context of it being legally permissible for wholly unconnected third parties to engage in the business of funding litigation in return for a share of the proceeds, it is hardly surprising that the courts have been prepared to require the disclosure of the existence of such funders even in advance of the case coming to trial.
I am not satisfied that case law from other common law jurisdictions which post dates a change in the law in relation to maintenance and champerty (whether by judicial decision or by statute) is of great assistance in determining the extent of the court’s jurisdiction to order disclosure at an early stage of a third party funder in a jurisdiction such as Ireland where maintenance and champerty remains the law. Here the situation is very different. In Ireland it is unlawful for a party without an interest (or some other legitimate concern including charity) to fund the litigation of another at all and, in particular, it is unlawful to fund litigation in return for a share of the proceeds. The only form of third party funding which is, therefore, legitimate in Ireland is one which comes within the exceptions to maintenance and champerty…”
48. The State defendants referred to the above decision as a reaffirmation of the orthodox position as stated in O’Keeffe. The plaintiffs submitted that the statements of the court are obiter; however, the State defendants viewed that any decision of this Court which would be inconsistent with the rationale of the decision by Clarke J. would amount to a rejection of that authority. They further observed that the decision functions as a relevant statement of the legal principles concerning maintenance and champerty in Ireland. The fourth named defendant submitted to the court that the decision by Clarke J. represents a continuation of the law as established to date and further functions as authority for the non-application of authorities outside of the jurisdiction. They pointed in particular to the dicta of Clarke J. at para. 22 above querying the value of case law from other common law jurisdictions.
49. In Greenclean Waste Management v. Leahy (No. 2) Hogan J. considered the law on maintenance and champerty in the context of “After the Event” (“ATE”) insurance where he refused to make an order for security for costs against the plaintiff. Hogan J. embarked on an analysis of the law surrounding maintenance and champerty observing that these torts and offences “have long pre-dated the coming into force of the Constitution and, accordingly, these nominate torts were carried over into our law by Art. 50.1 of the Constitution.” He isolated the legislative change in the jurisdiction of England and Wales as a point of divergence for the law in both contexts and the applicability of case law therefrom. He stated, at para. 9:-
“This legislative change was nonetheless significant in altering the legal landscape, so much so that English case-law which post-dated this change may not necessarily be ‘of great assistance in determining the extent of the court’s jurisdiction to order disclosure at an early stage of third party funder in a jurisdiction such as Ireland where champerty and maintenance remains the law’: Thema International Fund v. HSBC Institutional Trust Services (Ireland) Ltd…The actual significance of this legislative change may nonetheless be possibly overstated, since even the contemporary English case-law still evinces a suspicion of and a hostility to anything that smacks of trafficking in litigation…Besides, s. 14(2) of the 1967 Act may be thought to have expressly preserved the common law as champerty and maintenance in civil (as distinct from criminal) matters.”
Having discussed the English authorities Hogan J. continued to note, at para. 15:-
“There is, nonetheless, no doubt at all that the tort of champerty not only still exists in this jurisdiction, but that it also has a practical vibrancy. This is well illustrated by the Supreme Court’s decision in O’Keeffe v. Scales [1998] 1 IR 290, but also perhaps more recently by the judgment of Clarke J. in Thema International Fund plc. v. HSBC Institutional Trust Services (Ireland) Ltd. [2011] IEHC 654 [2011] 3 IR 654.”
50. The plaintiffs to the within proceedings sought to suggest that the decision of Hogan J. in Greenclean (No. 2) amounted to a reappraisal of the Irish authorities. They submitted to the court that, having discussed O’Keeffe and Thema, it was the view of Hogan J. that “the principle expounded by Clarke J. in Thema International, is really about trafficking in litigation.” They continue to cite the observations of Hogan J. at para. 25:-
“Against this background is can be said that agreements which involve the trafficking in litigation or - as in Simpson - which concern the assignment of a bare cause of action for purposes which the law does not recognise as legitimate will be held to be void as contrary to public policy on the ground that they savour of champerty. That, in my opinion, is true leitmotif which runs through all of this case-law in this area.”
51. The plaintiff relied upon the conclusion of Hogan J. whereupon he found that ATE insurance amounted to “a legitimate service by providing access to justice and this service cannot properly be regarded simply as either investing in or trafficking of litigation.” They further isolate his observations at paras. 37-38 which are as follows:-
“Taken in the round, therefore, I find myself inclining to the conclusion that ATE insurance - at least in the form in which it manifests itself in these proceedings - is not on the whole champertous or amounting to maintenance. And reverting to the previous simile of secular simony, it may well be that if the venerable judges and jurists who first formulated the torts of champerty and maintenance sometime between the days of the Yearbooks of the courts of Henry IV and the emergence of the nominate law reports in the 16th and 17th centuries were to realise the direction in which the common law might now be heading, they would doubtless rise from their graves and affix their own theses of protest outside wherever the legal equivalent of Wittenberg Cathedral happens to be.
Yet, as Cozens-Hardy M.R. recognised over 100 years ago in British Cash, while the general parameters of the torts of champerty and maintenance are clear, the modern application of these principles is not frozen by reference to the social conditions and public policy considerations which pertained several hundred years ago. The law must accordingly move on and assess whether, by reference to modern conceptions of propriety, ATE insurance amounts to trafficking in litigation…”
52. The State defendants submitted to the Court that the decision of Hogan J. should not be interpreted as a disapproval of the decision of Clarke J. regarding the illegality of third party litigation funding. They suggest that it was the view of Hogan J. that third party funding agreements amounted to the very “trafficking in litigation” which is prohibited.
53. The fourth named defendant submitted to the court that the decision of Hogan J. should be interpreted to mean that, while the torts and offences of maintenance and champerty continue to form part of the tapestry of Irish law informed from the common law tradition, they cannot be interpreted in the same manner as from when they were originally conceived of in antiquity. To this end, they noted the citation by Hogan J. of British Cash and Parcel Conveyors Ltd. v. Lamson Store Service Co. Ltd. [1908] 1 K.B. 1005, where it was observed by the English courts that maintenance and champerty were devised according to different public policy conceptions. They emphasised the observation of Hogan J. where he noted that “the tort of champerty…has a practical vibrancy.” The fourth named defendant submitted to the court that the circumstance of the present application are on all fours with those before Hogan J. in Greenclean (No. 2) on the basis that both applications concerned an allegation that a third party funder was investing in litigation with a view to recovering a percentage of proceeds from that litigation.
54. It is important to note at this juncture that, in Greenclean Waste Management Ltd. v. Leahy p/a Maurice Leahy Wade & Company Solicitors [2015] IECA 97, the Court of Appeal allowed the appeal against the decision and judgment of Hogan J. in the High Court to decline the application for security for costs in the light of the provision for ATE insurance, with Kelly J., as he then was, concluding for the court at para. 55-58:-
“In the absence of the no-win no-fee agreement and its compliance with s. 68 of the Solicitors Act (Amendment) 1994, it cannot be said that there was sufficient evidence before the High Court to demonstrate the existence of an effective ATE policy.
Even if such proof had been placed before the court, the policy here is so conditional (even with the ‘prospects clause’ neutralised) that it does not provide a sufficient security to the defendant to warrant refusal of an order for security for costs. The policy is voidable for many reasons which are outside the control, responsibility or, by times, knowledge of the defendant. None of these were taken into account by the trial judge whose sole concern was the ‘prospects clause’.
This ATE policy does not, in my view, raise a sufficient inference of an ability to discharge the defendant’s costs to justify the refusal of the s. 390 order. It falls far short of providing as good a security as a payment into court or a bank or insurance bond.
I am satisfied that the judge was in error in coming to the conclusion…”
55. While it can be said that that the appeal in Greenclean (No. 2) compromises the utility of High Court decision, it can be observed that the Court of Appeal decision isolates the terms of the ATE Insurance agreement in holding that the trial judge fell into error. The Court of Appeal did not consider or comment upon the learned trial judge’s analysis on the law of maintenance and champerty as it exists in Ireland.
56. In the case of SPV Osus Ltd. v. HSBC International Trust Services (Ireland) Ltd. [2015] IEHC 602 the defendants alleged that the assignment of a cause of action to a plaintiff, whom they stated to be unconnected to the underlying contracts which gave rise to the claim, made the assignment void as being champertous. Costello J. restated the authorities, drawing particularly upon the decision of Clarke J. in Thema and observed as follows, at para. 27:-
“It has long been the law, as was pointed out by Clarke J. in Thema, that the courts will not enforce any agreement for any form of benefit where the agreement savours of maintenance or champerty. This is because it offends against Irish public policy. It matters not that the agreements in question is valid under the proper law of the contract in question. It is for the Irish courts to determine whether the enforcement of the agreement would offend against Irish public policy.”
57. Having reviewed the Irish case law, Costello J. suggested a number of principles which could be derived therefrom. Those principles most at issue in this case appear to be the following:-
“(1) It is unlawful to fund or assign litigation in return for a share of the proceeds unless the funder or assignee has a lawful interest or some other legitimate concern in the litigation;
…
(5) the scope of the law of maintenance and champerty must accommodate itself to modern social realities;
(6) the law in relation to maintenance and champerty must be considered in the light of the constitutional right of access to justice;
(7) the law in relation to maintenance and champerty must not place any unnecessary obstacles in the path of persons with a legitimate claim;
…
(9) the interest which a party maintains or enjoys in a suit which he is maintaining must exist independently of the agreement which gives him a share in the proceeds of the suit;
…
(12) professional third party funders who make a commercial decision to ‘invest’ in litigation in the hope of making a profit commit the torts of either maintenance and/or champerty;
(13) in considering whether an agreement is champertous, the Court should look at the totality of the transaction;
(14) the Court is concerned with substance rather than the form of a transaction in considering whether it offends the law of maintenance and/or champerty.”
58. In her judgment, Costello J. endorsed the authorities which exist in the jurisdiction to date. She cited with approval the decision of Hogan J. in Greenclean (No. 2) with regard to the desirability that the law surrounding maintenance and champerty be considerate of the contemporary legal realities so as to guard against any disproportionate interference with the rights of individuals to access justice.
59. The plaintiffs attempted to rely upon an Order of the High Court (Finlay Geoghegan J.) in In re Gaelic Seafoods (Ireland) Limited (In Liquidation) [2002 No. 153 COS] wherein, it is stated, the court approved of a litigation funding agreement with a third party, an English funder, Insolvency Management Limited. In the absence of any written determination in In re Gaelic Seafoods (Ireland) Limited (In Liquidation), it is the view of this Court that any attempt to find a divergence from the established and consistently affirmed case law of the court in Ireland on the basis of an Order would be both inappropriate and unmerited.
THE APPLICABILITY OF THE IRISH AUTHORITIES
60. The plaintiffs relied heavily upon the decision of Hogan J. in Greenclean (No. 2) in the present application. They suggested that the decision of that court can be interpreted to mean that maintenance and champerty should not be understood as a simple system of prohibitions but rather as a principle informed set of prohibitions which can only be understood “in the round” and in the context of the agreement. In particular they pointed to the nature of ATE insurance, which, they submitted, has many of the features of third party funding agreements.
61. The plaintiffs attempted to distinguish the decisions of Clarke and Costello JJ. in Thema and SPV Osus respectively on the basis that such decisions did not deal with the question of the permissibility of third party litigation funding. They stated that the fourteen principles, as identified by Costello J. in SPV Osus, constituted summaries of statements which have been made in particular cases as opposed to any framework for the application of the rules on maintenance and champerty. They submitted that internal inconsistencies are present in these statements, particularly relying upon the impact of the constitutional right of access to justice. The plaintiffs further suggested that the statement that third party litigation funders are guilty of the torts of maintenance and champerty should be viewed as a summary of a statement made in Thema as opposed to a principle to be applied. They stated that it is not clear whether the court in SPV Osus was attempting to consider in detail the content of the public policy surrounding maintenance and champerty and they attempt to distinguish this case upon that basis. Finally, they submitted to the court that it should be cognisant of the decision of the Court of Appeal in the jurisdiction of England and Wales in Neville v. London Express Newspaper Ltd. [1919] A.C. 368 whereupon Lord Finlay stated, at 379:-
“The action for maintenance is, in my opinion, one which can be sustained only if special damage has been occasioned to the plaintiff by the maintenance.”
62. This Court has considered the varied approaches to the interpretation of maintenance and champerty placed before it during the hearing of this application. Many authorities from foreign jurisdictions were relied upon by the plaintiffs; however, this Court cannot escape the existence of the various observations made by the High Court, recited above, as to the strength of the assistance which may be gained from many of these cases in circumstances where legislative changes have occurred in those jurisdictions. The Court must not only exercise caution with regard to judicial developments in alternative jurisdictions but, more fundamentally, must give all appropriate deference to pronouncements by the Superior Courts of Ireland as to how the law in this jurisdiction is to be interpreted. The Court is, therefore, required to adjudicate on whether this type of funding agreement is prohibited by the torts and offences of maintenance and champerty in view of the Irish authorities cognisant of the restrictions placed upon it by the separation of powers.
63. The State defendants have relied heavily upon the separation of powers in both written and oral submissions. They emphasised that the maintenance of the separation of power between the legislative, executive and judicial organs of the State is well established and is a fundamental principle of the law in Ireland. In this regard, the fourth named defendant relied upon Art. 15.2.1˚ of the Constitution which vests sole and exclusive power of the making of laws in the Oireachtas. The State defendants relied upon the authorities of Buckley v. Attorney General [1950] I.R. 67; Sinnott v. Minister for Education [2001] 2 IR 545; and, Kavanagh v. Government of Ireland [1996] 1 I.R. 321. They noted that the Constitution has assigned the development and implementation of public policy to the Oireachtas and the Government, relying upon The State (Walshe) v. Murphy [1981] 1 I.R. 275; and, Norris v. Attorney General [1984] IR 36 whereupon the Supreme Court stated:-
“…the sole function of this Court, in a case of this nature, is to interpret the Constitution and the law and to declare with objectivity and impartiality the result of that interpretation on the claim being considered. Judges may, and do, share with other citizens a concern and interest in desirable changes and reform in our laws; but, under the Constitution, they have no function in achieving such by judicial reasoning. It may be regarded as emphasising the obvious but, nevertheless, I think it proper to remind the plaintiff and others interested in these proceedings that the sole and exclusive power of altering the laws of Ireland is, by the Constitution, vested in the Oireachtas. The Courts declare what the law is - it is for the Oireachtas to make changes if it so thinks proper.”
64. The State defendants submitted to the court that its jurisdiction to vary the common law is limited; however, they accepted that the court enjoys jurisdiction to “apply old principles to new facts.” They relied upon the decision of the Supreme Court in B.L. v. M.L. [1992] 2 I.R. 77 reversing the judgment and order of Barr J., whereupon Finlay C.J. noted, at p. 107:-
“However, the problem which appears to me to arise is a simple question as to whether if this court were to follow the reasoning contained in the judgment of Barr J. it would in truth, as he suggests, and as the comments of Barrington J. suggest, be developing an existing law within the permissible limits of judicial interpretation, or whether in fact it would be legislating.
After careful consideration and with a reluctance arising from the desirable objective which the principle outlined in the judgment of Barr J. would achieve, I conclude that to identify this right in the circumstances set out in this case is not to develop any known principle of the common law, but is rather to identify a brand new right and to secure it to the plaintiff. Unless that is something clearly and unambiguously warranted by the Constitution or made necessary for the protection of either a specified or unspecified right under it, it must constitute legislation and be a usurpation by the courts of the function of the legislature.”
65. The State defendants suggested that the court should be led by the decision of Hynes-O’Sullivan v. O’Driscoll [1988] I.R. 436 where the Supreme Court was invited to amend a defence of longstanding to defamation at common law. Henchy J. noted, at 449:-
“I am of the opinion that the suggested radical change in the hitherto accepted law should more properly be effected by statute. The public policy which a new formulation of the law would represent should more properly be found by the Law Reform Commission or by those others who are in a position to take a broad perspective as distinct from what is discernible to the tunnel vision imposed by the facts of a single case. That is particular so in a case like this where the law as to Qualified Privilege must reflect a due balancing of every citizen’s good name. The articulation of public policy on a matter such as this would seem to be primarily a matter for the legislature.”
66. They further relied upon Healy v. Stepstone Mortgage Funding Ltd.; R. and Ors. v. An tArd Chláraitheoir [2014] IESC 60; and, H. v. H. [2015] IESC 7 wherein the Supreme Court considered if it could or should develop the common law so as to recognise certain classes of pre-1986 foreign divorces. In a concurring judgment in H. v H., Clarke J. stated, at paras 2.4 - 2.6 thereof:-
“Much of the reticence which has been expressed in this jurisdiction concerning the over-ambitious change of the common law by judicial decision has been placed in the context of a desire not to overstep the separation of powers by permitting the courts to slip into what might properly be regarded as the constitutional legislative function of the Oireachtas (see most recently the judgments of both Hardiman J. and myself in R. and Ors. v. An tArd Chláraitheoir and Ors. [2014] IESC 60 which, while demonstrating some disagreement on questions of detail, both caution against an overbroad use of the evolution of the common law).
In speaking of the proper constitutional role of the courts in affecting change to the law, in R. v. An tArd Chláraitheoir, I said the following, at para. 2.5:-
‘However, it is clear that the role of the courts in that process, while important, is limited. Short of the existing law being found to be in breach of the Constitution, the only proper role of the courts is to play their appropriate part in the evolution of the common law in its application to new conditions and circumstances or to interpret legislation. Even where it is clear that the existing law is no longer fit for purpose it may well be that the only solution lies in legislation. This will particularly be so where any solution to identified problems requires significant policy choices and detailed provisions beyond the scope of the legitimate role of the courts.’
Hardiman J. expressly agreed with that passage in his judgment in the same case. The passage draws a distinction between the proper evolution of the common law where the same fundamental principles are required to be applied, perhaps in quite a different way, because of new circumstances and conditions, on the one hand, and changes which require policy choices and detailed provisions, on the other.”
67. The State defendants noted that, since the passing of the Constitution, the court can no longer “create, repeal or substantially amend an indictable common law offence.” They also relied upon the decision of Hogan J. in Healy v. Stepstone Mortgage Funding Ltd. as above mentioned. They submitted that two separate issues arise when attempting to engage the Constitution to develop a common law offence. First, that the court can develop the scope of a tort to ensure that it remains consistent with the Constitution; and, secondly that, when the court considers whether it ought to develop the common law rule that prohibits certain contracts on the basis that they are contrary to public policy, the court can look at the Constitution for two reasons; to find the prohibition unconstitutional or as a source of public policy.
68. With regard to the first issue, they relied upon Hanrahan v. Merck, Sharp and Dohme Ltd. [1988] ILRM 629 wherein Henchy J. stated:-
“So far as I am aware, the constitutional provisions relied on have never been used in the Courts to shape the form of any existing tort or to change the normal onus of proof. The implementation of those constitutional rights is primarily a matter for the State and the Courts are entitled to intervene only when there has been a failure to implement, or where the implementation relied on is plainly inadequate, to effectuate the constitutional guarantee in question. In many torts - for example, negligence, defamation, trespass to person or property - a plaintiff may give evidence of what he claims to be a breach of constitutional right, but he may fail in the action because of what is usually a matter of onus of proof or because of some other legal or technical defence. A person may of course in the absence of a common law or statutory cause of action, sue directly for breach of constitutional right (see Meskell v. C.I.E. [1973] IR 121) but when he founds his action on an existing tort he is normally confined to the limitations of that tort. It might be different if it could be shown that the tort in question is basically ineffective to protect his constitutional right. But that is not alleged here. What is said is that he may not succeed in having his constitutional rights vindicated if he is required to carry the normal onus of proof. However, the same may be said about many other causes of action. Lack of knowledge as to the true nature of the defendants’ conduct or course of conduct may cause the plaintiff difficulty, but it does not change the onus of proof.
It is also to be noted that the guarantee to respect and defend personal rights given in Art. 40.3.1 applies only ‘as far as practicable’ and the guarantee to vindicate property rights given in Art. 40.3.2 refers only to cases of ‘injustice done’. The guarantees, therefore, are not unqualified or absolute. I find it impossible to hold that Art. 40.3.1 means that a plaintiff in an action in nuisance is to be relieved of the onus of proving the necessary ingredients of that tort. Neither, in my view, does Art. 40.3.2 warrant such a dispensation, for the guarantee of vindication there given arises only ‘in the case of injustice done’, so it is for the plaintiff to prove that the injustice relied on was actually suffered by him and that it was caused by the defendant.” (emphasis added)
69. Finally, they submitted to the Court that, were it satisfied that it could develop the tort, the plaintiff would have to persuade the court that the tort of maintenance and champerty, as currently understood, amounts to a disproportionate and unconstitutional interference with their rights of access to the court. They queried whether a company enjoyed any such right under the Constitution. They sought to counter the suggestion that, should the plaintiff be precluded from accessing third party litigation funding, they would be precluded from litigation. They suggested other funding mechanisms including an equity investment.
70. It is accepted that the court does not possess a legislative jurisdiction by virtue of the separation of powers which has been provided for by Art. 15.2.1˚ of the Constitution. So too are the State defendants correct in their submission that the jurisdiction of this Court to vary the common law is limited.
71. In a general sense, the arguments of the plaintiffs during these proceedings were designed, albeit unwittingly, to disprove the obiter observation of Costello J. in Fraser v. Buckle whereupon he suggested that “[t]he general principles of the law of maintenance and champerty are easily ascertained and are not controversial”. To the extent that the principles are easily ascertained; they prima facie contradict what is submitted by the plaintiffs. To the extent that they are not controversial; they appear to outlaw third party funding. What is being asked of this Court, is to develop the law of maintenance and champerty beyond what has been generally understood in this jurisdiction since the conclusion of the twenty-first century as evidenced by the statements of so many eminent judges cited above.
CONCLUSION
72. As stated at the outset of this judgment, this is the first such application of its type to come directly before the courts in Ireland; however, it appears to this Court that the application can be answered with reliance upon the longstanding line of authorities existing in this jurisdiction. A seemingly unique application, as this present matter has been so called, does not necessarily enable the court to depart from the very considerable jurisprudence which has existed to date.
73. Notwithstanding the view of the Court that the Statute Law Revision Act 2007 is not determinative of the issues herein, the Act of 2007 is significant as it retained in existence the torts and offences of maintenance and champerty. Its importance is not so much as an indicator of particular public policy, but as being indicative of the continuation of all the ingredients of the torts and offences of maintenance and champerty subsisting at the time of its enactment. Thus the Court’s primary role is to determine whether professional third party funding would amount to a breach of the torts and offences of maintenance and champerty. The starting point is therefore whether such funding falls foul of the torts and offences, and not whether public policy considerations might (or indeed should) otherwise permit such funding.
74. Certain aspects of the case law can be isolated for their illustrative effect in ascertaining the current legal perception of maintenance and champerty. In O’Keeffe v. Scales Lynch J. found that it was clear “that the law relating to maintenance and champerty still exists in this State.” In Fraser v. Buckle O’Flaherty J. concluded that “the law on maintenance and champerty has not undergone any sea change in this jurisdiction since the last century.” Clarke J. in Thema observed that a contract in support of litigation cannot occasion maintenance and champerty in the presence of a bona fide independent interest in that litigation, echoing the same sentiments of the Supreme Court in O’Keeffe.
75. The high water mark of the plaintiff’s case can be said to rest upon the decision of Greenclean (No. 2) in which Hogan J. considered the decision of the English courts in British Cash and Parcel Conveyors Ltd. v. Lamson Store Service Co. Ltd. Hogan J. placed emphasis upon the view of Cozens-Hardy M.R. whereupon he stated that the law as to maintenance and champerty must be viewed “in accordance with modern ideas of propriety”. Indeed, such a view is echoed by this Court in the present application; however, one other factor can be extracted from the decision of British Cash and Parcel Conveyors Ltd. which is relevant in to the present application.
76. In that case, the defendants obtained contracts from three of the plaintiff’s customers while they were still subject to a contract with the plaintiff. The defendant agreed to indemnify the customers for any claim which the plaintiff might bring against them alleging a breach of contract. Fletcher Moulton L.J. considered it appropriate to make certain remarks on the legality of contracts of indemnity such as this, noting that:-
“[s]uch contracts are well known to the law and in no way offensive to it….[U]nless there is something improper in the nature of such a contract arising out of the circumstances attending its origin, the Courts have never shewn any disapprobation of such contracts or any disinclination to enforce them.”
It is clear that the Court of Appeal of England and Wales found such contracts of indemnity to be a legitimate component of a commercial relationship between parties. It should be born in mind that such a relationship was antecedent to there being any litigation commenced and also in the absence of any certainty of litigation; rather, the contract of indemnity was merely a term of the commercial agreement. The parties had a relationship independent of legal suit and their agreement, to mitigate against the potential for such suit, could not be described as the trafficking in litigation so condemned by the authorities discussed herein.
77. Fletcher Moulton L.J. states as follows, at p. 1014:-
“No transaction can constitute maintenance if the Court treats it as valid and enforces obligations under it. Maintenance is certainly a turpis causa, and therefore a contract of maintenance is incapable of being enforced…”
Maintenance must include this component of what may be described as legal impropriety. No such legal impropriety was found in British Cash. It is the presence of legal impropriety that identifies maintenance and, if carried out with a view to sharing in the profits of the action, will amount to champerty.
78. Legal impropriety is occasioned by actions offensive to public policy. In that regard it is noteworthy that Hogan J. cited the observation of Clarke J. in Thema whereby he stated:-
“In Ireland it is unlawful for a party without an interest (or some other legitimate concern including charity) to fund the litigation of another at all and, in particular, it is unlawful to fund litigation in return for a share of the proceeds. The only form of third party funding which is, therefore, legitimate in Ireland is one which comes within the exceptions to maintenance and champerty.”
79. From that passage, and from the other Irish authorities, it can be observed that there is a difference in approach between the Irish courts and those of England and Wales. While Fletcher Moulton L.J. in British Cash, doubted “whether any of the attempts at giving definitions of what constitutes maintenance in the present day are either successful or useful”, subsequent Irish authorities have approved of and had recourse to the utility of such definitions. It is those definitions which are binding on this Court.
80. It is not accepted that the statement of Clarke J. in Thema can be characterised as mere obiter. It is clear that his findings in relation to maintenance and champerty constituted an integral part of the rationale underlying his decision. Moreover, his judgment records that his attention was drawn to decisions from a number of other jurisdictions where third party funding agreements were not deemed champertous or contrary to public policy; therefore, even though he rejected their utility, he had given consideration to them as have I.
81. Without doubt it can be stated that the law of maintenance and champerty continue to exist in this jurisdiction and have, to echo Hogan J., a practical vibrancy. The jurisprudence of the Superior Courts as recited above, is clear that the provision of assistance with a view to supporting litigation in return for a share of the proceeds in the absence of a bona fide interest is contrary to public policy and constitutes an abuse of process. Thus, the Supreme Court and High Court have spoken as to that which may constitute legal impropriety in this jurisdiction. The Supreme Court had done so at the time of the enactment of the Statute Law Revision Act 2007 which confirmed the continued existence of the torts and offences of maintenance and champerty. The High Court has repeated this finding of legal impropriety with respect to professional third party funding in the years since that enactment. While “modern ideas of propriety” may not necessarily include such deep suspicion of properly policed professional third party funding agreements having regard to changing views on public policy in other common law jurisdictions, the entrenched statements as to the prohibition of such type of agreements in this jurisdiction means that any amendment to that position may, at the very least, be for an appellate court, if not the legislature.
82. The issue of access to justice and the rights which the plaintiff enjoys in that regard has been pressed upon the Court. The Court has carefully considered the issue of access to justice alongside the development of the torts of maintenance and champerty. The Court accepts that common law torts may be subject to development and that respect for constitutional rights has a role in such development. Such development operates within the boundaries of the law as exemplified by the Supreme Court in the case of Hanrahan v. Merck, Sharpe and Dohme Ltd.
83. The case of McKinley, cited in Healy v. Stepstone Mortgage Funding Ltd. demonstrates the extent to which the common law could be developed cognisant of the guarantees enshrined within the Constitution. There, the court was required to extend the tort which, while still existing in the jurisdiction after 1922, was no longer capable of operation in consistent terms with the 1937 Constitution and in particular the guarantee of equality contained therein.
84. In the present situation the access to justice issue is a much more indirect issue than that of the blatant inequality of the extant understanding of the tort concerned in McKinley. That alone might not be decisive to hold that the tort may not be developed; but, in this case, what is at issue is not simply the ingredients of a tort but also the ingredients of an offence. To “develop” the ingredients of a statutory offence (although one originating at common law) in a manner so as to alter fundamentally the nature of the offence is beyond the jurisdiction of this court.
85. The Court has also taken into account the double construction rule but is of the view that it is inapplicable to the present situation. There is no doubt about the interpretation or ingredients of the torts or offence of maintenance and champerty on the basis of the existing Irish authorities. It has been defined in such a manner as to prohibit professional third party funding. Such funding, being made by a party without an interest in the litigation and for the purpose of a share in the profits amounts to maintenance and champerty on those authorities. In so far as maintenance and champerty are rules of public policy, it has already been determined that these professional third party funding agreements give rise to legal impropriety which offends those rules.
86. It is important to recall that, the application before the Court is not a constitutional challenge; the Court has not been asked to examine the constitutionality of the offences and torts of maintenance and champerty and no declaration of unconstitutionality has been sought. The resolution of any issues regarding constitutional rights, including access to justice or indeed whether these ancient torts and offences are truly “in accordance with law” awaits any such constitutional challenge. On the basis of the relief claimed in the notice of motion, and in circumstances where the Court is of the view that the ingredients of the offences (and also the torts) of maintenance and champerty have been stated clearly by the Superior Courts of Ireland to prohibit professional third party funding, there are no grounds for entering into an examination of whether the interpretation given to the torts and offences is in accordance with the Constitution.
87. In conclusion, maintenance and champerty continue to be torts and offences in this jurisdiction. From the Irish authorities abovementioned, there is a prohibition on an entity funding litigation in which it has no independent or bona fides interest, for a share of the profits. It is the view of this Court that Harbour III L.P., as a professional third party litigation funder, has no independent interest in this present litigation. Furthermore, it is clear that third party funding arrangements cannot be viewed as being consistent with public policy in this jurisdiction or that modern ideas of propriety in litigation have expanded to such an extent to afford this Court the opportunity to characterise this funding arrangement as acceptable. While the plaintiff has pressed upon this Court that there is a lack of clarity in this regard, that submission is not accepted in view of the consistent line of authorities to the contrary.
88. In the circumstances, I refuse the relief sought by the plaintiffs.
