Litigation Funding, Assignment of Actions and Access to Justice: SPV Osus v HSBC [2018] IESC 44

• Date: 01 January 2019

93

Litigation Funding, Assignment of

ActionsandAccess to Justice:

SPV Osus v HSBC [2018] IESC 44

GLEN ROGERS*

e costs of pursuing litigation in this country are frequently a direct barrier to

the ventilation and resolution of valid claims before our courts. In comparable

jurisdictions, the structural problems of prohibitively high costs and the attending

restrictive impact on access to justice are at least partially oset by the availability

of litigation funding, whereby a third party nances another’s litigation typically in

exchange for a share of the proceeds if successful.

e expansion of litigation funding across the globe has followed a path of

chequered development. e ancient doctrines of maintenance and champerty

historically sought to purify the administration of justice by prohibiting non-

parties from interfering in or proting from litigation. ese doctrines over time

gave rise to inconsistent judicial acceptance of litigation funding. Common law

courts have, however, been more united in their approach to, and universally more

suspicious of, outright assignments of ‘bare’ causes of action for consideration.

When compared to the mere funding of a plainti’s claim, such assignments are

considered to be innitely more oensive than maintenance or champerty because

the plainti in whom a lawful claim originally vested is entirely removed from the

litigation in place of an unconnected, prot-motivated assignee who has purchased

a contractual right to run the litigation. us, while most common law courts

have been willing to embrace liberalisation of litigation funding arrangements

as facilitative of access to justice, they have generally been slow to recognise the

validity of assignments of actions, unless those assignments are supported by

legitimate interests.

While the Irish courts have recently armed that both litigation funding and

assignment of actions remain barred by law, the Supreme Court has expressed

serious concern at the continuation of the status quo. In SPV Osus,1 Clarke CJ

entreated the legislature to give ‘urgent consideration’2 to the continued operation

of the barriers to litigation funding in the face of the unsatisfactory current

environment in which high costs increasingly impede the constitutional promise

of access to the courts and the right to litigate.3 Being ‘strongly of the view that

* LL.B. (Dubl.), Solicitor.

1 SPV Osus Limited v HSBC Institutional Trust Services (Ireland) Limited & ors [2018] IESC 44.

2 ibid [2.5] (Clarke CJ).

3 Article 40.3, Constitution of Ireland. See generally Gerard Hogan and others, Kelly: e Irish

Constitution (5th edn, Bloomsbury Professional 2018) 1729.

94  

it is necessary that some measures be taken to attempt to address this problem,’4

Clarke CJ vociferously reiterated the point he made in Persona5 that the courts may

be le with ‘no option’ but to intervene in the event that the legislature fails to

act, notwithstanding that unregulated change by the courts may be undesirable.6

McKechnie J similarly considered that ‘urgent reform is needed so that the right of

access to the courts can be rendered eective in a practical sense’.7

is note considers the lengthy legal context and factual background to SPV

Osus and follows with analysis of and commentary on the judgment for the

Court delivered by O’Donnell J and the concurring judgments of Clarke CJ and

McKechnie J in that case.

e Story So Far

Maintenance and Champerty

e prohibitions on maintenance and champerty proscribe litigation funding in

Ireland. Maintenance is the support (typically nancial) of litigation by a non-

party who does not have a ‘legitimate interest’ in that litigation. e full scope of

exceptions under the legitimate interest test is not exhaustively known, but some

examples disclosed by case law are considered below. Champerty is an aggravated

form of maintenance, in which litigation is funded in exchange for a share of the

proceeds of that litigation. Champerty has been described as ‘a secular form of

simony within the legal system’8 and is considered to be a form of abuse of process

which oends against public policy by stirring up litigation.

Maintenance and champerty were historically both torts and criminal oences at

common law and under statute. e earliest recorded statutes on maintenance and

champerty were enacted in medieval England,9 at a time when nobles frequently

abused their position to interfere in litigation and subvert the administration of

justice before edgling common law courts.10 ese early statutes were, however,

perceived as merely declaratory11 of the common law position already extant at

that time, which was itself apparently derived from legal principles prevailing in

Ancient Greece and Ancient Rome.12

4 SPV Osus (n 1) [2.2] (Clarke CJ).

5 Persona Digital Telephony Limited & anor v Ireland & ors [2017] IESC 27.

6 SPV Osus (n 1) [2.9] (Clarke CJ); Persona (n 5) [4.1] (Clarke J).

7 SPV Osus (n 1) [20] (McKechnie J).

8 Greenclean v Leahy [2014] IEHC 314 [10].

9 Statute of Westminster 1275 (3 Edw I, c 25, 28, and 33); Statute of Conspiracy (Maintenance and

Champerty) 1305. See Statute Law Revision Act 2007, s 6(c).

10 Nick Rowles-Davies and Jeremy Cousins, ird Party Litigation Funding (Oxford University Press

2014) 24.

11 Percy Henry Wineld, ‘e History of Maintenance and Champerty’ (1919) 35 Law uarterly

Review 50, 56.

12 Max Radin, ‘Maintenance by Champerty’ (1935) 24 California Law Review 48, 49.