Persona Digital Telephony Ltd v Minister for Public Enterprise

JurisdictionIreland
Judgment Date23 May 2017
Docket Number[S.C. No. 72 of 2016]
CourtSupreme Court
Persona Digital Telephony Limited and Sigma Wireless Networks Limited,
Plaintiffs
and
The Minister for Justice, Ireland, The Attorney General and Denis O'Brien,
Defendants

and

Michael Lowry,
Third Party

[2017] IESC 27

[S.C. No. 72 of 2016]

Supreme Court

Champerty — Maintenance — Third-party litigation funding arrangement — Right of access to courts — Whether agreement to fund where no connection between party and funder contrary to law — Whether Irish law on maintenance and champerty remaining unchanged — Statute of Conspiracy (Maintenance and Champerty) — Maintenance and Embracery Act 1540 (32 Hen. 8, c. 9) — Maintenance and Embracery Act 1634 (10 Chas. 1 sess. 3, c. 15) — Statute Law Revision Act 2007 (No. 28) — Constitution of Ireland 1937, Article 40.3.

The plaintiffs entered into a third-party professional funding arrangement to fund their litigation against the defendants. The litigation related to alleged improper and unlawful conduct in relation to the awarding of a GSM mobile phone licence.

The plaintiffs applied to the High Court for an order, by declaration or otherwise, that in entering into the litigation funding arrangement, they were not engaging in an abuse of process and/or were not contravening the rules on maintenance and champerty. The High Court (Donnelly J.) refused the plaintiffs' application, holding that maintenance and champerty continued to be torts and offences in the State, and that there was a prohibition on an entity funding litigation in which it had no independent or bona fide interest (see [2016] IEHC 187).

The plaintiffs sought and were granted leave to appeal directly to the Supreme Court (see [2016] IESCDET 106) on the following issue:

“Whether third-party funding, provided during the course of proceedings (rather than at their outset) to support a plaintiff who is unable to progress a case of immense public importance, is unlawful by reason of the rules on maintenance and champerty.”

The plaintiffs argued, inter alia, that champerty did not act as a per se prohibition on third-party funding; that there was no statutory definition stating that third-party funding was unlawful per se, and that the specific fact examples previously identified by the courts were not an exhaustive definition. The plaintiffs further argued that the agreement did not offend against the public policy factors that the rules sought to protect; that the agreement had been entered into after the litigation was commenced and did not stir up the litigation; that the plaintiff retained control of the proceedings; that there was no improper motive and that the agreement was with a reputable funder. The plaintiffs also argued that there was no credible basis for believing that the agreement would undermine the administration of justice; rather, it would enhance the access to and the administration of justice in permitting the plaintiffs to avail of the funding. The plaintiffs argued that the court could not draw an absolute prohibition on third-party funding by the retention by the Statute Law Revision Act 2007 of ancient statutes that prohibited maintenance and champerty; those statutes used ancient language, had always been treated as simply declaratory of the common law, and were merely descriptive of maintenance and champerty, giving some examples of things recognised as evils at that time.

The first to third defendants argued, inter alia, that maintenance and champerty remained offences and torts in Ireland and their status had been deliberately reaffirmed by their inclusion in the Statute Law Revision Act 2007; the Law Reform Commission had not recommended their abolition or amendment, nor had it recommended the introduction of professional third-party funding.

The fourth defendant and the third party both adopted the submissions of the first to third defendants and made further submissions. In particular, the third party argued that despite the suggestion that maintenance and champerty were historic concepts, there remained very important modern considerations for their continued relevance to the administration of justice.

Held by the Supreme Court (Denham C.J., Clarke, MacMenamin and Dunne JJ.; McKechnie J. dissenting), in dismissing the appeal, 1, that an investment agreement to fund litigation where there was no connection between the party and the funder other than the funder's decision to fund was champertous and contrary to law. The torts and crimes of maintenance and champerty had been retained by virtue of the Statute Law Revision Act 2007 and the common law had been stated clearly in recent cases. Champerty remained the law in the State and a person who assisted another's proceedings without a bona fide independent interest acted unlawfully.

Rees v. De Bernardy [1896] 2 Ch. 437, Trepca Mines Ltd. (No. 2), In re. [1963] Ch. 199, McElroy v. Flynn[1991] I.L.R.M. 294, Fraser v. Buckle[1994] 1 I.R. 1, O'Keeffe v. Scales[1998] 1 I.R. 290, Thema Intl. Fund v. HSBC Inst. Trust Services (Ireland)[2011] IEHC 357, [2011] 3 I.R. 654, Greenclean Waste Management Limited v. Leahy[2014] IEHC 314, SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited[2015] IEHC 602 and SPV Optimal Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited[2017] IECA 56 considered.

Per McKechnie J. (dissenting): The common law rules on maintenance and champerty had to be read in such a way as to be constitutionally compliant. To truly align the common law on maintenance and champerty with constitutional imperatives, one had to purposefully examine, in a modern setting, the agreement in issue. Given the contemporary difficulties with giving practical effect to the constitutional right of access to the courts, the courts should take a modern approach to both the interpretation and application of the torts of maintenance and champerty. There was no difficulty, from the perspective of the separation of powers, with the courts applying such approach and, indeed, they had to if they were to remain constitutionally compliant.

2. That while, in light of modern issues, it might well be appropriate to have a modern law on champerty and the third-party funding of litigation, this was a complex, multifaceted issue, which was more suited to a full legislative analysis. This was reenforced by the retention of the old statutes by the Statute Law Revision Act 2007, and by the work of the Law Reform Commission.

Per Clarke J. (concurring): There were strong, modern considerations relevant to the permitting of third-party funding, which would have to be balanced very carefully in any analysis that might lead to a change to the law in this area. The court would be impermissibly engaging in legislating if it were to take onto itself the task of radically changing the law in this area.

Per McKechnie J. (dissenting): The judiciary, over the centuries, had taken effective control of the development and parameters of maintenance and champerty and had done so without legislative input. The competence of the judiciary in that regard stemmed from its parental responsibility for the administration of justice and, since the foundation of the State, from its central role in the protection of the Constitution. That being so, the judiciary was not now obliged to abandon its historical function and cede competence to the legislative arm of government.

3. That the fact that funding was provided during the course of proceedings rather than at the outset of proceedings was not a relevant factor.

4. That the fact that the case was described as one of immense public importance was not a relevant factor.

Obiter dicta, per Clarke J. (concurring): 1. It might be necessary to consider whether the right of access to the courts needed to be looked at on a broader basis, which might require consideration of whether the right was effective in practice, even though there might not be a formal barrier to its exercise.

2. Even if a court were to be satisfied that there was a sufficient diminution in the right of access to the courts to warrant a finding of breach of constitutional rights, it would not necessarily follow that the solution would be to materially change the law of champerty. There were many ways in which such difficulties might be alleviated. These could include legal aid, adjustments to “no foal, no fee” arrangements, changes between the obligations of the parties and the resources provided by the court, and some form of legitimate third-party funding. A choice of solution was very much a matter of policy, and at least initially, not one in which the courts could properly have any involvement.

3. If after a definitive finding that there had been a breach of constitutional rights, no action (or clearly insufficient action) was taken by the legislature or Government to alleviate the situation, the courts, as guardians of the Constitution, might have no option but to take measures that would not otherwise be justified.

Obiter dicta, per MacMenamin J. (concurring): It might be true that third-party funding could enhance access to justice and foster development of the law, but there were also other consequences, such as the possibility of cases with a strong individual “personal rights” dimension being assigned to a funder, difficulties in already busy court lists being created and problems as to how to deal with cases with a multiplicity of plaintiffs. There were also broader “regulatory issues”, such as whether third-party funders ought to be regulated, whether there ought to be statutory limits on recovery and who should bear responsibility for adverse costs orders. There were therefore significant policy questions that might arise in the event of a finding of unconstitutionality in the case of maintenance and champerty, which were matters for another day, and perhaps for the legislature, rather than the courts.

Obiter dicta, per Dunne J. (concurring): A historical analysis of the role of champerty and...

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