High Court dismisses claim that professional third-party litigation funding violates maintenance and champerty rules.

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

AND

MICHAEL LOWRY

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 K.B. 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 A.C. 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 I.R. 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] I.R. 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] I.L.R.M. 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.