This case itself concerns the claimants allegations that there was impropriety in a tender process resulting in the award of a mobile phone licence to Esat Digifone in 1996. As the claimants bid was unsuccessful they claim this resulted in a material loss. In order to bring their claim before the courts they needed to raise funding. The claimants then sought a declaration from the High Court as to the validity of the proposed funding arrangement.
Donnelly J. examined the long history of the doctrines of maintenance and champerty. It was held that, while some of the more recent cases appeared to suggest that the doctrines needed to be developed to take into account modern realities, the majority of third party funding of litigation continued to be prohibited on public policy grounds.
The State submitted that maintenance and champerty are criminal offences as well as torts, being common law offences which have had statutory recognition for hundreds of years. The State relied on the Maintenance and Embracery Act 1634, “the Act of 1634”, which was retained by the Statute Law Revision Act, 2007. The State submitted that the torts of maintenance and champerty are still extant, and that the courts have defined maintenance and champerty in terms which encompass the funding agreement at issue in this case. The State submitted that the funding agreement was void for illegality, and that the plaintiffs were asking the Court to vary the scope of the offences and torts of maintenance and champerty, which was not within the jurisdiction of the Court.
As we detailed in an earlier article the claimants Persona Digital Telephony Ltd., and Sigma Wireless Networks Ltd. appealed this decision with the Supreme Court. Unfortunately for the claimants and litigation funders the court ruled that the doctrine of champerty and maintenance will be upheld.
Judge Denham C.J ruled:
“This investment agreement, is an agreement by HF3 (Harbour Fund) to fund the plaintiffs’ case. HF3 have no connection with the plaintiffs, apart from an agreement to fund their proceedings. It is, thus, a champertous agreement as described in case law by the High Court and this Court over the last four decades. It is not an exception as permitted by law for such an agreement.”