Supreme Court confirms that Maintenance and Champerty remain illegal

Persona Digital Telephony (“Persona”) and Sigma Wireless Networks Limited (“Sigma”), were part of a consortium of unsuccessful bidders who competed for a mobile telephone licence which was granted to Esat Digiphone in 1995. Persona and Sigma subsequently brought High Court proceedings seeking damages for unlawful interference by the Minister for Communications in the competition. In 2015, Person and Sigma engaged the services of Harbour III Limited Partnership (“Harb... Persona Digital Telephony (“Persona”) and Sigma Wireless Networks Limited (“Sigma”), were part of a consortium of unsuccessful bidders who competed for a mobile telephone licence which was granted to Esat Digiphone in 1995. Persona and Sigma subsequently brought High Court proceedings seeking damages for unlawful interference by the Minister for Communications in the competition. In 2015, Person and Sigma engaged the services of Harbour III Limited Partnership (“Harbour”), a UK professional litigation funder to continue to fund their long-running litigation. Litigation funding involves a third party providing financial assistance to progress legal proceedings. This type of arrangement is common practice in the UK but falls foul of two long standing Irish common law rules which date back to 1634. The crime and tort of maintenance occurs where a third party supports litigation without just cause or without having a legitimate interest in the matter. Champerty is an aggravated form of maintenance where the third party supports litigation without just cause in return for a share of the proceeds. In Persona Digital Telephony Ltd & anor -v- The Minister for Public Enterprise & ors [1]  Persona sought an Order to the effect that they were not engaging in an abuse of process or contravening the rules on maintenance and champerty by entering into a litigation funding arrangement with Harbour. On 20 April 2016, the High Court affirmed the prohibition on maintenance and champerty and held that the arrangement constituted unlawful third party funding.

Supreme Court decision

Persona was granted leave to have the matter heard by the Supreme Court, by-passing the Court of Appeal. Such “leapfrog” appeals are only granted in exceptional circumstances where an issue of general public importance is raised. Persona contended that their third party funding arrangement should be viewed as enabling a claim of public importance to proceed in circumstances where it otherwise would not. The Supreme Court delivered judgement on 23 May 2017.[2] It dismissed Persona’s appeal, making the following key points;

1. Champerty remains unlawful in the Ireland. A person who assists in another’s proceedings without a bona fide independent interest acts unlawfully.
2. The agreement at issue between the Plaintiffs and Harbour is a champertous agreement.
3. Reform of the law in this area is more suited to legislation.
4. The fact that the case was described as one of ‘immense public importance’ was not a relevant factor.

While in agreement with the majority decision, Clarke J.  expressed some disquiet at the very real possibility of a case of potential public relevance failing to progress due to lack of funding. He commented that the increased complexity in modern litigation may call for a review of the current system in light of the constitutional right of access to a court.

Impact

The outcome of Persona affirms the long established position that maintenance and champerty remain unlawful. The Supreme Court has confirmed that if there is to be any reform in this area, then that is a matter for the legislature. We will consider the impact of the Persona case and well as other recent decisions relating to After The Event insurance in a further blog over the coming weeks. A link to the judgement of Denham C.J can be found here. [1] [2016] IEHC 187 [2] [2017] IESC 31