Third party cannot fund Esat Digifone case, court rules

An English company cannot, because of laws dating back to the mid-14th century, fund a major legal action here over the 1996 award of the State's second mobile phone licence to Esat Digifone, a company of businessman Denis O'Brien, the Supreme Court has ruled.

Several of the judges voiced disquiet the ruling may mean a case of major importance, involving serious and disputed allegations against the State and its institutions, might not proceed to a full hearing where the estimated litigation costs are €10 million.

The policy issues raised, including about obtaining “effective” access to justice against a background of increasing cost and complexity of litigation, are complex and are for the legislature to address, they said.

There is “a very real problem” in practice about access to justice, Mr Justice Frank Clarke observed.

Ms Justice Elizabeth Dunne indicated there may be issues concerning the constitutionality of the relevant laws, while Mr Justice John MacMenamin said other issues include whether non-party litigation funders should be regulated and if limits should be placed on the funds they might recover.

Champerty

The court dismissed the appeal by Persona Digital Telephony against the High Court’s rejection of its funding arrangement after upholding the High Court finding the arrangement was unlawful because of laws here prohibiting maintenance and champerty.

Mr Justice William McKechnie, in an unprecedented move, said he personally would defer making any order and invite the State to address the “deeply disturbing” situation of Persona being unable to prosecute its case “solely because of the continuing existence of ancient principles of law”.

The issues in Persona's case, from the perspective of the State and its institutions, "could not be graver" and it was "of immense concern" legislation of "such enormous antiquity" can prevent them being reviewed on their merits, he said. That was precisely what the State, Mr O'Brien and former government minister Michael Lowry argued, the same parties who would, if the allegations were upheld, "be damnified in a manner heretofore unexpressed in the State's history".

Persona and Sigma Wireless Networks Ltd, members of a consortium among the failed bidders for the licence, had argued their case against the State and Mr O’Brien, with Mr Lowry as a third party, is of “immense public importance” but, without the litigation funding arrangement, they may be unable to continue it.

Disappointed

Persona boss Tony Boyle said he was disappointed by the ruling but would consult his legal team before making his next move.

"There were a lot of issues flagged in the judgment that would have to be considered by all sides," he told The Irish Times.

He said the ruling was far from straightforward and it would take time to understand the implications of certain aspects.

“We’ve been at this for 20 years and we’re still absolutely committed to getting the justice we deserve,” he said.

The Supreme Court upheld the High Court’s April 2016 finding Persona’s funding arrangement with Harbour III Limited Partnership is impermissible because of the laws on maintenance and champerty. Harbour was to get an estimated 40 per cent of any return from the litigation.

Maintenance involves improper interference in civil proceedings including by providing financial assistance. Champerty is a form of maintenance where financial support is provided by a party with no connection to the dispute in exchange for a share in the spoils of any proceeds from the litigation or some other profit.

Non-party funding of litigation here is permitted only where it does not breach either of these prohibitions.

Independent interest

In her judgment, the Chief Justice said third party funding to support a plaintiff is unlawful because of the rules on champerty and none of the exceptions to that provision applied here. Champerty remains the law here and a person who assists another’s case without a bona fide independent interest acts uunlawfully, she held.

While Persona argued the court could develop the common law on champerty, policy issues would involve more complex situations more suited to legislation and after a report of the Law Reform Commission, she said.

The fact the funding was provided during the case, rather than at the outset, or that the case is described as of immense public importance, are not relevant factors, she said.

She added she was concerned the defendants and Mr Lowry, who had “vigorously opposed” Persona’s motion aimed at having its funding arrangement permitted, are beneficiaries if the case does not proceed.

That “may be a matter for consideration at another time and place”. There was a “long history” of lawyers taking cases on a “no foal, no fee” basis or perhaps “an alternative route may be found whereby the litigation would cost less”.