Ruling could help impoverished plaintiffs
Impoverished plaintiffs should have easier access to professional finance to fund their lawsuits after a Supreme Court ruling today.
The court's decision followed legal action by Geoff Waterhouse and his son, Robert, against Auckland-based insurer Contractors Bonding, in which they are seeking damages of $4.5 million for alleged deceit, breach of fiduciary duty and negligence.
The Waterhouses' case is being paid for by a litigation funding company, understood to be LPF Group.
Contractors Bonding wanted full disclosure of the funding agreement along with information about the funder.
The Waterhouses objected because full disclosure could reveal important details, such as the amount of funding available, which could give the defendant a tactical advantage.
The battle went all the way to the Supreme Court, which ruled that only two details had to be disclosed - the identity of the litigation funder and its amenability to the jurisdiction of New Zealand courts.
Details of the financial strength of a litigation funder would not have to be revealed, said the court, because defendants could obtain security for costs in the conventional way.
Simpson Grierson litigation partner Ben Upton said the decision was sensible.
"It will assist litigation funders because it gives greater clarity around what they're obliged to disclose," he said.
"Funding's all about giving people a chance to fight a case they would otherwise not be able to do. It's a growing market in New Zealand."
The information funders were required to disclose would tell defendants what they needed to know, he said.
"If somebody's funding a case you want to know who it is, and that you don't have to go to Zimbabwe to chase them for money."
LPF Group director Phil Newland said he was pleased to have some certainty.
"The highest court in the land has confirmed the role of litigation funders. As the largest New Zealand-based litigation funder it's great - we just want to get on with providing access to justice."
LPF Group's other two directors are former Shareholders' Association chairman Bruce Sheppard and former Supreme Court judge Bill Wilson.
The Waterhouse case relates to their role as brokers for Contractors Bonding in the US state of Georgia between 2000 and 2005, a role that ended abruptly when US regulators found the policies they were selling were unlawful.
After a law change in 2002, Contractors Bonding had become ineligible to sell insurance in the state, but the business continued because, as the Waterhouses allege, Contractors Bonding claimed a deal with an eligible insurer in American Samoa allowed it to continue to offer policies.
According to a state law enforcement officer's affidavit obtained by BusinessDay the American Samoa connection was fictitious.
Policies sold by the Waterhouses bore the name of genuine Samoan company Mark Salofa Insurance, but it had no relationship with Contractors Bonding, was not eligible to write insurance in the state and was not aware of its name being used for that purpose.
The Waterhouses say they suffered severe personal and financial losses from the US regulatory crackdown and allege Contractors Bonding misled them about the Samoan deal.
According to court documents, Contractors Bonding says the problems were the result of a mistake by the Georgian authorities.
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