Fostif

Fostif

The Australian High Court has gone further than the English judiciary in holding that there are no public policy objections to third party funding where a funder seeks out, and then controls, litigation with the aim of profiting from it 

 

In Fostif a funder backed tobacco retailers’ actions against various wholesalers in return for one-third of any recovery.  The actions proceeded on an ‘opt-in’ basis – the claimants obtained the names and addresses of other retailers and sent notices inviting them to join in the litigation 

 

In a landmark decision, the court held (by a majority) that the funding arrangements did not render the proceedings contrary to public policy nor an abuse of process, at least in the Australian states that have abolished the crimes and torts of maintenance and champerty.  There was no public policy that would bar funded proceedings, even where the funder had substantial control of the management of the litigation and/or stood to make significant profits.  The majority stressed the desirability of facilitating access to justice by means of such funding arrangements

Glossary

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