Bernardus Hubertus Van Stokkum and the People Named in Schedule A v The Finance Brokers Supervisory Board - [2004] WASC 42

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BERNARDUS HUBERTUS VAN STOKKUM AND THE PEOPLE NAMED IN SCHEDULE A & ORS -v- THE FINANCE BROKERS SUPERVISORY BOARD [2004] WASC 42

CORAM: MCLURE J

HEARD: 26 FEBRUARY 2004

DELIVERED : 2 MARCH 2004

FILE NO/S: CIV 1197 of 2002

BETWEEN: BERNARDUS HUBERTUS VAN STOKKUM AND THE PEOPLE NAMED IN SCHEDULE A
First Plaintiffs
JOHN HENRY CARTLEDGE AND THE PEOPLE NAMED IN SCHEDULE B
Second Plaintiffs
GEOFFREY HAROLD PALMER AND THE PEOPLE NAMED IN SCHEDULE C
Third Plaintiffs
JOHN ROBERT LYNN AND THE PEOPLE NAMED IN SCHEDULE D
Fourth Plaintiffs
MARTIN LEACH AND THE PEOPLE NAMED IN SCHEDULE E
Fifth Plaintiffs
ARNOLD DOUGLAS FROST AND THE PEOPLE NAMED IN SCHEDULE F
Sixth Plaintiffs
NEVILLE THOMAS HORN AND THE PEOPLE NAMED IN SCHEDULE G
Seventh Plaintiffs
BRIAN PATRICK DEVERALL AND THE PEOPLE NAMED IN SCHEDULE H
Eighth Plaintiffs
DONALD GEORGE FORBES AND THE PEOPLE NAMED IN SCHEDULE I
Ninth Plaintiffs
ADELE EDNA MCNALLY AND THE PEOPLE NAMED IN SCHEDULE J
Tenth Plaintiffs
SECILE MILLIE BOLTON AND THE PEOPLE NAMED IN SCHEDULE K
Eleventh Plaintiffs
CLARENCE ROBERT BENNIER AND THE PEOPLE NAMED IN SCHEDULE L
Twelfth Plaintiffs
BRIAN HANLEY AND THE PEOPLE NAMED IN SCHEDULE M
Thirteenth Plaintiffs
MALCOLM CARLYLE CROSBY AND THE PEOPLE NAMED IN SCHEDULE N
Fourteenth Plaintiffs
AND
THE FINANCE BROKERS SUPERVISORY BOARD
Defendant

Catchwords:

Practice and procedure - Application for interim stay - Maintenance and champerty - Funding agreement between plaintiffs and third party - Abuse of process - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Legal Practice Act 2003, s 221
Legal Practitioners Act 1893, s 59

Trustees Act 1962, s 27

Result:

Interim stay granted

Category: B

Representation:

Counsel:

First Plaintiffs               :     Mr S J Gageler SC & Mr J C Giles
Second Plaintiffs           :     Mr S J Gageler SC & Mr J C Giles
Third Plaintiffs             :     Mr S J Gageler SC & Mr J C Giles
Fourth Plaintiffs            :     Mr S J Gageler SC & Mr J C Giles
Fifth Plaintiffs              :     Mr S J Gageler SC & Mr J C Giles
Sixth Plaintiffs              :     Mr S J Gageler SC & Mr J C Giles
Seventh Plaintiffs          :     Mr S J Gageler SC & Mr J C Giles
Eighth Plaintiffs            :     Mr S J Gageler SC & Mr J C Giles
Ninth Plaintiffs             :     Mr S J Gageler SC & Mr J C Giles
Tenth Plaintiffs             :     Mr S J Gageler SC & Mr J C Giles
Eleventh Plaintiffs        :     Mr S J Gageler SC & Mr J C Giles
Twelfth Plaintiffs          :     Mr S J Gageler SC & Mr J C Giles
Thirteenth Plaintiffs      :     Mr S J Gageler SC & Mr J C Giles
Fourteenth Plaintiffs     :     Mr S J Gageler SC & Mr J C Giles
Defendant:     Mr R J Meadows QC & Ms J C Pritchard

Solicitors:

First Plaintiffs               :     Solomon Brothers
Second Plaintiffs           :     Solomon Brothers
Third Plaintiffs             :     Solomon Brothers
Fourth Plaintiffs            :     Solomon Brothers
Fifth Plaintiffs              :     Solomon Brothers
Sixth Plaintiffs              :     Solomon Brothers
Seventh Plaintiffs          :     Solomon Brothers
Eighth Plaintiffs            :     Solomon Brothers
Ninth Plaintiffs             :     Solomon Brothers
Tenth Plaintiffs             :     Solomon Brothers
Eleventh Plaintiffs        :     Solomon Brothers
Twelfth Plaintiffs          :     Solomon Brothers
Thirteenth Plaintiffs      :     Solomon Brothers
Fourteenth Plaintiffs     :     Solomon Brothers
Defendant:     State Solicitor

Case(s) referred to in judgment(s):

Clairs Keeley (A Firm) v Treacy & Ors [2003] WASCA 299
Giumelli v Giumelli (1999) 196 CLR 101
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re Movitor (1997) 73 FCR 219
Re Tosich (1996) 64 FCR 380
Treacy & Ors v Rylestone Pty Ltd & Ors [2002] WASC 178

Case(s) also cited:

A v Hayden (1984) 156 CLR 532
Abraham v Thompson [1997] 4 All ER 362
Arkin v Bouchard Lines Ltd [2003] EWHC 2844 (Comm)
Asher v Secretary of State [1974] Ch 208
Ashmore v British Coal Corporation [1990] 2 QB 338
Australian Granites Ltd v Eisenwerk Hensel Bayrenth Dipl-ing Burkhardt Gmbh [2001] Qd R 461
Bandwill Pty Ltd v Spencer-Laitt (2000) 23 WAR 390
Brewer v Brewer (1953) 88 CLR 1
Buiscex Ltd v Panfida Foods Ltd (in liq) (1998) 28 ACSR 357
Burden v Ainsworth [2004] NSWCA 3
Choules & Ors v Siglin [2002] WASC 230
Co-Ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 1 ALR 201
Commonwealth v Verwayen (1990) 170 CLR 394
D H Christie Pty Ltd v Baker [1996] 2 VR 582
Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receiver & Manager Appointed) (in liq) (1993) 43 FCR 510
Elfic Ltd v Macks [2003] 1 Qd R 125
Fayrab v Smyth [1998] EWCA Civ 1418
Freehill Hollingdale & Page v Bandwill Pty Ltd [2000] WASCA 150
Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429
Hamilton v Al Fayed (No 2) [2003] QB 1175
Henderson v Henderson (1843) 67 ER 313
Hodges v New South Wales (1998) 62 ALJR 190
House of Spring Gardens Ltd v Waite [1991] 1 QB 241
Hunter v Chief Constable of the West Midlands Police [1982] AC 529
Law Society of New South Wales v Foreman (1994) 34 NSWLR 408
Law Society of New South Wales v Harvey [1976] 2 NSWLR 154
Law Society of New South Wales v Moulton [1981] 2 NSWLR 736
Linsley v Petri [1996] 1 VR 427
Maguire v Makaronis (1997) 188 CLR 449
Martell v Consett Iron Co Ltd [1955] Ch 362
McIntyre v Attorney-General of Ontario (2002) 218 DLR (4th) 193
Miller v University of New South Wales (2003) 200 ALR 565
Neil Pearson & Co Pty Ltd v Comptroller General of Customs (1995) 38 NSWLR 443
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
Nominal Defendant v Manning (2000) 50 NSWLR 139
O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 205
R (Factortame & Ors) v Transport Secretary (No 8) [2003] QB 381
R v Lord Chancellor; ex parte Witham [1998] QB 575
R v O'Halloran (2000) 182 ALR 431
Ramsay v Pigram (1968) 118 CLR 271
Re Trepca Mines Ltd (No 2) [1963] Ch 199
Reichel v Magrath (1889) 14 App Cas 665
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198
Roebuck v Mungovin [1994] 2 AC 224
Rogers v R (1994) 181 CLR 251
Saffron v Commissioner of Taxation (1991) 30 FCR 578
State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Rep 81-423
Thai Trading Co v Taylor [1998] QB 781
Tiufino v Warland (2000) 50 NSWLR 104
Unity Insurance Brokers Pty Ltd v Tocco Pezzano Pty Ltd (1998) 192 CLR 603
UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd (1996) 21 ACSR 457
VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716
Walton v Gardiner (1993) 177 CLR 378

MCLURE J: This is the defendant's application for a stay of the action until further order. The defendant is the Finance Brokers Supervisory Board ("the board").
The plaintiffs are investors who claim to have suffered loss and damage by reason of the board's alleged negligence and misfeasance in public office. The number of plaintiffs in the action exceed 3000. The costs of and in connection with the action are being funded by Insolvency Litigation Fund Pty Ltd, formerly known as Insolvency Management Fund Ltd ("IMF"), whose parent is a publicly listed company which carries on the business of litigation funding.
IMF has funded approximately 38 cases related to finance broking transactions. This action is one. Another is an action in this Court by five investor plaintiffs against, among others, the law firm Clairs Keeley who is said to have acted for the investors and the borrowers in connection with mortgage transactions brokered by a licensed finance broker ("Clairs Keeley action").
The five investor plaintiffs in the Clairs Keeley action are also plaintiffs in this action. The plaintiffs in both actions entered into litigation funding agreements with IMF and, purportedly by their duly authorised agent IMF, into retainer agreements with the solicitors on the record in both actions, Solomon Bros.
Clairs Keeley applied for a stay of the Clairs Keeley action on the ground that it was champertously maintained and an abuse of process of the Court. Scott J dismissed the application: Treacy & Ors v Rylestone Pty Ltd & Ors [2002] WASC 178. The Full Court comprising a coram of five judges upheld the appeal and granted a stay of the Clairs Keeley action: Clairs Keeley (A Firm) v Treacy & Ors [2003] WASCA 299 ("Clairs Keeley").
It appears to be accepted by the parties that the Full Court decision was interlocutory. I am advised by the parties in this case that the Full Court granted to the respondents (plaintiffs) in the Clairs Keeley appeal liberty to apply to the Full Court for its approval of new funding arrangements which they might wish to pursue.
The respondents in that action have made an application to the Full Court to lift the stay based on proposed amendments to the funding agreements and retainers, which amendments are also relied on in opposition to the board's stay application. The board is seeking an interim stay pending the Full Court's determination of the investors' application in the Clairs Keeley appeal.
The respondents submit that the proper course is to adjourn the board's stay application until the Full Court rules on the application before it. In order to grant an interim stay of this action, I have to be satisfied that it is arguable that the Full Court decision applies to the facts of this case and that the balance of convenience favours a stay.
The respondent has filed affidavit evidence in opposition to the board's application, a great deal of which the board says is inadmissible either on the basis of Anshun estoppel, a principle which gets its name from the High Court decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 or, because to admit the evidence would be an abuse of process, the argument being, as I understand it, that the material could and should have been adduced in the Clairs Keeley stay application.
It is unnecessary for me to rule on that issue at this stage. I have had regard to the material on a provisional basis for the purpose of the interim application in light of the respondents' submission that the material in the affidavit, or at least substantial parts of it, is relevant to the question whether the facts in this case are materially distinguishable from those in Clairs Keeley upon which the Full Court ordered the stay.
It is common cause that no issue estoppel or res judicata arises. The only question is whether Clairs Keeley is distinguishable on its facts. The terms of the funding agreement and retainer between the relevant parties (being the investors, IMF and Solomon Bros) in the Clairs Keeley action and in this action were the same at the time this stay application was filed. Since that time, a substantial number of plaintiffs in this action have entered into agreements to vary the funding agreements and the retainer.
The variation agreements are intended to address the matters identified by the Full Court in Clairs Keeley as giving rise to an abuse of process of the Court. The respondents rely on the variations and other factual differences to distinguish the Full Court decision.
It is necessary to refer in a summary way to the reasons of the Full Court in Clairs Keeley. Templeman and Pullin JJ each gave detailed reasons for decision. The two other members in the majority, Parker and Wheeler JJ, agreed with the reasons and the decisions of both Templeman and Pullin JJ. Murray J dissented.
Templeman J found that the funding agreement and the retainer were separately and together an abuse of process of this Court. Pullin J in his reasons focused primarily on the funding agreement and concluded, arguably on wider grounds, that it was an abuse of process.
Dealing firstly with the funding agreement. It is unnecessary to refer to its terms in detail. In essence, the actions are being funded and supported by IMF. Only if the investors recover money in the action will the investors owe any money to IMF. In such circumstances, they will be required to reimburse IMF its funding and investigation costs and to pay to IMF 35 per cent of the amount recovered in the action. Of that 35 per cent, 5 per cent was payable by IMF to the Real Estate Consumers Association Inc ("RECA"). IMF's percentage did not vary in the event of an early settlement. If an investor wished to settle for an amount which an independent QC concluded was inadequate, IMF's commission increased to 45 per cent.
The funding agreement also provided that although the solicitors Solomon Bros would be retained by the investor they would be paid directly by IMF upon invoices being rendered by the solicitors. IMF's rights are specified in cl 6 of the funding agreement to include receipt of a monthly report on progress from Solomon Bros, to be advised immediately by Solomon Bros of any proposal for settlement and to have access to the Solomon Bros files. Clause 8 of the funding agreement provides that IMF will not interfere with the conduct of legal proceedings or the terms of any settlement thereof, which shall remain in the discretion of the plaintiffs and Solomon Bros.
Mr McLernon, an executive director of IMF, deposed in the Clairs Keely action that "all legal work and all decisions are made by Solomon Bros." Notwithstanding cl 8 and Mr McLernon's evidence, Templeman J drew the inference that there was a high probability the action would be taken out of the plaintiffs' hands and run by IMF and that the decisions made by the plaintiffs would be mere formalities, that is they would be mere ciphers and simply do as they are advised by IMF.
Templeman J drew those inferences based firstly on the terms of the funding agreement, in particular cls 6 and 10.2, which provides that IMF shall assist in any settlement negotiations if requested to do so by Solomon Bros; secondly, on Mr McLernon's evidence of his legal qualifications and considerable experience in commercial litigation; thirdly, on the plaintiffs' lack of relevant expertise; fourthly, on the fact that the plaintiffs had nothing to lose and everything to gain by accepting the advice "given to them by IMF through Solomon Bros; and finally, it was probable that because IMF was playing for high stakes Mr McLernon would exert the greatest possible influence over the litigation.
On the basis of those matters Templeman J concluded that there was a de facto assignment to IMF of the plaintiffs' causes of action. He said the reality was that IMF was running the action for its own benefit in consideration of a payment to the plaintiffs of 65 per cent of the recovery and accordingly, the Court's resources were being subverted to a commercial enterprise.
Templeman J said the Clairs Keeley action should be stayed until some safeguard was put in place to ensure that IMF's role was confined to funding. However, he noted it might be difficult to formulate acceptable arrangements given the nature and extent of Mr McLernon's role in that action to date.
The risk of "inter-meddling" identified by Templeman J (at par 181) is, on my reading, a reference to the risk of IMF exercising control of the action rather than any risk of actual misconduct. That is also Pullin J's understanding of the term in this context (see par 209).
Pullin J identified four features of the litigation funding arrangement on which he based his conclusion to grant a stay. They are firstly, IMF has no legitimate interest in the litigation distinct from the benefits it would receive under the litigation funding agreement; secondly, the funding agreement is champertous and the share of the proceeds to be taken is significant; thirdly, the plaintiffs bear no financial risk or exposure in participating in the action apart from the risk of IMF failing financially and but for the deal offered by the litigation funder, the plaintiffs would undertake a risk/cost/benefit analysis and in many cases choose, regardless of means, not to litigate; fourthly, the reality and the risk that IMF would participate as though it was the client. In reaching this last conclusion Pullin J relied on and had regard to the terms of the funding agreement, in particular cls 6 and 10 referred to earlier, and IMF's conduct in entering into the retainer without the plaintiffs' authority.
Only Templeman J addressed the retainer in detail. He was particularly critical of the fact that IMF and Solomon Bros agreed the terms of the retainer entirely without reference to the plaintiffs, IMF purporting to do so as their agent and that Solomon Bros was entitled to a success fee, being an uplift of 25 per cent above its standard rates, if IMF recovered all its costs and expenses.
The board submitted that the Full Court in Clairs Keely reached its decision solely on the basis of the terms of the funding agreement and retainer. I am not persuaded that is a correct reading of Templeman J's reasons although it may be of Pullin J's reasons. In the circumstances it is appropriate to refer to the facts deposed to in this case by Mr McLernon. He identifies the nature and extent of IMF's involvement in this litigation. By any measure it is significant. He deposes again to his legal qualifications and very considerable experience as a commercial litigator. IMF employs five other lawyers. Mr McLernon and nine of his staff investigated the facts relating to the approximately 700 loan and mortgage transactions which form the centrepiece of this litigation. They worked on a virtually full-time basis for one and a half years from July 2001. They sought and obtained documentation from a very wide range of sources, prepared reports from the source material, and set up an elaborate filing system for the material. The reports and files were provided to Solomon Bros. By the end of 2002 the investigation work undertaken by IMF had largely been completed.
Three IMF support staff continue in an administrative and document management role assisting Solomon Bros. The documents are largely stored at IMF's offices. The plaintiffs' discovery list was prepared by IMF staff under the direction and supervision of Mr Giles, the solicitor at Solomon Bros handling the solicitor's work associated with this action.
Solomon Bros have used the IMF reports in the pleading and Mr McLernon has assisted Solomon Bros with factual matters, including lists of facts and summaries of documentary information for the particulars of the pleading. Mr McLernon says at par 144 of his affidavit:
"Because I have an overall understanding of the facts, and know the whereabouts of documents and the connection between documents in one matter and those in another, I have continued to have a role so far as the facts and documents relating to each action are concerned. That is a role which must be undertaken by at least one person in connection with this action. The action as deposed to below is essentially documentary and the volume of documents is enormous."
Mr McLernon's affidavit in support of an application in this action to be released from the implied undertaking as to discovery is further evidence of his very significant and considerable involvement in the preparation required to bring this action to trial. Mr McLernon also deposes to the fact that he discusses the progress of the action with Mr Giles from time to time, that if asked he volunteers his views on strategic decisions in the litigation and has attended meetings with senior counsel instructed by Solomon Bros. In my experience the identification, investigation, analysis and reporting on factual matters by or under the supervision of an experienced commercial litigator such as Mr McLernon must inevitably be driven by and presented in a legal framework.
IMF explained its proposed role in this action in a letter to RECA members enclosing an explanatory memorandum. The letter states:
"Hugh McLernon and the other members of the IMF board have between them pioneered the opening up of high risk, high value litigation to those members of the community who would otherwise be denied access to the legal system, either because of a lack of financial resources or because they are risk adverse."

The term "risk adverse" is defined to mean those investors who are prevented from taking legal action because they do not want to run the risk of throwing good money after bad or do not want to run the risk of losing the case and then face the burden of paying adverse cost orders that may be awarded. The letter goes on:
"We have successfully managed many group actions involving high value claims and complex evidentiary matters. We have a proven record in what for you will be high end, high value litigation."
I go now to the variations to the funding agreement and the retainer. The changes are as follows. IMF's fee is now 22 per cent of recovery if the action settles at or before mediation. Otherwise the fee is 30 per cent of net recovery. RECA no longer receives a fee calculated as a percentage of recovery. There is no pecuniary disincentive for a plaintiff settling against IMF's wishes. The solicitors' fees are now the solicitors' usual fees and there will be no discount or uplift.
The solicitors will have a separate agreement with each plaintiff. That agreement expressly vests day‑to‑day decision‑making in the solicitors. The solicitors are only required to obtain instructions from the plaintiffs in relation to settlement or decisions which appear to have a real effect on the plaintiffs' likely return. It is unclear to me just what is encompassed by "a decision which has a real effect on the plaintiffs' likely pecuniary return".
The solicitors are required to report to the plaintiffs three‑monthly and in certain other circumstances. The plaintiffs are expressly informed that they can take advice or instructions from the solicitors, although are cautioned not to phone regularly and finally, although not a change, the plaintiffs are expressly reminded that their instructions prevail over IMF's wishes.
As can be seen from the short description of the changes, there is no change to cls 6, 8 or 10 of the funding agreement. Having regard to the agreements as varied and the nature and extent of IMF's involvement in this action, my preliminary assessment is it is strongly arguable that there has not been any material change of position on the issue of IMF's control of the action which, in my assessment, was central to the Full Court's decision in Clairs Keeley to stay that action.
The plaintiffs also rely on other factual differences between the actions to distinguish Clairs Keeley. They include the following. Firstly, the respondents contend that as this case will be largely, if not almost entirely, documentary, there is not a real risk of actual misconduct such as, for example, inflating damages or suborning witnesses. I have doubts about the accuracy of the risk assessment. However, assuming it to be accurate, I do not understand the rule against assignments of a bare cause of action (the archetypal maintenance/champerty transaction) as being dependent on proof or disproof of a real risk of actual misconduct. In any event, it is arguable the Full Court decision in Clairs Keeley supports the proposition that IMF control of the litigation would be unacceptable even in the absence of a real risk of actual misconduct because the public policy objective is to prevent trafficking in litigation.
The second additional matter relied on is that approximately one-third of the investor plaintiffs in this action sue as trustees and that they are in a position that is indistinguishable from liquidators and trustees in bankruptcy. Insolvency practitioners are protected by statute if they assign a bare cause of action or sell an interest in the proceeds of an action. Under clause 11.2 of the funding agreement, which remains unchanged, there is no relevant sale of property by the plaintiff trustees. IMF's claim is expressly stated to be in debt. The plaintiffs rely on Templeman J's conclusion of a de facto assignment of the cause of action.
Without determining the matter, it seems to me that there are a number of difficulties in the way of this argument. Firstly, s 27 of the Trustees Act refers to a de jure sale of property. Secondly, there is authority for the proposition that even where a legal or equitable interest in property passes from an insolvency practitioner, the relevant legislation does not authorise an abuse of process: Re Movitor (1997) 73 FCR 219 and Re Tosich (1996) 64 FCR 380. Thirdly, there is a question whether the interpretation of laws relating to insolvency practitioners would or should extend to trustees.
The third additional matter relied on by the plaintiffs is that as a result of the very significant investigation and collection activities undertaken by IMF before commencement of this action, IMF had a legitimate pre-existing interest in the litigation. The correctness of this proposition may also be questioned. The authorities are to the effect that the interest must exist independently of the allegedly infringing agreement or conduct: Re Movitor and Re Tosich at pages 388 and 227 respectively.
Finally, reliance is placed on an estoppel. It is said the board and the State endorsed the funding of this action by IMF, that IMF relied on that endorsement and as a result has suffered large financial detriment. The evidence on this matter is given by Mr McLernon, seemingly on behalf of IMF. Little distinction is made in the evidence or in submissions between the position of the plaintiffs and that of IMF. Different considerations apply to each.
Assuming the plaintiffs or IMF have an arguable estoppel claim, I am not satisfied that there are strong prospects of the court granting relief which would have the effect of permitting the continuation of an action that was an abuse of its process. As the High Court made clear in Giumelli v Giumelli (1999) 196 CLR 101, the court has a discretion as to the type of relief it grants and relief is moulded according to the particular circumstances of the case.
In summary, notwithstanding the variations to the agreements and the additional matters relied on by the plaintiffs, I am satisfied that, based on the Full Court decision in Clairs Keeley which I am bound to apply, the board has a good arguable case that the action is an abuse of process.
I turn now to the balance of convenience. I am satisfied that the balance of convenience or interest favours the grant of a stay for the following reasons: firstly, the Board seeks an interim stay until the determination of the plaintiffs' application in Clairs Keeley to lift the stay based on the contractual variations. If the plaintiffs in Clairs Keeley succeed the Board will not, as it told this court, seek the continuation of the stay in this action.
Secondly, the public interest is not served by the interim continuation of an action which involves an arguably unlawful champertous abuse of process. Thirdly, the plaintiffs having incurred no costs in the action, they will not suffer any material financial disadvantage as a result of any interim stay. Although IMF may be in a different position that is not in my view a relevant consideration in the balance of convenience.
Fourthly, my necessarily preliminary assessment is that the matters relied on by the plaintiffs to distinguish the Full Court decision in Clairs Keeley are not of such strength as to materially impact on the balance in favour of the plaintiffs and particularly so where the application is for an interim stay.
I accept it to be the case that this action would and could not have been brought unless funded by IMF. However, based on the Full Court's reasons in Clairs Keeley, in particular those of Pullin J, I do not understand that to be an unequivocal factor in favour of refusing a stay. As IMF's parent has told the market, it creates litigation. I infer that is because of the two categories of potential IMF clients being those that cannot take legal action because they do not have the means and the risk averse category who would not take action because their financial interests would be at stake.
For these reasons I propose to grant the board's application.