Chameleon Mining NL v International Litigation Partners Pte Limited

Chameleon Mining NL sought to rescind a litigation funding agreement with International Litigation Partners Pte Limited, asserting that the funding arrangement constituted a financial product under the Corporations Act 2001 (Cth) and that the funder did not hold a requisite Australian financial services licence. This contention arose from specific provisions in the Act that allow for the rescission of such arrangements in the absence of a valid licence. The Federal Court was tasked with determining the nature of the agreement and whether the funder's lack of a licence warranted the rescission of the agreement. Additionally, the Court needed to construe the terms of the funding deed to resolve a dispute over the funder's entitlement to fees upon a Change in Control of the plaintiff.

The Court first examined whether the funding arrangement constituted a financial product within the meaning of the Corporations Act 2001 (Cth). It found that the arrangement did not fit the statutory definition of a financial product and was not a derivative financial product. The Court also considered whether the funder managed financial risk for the plaintiff but concluded that the funding deed did not create such a relationship. Consequently, the plaintiff's attempt to rescind the agreement on the basis of the funder's lack of an Australian financial services licence was unsuccessful. The Court then turned to the construction of the funding deed, focusing on the funder's entitlement to fees. The deed provided for an Early Termination Fee upon a Change in Control of the plaintiff, but the Court found that the funder was not entitled to an additional Funding Fee upon resolution of the funded proceedings.

In its judgment, the Court clarified that the funder was entitled to the Early Termination Fee due to the Change in Control but was not entitled to the Funding Fee as well. The Court's interpretation of the deed was based on its plain and ordinary meaning, leading to the conclusion that the funder could not claim both fees. The Court thus dismissed the plaintiff's claim to rescind the agreement and ruled against the funder's entitlement to the additional Funding Fee. The final orders reflected these findings, affirming the funding deed's terms and the funder's entitlement solely to the Early Termination Fee.