Elfic Ltd v Macks

Elfic Ltd, a company in liquidation, was involved in proceedings against Macks, a company, to recover certain funds. The liquidator of Elfic Ltd sought court approval for a funding arrangement to enable the prosecution of the recovery proceedings. The dispute centred around whether the funding arrangement was champertous, whether the approval order should be set aside due to non-disclosure, whether the creditors should have been called to approve the arrangements, and whether the funder's capacity to control the proceedings warranted setting aside the orders. Additionally, there were allegations against the liquidator for not acting impartially and for acting with an improper motive.

The court was required to determine whether the funding arrangement was champertous, whether the order for approval should be set aside due to non-disclosure, whether the order should be set aside because creditors were not called on to approve the arrangements, and whether the orders should be set aside because of the funder’s capacity to control the proceedings. The court also needed to consider whether the conduct of the liquidator amounted to the tort or champerty in Queensland and public policy considerations in this regard.

The court found that the funding arrangement was not champertous and that there was no sufficient evidence of non-disclosure to warrant setting aside the approval order. The court held that there was no requirement for creditors to approve the arrangements and that the funder’s capacity to control the proceedings did not justify setting aside the orders. The allegations against the liquidator for not acting impartially and for acting with an improper motive were not substantiated. The court dismissed the action.

The court dismissed the action, finding no grounds for setting aside the approval order or removing the liquidator. The allegations against the liquidator were dismissed, and the funding arrangement was held not to be champertous. The court held that the liquidator's conduct did not amount to the tort or champerty in Queensland and did not contravene public policy.