Hutchison v Hillcrest Litigation Services Ltd

The case of Hutchison v Hillcrest Litigation Services Ltd was before the Federal Court of Australia, which was required to determine questions of construction of a litigation funding agreement. The plaintiffs, represented by the Insolvency Practitioner, had entered into a litigation funding agreement with the defendant, Hillcrest Litigation Services Ltd, to fund the costs of arbitration proceedings. The dispute arose from the interpretation of the funding agreement, specifically whether it contained an implied term that the defendant would act reasonably in determining whether to agree to particular fees or disbursements being recoverable as "Insolvency Practitioner's Fees and disbursements." The plaintiffs argued that the funding agreement was void for uncertainty if the power to give or refuse agreement to particular expenses was not qualified by an implied term to act reasonably.

The court had to decide whether the funding agreement contained an implied term of reasonableness in the defendant's discretion to approve fees or disbursements and whether the agreement was void for uncertainty if such a term was not present. The court found that the funding agreement did not contain an implied term that the defendant would act reasonably in determining whether to agree to particular fees or disbursements. However, the court held that this did not render the agreement void for uncertainty. The court concluded that the power to give or refuse agreement to particular expenses was qualified by an implied term to act reasonably, which was a common law implication that applied to the funding agreement.

The court's decision was that the funding agreement was not void for uncertainty, and the implied term of reasonableness applied to the defendant's discretion in approving fees or disbursements. The court made orders approving the liquidators' entry into a costs agreement with a firm of solicitors and extending the time for applying for approval under the Corporations Act 2001 (Cth), s 1322(4)(d). The court also made orders for costs and directions for the preparation and filing of further documents.