Mitchell v Roads and Maritime Services (now known as Transport for NSW) (No 2)

The plaintiffs in this case sought to join a litigation funder as a defendant in a representative proceeding. The litigation funder had previously funded the plaintiffs' legal costs. The dispute between the plaintiffs and the funder centred on issues related to the funding agreement and fiduciary duties. The case was heard in the Supreme Court of New South Wales, where the plaintiffs applied for an interlocutory determination of the dispute with the litigation funder. The court was required to decide whether it was appropriate to determine the dispute between the parties at the interlocutory stage, or whether the proceedings should be stayed and separate proceedings initiated. The court also needed to consider whether an arbitration agreement between the parties was null, void, inoperative, or incapable of being performed, and whether the funder owed fiduciary duties to the plaintiffs.

The court considered the nature of the dispute and the appropriate procedural steps to take. It examined the meaning and application of the court’s power under the Civil Procedure Act 2005 (NSW) s 183 and determined that it was both appropriate and necessary to ensure that justice was done in these proceedings by determining the dispute between the plaintiffs and the litigation funder. The court also found that clause 14 of the Funding Agreement was an “arbitration agreement” within the meaning of that expression in s 7(1) of the Commercial Arbitration Act 2010 (NSW). The court held that the arbitration agreement was not null, void, inoperative, or incapable of being performed. Finally, the court found that the litigation funder did not owe fiduciary duties to the plaintiffs, as the plaintiffs’ lawyers held the funds deposited by the funder on trust on behalf of the litigation funder, not the plaintiffs.

The orders of the court included that the dispute between the plaintiffs and the litigation funder should be determined at the interlocutory stage, and that the arbitration agreement was not null, void, inoperative, or incapable of being performed. The court also found that the litigation funder did not owe fiduciary duties to the plaintiffs. The court stayed the proceedings against the litigation funder pending the outcome of the arbitration.