Nationwide Oil Pty Ltd & Anor v. Interline Hydrocarbon Inc

In the Supreme Court of Queensland, Nationwide Oil Pty Ltd and Brenzil Pty Ltd initiated proceedings against Interline Hydrocarbon Inc and IMF (Australia) Ltd. The plaintiffs sought moneys due or damages for breach of an agreement concerning the design, construction, and assembly of a waste oil refinery in Sydney. The defendants counterclaimed for relief, including an amount exceeding the plaintiffs' claims. The defendants argued that the plaintiff's litigation, funded by IMF, constituted an abuse of the Court's process. They contended that IMF's involvement in the litigation amounted to "litigation trafficking" and a cynical exploitation of the Court's process for profit rather than to vindicate rights and achieve a fair balance.

The court examined whether the funding arrangement between IMF and the plaintiffs constituted an abuse of process. It noted that external funding in litigation does not inherently amount to an abuse of process. The court also held that the defendants' predicament of not recovering on a judgment on the counterclaim for compensation exceeding the plaintiff's claim had always been inherent in the contractual arrangements the parties put in place initially. The defendants did not take guarantees from the plaintiff's directors, shareholders or holding company, nor did they conclude an arrangement to secure the value of any future litigious claim. The court found that no abuse of process was involved in a state of affairs that left the defendants unsecured in respect of the value of the counterclaim and entangled in litigation against another party which, despite recourse to external funding, would likely never have more money than needed to take its case to judgment.

The court dismissed the defendants' application for a stay of the plaintiff's claim. It further ordered that the applicants pay the respondents' costs of and incidental to the application, to be assessed.