Pockett v Dean-Willcocks

The parties in this matter were the claimants, who sought leave to appeal, and the respondents, who were the deed administrators of Etrend Pty Limited. The dispute concerned the propriety of summonses for the examination of employees of a proposed defendant, in circumstances where the administrators were seeking litigation funding. The claimants argued that the proposed funding arrangement was champertous and that the examinations were sought for an improper purpose. The application for leave to appeal was heard by the Court.

The legal issues before the court were whether the summonses for examination were sought for a proper purpose, and whether the proposed litigation funding arrangement was champertous and contrary to public policy. Specifically, the claimants contended that the primary judge erred in failing to find that the examinations were in furtherance of a champertous arrangement, that the administrators had a proper interest in conducting the examinations, and that the purpose of the examinations was to obtain information to facilitate litigation funding. They also argued that the court should not lend its processes to such an arrangement and that the predominant purpose of the examinations was to obtain information for a third-party litigation funder, which was a collateral and improper purpose.

The court dismissed the application for leave to appeal, finding no substance in the primary arguments. It held that litigation funding for an administrator of an insolvent company could be lawful, provided the administrator did not dispose of a cause of action otherwise than in a bona fide exercise of their power. The court reasoned that it should not be assumed that the administrators would enter into an unlawful agreement and that they were not required to prove the specific terms of any funding agreement at that stage. The primary judge's finding that the administrators' purpose was to obtain information about the strength of the cause of action was upheld, and it was determined that this was a proper purpose. The court further held that the mere possibility of submitting this information to a litigation funder did not make the purpose improper or constitute an abuse of process. While acknowledging the brevity of the primary judge's reasons on discretion, the court found that his findings regarding the purpose of assessing the claim's strength and the absence of a collateral purpose were sufficient. The court also found that the affidavit relied upon sufficiently demonstrated that the administrators lacked information regarding key matters, such as the reasons for Woolworths' withdrawal from negotiations and the potential quantum of damages, which were relevant to assessing the claim's strength.

The application for leave to appeal was dismissed with costs.