Ravenswood Resort Pty Ltd (in liq) v Kammal

Ravenswood Resort Pty Ltd (in liquidation) sought to set aside the company's approval of a litigation funding agreement with Kammal. The case was heard in the Federal Court of Australia, where the primary judge had set aside the company's approval, finding that it was unreasonable. Kammal appealed to the Full Court of the Federal Court, which needed to decide whether the primary judge's decision was correct.

The central legal issue was whether the primary judge was correct in finding that the company's approval of the litigation funding agreement was unreasonable. The Full Court considered whether the primary judge had erred in his qualitative assessment of the unreasonable prejudice to the company, whether there was evidence of a conflict of interests, whether the liquidator's investigation was at risk, and whether the absence of the funding agreement inhibited the company from initiating or defending proceedings. The Full Court concluded that the primary judge had erred in his qualitative assessment of the unreasonable prejudice to the company, and that the appeal should be allowed.

The Full Court found that the primary judge had not adequately considered all the relevant factors in making his qualitative assessment of the unreasonable prejudice to the company. The Full Court held that the primary judge had failed to consider the evidence of the director who approved the funding agreement, who was also a director of the litigation funder, and that this evidence was relevant to the assessment of the unreasonable prejudice to the company. The Full Court also found that the primary judge had not adequately considered the evidence of the liquidator's investigation, and that this evidence was relevant to whether the absence of the funding agreement inhibited the company from initiating or defending proceedings.

The Full Court allowed the appeal, set aside the order of the primary judge, and substituted a new order. The new order was that the company's approval of the litigation funding agreement was not unreasonable.