Treacy v Rylestone Pty Ltd

This case concerned an application by a defendant to stay the proceedings on the basis that the agreement between the plaintiffs and a litigation funder was tainted by champerty. The plaintiffs were mortgagees who had entered into an agreement with a litigation funder, IMF, to fund their action to recover the mortgage funds. The agreement provided for a success fee of 35 per cent of any amount recovered from the defendant. The defendant argued that the agreement was champertous and that the proceedings should be stayed on the basis of abuse of process. The Court held that there was an arguable case that the agreement was champertous, but the Court refused to grant a stay on the basis that there was no evidence of actual interference in the proceedings and that the plaintiffs would be unable to fund the action without the funding agreement. The Court held that the matter should be left to the trial of the action to determine whether there had been any interference in the proceedings and whether the funding agreement was champertous.