Liquidators And Funded Litigation - Is Court Approval Necessary?

Key Point

• Considering that creditors usually have assessed the merits of litigation funding, and the cost of going to court, making court approval a mandatory step does not appear justified.

Should all litigation funding agreements involving liquidators be screened by courts?

That was the proposal put forward by Justice Palmer in his now-famous attack on litigation funding in Hall v Poolman [2007] NSWSC 1330. However, an analysis of the current state of litigation funding and its brief history in Australia calls into question the practicality of his suggestion.

Background

In Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 80 ALJR 1441, the High Court held that litigation funding is a reality of commercial life and that courts would look favourably on litigation funding arrangements that offered access to justice, provided that any tendency to abuse of