Litigation Funding As A MIS A "square Peg In A Round Hole"

Court reverses earlier decision

The Full Federal Court has overturned its previous decision in Brookfield Multiplex Ltd v International Litigating Funding Pte Ltd [2009] FCAFC 147; (2009) 180 FCR 11 (Brookfield), finding in 2022 that a relevantly identical litigation funding arrangement to that in Brookfield did not, in fact, have the features of a "managed investment scheme" (MIS) for the purposes of the Corporations Act 2001 (Cth) (the Act).

In LCM Funding Pty Ltd v Stanwell Corporation Limited [2022] FCAFC 103, Justice Anderson, with whom Justices Middleton and Lee agreed, held that the fact that so many provisions of the MIS regime under the Act are impossible for a typical litigation funding scheme to comply with was a strong indicator that the that the MIS regime under the Act was not intended to apply to litigation funding schemes.<¹