Third-party funding agreements, an established part of civil
litigation overseas, have so far been little used in New Zealand
but are becoming more common.
Last week the Supreme Court issued a definitive
ruling on such agreements, holding that the courts have no
general role of regulating third-party funding. Accordingly, in the
ordinary course, only the existence of such an agreement and
location of the funder, but not the agreement itself, must be
disclosed when proceedings are issued.
The case
The issue arose in a dispute between New Zealand parties (the
Waterhouses) suing a United States company (Contractors Bonding
Ltd) in relation to a failed insurance business. When Contractors
Bonding was informed by the Waterhouses of the existence of
litigation funding, it applied for a stay of the proceeding on the
grounds of abuse of process.1
