Lawyers seek funding arrangements between litigation funder and company suing State over unsuccessful license bid
Published 20/05/2015 | 19:14
Lawyers for the State and businessman Denis O'Brien have sought to inspect the funding arrangements between an unsuccessful bidder for the State's second mobile phone license and a British company willing to fund the unsuccessful bidder's action for damages against the State.
Members of the consortium taking the case - Persona Digital Telephony and Sigma Wireless Networks - were runners-up in a competition for the State's second mobile phone licence, which was awarded to Mr O’Brien’s Esat Digifone consortium in 1996.
Persona and Sigma claim the process was conducted unfairly and that Esat allegedly won the competition by bribing the then Minister for Communications, Michael Lowry- which is denied.
The case was brought against the Minister for Enterprise and the State. Mr O’Brien secured an order allowing him to be joined in the proceedings last year while Mr Lowry, now an Independent TD, is a third party to the case.
British-based Harbour Litigation Funding, a “third-party funder”, will get a share of the proceeds if Persona and Sigma are successful.
In the High Court today lawyers for the defendants sought sight of the funding arrangements between the plaintiffs and HLF prior to the plaintiffs application for approval of the funding agreement in July.
An affidavit by James A Boyle, a director in both Persona and Sigma, to ground the application for approval was read to the court in which Mr Boyle stated that he had carried out research on litigation funding and found HLF were one of the leading companies in that regard.
A funding agreement was then negotiated and entered into between the plaintiffs and Harbour to provide funding for the plaintiffs to continue to prosecute these proceedings, the affidavit stated.
Harbour's role is limited to that of a funder; It will act in accordance with the code of conduct for litigation funders; It cannot withhold consent to change counsel and the decision to halt proceedings rests at all time with the plaintiffs, the court heard.
Harbour has the necessary experience and financial resources and has funded many large cases in many jurisdictions, the affidavit stated.
Counsel for the Minister for Public Enterprise, Conleth Bradley SC, said it was “erroneous” of the plaintiffs to “self-select” aspects of the funding arrangement to put before the court.
Not only did they “self-select” aspects of the arrangement but they sought to have a particular dialogue witht the court to the exclusion of the other parties, Mr Bradley said.
Citing a recent case, known as Thema, Mr Bradley said the Supreme Court not only referred to requirements for other parties to know the identity of a third party funder but also the terms of the funding arrangement.
The Supreme Court had stated, Mr Bradley submitted, that professional third party funding was not permitted in Ireland and the arrangement between HLF and the plaintiffs fell squarely with that statement.
The plaintiffs were effectively asking the court for “a free pass” in the law of champerty and maintenance, Mr Bradley said.
Counsel for Mr O'Brien, Jim O'Callaghan SC, said the parties should be given access to the agreement before the hearing in July.
Mr O'Callaghan cited Rules of the Superior Courts (Order 31 Rule 15) which states that where a party refers to a document in an affidavit and relies upon it, an opposing party is entitled to inspect the document.
Mr O'Callaghan said it was apparent that Mr Boyd was referring to a specific document in his affidavit – the funding agreement of March 24 2015 between the plaintiffs and HLF.
Counsel said Mr Boyd described the agreement as confidential and privileged. However, at no stage did he identify the basis for claiming confidentiality and he did not provide any elobaration on why it was privileged.
Even if it was a confidential agreement, Mr O'Callaghan said that did not protect it from disclosure in legal proceedings citing the Beverley Cooper Flynn case versus RTE in which information in relation to customers of a financial institution was disclosed.
Confidentiality was not a bar to disclosure, he said.
Counsel for Persona/Sigma, Michael Collins SC, said disclosure of the funding agreement would give the defendants a significant advantage.
It might allow them to know the limits of the funding and at what point funding would cease.
If the defendants knew the pressure points it would be a “magnificent thing to know” how to engineer a case, Mr Collins said, though he wasn't suggesting any impropriety on the part of the present defendants.
At no point did the defendants address the question of why they needed site of the document, Mr Collins said.
He said a number of cases had been taken arising out of the awarding of the license to Esat Digifone and of relevance to the question of whether the document should be handed over was the “unique nature” of the case.
Mr Collins cited Supreme Court judge Mr Justice Adrian Hardiman, who had described Persona's case as 'absolutely unique' and possibly without precedent in the history of the State if their claims of alleged corruption were true.
For these reasons, this type of litigation does not effect the fundamental public policy concerns that were indentifed by Mr Bradley in the jurisprudence, Mr Collins said.
In circumstances of this unique litigation, where the plaintiffs cannot get access to the courts, it was necessary for the vindication of their rights, he said.
Mr Collins said it was a matter between the court and the plaintiffs to ensure the court's own processes were not being abused and was not for the purpose of excluding the defendants.
He said champerty traditionally existed, in the 14th and 15th centuries, to prevent powerful people stirring up litigation to protect their own interests and "that's what we're going to argue in July".
Mr Collins said the defendants had not identified why it was necessary for them to see particular details for the purposes of arguing that issue in July.
Reserving judgment, Ms Justice Aileen Donnelly said she would give her decision as soon as possible.