Thursday 27 June 2019

Politicians must tackle legal costs or courts will act, warns Chief Justice

'The cost of litigation is forever increasing beyond the means of more and more people' Stock photo: PA
'The cost of litigation is forever increasing beyond the means of more and more people' Stock photo: PA

Tim Healy

Legislation needs to be urgently enacted to address mounting difficulties with securing access to justice in the civil courts, particularly complex commercial litigation, senior judges have warned.

Chief Justice Frank Clarke warned that if a point is reached where it is clear that politicians are making "no real effort" to address the problems, the courts may have to fashion a solution - "undesirable and all as unregulated change might be".

"There is a problem that requires to be addressed. The best way, by far, of attempting to provide solutions is by means of legislation," he said.

Unregulated change in relation to third-party funding of cases or the assignments of actions has the potential "to do more harm than good", he stressed.

Mr Justice William McKechnie said he was increasingly concerned about the difficulties many potential litigants faced in attempting to gain access to justice.

The right of access to the courts, a personal right of every citizen guaranteed by the Constitution, "is of little practical value to the majority of litigants if they cannot afford the ever rising price of litigation".

"The cost of litigation is forever increasing beyond the means of more and more people," he added.

Both judges made the remarks when agreeing with a substantive judgment delivered by Mr Justice Donal O'Donnell on behalf of the five-judge court, the focus of which was on litigation trafficking - or trading in claims.

Ms Justice Elizabeth Dunne and Ms Justice Mary Finlay Geoghegan also agreed with the Chief Justice's remarks.

In his judgment, Mr Justice O'Donnell ruled that SPV Osus Ltd cannot proceed with its case here because the assignment "very clearly involved trading in claims" and was thus void under Irish law.

Back in 2011, Osus was assigned a cause of action arising from the scandal surrounding US fraudster Bernie Madoff.

Osus had in 2014 initiated proceedings against HSBC Institutional Trust Services (Ireland) Ltd (HITS); HSBC Security Services (Ireland) Ltd (HSSI); Optimal Investment Services SA and Banco Santander SA.

Mr Justice O'Donnell said the case arose after funds of clients of the Santander bank were invested through New York and HITS was appointed as custodian and HSSI as administrator.

Optimal Multi Advisors ltd, a Bahamas incorporated investment company, had offered clients an opportunity to access investments in funds including the Strategic Series fund.

Optimal Strategic US Equity Ltd was the vehicle used for the Strategic Series of shares and to represent the interest of individual investors.

By late November 2008, almost all its assets, with a net paper value of US$2.9bn and a net equity value off US$1.5bn, were invested in Bernard L Madoff Investments LLC (BLMIS), which had been appointed sub-custodian by HITS.

After BLMIS collapsed due to a "long-running and very large scale Ponzi fraud", the assets of Optimal Strategic became whatever value could be extracted from that collapse.

Irish Independent

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