Friday, 4 January 2013

Law report - disclosure of funding agreement

Stiftung Salle Modulable v Butterfield Trust (Bermuda) Limited [2012] SC (Bda) 71 Com

Part of the Plaintiffs' claim for damages included the costs of pursuing its rights in the matter, including the cost of a funding arrangement for the litigation.

The Defendant sought disclosure of the funding arrangement, alleging that the Plaintiffs were unable to claim such damages as it was too remote from their claim and that such an agreement was champertous (i.e. it is unlawful for third parties to fund litigation with an expectation to receive part of the proceeds). The Plaintiffs disclosed only a redacted version, and the Defendant applied for full disclosure.

Kawaley CJ held that the document was covered by litigation privilege. However, such privilege can be waived when a party relies on the document for his case. Voluntary reliance on any part of a document normally waives privilege in the entire document. However, even when privilege has been waived it might still be the case that part of a document may be withheld due to irrelevance to the matters at hand.

In the circumstances, the redacted portions, relating to the amount of the financing and the budget and timeline, were irrelevant for the purposes of determining whether or not the agreement was unlawful. Such information could give away the Plaintiffs' litigation strategy and prevent the parties being on an equal footing before the court.

This is to say nothing about whether or not the document is lawful or not which, presumably will be a matter for another day.

Comment - Lawyers will wait with much interest to discover the outcome of the case, which might help clarify when funding arrangements may be entered into for litigation. Kawaley CJ has said previously, in First Atlantic Commerce Limited v The Bank of Bermuda Limited [2007] Bda LR 36,  that (my emphasis) "If maintenance is still a tort in Bermuda, public policy will rarely be offended by any funding arrangement which is recognised in the wider commercial world. "

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