Firm urges court to let case over Esat licence award proceed

Court must decide if type of third-party funding involved is contrary to public policy

Key to the case are questions around maintenance and champerty.

Key to the case are questions around maintenance and champerty.

 

The Supreme Court has been urged to overturn a ruling preventing an English company funding a legal action over the award of the State’s second mobile phone licence. The licence was awarded to Esat Digifone, a company of businessman Denis O’Brien, in 1996.

Unless the Supreme Court does so, Persona Digital Telephony says it will have to drop its case against the State, Mr O’Brien and former Government minister Michael Lowry because it does not have the estimated €10 million necessary to continue it.

The case is of significant public importance and it is in the interests of justice and public policy to let it proceed, Michael Collins SC argued.

The court must decide if the type of third-party funding involved is contrary to public policy and his side contended it was not.

Counsel was opening the appeal by Persona and Sigma Wireless Networks Ltd against a High Court decision the intended funding arrangement with Harbour III Limited Partnership is impermissible because of the law in Ireland on maintenance and champerty.

Non-party funding

Maintenance involves improper interference in civil proceedings often by way of provision of financial assistance.

Champerty is a form of maintenance where financial support is provided by a party with no connection to the dispute in exchange for a share in the spoils of any proceeds from the litigation or some other profit.

Non-party funding of litigation here is permitted only where it does not breach either of these prohibitions.

Persona argues its arrangement with Harbour does not contravene the rules on maintenance and champerty.

Should the case be successful, it is understood the funder will get some 40 per cent of any proceeds or damages.

In April 2016, the High Court found maintenance and champerty continue to be torts and offences here and there is a prohibition on a body funding, in exchange or a share of any profits, litigation in which it has no independent or bona fide interest.

Ms Justice Aileen Donnelly held Harbour had no independent interest in this litigation and also held third-party funding arrangements cannot be regarded as consistent with public policy here.

Persona/Sigma sought to appeal that decision.

Leapfrog

In July 2016, the Supreme Court said Persona/Sigma could bring a “leapfrog” appeal directly to that court because the case raised a legal issue of general public importance concerning application of the doctrines of maintenance and champerty which may involve issues of access to justice and the courts.

It agreed to consider whether third-party funding provided during the course of proceedings – rather than at their outset – to support a plaintiff who is unable to progress a case of “immense” public importance is unlawful by reason of the rules on maintenance and champerty.

In arguments on Monday opposing the appeal, John O’Donnell SC, for the State, argued Irish law clearly does not permit maintenance or champerty, that position was reinforced in 2007 by legislation and any change could only be effected by legislation, not the courts.

During exchanges with counsel, Mr Justice John MacMenamim raised issues whether certain costs arrangements between lawyers and their clients may also fall foul of maintenance and champerty, including arrangements where a lawyer may seek a large portion of a damages award.

When counsel argued “no foal no fee” or other arrangements between lawyers and their clients were about deferred payment rather than deferred compensation, Mr Justice Frank Clarke queried the accuracy of that statement.

Mr O’Donnell said an agreement contracting for “a slice” of proceeds is champerty. The fact this was an important case was not sufficient to allow an exception to the rules against maintenance and champerty, he added.

The appeal continues on Tuesday.