Litigation Finance

1. Litigation Finance

2. Overview Recent Case Law developments re: Litigation Finance. Development of the Industry. overseas and domestically. Lessons for claims handling in BC.

3. Bourgoin v. Ouellete (2009 � N.B.) Personal Injury Action. Defendant ordered to pay interest on disbursement loan (at 32.9%).

4. Herbert v. City of Brantford (2010 � Ont.) Bourgoin is applied. Litigation finance interest rate not determined at time of adjudication.

5. Ramifications for Defendants

6. Examinations for discovery are often the most critical step in a civil action. An unprepared client can destroy a case that you have based on factual assumptions that you suddenly realize are wrong. On the other hand, a well planned and executed discovery can pave the way to a speedy and favourable resolution for your client without the need for a full trial. The best practice tip that can be offered is to treat discoveries as seriously as you would a trial. Examinations for discovery are often the most critical step in a civil action. An unprepared client can destroy a case that you have based on factual assumptions that you suddenly realize are wrong. On the other hand, a well planned and executed discovery can pave the way to a speedy and favourable resolution for your client without the need for a full trial. The best practice tip that can be offered is to treat discoveries as seriously as you would a trial.

7. U.K. Legal Aid & Litigation Financing The Legal Aid and Advice Act 1949 Since then, reduced availability. Birth of the CFA.

8. Conditional Fee Agreements Contingent success fee = uplift on fees. Limits on amount. Recoverable from Defendant.

9. �After The Event� Insurance Protects litigants against their liability for an adverse costs award. Can also cover other costs, such as liability for experts fees or other disbursements.

10. �Before The Event� Insurance Sometimes referred to as legal expenses insurance. Usually appears, at least in the domestic and motor vehicle contexts, as an �add-on� to an existing policy.

11. The U.K. Costs Experience 1 - Callery v. Gray (2002 HL) a straightforward, �RTA� personal injury action. Damages settled (�1,500) + costs. Costs claimed = �4,709.35 incl ATE premium (�367.50).

12. 2 - Claims Direct Large claims management company. Operates as a franchise. Limited use of solicitors. Relatively low value MVA claims.

13. Champerty & Maintenance The crime and tort abolished by Criminal Law Act 1967. Survive as a rule of public policy capable of rendering a contract unenforceable. In Canada, the tort remains - its role is largely the same.

14. Evolution of Third Party Financing for Profit in England & Wales: Trendtex Trading Corp v. Credit Suisse (1982) Giles v. Thompson & Devlin v. Bassington (1993) R. (Factortame Ltd.) v. Transport Secretary (No.8) (2002) Hamilton v. Al Fayed (No.2) (2002) Arkin v. Brochard Lines (2005)

15. Litigation financing in Australia: CFA�s are permissible in NSW and Victoria. Contingent fee agreements are not Maintenance & champerty same as U.K. No developed market for ATE insurance.

16. Third Party Funding for Profit in Australia: Campbells Cash and Carry Pty Ltd v. Fostif Pty Ltd. (2006) Jeffrey & Katauskas Pty Ltd v. SST Consulting Pty Ltd. (2009) Brookfield Multiplex Ltd v. International Litigation Funding Partners Pte Ltd. (2009)

17. Litigation Financing in New Zealand: Statutory bar to actions for personal injury. �Subsidizing Litigation� (Law Commission, 2001). The torts of maintenance and champerty have not been abolished by statute. CFA�s allowed in narrow areas.

18. Third Party Funding for Profit in New Zealand: Saunders v Houghton (2009)

19. Lessons for Claims Handling in B.C.

20. Domestic Litigation Credit Providers: Lexinsure Seahold Investments Inc. Bridgepoint Financial Services Rhino Legal Finance Inc., Lawmax Legal Finance , and Lexfund Management Inc. DAS (La D�fense Automobile Sportive)

21. Maintenance and Champerty in BC Wiegand v. Huberman Funding of a shareholder oppression action. Creditor sues debtors when they fail to sue. BC Court rules agreement does not constitute Champerty or Maintenance and is an enforceable debt.

22. Does this mean that Bourgoin will be applied in BC?

23. Schmolzar v. Higenbottan Alberta court considers Bourgoin. Interest rate different from Judgment Interest Act only to be awarded in �exceptional� circumstances. Defendant not ordered to pay interest.

24. BC Cases on Interest Moore v. Dhillon 1992 CarswellBC 1453 Sovani v. Jin 2005 BCSC 1285 McCreight v. Currie 2008 BCSC 1751 Milne v. Clarke 2010 BCSC 317 Farrokhmanesh v. Sahib 2010 BCSC 1797

25. Questions for Consideration Will the Milne approach be applied to commercial third party financiers or will the more cautious approach seen in Schmolzar govern? Will defendants be entitled to notice when litigation finance is sought?

26. Additional Questions for Consideration What will be financed? May litigation financiers be exposed to costs consequences as in the UK? Caps on exposure as a ratio of damages?

27. Further Questions for Consideration What litigation products can we expect in BC? Exposure for counsel who fail to advise clients of credit available? Will the litigation finance industry require regulation?

28. Conclusion (watch this space)

29. A. Howden-Duke A.D.C. Kask 604-844-5505 604-844-5506 ahd@guildyule.com akask@guildyule.com