Litigation- United Kingdom

Facts

In Mansell v Robinson [2007] EWHC 101 (QB) the claimant, a freelance journalist, had entered into an agreement with the defendant to assist a third party in a dispute with Time Warner over the rights to the commercial exploitation of the Batman comic strip. The claimant was to:

make inquiries into the circumstances surrounding the dispute;

identify issues that could be of public interest; and

assist in the preparation and distribution of news stories about such issues.

In return he was to receive a weekly retainer, expenses and a 1% share of any recovery from Time Warner. The present action was a claim for unpaid expenses and instalments of the retainer under the agreement - there was no claim for a share of the proceeds because no recovery had been made.

The claim was struck out at first instance (in Wandsworth County Court) on the grounds that the agreement for a share of the proceeds was champertous (ie, supported by an outside party acting for financial gain) and that it was impossible to sever the offending provision because the remuneration had been conceived as a package.

Appeal

The High Court allowed the claimant's appeal. The agreement to provide investigation services in relation to potential litigation which was to be remunerated in part by a 1% share of the proceeds was not unenforceable as champertous on the facts. The judge held that modern authorities on the issue of champerty have made clear that the mere fact that litigation services have been provided in return for a promise of a share of the proceeds is not of itself sufficient to make such a promise unenforceable.

The judge relied on R (Factortame Ltd) v Secretary of State for Transport Local Government and the Regions (8) [2003] QB 381, in which the Court of Appeal held that an agreement under which a firm of accountants rendered litigation services to the claimants in return for 8% of the recovery was enforceable. The court in that case emphasized that it was wrong to apply a mechanistic rule and that it was necessary in each case to decide "whether the agreement in question had a real tendency to produce the evils against which the law of maintenance and champerty is intended to guard". Lord Phillips stated that this meant considering whether the facts suggested that the agreement "might tempt the alleged champertous maintainer for his personal gain to inflame the damages, to suppress evidence, to suborn witnesses or otherwise to undermine the ends of justice".

In the Mansell Case the judge held that, for a number of reasons, the agreement could not realistically be said to have a "tendency to corrupt public justice" in England and Wales. There was no direct relationship between the claimant's services and potential litigation, still less litigation within the jurisdiction. The question of whether litigation would occur - and if so, in which forum - was highly speculative. The fact that the claimant was to make inquiries directly with potential witnesses of fact came "nearer to the line", but on the facts of the case it was not enough to make the agreement contrary to public policy.

The judge stated that if he was wrong on the champerty issue, the promise to pay a 1% share could be severed so that the contract for payment of the retainer and expenses remained enforceable.

Comment

This case does not establish new principles, but demonstrates the court's modern, more flexible approach to the rules against champerty. The case suggests that an agreement may be considered champertous if the services to be remunerated by a share of the proceeds include interviews with witnesses or potential witnesses, although in this case this point was not enough to cross the line, as the judge felt that the relationship with potential English litigation was too remote. The judge stated that it was:

"not difficult to see why it might be undesirable for a non-professional researcher tasked with interviewing witnesses to have a direct pecuniary interest in their giving evidence that favoured the case of the party employing him."

Other factors that the judgment suggests might be relevant include:

whether the maintainer is subject to professional regulation - if not, a finding of champerty is more likely;

whether the maintainer possesses information which he or she volunteered to supply, or whether the litigant took the initiative to engage a researcher to supply information on its behalf, with a finding of champerty being more likely in the former case; and

whether remuneration is wholly or partly by reference to the proceeds, with the former being more likely to offend.

The case also underlines that the rules against champerty are concerned with the protection of the integrity of litigation in England and Wales. They do not allow an English court to refuse to enforce provisions relating to foreign litigation if the terms would not be contrary to public policy in the foreign forum; the onus would be on a party seeking to assert illegality in the foreign jurisdiction to prove it.

International Law Office