Litigation funders must disclose their identity. They cannot hide behind nominees the High Court ruled, following an application by Queenstown Lakes mayor James Boult being sued for alleged Companies Act breaches when director of the Stonewood group.
Companies in the Stonewood Homes group are in liquidation with unsecured creditors claiming some $27 million. Liquidators Ernst & Young are suing Mr Boult and former Stonewood managing director Brent Mettrick for $25.47 million alleging breaches of the Companies Act. Both deny liability. Ernst & Young are using third party funders; Stonewood has no money to pay for drawn-out litigation, they say.
The High Court was told a company called PLF Services Ltd is putting up the money. Ultimate owners of PLF are not identifiable from the public record. The trail ends with a private nominee trust company. The courts have only recently allowed litigation funders into the courts; justified as improving access to justice. Previous judicial concerns had been that outside funding might lead to an abuse of process; those with a grievance intermeddling in private litigation to settle old scores.
Justice Mander ruled use of nominees to disguise who is the ‘real’ litigation funder again raises concerns about abuse of process. Ernst & Young were ordered to disclose who is behind PLF Services. If the liquidators do not know, Mr Boult can ask to have PLF removed from the case, Justice Mander ruled.
Cain v. Mettrick – High Court (12.04.19)
19.075