Akhmedova v Akhmedov & Ors (Litigation Funding) (Rev 1) [2020] EWHC 1526
One of the dangers of funding financial remedy litigation is that the atmosphere of animosity leads to applications concerning the funding arrangements. In this case, an attempt was made to scupper the proceedings by prohibiting the wife from instructing lawyers funded from monies paid by Burford Capital on the basis that the funding arrangements were contrary to public policy against champerty. Given that this application came from the camp that had failed to pay a Court ordered amount of c £450m, it was a bold move.
The litigation funding agreement was not disclosed in the case, but a deed of assignment was which granted Burford Capital all her rights and interests in the financial remedy proceedings. However, the wife is entitled to exercise al her rights and retained sole control over the litigation until she defaulted in paying Burford Capital. The solicitor confirmed that it was the wife, rather than Burford Capital, who decided what steps to take and to give appropriate instructions to the lawyers. He stated that Burford Capital was consulted but stated that Burford Capital did not control the proceedings.
The case provided the Court with the opportunity to consider the law with respect to champerty which was reasonably settled. The test was stated to be that maintenance and champerty (where profit is involved) would only be established where there was "wanton and officious intermeddling with the disputes of others in which the [maintainer] has no interest whatsoever and where the assistance he renders to the one or the other party is without justification or excuse". A review of the case law led the Court to say that it was “difficult to envisage how litigation funding conducted by a responsible funder adhering to the [ALF] Code of Conduct could be construed to be illegal and offensive champerty or might be held to corrupt justice”.
Reliance was placed on the significant control ceded by the wife to Burford Capital, including the fact that the consent of the funder was necessary in relation to settlement and the funder was able to require the wife to take particular steps. Importantly, from a funder’s perspective, the Court held that “mere control would not - of itself - suffice to engage the law of champerty. A funder of litigation is not forbidden from having rights of control but is forbidden from having a degree of control which would be likely to undermine or corrupt the process of justice”. This is a valuable statement of the law because funders have sometimes been reluctant to be seem to be in control, but in truth there is no reason why they should be concerned about that control unless it could be said that they were in some way abusing the process – perhaps the greatest concern here is that the client may ultimately say that they were prevented from litigating in the way that they wanted. Any interference with the freedom to instruct does carry with it a risk that the funder could be seen to be stepping into the litigant’s shoes – for this reason, a funder proposing to do this must provide that there is a review mechanism if the claimant does not agree with the funder. In respect of funder consent, the Court took the view that this was perfectly proper protection for the funder and would not tend to corrupt justice.
Since family proceedings are not covered by the rules in relation to conditional fees, the role of funding has a unique role in such cases and arguably presented a recalcitrant defendant with fuel for its argument against funding per se. However, unless a litigant would still need to show some prejudice or injustice arising from the funding arrangements or that the funding arrangement may be champertous. The activities of a commercial litigation funder, provided they following the ALF Code of Conduct, are never likely to engage the rule of champerty. In this case, the Court reminded itself that the funding was being provided post-judgment to enable the wife to secure the recovery of sums already awarded to her in the face of the husband's “contumelious conduct (assisted by others) in evading and frustrating the enforcement of the judgment debt”.
Just as Excalibur was about as bad on the facts as it could get for the funder, this case was about as good as it could get. If the Court had ruled against the funding agreement the wife would have lost access to justice and the chance of recovering the monies awarded to her in December 2016.
It is salutary from the funder’s perspective that the funder was able to prevail without its funding agreement needing to be disclosed. It shows that, absent unusual features, the funder will not have to justify the legality of its actions. It is almost the other side of the coin of the Court’s increasingly obvious approach on costs and security. There is an almost automatic acceptance of the funder’s right to participate; it is just the consequences of that participation that are being developed as time has gone on.