Third-party litigation funding in Australia: More external regulation and/or enhanced judicial supervision?

Third-party litigation funding continues to generate debate in relation to its merits and demerits, but there is no doubt it is, and will continue to be, an important part of the Australian legal landscape. This article examines case law in the appellate courts, such as the decisions of the High Court of Australia in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd and the Full Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd, that support the evolution of the legal framework in which litigation funding operates. Extensive reference is made to the Victorian Law Reform Commission’s, Access to Justice – Litigation Funding and Group Proceedings Consultation Paper (July 2017), the Australian Law Reform Commission’s Discussion Paper, Inquiry into Class Action Proceedings and Third-Party Litigation Funders (June 2018), and other regulatory reform proposals and initiatives. In the absence of hard evidence that litigation funding is fuelling an avalanche of frivolous or unmeritorious claims, caution is suggested against the adoption of any new external regulatory regime without the actual, quantifiable costs and benefits of the proposed regulation, as well as the risks of unintended consequences, being fully assessed. This is particularly the case given the High Court’s view of a court’s capacity to protect its processes, and the increasing willingness of the courts to bring flexibility and nuance to oversight and supervisory roles in relation to litigation funding.