In Contractors Bonding Limited v Waterhouse [2012] NZCA 399 the Court of Appeal has provided clear guidelines as to the extent to which a litigant whose case is funded by a third party must disclose details of that funding arrangement.

The issue arose in Contractors Bonding because the High Court had refused to stay the proceedings pending production to the defendant of the agreement between the plaintiff and its litigation-funder. The defendant appealed against that refusal.

In considering the appeal, the Court referred to its earlier ruling - in a different case - that third party funding should not be prohibited in representative actions (ie lawsuits brought on behalf of a class of plaintiffs), provided that certain conditions were met. It observed that the need for the Court to supervise funding arrangements was less acute in non-representative cases, such as the present. Nevertheless, disclosure of the key features of the arrangements remained necessary in order to ensure that there was no abuse of process. Accordingly, the plaintiff was ordered to disclose the following matters to the defendant:

  • The identity and location of the litigation funder
  • Its financial standing and viability
  • Its amenability to the jurisdiction of the New Zealand Courts, if that was relevant
  • The terms on which funding could be withdrawn and the consequences of withdrawal.

The Court refrained from imposing further general restrictions in respect of non-representative proceedings, leaving it to the defendant to raise any concerns in a particular case.

It is clear from the Court of Appeal's decision that, regardless of whether a proceeding is "representative" or not, a party who obtains funding from a third party must be prepared to disclose certain, fundamental information regarding that funder. It remains to be seen whether this will lead parties to exercise a new degree of caution in accepting third party funding.