Complete control over the Lease Proceedings
64 There is a body of authority to the effect that substantial control over litigation does amount to abuse. For example in Clairs Keeley (a firm) v Treacy (2005) 29 WAR 479 the Full Court of the Supreme Court of Western Australia said at 502 [125]:
"Consequently, it is necessary to balance the competing interests in the course of assessing that risk to the due administration of justice which has been introduced by the funding arrangements. In seeking that balance one important consideration should, we think, be whether or not the litigation is, in truth, still that of the plaintiff or defendant. That is to say, the funded party should still be in a position to benefit from a successful outcome and should be entitled to make informed decisions which are critical to the litigation. If the funder's level of control is such that, in reality, it will be making decisions of that kind, or even if the funded parties are not to be given sufficient information to enable them properly to make decisions of that kind, there will be a substantial risk that the funder's intervention will be inimical to the due administration of justice and that the Court's processes will be misused for commercial gain."
65 In Fostif, this Court did not follow that reasoning. Mason P at [114] disagreed with the "categorical thrust of the last two sentences", saying:
"In my opinion, a conclusion about abuse of process must stem from a finding directed at the actual or likely conduct of the party in whose name the litigation is brought (or its agents). The court is not concerned with balancing the interests of the funder and its clients. Indeed, it is not concerned with the arrangements, fiduciary or otherwise, between the plaintiff and the funder except so far as they have corrupted or have a tendency to corrupt the processes of the court in the particular litigation. It is only when they have that quality that the defendant has standing to complain about them. Even at common law, the aspects of public policy hostile to champerty were concerned with the interests of the imposing party, not the party who had entered into the champertous arrangement ( Giles v Thompson (1993) 3 All ER 321 at 336 per Steyn LJ [[1994] 1 AC 142])."
66 The President observed (at [132]):
"In my opinion, the court's basal inquiry should be whether the role of the particular funder has corrupted or is likely to corrupt the processes of the court to a degree that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process."
67 I agree with and adopt his Honour's remarks. The submissions advanced on behalf of Narui must be judged against the background of this Court's approach in Fostif.
68 Many insurance policies confer on the insurer exclusive control over litigation involving the insured. The courts have always countenanced this. In Fostif Mason P remarked in this connection at [82]:
"An insured owner of a motor vehicle whose claim for indemnity is accepted by the insurer may place the matter in the hands of that insurer, leaving it to the insurer and the retained solicitor to do whatever is necessary, consistent with the ultimate recognition of the owner's position as client. The insurance analogy also illustrates the regularity of informed arrangements whereby solicitors represent both insurer and insured as principals, even though conflict of interest issues may arise and, if they do, will have to be dealt with properly (see generally Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray [2004] NSWCA 151, 13 ANZ Ins Cas 61-612)."
69 The insurance context provides a useful example of how the law copes adequately with a situation where control over litigation is given to a person who is not a party to the litigation itself.
70 Generally, the law assumes that a lawyer-client relationship exists between the solicitor appointed by the insurer and the insured, but not necessarily to the exclusion of a similar relationship with the insurer. Both insurers and the solicitors they appoint owe a duty to the insured to conduct the proceedings with due regard to the latter's interests, and an action for damages will lie for breach of that duty: Groom v Crocker [1939] 1 KB 194.
71 If an insurance policy so provides, solicitors' reports must be furnished in full to the insurers: Brown v Guardian Royal Exchange Assurance Plc [1994] 2 Lloyd's Rep 325. It is implicit in the remarks of Neill LJ in Brown (at 329) that, but for provisions to the contrary in the policy, the insurer would have been entitled access to all the documents provided by the insured (cf FAI General Insurance Co Ltd v ACN 010 087 573 Pty Ltd [1999] QCA 524 at [17] per Derrington J). Insurers have the right to decide upon the proper tactics to pursue in the conduct of the action, provided that they do so in what they bona fide consider to be in the interests of themselves and the insured: Groom v Crocker (at 203). When the insurer takes over the conduct of the insured's defence, each party comes under an obligation, as a matter of contractual implication, to act in good faith with due regard to the interests of the other: K/S Merc-Scandia XXXXII v Lloyd's Underwriters (2001) 2 Lloyd's Rep 563 at 572-574. In cases of conflict of interest, the law prescribes the duties of the various parties including the solicitors involved. See generally Macgillivray On Insurance Law, 10th ed, at para 28-35.
72 These are examples of the manner in which the law has developed rules to cope with a situation not dissimilar to that between Austcorp, the Barr Interests and their solicitors. The rules that have been formulated are readily adaptable to the situation presently under consideration.
73 There is another situation where the law, for more than 200 years, has accepted that a person, not a party to particular litigation, may control that litigation in the name of a party. That is where the assignee conducts legal proceedings in the name of the assignor.
74 Windeyer J explained in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 27 that, despite the common law doctrine that debts were not assignable, equity allowed the assignor to give a power of attorney to the assignee to sue the debtor in the assignor's name. His Honour stated:
"[C]ourts of equity would come to the assistance of the assignee if the assignor refused to do whatever was necessary to enable the assignee to get the benefit of the assignment. Thus a recalcitrant assignor would be required, on having an indemnity for his costs, to permit his name to be used in an action to recover the debt."