Greenclean Waste Management Ltd v Leahy p/a Maurice Leahy & Co. Solicitors (No.2)

Factual and Procedural Background

The Plaintiff, a waste management company, initiated proceedings against the Defendant, a solicitor firm, alleging professional negligence connected to advice given regarding the lease of industrial premises in 2001/2002. The Plaintiff claimed the premises were in poor condition at lease end due to inadequate maintenance and that the Defendant failed to properly advise on repairing obligations under the lease. In 2006, the lessor commenced an action against the Plaintiff for breach of covenant, which was settled for €310,000 plus a contribution of approximately €150,000 towards costs.

The present claim includes allegations of further breaches and professional negligence, including failure to advise on limitation periods and non-disclosure of a conflict of interest involving a former principal of the Defendant firm. The Defendant denied negligence.

During the proceedings, the Defendant sought security for costs. The Plaintiff relied on after the event ("ATE") insurance as security, which led the trial court to refuse the security order, subject to certain undertakings by the insurer. The Defendant appealed this decision to the Supreme Court, which remitted the question of whether ATE insurance is illegal due to champerty or public policy to the High Court, joining the insurer as a notice party.

Legal Issues Presented

1. Is after the event ("ATE") legal costs insurance illegal in this jurisdiction by reason of the tort of champerty or other analogous public policy considerations?
2. What is the current status and scope of the tort of champerty in Irish law?
3. Does the particular form and operation of ATE insurance amount to champerty or maintenance?

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff relied on the existence of ATE insurance as sufficient security for costs, arguing that the insurance facilitates access to justice and is not champertous.
• The Plaintiff contended that the insurance policy’s conditions, including cooperation with a nominated solicitor, did not amount to objectionable control over litigation.

Defendant's Arguments

• The Defendant challenged the validity of ATE insurance, arguing it was champertous and thus illegal, particularly criticizing the insurer’s influence over litigation conduct through the nominated solicitor clause.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Greenclean Waste Management Co. Ltd. v. Leahy [2013] IEHC 74	Refusal to order security for costs based on existence of ATE insurance despite insolvency.	Referenced as the initial judgment subject to appeal concerning security for costs and ATE insurance.
Healy v. Stepstone Mortgage Funding Ltd. [2014] IEHC 134	Common law torts as carried over by Article 50.1 of the Constitution and their development constrained by constitutional principles.	Used to frame the constitutional and historical context of tort law including champerty.
Thema International Fund v. HSBC Institutional Trust Services (Ireland) Ltd [2010] IEHC 357, [2011] 3 IR 654	Limits on disclosure of third party funding and distinction between legitimate funding and champerty.	Applied to distinguish legitimate third party funding with a proper interest from champertous arrangements.
Camdex International Ltd. v. Bank of Zambia [1998] Q.B. 22	Definition of champerty as trafficking in litigation involving sharing proceeds without legitimate interest.	Adopted to explain the nature and objections to champerty.
Giles v. Thompson [1994] A.C. 143	Modern interpretation of maintenance and champerty in light of social realities and legitimate interests.	Used to support the view that nominated solicitor clauses and certain funding arrangements are not champertous.
British Cash and Parcel Conveyors Ltd. v. Lamson Store Service Co. Ltd [1908] 1 K.B. 1005	Recognition that maintenance law must adapt to modern commercial interests and contracts of indemnity.	Referenced to show evolution of maintenance and champerty law reflecting modern propriety.
O’Keeffe v. Scales [1998] 1 I.R. 290	Champerty does not extinguish constitutional right of access to courts; champertous claims not struck out but subject to damages action.	Affirmed that champerty must be balanced against constitutional access rights.
Simpson v. Norfolk and Norwich University Hospital NHS Trust [2012] QB 640	Assignment of bare personal injury claims for consideration is unlawful and void as champerty.	Applied to illustrate boundaries of champerty relating to trafficking in litigation.
Macauley v. Minister for Posts and Telegraphs [1966] I.R. 345 and Blehein v. Minister for Health and Children [2008] IESC 40, [2009] 1 IR 275	Constitutional right of access to justice and courts.	Used to emphasize constitutional underpinning limiting champerty doctrine.

Court's Reasoning and Analysis

The Court began by situating the tort of champerty within the common law as it existed at the date of the Constitution, noting that while the tort remains part of Irish law, its application must reflect modern social realities and constitutional principles, especially the right of access to justice.

The Court reviewed the historical purpose of champerty and maintenance as safeguards against improper litigation funding designed to prevent trafficking in litigation and abuse of the legal process. It acknowledged that modern developments—such as legal aid, no-win-no-fee arrangements, and third party funding by interested parties—require a nuanced application of these torts.

Key English and Irish authorities were examined to show that the law distinguishes between legitimate funding by parties with a commercial or charitable interest and impermissible trafficking in litigation for profit.

The Court analyzed the specific ATE insurance policy, noting its contingency on a no-win-no-fee agreement, the insurer’s limited influence via a nominated solicitor clause, and the premium structure payable after a successful outcome or certain defined events. The Court found that this did not amount to impermissible control or trafficking in litigation.

Although the premium may appear high and payable contingent on success, the Court emphasized the important role of ATE insurance in facilitating access to justice for parties who might otherwise be unable to litigate. The insurer’s financial interest was deemed legitimate and not champertous.

Ultimately, the Court concluded that ATE insurance in its current form does not amount to maintenance or champerty and is valid under Irish law.

Holding and Implications

The Court held that the Plaintiff’s ATE insurance policy does not amount to either maintenance or champerty and is therefore valid and enforceable.

This decision confirms that ATE insurance, as structured in these proceedings, is a legitimate means of securing access to justice and does not contravene public policy or the tort of champerty. The ruling directly affects the parties by validating the use of ATE insurance as security for costs and does not establish new precedent beyond affirming the modern application of champerty principles in Ireland.