“It remains early days for litigation funding in Canada…”

There have been a handful of Canadian cases where litigation funding has been approved by the courts, in the provinces of Ontario, Alberta and Nova Scotia although some judgments were ex-parte.

Arguably, the ruling in Dugal v Manulife Fin. Corp [2011] has changed the legal landscape in Canada with the “open” judgment of the Ontario Superior Court of Justice. It held that a litigation funding agreement did not violate the rule against champerty and maintenance and indeed helped to provide access to justice to the plaintiff. In one of the first cases of its type in Canada, E. Eddy Bayens and others v Kinross Gold Corporation and others, 2013 ONSC 4974, the Ontario Superior Court approved Harbour’s litigation funding in relation to a Canadian class action.

In the case of class actions, the Court held that approval of third party litigation funding agreements is required and such funding agreements are not capable of coming into force without Court approval.  A number of principles such as non-interference, duty of confidentiality, fair and reasonable financial terms and the necessity of TPF to provide access to justice were identified by the Court as important when approving litigation funding agreements for class actions.

It is perhaps fair to say that it remains early days for litigation funding in Canada, but legal commentators believe that the principles endorsed in these judgments sets the stage for much broader litigation funding arrangements beyond the class actions remit.