Fostif Pty Ltd v. Campbells Cash – Carry Pty Ltd  NSWCA 83; (2005) 63 NSWLR 203 to 226 (“The law now sees positively funding agreements that provide access to justice as long as any tendency to abuse of process is controlled” and Hall v Poolman  NSWSC 1330; (2007) 215 FLR 243 to  (“The Facts of This Case … [show] how a mammoth of a dispute can be triggered, perhaps to the ruin of an accused, with negligible “access to justice” for those who have suffered a false but lucrative reward for those who make a case of investing in court proceedings.”). The respondent also submitted that the definition of the group was an opt-in approach that contradicted the opt-out nature of a Part IVA class action and that the dispute financing agreement had imposed a loss of fat on the possibility of opt-in from section 33J.  Reward and risk must be coordinated. If the funder allows litigation and benefits from a successful outcome, they should be responsible for the consequences of an unsuccessful outcome – an unfavourable cost scale. If this standard is not applied with respect to litigation financing, there is no deterrent to immersive litigation.  In 2006, the Australian Stability Committee of Attorneys General (“SCAG”) examined the need to regulate process funding.  It would appear that the Commonwealth Minister of Financial Services, Overannuation and Corporate Law is now relying on the work of SCAG, which could include a change in the law to establish criteria for legally acceptable funding agreements and to adopt prudential rules for funders.  However, litigation financing tends to remain relatively unregulated and, as a result, there is concern that funding agreements may be made in an unjustified manner.
This is particularly important as there is relatively little competition for funders and these agreements often provide lenders with high fees relative to fees collected by lawyers, which are regulated and subject to competition.  A funder`s request to guarantee costs will also improve the development of the process financing sector, as it ensures that only funders can support litigation or that only large funders can create major litigation. Such a requirement would also provide some protection when a funder becomes insolvent because of litigation, since it must be able to post guarantees.  ASIC announced its intention to grant a temporary waiver to the MIS requirements until June 30, 2010 to lawyers and trial financiers who participated in the execution of class actions opened before November 4, 2009.  This transitional discharge is granted on an individual basis by issuing an instrument that explicitly excludes “a system of participation, implementation and financing of judicial proceedings” from the definition of the managed investment system, in order to determine how Chapter 5C applies to the parties covered by the various instruments. It should be noted that the transitional discharge applies only to previous class actions and is granted only at the individual request of the parties.