Lawsuit document containing allegations of tortious champerty and tortious maintenanceHelpful Guide to Understanding the Elements Distinguishing Tortious Champerty and Tortious Maintenance

The torts of champerty and maintenance both involve elements of wrongful intermeddling in the legal proceedings of other people; essentially, sticking a nose in where it doesn't belong and doing so with nefarious intentions or an illicit purpose or otherwise without a legitimate and reasonably justified reason for doing so.  The tort of maintenance involves the providing of wrongful encouragement of litigative proceedings as well as some form of support, usually financial assistance with legal costs, among other things, which is generally arising from a desire within the person engaged in the maintenance to inflict disruption, disturbance, or other form of harm, via the litigative proceeding.  In short, the person encouraging or supporting the litigation, the 'maintainer' is without party status to the litigation and is providing the assistance with nefariously intentions.  Champerty is almost the same as maintenance; however, champerty involves the additional element of sharing in the proceeds of the litigation if successful.  Accordingly, maintenance may occur without champerty; however, champerty occurs with maintenance.  Both champerty and maintenance are age old torts and were historically treated as common law crimes.  Interestingly, in more recent times, where champerty concerns arise the allegations are frequently pointed towards lawyers who offer to support a case through a contingency retainer agreement whereby the lawyer pays upfront expenses required to bring and advance litigation in exchange for a significant portion of the proceeds should the case be successful and produce a rewarding outcome.  Champerty and maintenance were well articulated within the case of Ali v. Datta, 2011 ONSC 2496 where it was said:

[53]  Officious intermeddling in another’s lawsuit by assisting one of the parties to prosecute or defend the claim is the tort of maintenance: R.  v. Goodman, 1939 CanLII 21 (SCC), [1939] S.C.R.  446; McIntyre Estate v. Ontario (Attorney General) (2002), 2002 CanLII 45046 (ON CA), 61 O.R.  (3d) 257 (C.A.).  Champerty is a form of maintenance that adds the ingredient that there is an agreement to give the intermeddler a share of the proceeds or some other profit from the subject matter of the action: Trendtex Trading v. Credit Suisse, [1982] A.C.  679 at 694 (H.L.).  An action that involves maintenance or champerty may be dismissed as an abuse of process: Operation 1 Inc.  v. Phillips, 2004 CanLII 48689 (ON SC), [2004] O.J.  No.  5290 (Ont.  S.C.J.).

[54]  In Morden and Perell, The Law of Civil Procedure in Ontario (1st ed) (NexisLexis: Toronto, 2010) at p.  73, I discuss the nature of champerty and maintenance as follows:

The focus of attention of maintenance is on the officious intermeddler and the profiteer in another’s litigation.  The element of officious intermeddling — which is encouraging litigation that the parties would not otherwise pursue — must be present to constitute the tort: Buday v. Locater of Missing Heirs Inc (1993), 1993 CanLII 961 (ON CA), 16 O.R.  (3d) 257 (C.A.); Operation 1 Inc.  v. Phillips, 2004 CanLII 48689 (ON SC), [2004] O.J.  No.  5290 (S.C.J.); R.  v. Goodman, 1939 CanLII 21 (SCC), [1939] S.C.R.  446.  There is no maintenance unless there is an improper motive: Lorch v. McHale (2008), 2008 CanLII 35685 (ON SC), 92 O.R.  (3d) 305 (S.C.J.); S.  v. K., (1986), 1986 CanLII 2789 (ON SC), 55 O.R.  (2d) 111 (Ont.  Dist.  Ct.), and there is no maintenance if the alleged maintainer has a legitimate reason or justification for assisting the litigant: Lorch v. McHale, [2008] O.J.  No.  2807, 92 O.R.  (3d) 305 (Ont.  S.C.J.); Morgan v. Steffanini, [2005] O.J.  No.  1606 (S.C.J.); Ingle v. ACA Assurance, 2005 CanLII 39682 (ON SC), [2005] O.J.  No.  4653 (S.C.J.).  The objection to the assistance is that the person providing it is doing so without a proper purpose and is acting maliciously or to stir up strife.  If there is an allegation of maintenance, the court must carefully examine the conduct of the parties and the propriety of the motive of the alleged maintainer: McIntyre Estate v. Ontario (Attorney General), (2002), 2002 CanLII 45046 (ON CA), 61 O.R.  (3d) 257 (C.A.); Morgan v. Steffanini, [2005] O.J.  No.  1606 (S.C.J.). 

Over the years various decided case established what is reasonably justified assistance within litigation following cases brought against insurers supporting subrogation litigation against tortfeasors whose actions resulted in losses to both the insurer as well as policyholder (see: Simpson & Co.  v. Thomson (1877), 3 A.C.  279), trade unions whose efforts and funds expended on behalf of union members were alleged as tortious maintenance (see: Ali v. Datta, 2011 ONSC 2496), and legal representatives acting within a contingency retainer agreement (see: McIntyre Estate v. Ontario (Attorney General), 2002 CanLII 45046).

Another example of maintenance occurring legitimately involves the assignment of rights of members of organizations where associations may act on behalf of the collective members who, individually, would be unable to afford, and therefore proceed, in a genuine concern as a legal cause shared by the collective members.  This was stated in Fredrickson v. Insurance Corporation of British Columbia, 1986 CanLII 165 where it was said:

Other cases illustrate that a cause of action may be assigned even where the assignee has no ancillary property interest.  Assignment of the right to sue for infringement of copyright to a society formed to protect the interests of its members was upheld in Performing Rights Society (Limited) v. Thompson (1918), 34 TLR 351.  In an action for infringement, the defendants alleged the assignment violated the rules against champerty and maintenance and that the business of the society was that of "breedbates" and "trafficking in litigation".  Atkin J.  rejected that contention.  He found at p.  352 that the assignment constituted a "bona fide business arrangement" for "legitimate business reasons".  The society and its members, he said, both had a "real and bona fide interest in the result of the litigation".

Similarly, in Martell v. Consett Iron Co.  Ltd., [1955] Ch.  363, Danckwerts J.  followed a "genuine interest in the litigation" test, in upholding maintenance by an association for the prevention of pollution to rivers of an action brought by owners and occupiers of fisheries.

Martell was approved in the House of Lords in Trendtex, supra.  In the latter case, Lord Wilberforce at p.  524, held that, apart from subsequent dealings, an assignment of a cause of action would have been valid, because it did not offend the law of maintenance or champerty.  This was so because the assignee had a "genuine and substantial interest" in the success of the litigation.

Remedies

In addition to the usual array of damages available for tortious conduct that may be awarded within a case brought by a Plaintiff, who would be the 'victim' within the separate proceeding that was wrongfully supported, the wrongfully supported separate proceeding itself may be stayed as an abuse of process.  This view was stated within Operation 1 Inc.  v. Phillips, 2004 CanLII 48689 as follows:

[54]  This, in my view, was not merely a case of officious intermeddling by persons who had no pre-existing interest in the right of action, it was an egregious attempt to "traffic" in litigation in the sense in which the English courts - and the Court of Appeal in McIntyre Estate - used the term.  If it is not, I am unable to conceive of any reasonable meaning that could be given to the notion of trafficking unless – which, unless constrained by authority, I would not accept - it is confined to transactions that are part of a practice, or business, of buying rights to litigate.  Mr Lewis, or Mr Lewis and Mr Newbury, did not merely attempt to purchase a piece of the action in a literal sense - they were complete strangers to the events that gave rise to it, and to the parties involved, and having instigated, and not merely encouraged it, they seek to conduct it through the instrumentality of Operation 1 with a view to their own profit and without risk to Del Corporation - the only person or entity with a genuine interest in the subject matter of the litigation.  Whether or not the circumstances are to be considered to be aggravated by the fact that Mr Newbury was an officer of the court who obtained the information on which the action is based when acting as such in litigation with the present defendants and whether, as Mr Carr opined in correspodence with corporate counsel for Del Corporation, Mr Newbury was also "clearly actuated by an extreme dislike of Mr Phillips and his counsel", the facts, including the absence of any other motive - except profit - are, I believe, enough to make the commencement and prosecution of the proceedings an abuse of process.  Accordingly, I will grant the stay requested by the defendants.

Summary Comment

Both champerty and maintenance involve elements of wrongful supporting of legal proceedings.  In maintenance, the person providing the support, a 'maintainer' is without party status to the litigation, thus a stranger (although obviously somehow familiar) to the proceedings involving other persons and is lending support to a party with some illegitimate purpose such as a desire to assist in inflicting troubles upon the other party.  In champerty, the additional element of expecting to receive a share of the proceeds from the illicitly maintained proceedings is required.  Of course, some maintainers do so with purposes deemed legitimate in law such as insurance subrogation, collection of debts by assignees, trade unions acting on behalf of union members, among others.

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