D3 and D4 settle with P and take over P’s case against D1 and D2 (-not)

Taylor v Hobson [2016] QSC 226 is a strange old case. Plaintiffs sued defendants for damages alleging they had been misled into purchasing a business.  They sued the vendors and the vendors’ solicitors, alleging that each of the vendors and the solicitors had made misleading representations.  The solicitors (through their insurer) settled with the plaintiffs.  The solicitors promised to pay  a settlement sum to the plaintiffs and the plaintiffs promised to let lawyers appointed by the solicitors’ insurer act for them and run the plaintiffs’ case for them, with a view to recovering damages from the vendors and giving those damages to the solicitor defendants.  It was a creative form of litigation funding, if you will.  But it was a bit too creative for the Supreme Court of Queensland.

The insurer was to appoint new solicitors, not the solicitors which had been representing the solicitor defendants in the proceeding.  Nevertheless, the Court stayed the case as constituting an abuse of process for so long as the defendant-appointed solicitors were running the plaintiffs’ case.  The parties to the settlement might now amend it so as to remove the element of control over the plaintiffs’ case, therefore. The case may continue, and that aspect of the settlement deed which required the plaintiffs to give to the solicitor defendants the proceeds of their claim against the vendors might still have its operation.

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