That dispute centres on several agreements JustKapital Litigation Pty Ltd’s entered into with Lipman around June 2016 to acquire a litigation portfolio that included the Provident proceedings plus four other class actions. The Provident class actions settlement, under which JustKapital earned a $4.3 million cut, was signed off on in October of last year.

In exchange for selling the portfolio, Litman would receive a $1 million cash payment in two installments, shares in JustKapital, now known as Law Finance, to be issued to Litigation Management — a separate company controlled by Litman’s owner Michael Becker — and be entitled to a 50 per cent profit share, to be calculated by reference the amount JustKapital recovered in the proceedings. Litigation Management also entered a fee-based consultancy agreement with JustKapital at that time.

Under clause 3.4 of the Provident settlement deed, the $4.3 million was to be paid out to JustKapital. However, Litman argued that correspondence between August 2018 and February 2019 between the parties and their solicitors and settlement administrator Doug Raftesath at Meridian Lawyers — which related to halting distribution of funds from the Provident class actions and two others class action settlements in light of the dispute — had amounted to a variation of this clause.

In seeking to have the nearly $2.2 million remaining from the Provident settlement held by the court, Litman argued not only that JustKapital had agreed to this arrangement, but that it was in the interests of justice because of its likelihood of success in the case and because there was a serious question as to whether JustKapital could pay any order made against it.

Justice Michael Ball, however, found no such agreement could be inferred from the correspondence, which he said Litman had mischaracterised.

“[W]here the parties have recorded their agreement in a carefully drafted Deed, it should not readily be inferred that the parties have reached some different agreement by their subsequent conduct,” the judge said.

Justice Ball said Litman’s view that the clause only applied to JustKapital’s share of the funder’s cut was incorrect because only JustKapital Portfolio Pty Ltd, and not JustKapital (now Law Finance) was a party to the settlement deed.

“It follows that there was no agreement reached or representation made by JK Portfolio of the type alleged by Litman Holdings. Whatever else might be said, there was no communication by or on behalf of JK Portfolio that it accepted the interpretation of clause 3.4 of the Settlement Deed advanced by Mr Becker in his email dated 5 September 2018. Yet it is that email and the alleged acceptance of what it said by JK Portfolio that is critical to Litman Holdings’ case,” the judge said.

The judge also dismissed Litman’s arguments based on access to justice and JustKapital’s alleged financial position, saying Litman’s request was essentially for a freezing order, which it had not provided evidence in support of.

The litigation portfolio sales agreement between the two funders also included two class actions alleging Sandhurst Trustees failed to exercise reasonable due diligence in determining whether failed investment groups LKM Capital and GR Finance complied with the terms of the trust deeds and their obligations under the Corporations Act. Those matters resulted in $39 million in settlements.

The portfolio also included a class action by retirees over the collapse of property lender Wickham Securities that settled for $16.85 million last April that’s part of a separate dispute between JustKapital and its founder Phillip Kapp.

The fourth class action that was part of the deal is believed to be a shareholder class action against the former directors of failed pharmaceuticals company QRxPharma and its legal advisor Dibbs Barker.

JustKapital Portfolio was represented by Michael Elliot SC with B Cameron, instructed by solicitors with Roberts and Partners Lawyers. Litman was represented by Jeremy Clarke SC and Tom Hollo, instructed by solicitors with Esplins.

The case is Smith v Australian Executor Trustees Limited.