Pioneering product is launched ahead of expected changes to relationship property legislation
A peer-to-peer litigation funding product for divorce and estate disputes has been launched for the first time in New Zealand.
Zagga, an alternative investment platform, is offering investors the opportunity to fund its litigation loans as changes are expected to the Property (Relationships) Act 1976. Last year, the Law Commission recommended changes to the dated legislation.
Zagga said that its first litigation loan – a $663,880 personal loan with an 18% return – was funded in February. Its peer-to-peer funding for litigation is being offered as those seeking justice through the Family Court can struggle to pay legal bills, unless they have access to family money or if their lawyer is willing to bear the cost until the case is resolved.
Marcus Morrison, director and chief executive of Zagga, said that the company’s first loan was for a client whose ex-husband managed the family finances. She is now fighting for her share of the assets, which include freehold properties, he said.
“Her husband never gave her access to their money and she has none of her own, so how does she get justice if she can’t pay for legal representation? Her bills are mounting up and, while law firms and barristers will often carry the cost until the case is settled, that can become a major burden if the case drags on,” Morrison said.
He said cases like this are why Zagga launched its peer-to-peer litigation funding product.
“It’s never been done in New Zealand before, and Zagga is uniquely positioned to offer this as two of our directors – Mark Kirkland and Edwin Morrison – are also senior partners in K3 Legal, where they have been practising relationship property and disputes resolution for decades,” he said.
The success of the first loan has prompted Zagga to expand the service, which caters to a unique need for the product, Morrison said. However, the company is discerning about what matters to fund, he said.
“On our traditional investments, we offer our investors genuine security in the way of first mortgage over the borrower's property, the same as banks do with their lending. In the case of litigation loans like this one, Zagga takes a general security agreement over all property owned by the borrower and specific security over the borrowers’ interest in the claim and land,” Morrison said.