The Supreme Court of Western Australia has dismissed a A$7 million unfair preference claim brought by LCM Recoveries against the Commissioner of Taxation, finding that the company behind the claim had not been shown to be insolvent when the disputed payments were made.

As reported by Murrays Legal, the proceeding — *LCM Recoveries Pty Ltd v Commissioner of Taxation [No 2]* [2026] WASC 327 — concerned $7,005,329.27 paid to the Australian Taxation Office across 86 transactions between December 2012 and June 2013. LCM Recoveries pursued the claim as assignee of the liquidators' causes of action rather than as a funder standing behind the liquidators.

The court was not satisfied that the company was insolvent on the date relied on to trigger the statutory presumption of insolvency, or during the preference period that followed. It found the company faced liquidity problems but that the evidence did not establish an endemic shortage of working capital, noting that its books and records were incomplete and that internal reports relied on by the applicant's expert were too unreliable to establish insolvency. The Commissioner also succeeded on a good faith defence.

The judgment is likely to draw attention for its observations on the economics of assigned claims. On the figures before the court, even a full recovery would have returned roughly $206,916 to unsecured creditors after liquidator remuneration and costs, while the assignee retained the substantial balance. The court described as serious the question of whether an award in favour of an assignee that produces no benefit to the general body of creditors is consistent with the purpose of the preference regime.

The think tank Civitas has published a report on the UK class action and third-party litigation funding market that calls for funders to trace their ultimate capital ownership to named individuals, arguing that the reforms government has committed to so far leave structural gaps unaddressed.

According to Litigation Nation: The growth of a class action claims culture, written by Danna Brown and published this month by Civitas: Institute for the Study of Civil Society, the Civil Justice Council's 2025 review of the funding market produced 58 recommendations for reform, of which the government committed to accepting only two. The report argues that this approach leaves both the industry and the wider system exposed.

The report sets out three changes it says should be made to third-party litigation funding: a disclosure obligation to trace ultimate capital ownership to natural persons; sanctions screening conducted as a procedural prerequisite rather than a discretionary step; and robust checks to establish that a funder is financially fit to bear the risk it assumes when financing a claim. It concludes that implementing these safeguards "would give the market the institutional legitimacy on which the rule of law depends."

Civitas frames the paper as a contribution to public debate on legal culture, collective proceedings and regulatory reform in England and Wales. The report carries an explicit note that no company, law firm, funder, claims management company or individual named in it is accused or suspected of wrongdoing, and that identifying gaps in the regulatory framework should not be read as an allegation of misconduct against any party.