The High Court of New Zealand recently considered this question in Cain v Mettrick  NZHC 2125. The question is an important one in New Zealand where the market for litigation funding is still developing (less than 10 litigation funding companies are currently in play). It is also important because the Law Commission in New Zealand is presently undertaking a review of class actions and litigation funding. Although Cain v Mettrick involves litigation funding in the context of liquidation which is less controversial, the allegations of ulterior motive add an interesting layer of complication and the decision of the High Court offers clarity even though it held that there was no evidence to support the alleged ulterior motive.
As a preliminary step, the Court referred to Waterhouse v Contractors Bonding Ltd  NZSC 89 to note the recognised categories of case that will attract the court’s intervention on abuse of process grounds:
(a) proceedings which involve a deception on the court, or those which are fictitious or constitute a mere sham;
(b) proceedings where the process of the court is not being fairly or honestly used but is employed for some ulterior or improper purpose or in an improper way;
(c) proceedings which are manifestly groundless or without foundation or which serve no useful purpose; and
(d) multiple or successive proceedings which cause or are likely to cause improper vexation or oppression.
The argument in this case was that Mr Meehan (the person in control of the litigation funding entity) has a vendetta against Mr Boult (one of the defendants) and intended to interfere in his election as Mayor for a collateral purpose of influencing Council activity in respect to Mr Meehan’s commercial interests. . Amongst the evidence provided in this regard, mostly consisting of affidavits and depositions, Mr Boult deposed that Winton (company controlled by Mr. Meehan and funding the litigation) has never before been a litigation funder in any normal sense and the funding of this litigation is inconsistent with its business model. . On the other hand, it was argued on behalf of Mr. Meehan that Winton was funding the litigation for a commercial return on its investment. Although Winton had not previously been involved in litigation funding of this kind, it had looked into such opportunities.  Mr. Meehan further argued that the funding agreement was entered into by another entity, PLF, to provide anonymity for Winton since he wanted to avoid allegations of favoured treatment by the Council for Winton-related entities and equally to prevent Mr Boult (who was also the mayor of the Queenstown Lakes District Council) negatively influencing consent applications to the Council. .
Discussing when an ulterior motive amounted to abuse of process, the court stated that the “plaintiff’s purpose must be shown to be “not that which the law by granting a remedy offers to fulfil, but one which the law does not recognise as a legitimate use of the remedy sought”.” Further, it stated that “where a plaintiff has multiple purposes for bringing an action, including some that might be condemned as a collateral advantage, it will be sufficient that one of those purposes is legitimate”.  Citing Broxton v McClelland  EMLR 485, the court stated that “where a plaintiff’s action is funded, the funder’s purposes and motivations will not be attributed to the plaintiff”. . In the current case, the court held that the liquidators were pursuing genuine causes of action to obtain compensation on behalf of the companies in question. . It further held as follows:
They do not seek any advantage beyond that which the law allows. There is no criticism of the manner the proceeding has been conducted (apart from the issue of funding). The Liquidators and PLF have a common commercial interest in seeking the payment of compensation. It is from the success of the proceeding, or a settlement, that PLF will receive the Services Fee. 
About Mr. Meehan’s motives, the court simply held that his purpose in funding this litigation was to make a profit. Even if Mr Meehan had “a subordinate purpose that may be achieved as a by-product of the litigation, that is not an abuse of process, nor can such purpose be imputed to the Liquidators to taint this proceeding”.