The ECU Group Plc v HSBC Bank Plc & Ors [2022] EWHC 1616
This is another example of a case where the litigant became the litigation funder. Here, the funder, Therium, appeared in an attempt to head off an application that it pay the costs of the successful defendant on the indemnity basis and that it top up the payment on account that was supposed to have been paid by the claimant. The Court decided the underlying claim against the claimant in November 2021 and made an order for an interim payment on account of costs of $11m.
Therium commenced funding on 19 September 2019 by which time the pleadings had already been exchanged. Importantly, under the terms of the LFA, Therium also agreed to reimburse ECU for part of the costs incurred since 30 November 2018. Therium’s share of the funding of the claim amounted to be between 53-64%. The claim itself was under consideration since September 2016.
Therium’s position was that whilst it could not complain about having to pay some of the costs on the indemnity basis, that costs should only post-date the funding agreement and should then only be a 53-64% percentage of the overall level of costs incurred.
The Court’s initial approach, in line with authority, was that neither the scale of the overall costs nor the proportion of those costs incurred prior to the involvement of Therium make it just that Therium should bear costs incurred prior to the date on which it agreed to fund the litigation. However, the Court felt that because Therium accepted a liability for costs predating the funding agreement, it should also accept the downside and so be liable for costs as from that date. This is a chilling order because in principle it means that litigation funders will inevitably be discouraged from paying past costs, and it cuts across the causation argument that so far has protected funders reasonably well. It is also unsatisfactory that decisions that are made as between funder and claimant, that cannot have had an impact on the defendant, can be reviewed by the Court so as then make judgments after the fact. The Court was not wanting to get into the detail as to the percentage allocation between funders – it took the simple approach as to what was just to the defendant, and it was not just that it should be prevented from recovery its costs because of a dispute between funders. The proper course was to make the payment of costs and then potentially have the funders argue amongst themselves at a later date. This was not the approach that was followed in Excalibur and again is a sign of the Court’s increasing willingness to make orders that ensure that a defendant is not to be prejudiced because of the funding arrangements that were put in place by a claimant.