In ECU Group Plc v HSBC Bank Plc [2022] EWHC 1616 (Comm) Moulder J addressed the issue of joint and several liability in a case involving multiple litigation funders.
Background
The matter involved fraud proceedings, where the Defendant having successfully defended the matter, applied under the Senior Courts Act 1981 s51 for an order requiring a specific litigation funder to pay the Defendant’s costs. The funder in question had the dominant financial interest in the litigation and had effectively controlled the proceedings. Whilst the funder was one of several commercial funders its contribution amounted to 66%. After providing judgment for the Defendant, the court ordered the Claimant to pay the Defendant’s costs to be assessed on the indemnity basis. In addition, the funder was added as a party for the purpose of costs.
In response the funder submitted that it should only be liable for costs in the same percentage as its contribution, and only for costs incurred after the date of the litigation funding agreement.
It was held that the funder should bear joint and several liability with the Claimant for the Defendant’s costs irrespective of the other litigation funders. It was emphasised that the funder in question had the dominant financial interest and had controlled the litigation. The court held that the Defendant, who had no choice but to incur costs of defending the claim, should not be in a position where recovery of the costs should be reliant on its pursuit on numerous individuals/entities, with potentially an uncertain outcome. The funder was subsequently jointly and severally liable (with the Claimant) to pay the Defendant’s costs.
Summary
The matter can perhaps be seen as a warning shot to litigation funders who have a dominant financial interest and who seek to control the direction of the litigation. Whilst these funders stand to gain the most if a case is successful, they may also be held to be liable for the full amount of costs if a case is unsuccessful. The matter emphasises the courts wide discretion in relation to costs and a funder with a dominant interest may not be able to rely on the existence of other funders to reduce their liability. The court considered that it would not be reasonable for the Defendant to have to pursue numerous funders where one dominant financial funder exists.
Richard Platts is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com
