Security for Costs Retained After Judgment and Disclosure Ordered Against Litigation Funders

The decision in Yodel Delivery Network Ltd v Corlett & Ors [2026] EWHC 1741 (Ch) concerned a series of post-judgment costs applications following the dismissal of a substantial counterclaim and the award of indemnity costs in favour of the Claimant. The judgment addresses a number of important costs issues, including whether security for costs paid into court can be released to satisfy an interim costs order, the circumstances in which additional security may be ordered for detailed assessment proceedings, the availability of non-party costs orders against those directing litigation, and disclosure of litigation funders. The court ultimately refused to order the release of £1.525 million held as security for costs, granted further security for the costs of detailed assessment, made a non-party costs order against the First Defendant and ordered disclosure of the identity and funding arrangements of those who had financed the litigation.

Background

The Claimant successfully defended a counterclaim brought by the Third Defendant and additional claim by the Fourth Party (“counterclaim”) and was awarded costs on the indemnity basis, subject to detailed assessment. An interim payment on account of costs totalling approximately £2.75 million was also ordered.

Prior to trial, £1.525 million had been paid into court as security for the Claimant’s costs. Following judgment, the Third Defendant and Fourth Party applied under CPR 37.3 for that money to be paid out to the Claimant in partial satisfaction of the outstanding interim costs liability. The Claimant opposed the application and, in turn, sought:

• Additional security for the anticipated costs of detailed assessment proceedings;

• A non-party costs order against the First Defendant pursuant to section 51 of the Senior Courts Act 1981;

• Disclosure of the identity of those who had funded the litigation; and
• An extension of time for commencing detailed assessment proceedings.

Can Security for Costs be Used to Satisfy an Interim Costs Order?

The Third Defendant and Fourth Party argued that the purpose of security for costs had effectively crystallised once the Claimant obtained a costs order in its favour. They submitted that there was no reason why the money held by the court should not be released to satisfy part of the outstanding costs liability immediately.

The Claimant argued that the purpose of security for costs is to protect a successful party from the risk of non-payment of all costs liabilities arising from the proceedings. Releasing the security would leave the Claimant exposed to a substantial risk that further costs awarded following detailed assessment would be irrecoverable.

The Court accepted the Claimant’s position.

The Judge emphasised that security for costs paid into court is security held by the court to protect against enforcement risk. While funds paid into court are frequently released after judgment by agreement, that does not alter the essential nature of the security.

The Judge held that the Claimant was entitled to retain security until all liabilities in respect of which the security had been ordered had been satisfied. Granting the application would have discharged the interim costs debt whilst simultaneously depriving the Claimant of security for potentially more than £1.3 million of additional costs that could become payable following detailed assessment.

In deciding how to exercise its discretion the court looked at the circumstances, including the Third Defendant’s financial position. That evidence demonstrated why security for costs had originally been ordered and reinforced the continuing need for it. The application for payment out was therefore refused.

Additional Security for Detailed Assessment Proceedings

The Claimant also sought additional security for the anticipated costs of the detailed assessment itself and argued that it was likely to incur approximately £250,000 in assessment costs.

The court accepted that it had jurisdiction to order security for the costs of detailed assessment proceedings but whilst accepting that some additional security was justified, the court rejected the Claimant’s submission that those costs should be assessed on an indemnity basis merely because the underlying claim had resulted in an indemnity costs order. The Judge held that costs of detailed assessment proceedings are separate proceedings and any indemnity assessment would depend upon the conduct of those proceedings themselves.

The Court ordered additional security of £48,000. Failure to provide the security would result in the Third Defendant and Fourth Party being debarred from participating in the detailed assessment proceedings.

Non-Party Costs Order Against the First Defendant

The Claimant also sought an order under section 51 of the Senior Courts Act 1981 that the First Defendant be personally liable for the costs of the counterclaim.

Although the First Defendant opposed the application in part, he did not dispute in principle that such an order could be made.

One argument advanced was that it was too late for the Claimant to seek a non-party costs order because earlier costs orders had already been made. The Court rejected that submission. The Judge confirmed that there is no prescribed time limit for section 51 applications and noted that such applications are frequently made after costs orders have been obtained, particularly where questions subsequently arise over enforceability.

The Judge therefore made the First Defendant jointly and severally liable for the costs of the injunction application and the counterclaim proceedings.

However, the Court held that it lacked jurisdiction to make the First Defendant liable for costs previously awarded by the Court of Appeal because any such application would need to be determined by the Court of Appeal itself.

Disclosure of Litigation Funders

Perhaps the most notable aspect of the decision concerns the Claimant’s application for disclosure relating to those who had funded the counterclaim.

Evidence before the court established that the litigation had been financed by numerous investors. The Claimant sought extensive information concerning the identity of the funders, the amount of funding provided, the terms upon which funding had been made available and the extent of each funder’s involvement in the litigation.

The court accepted that such disclosure was appropriate and ancillary to potential future section 51 applications.

The Judge held that the Claimant was entitled to understand who had funded the litigation and assess whether non-party costs applications should be pursued. The Judge rejected arguments that disclosure should wait until after service of the bill of costs, particularly given the uncertainty surrounding the Third Defendant’s financial position.

Disclosure was therefore ordered within 14 days. However, recognising that the Third Defendant was attempting to raise funds to satisfy the outstanding costs liability, the court directed that the Claimant should not contact the identified funders until 1-month after the hearing date.

Conclusion

This decision provides useful guidance on the treatment of security for costs following judgment. It confirms that a successful party will not necessarily be required to release security merely because an interim costs order has been made. Where there remains a real risk that future costs liabilities may go unpaid, the court may permit the security to remain in place until detailed assessment has concluded, and all liabilities have been discharged.

The judgment also highlights the court’s willingness to order security for the costs of detailed assessment proceedings, make non-party costs orders against those responsible for litigation and require disclosure from those who have funded unsuccessful claims.

Ellena Hunter-Green is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercial@clarionsolicitors.com.