Third-party costs order made against funder with “massive” control over litigation

A High Court judge has made a third-party costs order against a company that had a “massive” level of control over a case, and disapplied the Arkin cap too.

Mr Justice Marcus Smith said the cap was not appropriate given the interest that Colosseum Consulting Ltd had in the case.

The applicant in Laser Trust v CFL Finance Ltd [2021] EWHC 1404 (Ch) has obtained three separate costs orders against CFL Finance Ltd (CFL), of which over £330,000 plus interest remains outstanding (some £100,000 having been paid). CFL lacked the funds to pay it.

Colosseum funded CFL’s participation in the litigation. Though, “generally speaking”, the discretion to order a non-party to pay costs would not be exercised against pure funders, this was a case where Colosseum had gone beyond mere funding, the judge said.

“It is quite clear that, under the terms of the funding agreement, the control that Colosseum had was massive. It may not quite be the absolute control that Ms Toube [for Laser] contends for, but it is very close to that.”

It was not clear to what extent that power was actually exercised, he went on. “I do not criticise either Colosseum or CFL for that failure to provide a full picture, but it seems to me that if the natural inference of the terms of the funding agreement between Colosseum and CFL – namely extreme control by Colosseum – is to be gainsaid, then a very high degree of frankness is to be observed by Colosseum and/or CFL. That has not happened.

“It seems to me that I must treat the funding agreement as saying what it says and, reading the funding agreement in that light, it seems to me that the test for imposing a third-party costs order has absolutely been met in this case.”

Marcus Smith J went on that the order should be made without reference to the Arkin cap, which limits the costs order to those costs which have actually been paid by the funder.

The nature of the interest Colosseum had in the proceedings was “so great” that the cap should not apply.

“It seems to me, therefore, that it is entirely appropriate that, in this case, I exercise the jurisdiction to order Colosseum to pay costs in the amounts that have already been assessed, without requiring the costs to be re-assessed.

“It seems to me that the orders of costs that have been made, and the manner in which costs have been determined against CFL, afford Colosseum all the protection that it deserves in terms of the amount of costs that I am going to order it to pay.”

He ordered Colosseum to pay the costs that had already been ordered against CFL.

Felicity Toube QC and Robert Amey (instructed by Stephenson Harwood) for the appellant/applicant.

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Costs News
Published date
03 Jun 2021

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