Burnden Holdings (UK) Ltd & Anor v Fielding & Anor

A non-party costs order under section 51 of the Senior Courts Act 1981 depends on whether, in all the circumstances, it is just to make the order. A funder becomes a real party where it has a sufficient financial interest in the litigation, even if it does not control the proceedings. Liability is ordinarily limited to costs caused by the period of funding. The Arkin cap is not an inflexible rule: its application depends on the justice of the individual case. Funding used to pay security for costs or adverse interlocutory costs may fall within the cap. The court also has power to depart from the general rule in CPR 44.10(1) where an earlier costs order omitted provision for costs.

This was a second consequential hearing following the dismissal of the claimants’ claims in [2019] EWHC 1566 (Ch). The court had already ordered Burnden Holdings (UK) Ltd to pay the defendants’ costs and had made interim payments on account. The remaining issues concerned whether Griffins, the firm of the second claimant’s liquidator, was liable as a third-party funder and, if so, the extent of that liability. The court also had to determine the costs of the first consequential hearing, despite the order made after that hearing containing no express costs provision.

1. Griffins was liable under section 51 of the Senior Courts Act 1981. The governing question was whether, in all the circumstances, it was just to make a non-party costs order. The firm was not a pure funder. Although the liquidator’s personal remuneration had to be distinguished from the firm’s funding return, Griffins had a sufficient financial interest through its entitlement to repayment and an uplift of 2.25 times the sums advanced. It was therefore a real party to the litigation.

2. Griffins was not liable for costs incurred outside the period of its funding. The applicable principle was causation. A mere “but for” connection was insufficient. After August 2017 the predominant cause of the continuation of the proceedings was funding by Project Appledene, so Griffins was not responsible for later costs.

3. The Arkin cap was not a hard and fast rule. Applying the approach in Davey v Money, the court considered whether a cap was just in the particular circumstances. Amounts used to pay adverse costs orders were included in calculating the funding, because they enabled the action to continue and were part of the investment in the litigation. Nevertheless, the cap was applied. The limited purpose of Griffins’ funding, the successful appeals, the reasonable fixed return, the benefit to creditors, and the comparatively small amount spent on the claimants’ own costs justified limiting liability to £478,265.

4. CPR 44.10(1) stated a general rule rather than an absolute bar. Because the parties had always intended a further consequential hearing and had understood the earlier costs order differently, the court could determine costs of the first hearing afresh. The fair order was no order as to costs on the substantive costs issues. Costs of the application for permission to appeal were to follow the outcome of any appeal, or, if permission was refused, the outcome of the application for permission to the Court of Appeal.

This was a first-instance consequential hearing following the dismissal of the claimants’ substantive claims in [2019] EWHC 1566 (Ch). The present judgment determined the remaining third-party funder and consequential-costs issues.