THE ECU GROUP PLC v HSBC BANK PLC

The court has a broad discretion under Civil Procedure Rules 1998, rule 44.2, as to whether costs are payable, their amount and when they must be paid. An admissible offer outside Part 36 may be considered, but it does not attract the self-contained consequences of the Part 36 regime. Where a non-party costs application is distinct from the underlying litigation, successful applicants should ordinarily receive their costs without waiting for detailed assessment of the main proceedings. Costs may be apportioned broadly to reflect the parties’ overall success. Solicitors’ rates substantially exceeding guideline rates require clear and compelling justification, although use of the same advisers as in complex underlying litigation is not itself unreasonable.

This was a consequential hearing following judgment on 24 June 2022 concerning the defendants’ application for a non-party costs order against Therium Litigation Finance Atlas AFP IC, a litigation funder. The court had held that Therium was liable for 90.8 per cent of HSBC’s costs, representing costs incurred from 30 November 2018.

The issues were whether costs should be reserved pending detailed assessment, what proportion of the application costs Therium should pay, and whether HSBC’s claimed costs were reasonable and proportionate. Therium relied on a £700,000 open offer, while HSBC relied on the distinction between that offer and a Part 36 offer.

1. Costs payable without delay. Rule 44.2 of the Civil Procedure Rules 1998 gives the court a broad discretion, to be exercised having regard to all the circumstances. The application concerned how the costs should be borne and was separate from the general litigation. HSBC was therefore entitled to its costs without waiting for detailed assessment of the main proceedings.
2. Effect of the offer. The £700,000 offer was not a Part 36 offer. Part 36 is a self-contained code. Therium could have obtained its protection by making a Part 36 offer, and the court was not required to reserve the costs decision merely because the eventual assessed costs might have affected whether the offer was beaten. Guidance could be obtained from McKeown v Langer [2021] EWCA Civ 1792.
3. Apportionment. Therium succeeded only on the temporal scope of its liability. It failed on the funding-percentage issue, the proposed credit for ATE insurance and retention-account proceeds, and the payment-on-account issue. Although the temporal issue reduced liability to 90.8 per cent of HSBC’s costs, the overall result justified only a small adjustment. Therium was ordered to pay 95 per cent of HSBC’s costs.
4. Summary assessment. Rates substantially above guideline rates required clear and compelling justification, applying the guidance in Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor [2022] EWCA Civ 466. HSBC was not to be criticised for using the same advisers as in the complex main litigation. Nevertheless, the rates claimed for this ancillary application were excessive. The reasonable overall figure for solicitors, counsel and associated fees was £71,000.