Old Park Capital Maestro Fund Ltd v Old Park Capital Ltd

The court may join a potential third-party costs payer before the costs liability has been finally determined or remains unpaid. The joinder application is not a mini-trial: the court should refuse it if joinder would be abusive or the proposed costs claim is obviously meritless, but need not require an arguable case. Disclosure concerning funders may be ordered where it is directly relevant, appropriately circumscribed and proportionate. Where detailed assessment is deferred for the receiving party’s benefit, interest on unpaid costs may be reduced to prevent a realistic financial disadvantage to the paying party.

The claimant’s claims against the second defendant, Hugo van Kuffeler, had been dismissed at trial, and the claimant was ordered to pay his costs, including costs on the indemnity basis. An interim payment had been made, but the claimant was insolvent and funded litigation through arrangements involving James Sherwin and potentially other funders. The claimant had permission to appeal.

Van Kuffeler applied to join Mr Sherwin as a costs-only party, obtain disclosure about the funding arrangements, and defer detailed assessment. The issues were whether joinder and disclosure could be ordered before final determination or non-payment of the costs, and what rate of interest should accrue during the deferral.

1. The court had power under Senior Courts Act 1981, section 51, with the procedure supplied by CPR 46.2. A potential third-party costs payer could be joined before costs liability had been finally determined and before an unpaid costs order existed. That conclusion followed from the absence of any contrary requirement in the CPR and from the practical advantage of allowing the joined party to participate in detailed assessment.

2. On joinder, the court should not undertake a detailed preliminary merits examination. It should refuse joinder if the application would be an abuse of process or the proposed third-party costs claim was obviously meritless. It was unnecessary to establish an arguable case. The possibility that a funder might have exercised control over, or obtained a financial benefit from, litigation funded for an insolvent company provided a sufficient basis for joinder where the evidence made that possibility plausible.

3. The court could order ancillary disclosure. The relevant considerations included the strength of the proposed costs application without disclosure, the likely probative value of the documents, privilege, and proportionality. Disclosure of the identity, funding, terms, involvement and interests of funders was sufficiently focused and proportionate. A high-level account of involvement was sufficient.

4. The joinder and disclosure applications were allowed. Mr Sherwin was joined under CPR 19.2 and 19.4. The court considered that delaying joinder risked unfairly binding him to a detailed assessment in which he had not participated.

5. The stay of detailed assessment was also granted. Because the deferral was for the receiving party’s benefit, the court should prevent it causing a realistic disadvantage to the paying party. Assuming the fund could obtain a return at base rate only, unpaid costs were to accrue interest at base rate rather than the 8 per cent Judgments Act rate until detailed assessment proceedings commenced.

• High Court (Chancery Division): the trial claims against Hugo van Kuffeler had been dismissed in the judgment reported at [2023] EWHC 1886 (Ch). The claimant had permission to appeal, but the appeal was pending and was not determined in this judgment.