The Court of Appeal has handed down an important decision regarding applications for security for costs and litigation funding.
The appeal arose in the context of the ongoing civil claim brought by hundreds of investors in the Ingenious films and games schemes against various defendants, including promoters and banks. A number of the Claimants in the litigation are funded by entities forming part of the Therium group.
A number of the Defendants obtained an order that Therium provide security in respect of their costs. The Therium-funded Claimants argued that the provision of security should be conditional on the Defendants giving a cross-undertaking as to damages because because there was a prospect that they might suffer loss as a consequence of the order.
In first instance judgments in February and June 2020, Nugee J (now Lord Justice Nugee) refused to make the provision of security conditional upon a general cross-undertaking. Instead, he decided that a limited cross-undertaking should be provided to cover the ‘external’ costs of providing security (for example the cost of securing a bank guarantee) but not covering ‘internal’ costs (namely sums that the Claimants were required to pay their litigation funder under their litigation funding agreements as a price of providing security).
On appeal, the Court of Appeal decided that no cross-undertaking should have been required at all, granting the Defendants’ appeals. Popplewell LJ (with whom Floyd and Henderson LJJ agreed) explained that a cross-undertaking should be required only “in rare and exceptional cases”, even in non-funded cases, and recent decisions which had indicated otherwise should not be followed.
In the Ingenious litigation:
Andrew Green QC, Simon Pritchard and Harry Adamson represent HSBC instructed by Eversheds Sutherland.
Andrew Hunter QC, Sam Grodzinski QC, Tom Cleaver and Gayatri Sarathy represent the Claimants who have instructed Stewarts.
Mark Vinall represents the Claimants who have instructed Peters & Peters.
Robert Anderson QC and Tom Mountford represent the Claimants who have instructed Mishcon de Reya.
The judgment can be found here.