The litigation funding market is highly developed in the UK and is increasingly being used in a variety of actions. The presence of funders in an action invariably changes the dynamics of the case, with funders exerting varying levels of control over the conduct of the litigation in each case. Where there is found to be high degree of control by the funder, a court may be more likely to use its discretion under section 51 of the Senior Courts Act 1981 to grant a non-party costs order against the funder. This was the case for Colosseum Consulting Limited (Colosseum), the funder of the claimant, CFL Finance, in its case against Laser Trust. Laser Trust had sought the order against Colosseum after having been awarded costs which CFL was unable to satisfy due to insufficient funds.
Whilst such orders are exceptional and will not be exercised against “pure funders”, the Court found that the terms of the funding agreement showed that Colosseum was granted a “considerable degree of control over the litigation". CFL and Colosseum failed to provide “full and frank” answers to the degree of control actually exercised, but the Court was satisfied that the natural inference from the funding agreement was that Colosseum was to have “extreme control” so “the test for imposing a third party costs order has absolutely been met in this case”.
For the same reasons, the Court also held that the so-called “Arkin cap”, which limits the order to those costs actually paid by the funder, should not apply.