High Court refuses to apply the so-called Arkin "cap" to adverse costs order against litigation funder

In one of the first decisions to consider the application of the so-called Arkin "cap" following the Court of Appeal's decision in Chapelgate Master Fund Opportunity Ltd v Money [2020] EWCA Civ 246, the High Court has once again made a third party costs order against a litigation funder, and refused to cap that order: Laser Trust v CFL Finance Ltd [2021] EWHC 1404 (Ch).

Laser Trust had previously obtained three costs awards in its favour against CFL Finance Limited (CFL) in litigation where CFL had been funded by Colosseum Consulting Limited (Colosseum). CFL failed to pay a significant proportion of the costs which it had been ordered to pay. Laser Trust therefore applied for a third party costs order against Colosseum, seeking the remainder of the funds owed.

The court made the costs award against Colosseum and did not apply a cap on the costs to be paid by it. In reaching its conclusion regarding the Arkin cap, the court held that the nature of Colosseum's interest in the proceedings was so great that the cap should not apply, commenting that Colosseum had a "massive" degree of control. It is not clear whether the court was referred to Chapelgate when considering the cap but, to the extent the decision suggests that there needs to be a high threshold of funder interest in order to dis-apply the Arkin cap, that would not be consistent with the Court of Appeal's conclusion in Chapelgate.

The decision in Chapelgate confirmed that the Arkin cap is not a binding rule, that the court retains a broad discretion as to the extent to which a funder should be liable for adverse costs, and that it need not limit the funder’s liability to the amount of funding provided (see our blog post: Court of Appeal confirms funders’ adverse costs liability not limited to amount of funding provided: Arkin “cap” not a binding rule).