Costs—non-party costs against liquidator’s firm—Arkin cap (Burnden Holdings (UK) Ltd v Fielding)

Costs—non-party costs against liquidator’s firm—Arkin cap (Burnden Holdings (UK) Ltd v Fielding)

A liquidator’s firm was ordered to pay the successful defendants’ costs as a non-party because it had provided funding for the litigation as a commercial funder. On the facts, however, it was appropriate for the firm’s liability to be capped at the amount of the funding it had provided (the Arkin cap). The liquidator was also personally liable for 15% of the defendants’ costs from the time that he had joined the proceedings in order to pursue a claim under section 423 of the Insolvency Act 1986 (the original claimant being the company in liquidation which was held liable for all the costs). Written by James Potts QC and Matthew Parfitt, barristers, at Erskine Chambers (who appeared for the defendants).

Burnden Holdings (UK) Ltd (in liquidation) and another v Fielding and another [2019] EWHC 2995 (Ch)

What are the practical implications of this case?

Funders, whatever their background, may be required to pay costs as a non-party. While every case turns on its own facts, there is no exemption for supposedly ‘non-professional’ funders, such as an insolvency practitioner’s firm, in circumstances where the provision of funding makes the firm a real party to the proceedings.

Funders will be able to limit their costs exposure by reference to causation and may in an appropriate case have their liability capped at the amount of funding provided (the Arkin cap), although the court is not obliged to impose a cap. In relation to the cap, the court followed the recent decision of Snowden J in Davey v Money [2019] Costs LR 399, [2019] EWHC 997 (Ch), (although an appeal is pending against that judgment, so this is a developing area).

In calculating the Arkin cap, sums provided by the funder to meet adverse costs orders are take

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About the author:

Zahra started working as a paralegal at Lexis Nexis in Banking and Insolvency teams in April 2019. Zahra graduated with a 2.1 honours in a BA French and Spanish, completed the GDL at BPP University and is seeking some experience before commencing the LPC. She has undertaken voluntary work for law firms in London, Argentina and Colombia.