Q&As

Can I recover the costs associated with entering into a funding agreement?

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Published on LexisPSL on 17/07/2015

The following Dispute Resolution Q&A provides comprehensive and up to date legal information covering:

  • Can I recover the costs associated with entering into a funding agreement?
  • The court’s general discretion to award costs
  • Are the costs of arranging funding recoverable?

Can I recover the costs associated with entering into a funding agreement?

The court’s general discretion to award costs

The court has a general discretion to award costs which is found in section 51 of the Senior Courts Act 1981 (SCA 1981), This discretion is specific to the costs ‘of and incidental to proceedings’.

Are the costs of arranging funding recoverable?

In light of the court’s discretion to order costs, the question is whether the costs of arranging a funding agreement and any subsequent costs, eg discussing matters with the after the event (ATE) insurers, are costs ‘of an incidental to proceedings’.

The court is very unlikely to make a costs order for the costs associated with funding arrangements as funding arrangements are collateral to be collateral to the proceedings and so the costs associated with such arrangements will not be costs ‘of and incidental to proceedings’ as required under SCA 1981, s 51 for the court to exercise its discretion and award costs.

This issue was considered by the Court of Appeal in a pre-CPR decision, Hunt v RM Douglas (Roofing), in which Purchas LJ said:

‘In exercising that discretion there is no duty imposed upon the court to award party and party costs on an indemnity basis and by established practice and custom funding costs have never been included in the category of expenses, costs or disbursements

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