If a client takes out a loan to enable them to bring a case that they then go on to win, should they be able to charge their opponent for the interest that they paid on that funding loan?
Cost judge Whalan grappled with this issue in the recent case of Adcock and others v Blemain Finance Limited [2022] EWHC 3280 SCCO, with judgment handed down last month. The claimants did not have the cash to fund their litigation disbursements privately, and so took out loans to cover those costs.
These ‘funding loans’ were non-recourse loans secured against the proceeds of the claims, with an annual interest rate of 30.3%.
Could the cost of this interest be recovered from the losing opponent? Costs judge Whalan held that while the Court did have a discretion to allow recovery of this pre-judgment interest, he was not satisfied that it should do so in this case. Adcock therefore joined a line of previous authorities in which the courts have declined to award pre-judgment interest in consumer and personal injury claims.
You might argue that this is unfair on litigants who could not have brought their successful claim without the aid of disbursement funding.
For commercial disputes, however, the position is more positive – certainly in the field of arbitration.
In 2016, champagne corks popped throughout the funding community when judgment was handed down in Essar Oilfield Services Ltd v Norscot Rig Management Pvt Ltd [2016] EWHC 2361 (Comm). In that case, the High Court upheld an ICC tribunal award in which the defendant had to meet the costs that the claimant had incurred in securing funding to bring the case.
This was a huge moment for the funding industry, making the use of litigation funding even more attractive for clients in arbitration proceedings.
Perhaps one day the same benefit will be extended to clients bringing lower-value consumer claims in the mainstream court system – who after all may not have been able bring those claims at all without the help of litigation loans or finance.
January 16, 2023
Insights
