England & Wales Court of Appeal · UK · 2020 · Decided
Citation/Docket: [2020] EWCA Civ 246, on appeal from Davey v. Money [2019] EWHC 997 (Ch)
Posture: Commercial funder vs. successful defendants, over a non-party costs order
Funder(s) involved: ChapelGate Credit Opportunity Master Fund Ltd
ChapelGate agreed in 2015 to fund roughly 2.5 million pounds for a former director suing a company's administrators. The claim failed and the claimant was ordered to pay indemnity-basis costs. The funder argued its liability should be capped at the amount it had invested, per Arkin.
The Court of Appeal upheld an uncapped indemnity-basis costs order against the funder. The Arkin cap is a guideline, not a binding rule, and courts retain broad discretion over a funder's adverse costs liability. The court observed the cap had become outdated as funding matured from an access-to-justice device into a sophisticated market.
In England a funder's downside is not automatically limited to what it invested, which is exactly why funders price adverse-costs cover and after-the-event insurance into a deal. If you are being funded, establish who bears the other side's costs if you lose.
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Compiled from public sources (court filings, published opinions, and secondary reporting) as part of the Institute's Phase 1 Dispute Library research. This is educational material, not legal advice; case citations should be independently verified before relied upon.