Non-Party Commercial Funder With "Significant Interest" Liable For Defendants’ Costs On Indemnity Basis.

MARANELLO ROSSO LIMITED v LOHOMIJ BV & ORS [2025] EWHC 1112 (Ch)

In Maranello Rosso Ltd v Lohomij BV [2025] EWHC 1112 (Ch), the High Court considered an application for a non-party costs order against Hamish Vans Agnew, who had provided funding to Maranello Rosso Limited (MRL) for litigation against various defendants. The claim arose from a failed scheme to sell a collection of vintage cars, with MRL’s claim ultimately being summarily dismissed at first instance and on appeal. The court examined Vans Agnew’s litigation funding arrangements, which included a complex “vehicle sale agreement” for an Alfa Romeo and a separate funding agreement with a potential 10% profit share. Applying the principles from Dymocks and related authorities, the court found Vans Agnew was not a “pure funder” but a commercial litigation funder with a significant interest in the outcome. The judgment rejected the Arkin cap approach due to Vans Agnew’s close involvement and substantial potential returns. The court ordered Vans Agnew to pay the defendants’ costs on an indemnity basis, specifically all costs up to 6 May 2021 and one-third of costs thereafter. The decision turned on Vans Agnew’s characterisation as a “real party” to the litigation, highlighting the court’s willingness to make non-party costs orders where a funder has a material economic interest beyond mere cost reimbursement.

...the respondent’s conduct here shows every reason why he should pay the applicants’ costs on the indemnity basis. First, he was not a “pure” funder, but had a significant interest in the outcome of the litigation. In effect, he co-owned the claim, and was a “real party” to it, but, having security for his contribution to costs, was carrying little risk even of losing his own stake. Secondly, he indulged in a childish and ineffectual attempt at deceiving the court, by structuring his contribution as a “sale and purchase” agreement, and then arguing it in court as such. Such devices may pass muster in other countries, but not here. And, if you play with fire, you cannot complain if you get your fingers burned.

Citations

Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17, CA A court may summarily determine a non-party costs application where the third party has a close connection to the proceedings and it is fair that they be bound by trial evidence and findings. Coyne v DRC Distribution Ltd [2008] EWCA Civ 488 Conflicting evidence in affidavits should not be disbelieved without cross-examination unless it is inherently or demonstrably incredible. Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807 A non-party who funds proceedings substantially for their own benefit and has a significant interest in the outcome may be liable for costs if the claim fails. Hamilton v Al Fayed (No 2) [2003] QB 1175 A “pure funder” who has no direct interest in the litigation and seeks only reimbursement is generally protected from a non-party costs order. Excalibur Ventures LLC v Texas Keystone Inc [2014] EWHC 3436 (Comm) A litigation funder may avoid liability for costs incurred before their funding contribution where such funding had no causal link to prior expenditure. Arkin v Borchard Lines Ltd (Nos 2 and 3) [2005] 1 WLR 3055 A professional litigation funder should be liable for the opponent’s costs only up to the value of the funding provided—establishing what became known as the “Arkin cap”. ChapelGate Credit Opportunity Master Fund Ltd v Money [2020] 1 WLR 1751 The “Arkin cap” is not a binding rule and the court retains discretion to order that a funder pay beyond the amount of their funding, particularly where they stand to gain a substantial return. Kazakhstan Kagazy plc v Zhunus [2019] EWHC 2630 (Comm) A non-party funder may be liable for costs incurred before funding contributions where justice requires, and causation is not a necessary precondition. Burnden Holdings (UK) Ltd v Fielding [2019] EWHC 2995 (Ch) A funder is not liable for costs incurred after ceasing to fund the litigation, even if their earlier funding enabled the case to progress initially.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

A non-party who funds litigation in return for a significant personal financial interest in the outcome, and not merely to facilitate access to justice for the claimant, may be liable for the successful party’s costs if the funded litigation fails. [21, 32]
The court retains a broad discretion in determining whether to make a non-party costs order under section 51 of the Senior Courts Act 1981; there is no rigid rule limiting liability to the amount of funding provided (i.e., the “Arkin cap”), and the court may consider the extent of the funder’s interest and involvement. [24]
A non-party funder’s liability for costs is not necessarily confined to costs incurred after their funding began; where their support was instrumental to the proceedings continuing, the court may in its discretion order payment of all relevant costs. [26, 34]
Indemnity costs may be awarded against a non-party funder where the funded litigation was conducted in a way that is materially “out of the norm” and the non-party’s role demonstrates that they were effectively the real party to the litigation. [36, 37]
Where the non-party and the funded party are closely aligned in interest and conduct, and the litigation has been dismissed with indemnity costs against the claimant, the court may treat the non-party as sufficiently identified with the funded party to justify an indemnity basis costs order. [36, 37]

"The size of the respondent's interest in this litigation, and his close relationship with Mr Sullivan, mean that it is inappropriate to apply the so-called Arkin cap. It also means that it is just and fair for the respondent to be bound by the findings of the court in the litigation. His own fortunes were closely bound up with those of MRL. He was a co-owner of the litigation, and a "real party" to it for his own purposes. In my judgment, the respondent should certainly pay the applicants' costs up to the point when the next significant contribution was made, because in my judgment the respondent's contributions caused the defendants to incur costs at least until then. That "next significant contribution" was the contribution of Scott Sullivan on 6 May 2021."

Key Findings In The Case

The court found that the respondent, Mr Vans Agnew, was not a “pure funder” but had a significant personal financial interest in the litigation through a prospective 10% share of any recovery and entitlement to a valuable Ferrari motorcar; this level of benefit rendered him a “real party” to the litigation within the meaning of Dymocks. [32]
The court determined that the “vehicle sale agreement” and the litigation funding agreement dated September 2020 were in substance a single transaction by which Mr Vans Agnew provided funding to the claimant for the purpose of pursuing the litigation, in return for financial returns contingent on success, and secured by rights over a vintage Alfa Romeo. [15, 18, 32]
The court concluded that the respondent’s funding in September 2020 was instrumental to the litigation proceeding, as the claimant was then in dire financial need and the contribution enabled the claim to be served and pursued against the defendants, thereby causing them to incur substantial costs. [13, 14, 34]
The court held that the respondent’s financial contributions gave rise to ongoing responsibility for a share of the litigation’s costs, even after other individuals (such as Scott Sullivan) made further contributions, because the litigation at that stage had momentum and the respondent continued to benefit from any potential recovery. [35]
The court found that the respondent had structured his funding arrangements in a manner designed to obscure his true role as a commercial litigation funder—purporting to “purchase” a vehicle while still retaining a contingent financial interest—which the court deemed a deliberate “childish and ineffectual attempt at deceiving the court,” justifying the award of costs on an indemnity basis. [37]

"But I do not think that the effect of the respondent's contribution to the costs was exhausted at that point. By that stage the litigation had a momentum of its own. The summary judgment hearing was fast approaching. It was likely that, one way or another, the litigation would continue at least until the result of the summary judgment application was known. Thus, after 6 May 2021, the respondent can fairly be described as still a co-funder, together with the Sullivans and Mr Hilder, of the litigation. He was certainly still a co-owner of it. In my judgment he should pay one third of the applicants' costs at first instance incurred after 6 May 2021."

Background

The case of Maranello Rosso Limited v Lohomij BV & Ors concerned an unsuccessful claim brought by Maranello Rosso Limited (“MRL”), a Guernsey company, against multiple defendants arising from a failed scheme to purchase and sell a collection of vintage cars. The claim, issued in May 2020, alleged a conspiracy to injure MRL by unlawful means. The defendants successfully applied for summary judgment in September 2021, with the court holding the claims were largely compromised by a prior settlement agreement. MRL’s appeal was dismissed in December 2022. The claimant was ordered to pay the defendants’ costs at first instance and on appeal, but the defendants recovered nothing from MRL. This led to the present applications by certain defendants for non-party costs orders against Hamish Vans Agnew, who was alleged to have funded the litigation.

Costs Issues Before the Court

The key costs issues were whether the respondent, Mr Vans Agnew, should be liable for the defendants’ costs under section 51 of the Senior Courts Act 1981 as a non-party funder, and if so, to what extent. The court had to determine: (1) whether the respondent was a “pure funder” or had a commercial interest in the litigation; (2) whether his funding caused the defendants to incur costs; (3) whether any liability should be capped at the amount of funding provided (the “Arkin cap”); and (4) whether costs should be assessed on the indemnity basis.

The Parties’ Positions

The applicants argued the respondent was a commercial funder who provided £514,000 to MRL through a “vehicle sale agreement” and separate loans, representing 46.5% of MRL’s first instance costs. They contended the transaction was effectively litigation funding, as the respondent stood to gain a 10% success fee plus a Ferrari worth £1 if the claim succeeded – a potential 14-fold return. They sought full reimbursement of their first instance costs on an indemnity basis.

The respondent argued he was merely securing repayment of existing loans through the car purchase, with only £27,000 constituting genuine litigation funding. He maintained the defendants’ costs would have been incurred regardless of his involvement, as other funders contributed £1.4 million after his payments. He denied controlling the litigation or being a “real party” to it.

The Court’s Decision

The court found the respondent was not a “pure funder” but had a substantial commercial interest in the litigation’s outcome. The “vehicle sale agreement” was held to be a funding arrangement disguised as a sale, with the car acting as security. The respondent’s funding enabled the claim to proceed at critical stages, causing the defendants to incur costs.

The judge rejected applying the Arkin cap, given the respondent’s significant potential returns. He ordered the respondent to pay: (1) all of the applicants’ costs up to 6 May 2021 (when another funder contributed); and (2) one-third of costs thereafter, recognising other funders’ involvement in the later stages. The court awarded costs on the indemnity basis due to the respondent’s attempt to disguise funding as a car purchase and his close alignment with MRL’s conduct of the litigation.

The decision illustrates the courts’ willingness to look beyond formal structures to the economic reality of funding arrangements when exercising their discretion under section 51. It also demonstrates that funders with substantial commercial interests may face uncapped costs liabilities, particularly where their involvement is causally linked to the incurring of costs by the opposing party.

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