As commercial litigation grows in popularity, the issue of security for costs looms large. Recently, the Court of Appeals, via Rowe et al vs Ingenious Media Holdings plc et al set a precedent about providing a cross-undertaking in damages when seeking security for costs.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
As commercial litigation grows in popularity, the issue of security for costs looms large. Recently, the Court of Appeals, via Rowe et al vs Ingenious Media Holdings plc et al set a precedent about providing a cross-undertaking in damages when seeking security for costs.
JD Supra details that the Court of Appeal held that no cross-undertaking should have been required by the court. This, they determined, should be required only in exceptional circumstances. They went on to say that decisions suggesting otherwise should not be followed. According to the Court of Appeals, a well-run commercial funder shouldn’t need to be ordered to provide security.
This decision is particularly impactful as it pertains to third-party litigation funding. The Court of Appeals stated that requiring a cross-undertaking when security is provided by a funder should be even rarer. Any funder that is properly capitalized should be able to provide evidence of their ability to meet an adverse cost order. Commercial funding is an investment, part of which includes security for costs (language to which is typically included in the funding agreement).
Before this recent Court of Appeals ruling, courts had leave to require a cross-undertaking as a condition pursuing security for costs, according to CPR 25 and CPR 3.1. This new precedent requires a “cogent and compelling” set of facts to reject the idea that costs incurred in funding claims cannot be recovered—thus laying that risk at the feet of defendants.
