Interesting Court of Appeal judgment in Hawksford Trustees Jersey Ltd v Stella Global UK Ltd & Anor [2012] EWCA Civ 987.

Main issue concerned a claimant who had been unable to obtain ATE cover prior to the original trial. He was successful at trial and the Defendant appealed. At this stage the Claimant managed to obtain ATE cover that not only provided cover in relation to the costs of the appeal but would also provide cover in relation to the costs of the original proceedings, if the appeal succeeded. The Court was concerned with issue of whether that element of premium attributable to providing cover for the original proceedings was recoverable as costs of the appeal (short answer: no).

Of rather wider significance was part of the reasoning why the majority of the Court concluded that it would be wrong to allow for such recovery. The importance of giving notice of funding to an opponent was highlighted. In the judgment of Lord Justice Rix:

“the importance of fair notice being given to the other party of a potential liability in additional costs is entirely undermined if the premium which the respondent seeks to recover in the appeal, so far as it relates to costs of trial, could be recoverable. For the defendant would have incurred all the costs of trial together with its potential (but retrospective) liability for the respondent’s ATE premium in ignorance, necessarily so, of what was coming round the corner when it appealed. When, however, in the course of its appeal, it learns for the first time of the ATE premium taken out in the appeal embracing cover for the costs of trial, it is too late for the defendant to do anything. It cannot concede the claim – it has already fought the trial. And if it concedes the appeal, then, if the respondent is correct in its interpretation of section 29, it will have to pay the ATE premium for the costs of trial. This is despite the fact that, in obtaining an appeal, it has persuaded the trial judge or the court of appeal that permission to appeal should appropriately be granted to it (while there is no similar hurdle in the standard case of a domestic claim form). In my judgment, such a situation is both unfair and antithetical to the purposes of the section. Moreover, although the matter was not debated before us, it is not clear to me that such unfairness can be dealt with as a matter of the question which arises before the costs judge of ‘whether the cost of insurance cover is reasonable’ as a matter of quantum: see CPR 44 PD 11.10. The present issue is rather a matter of principle and jurisdiction.”

It appears that exactly the same reasoning could be used to decline to allow recovery of a retrospective success fee.

This decision follows on from the earlier judgment of Master Gordon-Saker in JN Dairies Ltd v Johal Dairies Ltd & Anor [2011] EWHC 90211 (Costs) where he declined to allow recoverability of a retrospective success fee, although applying slightly different reasoning.