On 3 November 2023 Jacobs J handed down judgment in Omni Bridgeway v Bugsby Property [2023] EWHC 2755 (Comm). This was his second judgment in a case that is the first post-PACCAR challenge to the enforceability of a litigation funding agreement to reach the English courts.
This judgment concerned litigation funders’ obligations to fortify cross undertakings.
As explained in our previous update, Omni Bridgeway and Therium Capital Management Ltd had secured proprietary injunctions protecting c.£27m held for Bugsby Property LLC in a solicitor’s client account pending arguments at arbitration about the enforceability of their litigation funding agreements. To obtain those injunctions both funders had to give cross undertakings in damages in the usual way.
Bugsby Property LLC applied for orders for fortification of those cross undertakings. It sought bank guarantees or payments into court of over £5m on the basis that Bugsby Property LLC would itself have become a litigation funder and made that return over a year, if only it had free access to the injuncted funds.
The test for whether fortification of a cross undertaking should be ordered was essentially common ground and is restated by Jacobs J in his judgment. In summary, the applicant for fortification must show:
- A good arguable case, based on a credible evidential foundation, that it will suffer loss as a result of the injunction denying it the ability to deploy the injuncted funds.
- A good arguable case that the parties who have given the cross undertaking may not be ‘good for the money’ if that loss is actually suffered.
Jacobs J carefully considered Bugsby Property’s claims that it intended to become a litigation funder and would, but for the injunction, have made substantial returns. He ultimately determined that the loss for which fortification was sought was speculative and dismissed the fortification application on that basis.
More interestingly for the litigation funding industry, Jacobs J went on to consider, obiter, whether there was a good arguable case that Omni Bridgeway and Therium might not be ‘good for the money’. His conclusion, distinguishing the cases of Rowe v Ingenious Media Holdings Plc [2021] EWCA Civ 29 and Nederlandse v Societe Bengaz [2023] EWHC 1948), was that:
- Despite not having demonstrated sufficient funds currently in the jurisdiction, Omni Bridgeway and Therium had demonstrated through evidence of their capitalisation, corporate structures and governance that they was “no real doubt” as to their ability to meet a £5m liability.
- As Omni Bridgeway and Therium were both well-established and respected litigation funders, there was no realistic prospect that either would take the decision to breach court orders and potentially expose their officers to committal applications merely to avoid satisfying a liability. For litigation funders to behave in that way would, Jacobs J accepted, be disastrous for their business model and reputation.
This judgment that will be of considerable comfort to litigation funders faced with fortification applications or security for costs applications, in which analogous principles apply.
Robert Marven KC and Theo Barclay acted for Omni Bridgeway, instructed by Richard Viegas and Nick Maday at Taylor Wessing.
The judgment is available here.
