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Hamilton -v- Al Fayed (No.2)  3 All ER 641 (QBD)
Pure funders cannot benefit from litigation. If a third party provides funding in
a case and has a financial interest in the proceedings or may derive some benefit
from them they may be liable to pay the costs if they lose.
Arkin v Borchard Lines Court of Appeal (Civil) 26th May 2005
Conditional Fee Agreements and claims brought by impecunious Claimants. Reference
to Hamilton -v- Al Fayed (No.2)  3 All ER 641, R (Factortame Ltd) -v- Transport
Secretary (No. 8), British Cash and Parcel Conveyors Ltd -v- Lanson Store Services
Co Ltd , Awwad -v- Geraghty & Co  and Bevan Ashford -v- Geoff Yeandle
(Contractors) Ltd .
Professional funders and contingent fees: the circumstances in which an order for
costs should be made against a non-party funder that takes a share in the proceeds
if a claim is successful.
Here a Claimant was not eligible for Legal Aid and was advised by the professional
funder that the claim could not proceed if funding was not provided for disbursements.
He was also told that it was not possible to obtain ATE (After The Event) Insurance
because of the complex nature of the case. The Claimant could not afford to pay the
insurance premium himself. The relationship between the professional funder and the
Claimant, even though the funder could obtain profit as a result of the litigation,
was not against public policy. The funder had not taken a direct role in the conduct
of the litigation and did not place influence on the outcome of the proceedings except
in its reliance on Counsel’s advice.
CIBC Mellon Trust & Another v Stolzenberg & Ors, Court of Appeal (Civil Division)
24th May 2005
Whether a costs order should be made against a shareholder of a company who was not
a director but had a financial interest in the company to the degree that he funded
the litigation to his own interests.