Burnden Holdings (UK) Ltd & Anor v Fielding & Anor

This judgment was not the main trial decision. It was a later hearing about costs after the claimants had already lost the underlying case.

That matters because the court was not re-deciding the original business dispute. It was deciding who should bear the defendants’ legal costs and whether a non-party funder should contribute.

The company claimant was in liquidation, and its liquidator had pursued litigation that was effectively the estate’s main asset. Funding changed over time. Creditors funded the case first. Griffins then advanced money after the claim had been struck out on limitation grounds. Later, a professional funder stepped in.

The court had to work through that funding history and decide whether Griffins had crossed the line from helping the claim proceed to becoming a real commercial participant exposed to an adverse costs order.

This makes the case useful beyond insolvency disputes. Small businesses sometimes back claims brought by a group company, founder, investor, office-holder or distressed counterparty. They may do that to preserve a possible recovery, protect a commercial position or stop a claim collapsing before outside funding is available.

The warning from this case is simple. If your money is part of what keeps the case alive, the court may ask whether you were really just helping, or whether you were pursuing your own financial interest through someone else’s claim.

The key question was whether Griffins should be liable for any part of the defendants’ costs as a third-party funder. The court approached that through the general principles on non-party costs orders.

The broad test was whether, in all the circumstances, it was just to make the order.

The judge then had to answer a series of practical questions.

Was Griffins a pure funder helping access to justice, or a commercial funder with enough self-interest to be treated as a real party?

If Griffins was liable, should that liability be limited to the period when it funded the case?

Should the court apply a cap and limit liability to the amount Griffins had actually funded?

These questions matter for business owners because they go beyond labels. A document might describe money as a loan, support payment, remuneration mechanism or bridge funding. The court will still ask what the arrangement really achieved.

Did the money allow the case to continue? Did the funder stand to gain if the claim succeeded? Was the claimant otherwise unable to meet adverse costs or security obligations?

If those answers point towards commercial self-interest, the funder may be treated as a real participant in the litigation even without being named on the claim form.

The judgment gives a detailed picture of how the funding was structured.

In May 2015, Griffins advanced money to cover three things: a payment on account of the defendants’ costs, security for costs on appeal, and some of the claimant company’s own costs.

Later, more money was advanced for solicitors’ costs and for further adverse costs orders. The total funding from Griffins was stated to be £478,265.

The arrangement was later reflected in creditors’ resolutions. One resolution described the return as additional remuneration for the liquidator, but the court treated substance as more important than label. It accepted that the mechanism was intended to ensure Griffins recovered the funding advanced and an additional amount.

The court also noted that by August 2017 a professional funder, Appledene, had taken over with a larger funding package and an adverse costs indemnity.

For a business reader, the important point is that the court looked closely at what the money was used for. It did not treat only solicitors’ fees as relevant funding.

Money used to pay security for costs and money used to satisfy interlocutory costs orders could still count as part of the funding picture because those payments helped the litigation continue.

In other words, if your business pays a cost that must be met to stop a claim being struck out or stalled, that payment may still be seen as an investment in the litigation rather than a side issue.

This is one reason why informal rescue funding can be risky. A business may think it is only plugging a temporary gap or preserving value until a larger funder arrives. But if the payment is one of the reasons the case survives, the court may later connect that payment to the costs the other side had to incur while your funding was in play.

The court decided that Griffins was not a pure funder. Even though the judge rejected the defendants’ more aggressive arguments about extreme returns and control, he still found that Griffins had enough interest in the proceedings to be treated as a real party for third-party costs purposes.

Important factors included the commercial uplift on the funding, the context of the liquidation, and the fact that the litigation was the only meaningful asset.

But the court did not go as far as the defendants wanted. It rejected the idea that Griffins should be liable for all later costs simply because its earlier funding had helped keep the case alive.

Once Appledene took over, the predominant cause of later costs was Appledene’s funding. The judge also held that the just result was to apply a cap equal to the amount Griffins had funded: £478,265.

The reasoning is important. The court drew a distinction between saying Griffins had a sufficient financial interest to justify some liability, and saying Griffins should therefore carry every later cost consequence of the litigation.

Causation still mattered. The court focused on which funder’s money caused the defendants to incur which costs.

That meant the court was willing to impose liability, but only within boundaries tied to the actual funding period and the justice of the case.

The court also treated the cap as a fairness tool, not an automatic entitlement. It considered the limited purpose of the funding, the fact that some appeals funded during that period were successful, the nature of the return Griffins had bargained for, and the mismatch between the amount Griffins had funded for the claimant’s pursuit of the case and the much larger costs the defendants said they had incurred in that period.

The result was a middle position: real exposure, but not open-ended exposure.

If your business is thinking about funding litigation, this case is a warning that commercial upside can bring commercial downside.

A court may look past labels and ask what the arrangement really does. If the funder stands to gain, keeps the case moving, or fills a gap where the claimant cannot otherwise continue, the funder may be treated as more than a helper.

At the same time, the judgment is not anti-funding. The court recognised the policy value of funding that facilitates access to justice. That is why the analysis stayed focused on fairness, causation and proportionality.

For a business owner, the lesson is not never fund a claim. It is to understand exactly what risk you are taking, over what period, and whether your expected return justifies possible exposure to the other side’s costs.

A useful way to read this case is to separate three business questions.

• Why are you funding the claim at all? If the answer is that your business expects a return or is protecting its own economic position, that points towards greater risk.
• What exactly are you paying for? Funding legal fees, security for costs and adverse costs payments can all matter because each may help the case continue.
• When does your involvement start and end? If another funder later takes over, that may help limit your exposure to the period your money actually caused costs to be incurred, but it does not erase the risk for the period you were involved.

Example: a founder’s separate company advances money so an insolvent group company can continue a claim against a supplier. The money covers a costs payment ordered by the court and some appeal costs, with an agreed uplift if the claim succeeds.

Even if the founder’s company is not a party to the proceedings, this judgment shows the court may still ask whether it became a real party in substance. If so, it may face an adverse costs order if the claim ultimately fails.

For ordinary businesses, the safest approach is to treat litigation funding like any other high-risk investment.

The legal documents should match the commercial reality, and the commercial reality should be stress-tested before money is advanced. Informal arrangements, unclear repayment mechanics and blurred roles can all make later disputes harder.

This is especially important where the funded party is insolvent or in liquidation. In that setting, the court is likely to pay close attention to who really benefits from the claim and who enabled it to continue.

If your business is connected to the office-holder, that relationship should be analysed carefully rather than assumed to be legally harmless.

In practice, that means asking some uncomfortable questions early.

• If the claim fails, who pays the other side’s costs?
• If the claimant has no realistic means to do that, are you effectively stepping into the risk zone by keeping the case alive?
• If your return is structured through a side agreement, a creditor resolution or another mechanism that does not obviously look like funding, would a judge still see it as a commercial funding arrangement in substance?

This case suggests the answer may be yes.

It also helps to map the funding timeline. Courts may distinguish between one funder’s period and another’s. That can matter a lot where bridge funding is followed by professional funding.

A clear start date, stop date, purpose of each payment and repayment mechanism can all help explain the true scope of your involvement. They will not remove risk, but they may help define it.

Finally, avoid assuming that a cap will save you. The court in this case applied one, but only because it considered that result just on these facts. A business should therefore make its decision on the basis that some adverse costs exposure is possible and that the court will examine the whole arrangement, not just the headline amount advanced.