Litigation funder Therium should be jointly and severally liable for indemnity costs after a specialist currency debt management firm unsuccessfully sued HSBC, the High Court has ruled.

The funder agreed to back the claim by ECU Group against a number of HSBC entities over allegations that traders used knowledge of ECU’s foreign exchange orders to make a profit between 2004 and 2006, in a practice known as ‘front running’.

Therium signed a litigation funding agreement (LFA) in September 2019, by which time ECU had filed particulars of claim and HSBC had responded with its written defence, and provided a commitment of around £6.6m to ECU to fund the proceedings until the conclusion of the liability trial.

However, ECU’s claim was ruled to be time barred in November by Mrs Justice Moulder, who held that the company had ‘sufficient knowledge’ to plead its case in 2006. HSBC then applied for an order requiring Therium to pay its costs ‘of and occasioned by the proceedings on the indemnity basis’.

Therium said it provided £9.3m under the LFA to fund the proceedings – which, if successful, would have entitled it to a ‘contingency fee’ of three times the amount of costs funded plus 20% of any recovery net of costs above £100m, as well as the reimbursement of costs paid out.

It had also agreed to reimburse ECU for part of the costs incurred since the end of November 2018 and to pay almost £950,000 outstanding to ECU’s solicitors Mishcon de Reya.

Therium accepted that costs should be assessed on the indemnity basis, as that was the basis of the order against ECU, but argued it should only be liable for a proportion of the costs incurred after the LFA was signed as it was not the only source of funding.

But Moulder ruled on Friday that Therium ‘agreed to assume liability for the (reasonable) costs incurred’ since November 2018 when it agreed to fund the litigation costs under the LFA.

‘In my view, although Therium did not “cause” those past costs to be incurred, by agreeing to fund the litigation it was not just the “inheritor” of those costs but took a positive decision that as part of the funding arrangements it would fund those incurred costs,’ the judge said.

She added, however, that Therium should not be liable for ‘all costs of the proceedings’, including those incurred before November 2018 which were not covered by the LFA.

Moulder also held that Therium ‘should bear joint responsibility with ECU for the costs of the proceedings irrespective of the other funders/investors’, noting that ‘Therium had far and away the dominant financial interest in the outcome of the proceedings and effectively controlled the proceedings through the LFA’.

 

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