Court House Capital Pty Ltd v RP Data Pty Limited

The funding agreement is central to the later costs dispute. Court House agreed to fund the applicants’ solicitors, senior counsel, junior counsel and disbursements. The agreement did not indemnify the applicants against an adverse costs order, although it contemplated that a further agreement could include that kind of funding. It also said Court House was under no obligation to provide any further funding or indemnity.

At the same time, the agreement gave Court House a commercial interest in the outcome. If the applicants recovered money by judgment or settlement, they had to repay the funding and pay an additional sum calculated as 15% of the final amount. The applicants formally retained the right to instruct their solicitors and to direct, conduct and conclude the proceedings.

But they also had to consult with Court House on issues arising from the conduct or progress of the proceedings and could not compromise the claim without prior consultation with and consent from Court House.

The merits litigation moved through several courts. At first instance in December 2019, Mr Hardingham and REMA lost and costs orders were made in RP Data’s favour. They appealed and obtained a stay of those costs orders. In 2021 the Full Court allowed their appeal. RP Data then succeeded in the High Court in December 2022, which meant the original costs orders became operative again.

RP Data then turned to the funder. In February 2023 it sought an order that Court House pay RP Data’s costs on the same basis as the original costs orders and be jointly and severally liable with the applicants. The primary judge decided that Court House had a sufficient connection with the proceedings to justify a non-party costs order under s 43 of the Federal Court of Australia Act 1976 (Cth). Court House appealed that decision to the Full Court.

Court House argued on appeal that its connection was too limited. The extract records arguments that its funding was limited, that it had no real control over the conduct of the litigation, that the course of the proceedings would likely have been no different without the funding, and that the appellate proceedings did not have the benefit of funding. It also argued that making it liable for the whole of RP Data’s recoverable costs was disproportionate to its role.

The Full Court did not accept that those matters showed reviewable error by the primary judge. The court’s approach was not to ask whether one clause or one factual feature was decisive. Instead, it treated the question as a broad discretionary one under s 43, informed by the funder’s commercial interest, the terms of the agreement, the nature of the connection to the litigation and the justice of the case overall.

Importantly, the Full Court rejected any suggestion that there is a rigid checklist that must always be satisfied before a non-party costs order can be made. The relevant considerations depend in part on the character of the non-party. Different issues may arise where the non-party is, for example, a receiver, a family member, a union or a commercial litigation funder.

In the case of a commercial funder, the authorities recognise the fairness of requiring a person who funds litigation for commercial gain to share the downside if the litigation fails.

The court also endorsed the primary judge’s observation that it is not especially helpful to describe non-party costs orders as rare or exceptional in a way that obscures present commercial reality. While such orders are outside the ordinary run of cases where parties litigate for themselves and at their own expense, they are not exceptional where a litigation funder facilitates litigation for commercial gain. The judgment expressly noted that such orders have become increasingly common.

Another important part of the decision concerns impropriety. Court House argued, in substance, that a non-party costs order should only be made where there had been unreasonable conduct, impropriety or abuse of process. The Full Court rejected that proposition. It accepted that impropriety or abuse of process may be a basis for making such an order, but said those matters are not pre-conditions.

The task is broader: to examine the whole of the conduct of the proceedings and determine what the interests of justice require.

The court also dealt with RP Data’s failure to seek security for costs earlier. Court House argued that this should have counted strongly against a later non-party costs order. The Full Court disagreed.

It accepted the primary judge’s reasoning that RP Data could not be criticised for not seeking security at the start because the funder’s involvement was not then known, there was no basis to suspect inability to meet an adverse costs order, one applicant was an individual against whom security was unlikely, and the corporate applicant’s claims overlapped with his. After the funder’s involvement became known, RP Data sought production of the funding agreement, but no agreement was provided.

RP Data had incorrectly assumed the agreement included an indemnity for adverse costs. The primary judge had considered those matters, including the likely consequences if security had been sought, and the Full Court found no error in that evaluative exercise.

If your business is defending a funded claim, the case is also useful. It suggests that you should think early about whether funding is involved, whether the funding agreement should be sought, whether security for costs is commercially worthwhile and whether a later non-party costs application may be available if the claim fails.

The judgment also shows that not seeking security at the earliest possible moment will not necessarily shut the door on a later costs application against the funder, particularly where the funding position was unclear or not disclosed.

For funded claimants, the lesson is not that funding should be avoided. It is that the agreement should be reviewed carefully and understood in practical terms. Who pays legal fees and disbursements? Is there any adverse-costs cover? Who must be consulted on strategy? Can the claim be settled without the funder’s consent? What return does the funder receive if the case succeeds? Those questions can affect both the conduct of the case and the court’s later view of the funder’s connection to it.

Some parts of the published judgment are truncated. The core holdings on non-party costs, sufficient connection, fairness, security for costs and the rejection of an impropriety threshold are clear. But a full legal review should still confirm the complete treatment of all appeal arguments before relying on the case in a contested matter.