Nugee J has handed down an important judgment in the ongoing Ingenious Litigation, giving guidance on the court’s approach to issues of costs-sharing and security for costs in large multi-party claims.
The Ingenious Litigation arises out of a number of film production partnerships, set up by the Ingenious group in the mid-2000s. Individual investors made capital contributions to the partnerships. They then produced a number of leading films including Avatar and Life of Pi. The investors anticipated being able to secure certain tax benefits from their investments.
Some years later HMRC challenged the tax treatment of the partnerships. A number of investors have brought claims against Ingenious and various financial advisers, alleging (amongst other things) that they entered into their investments as a result of misrepresentations. Most of the Claimants’ costs are funded by third party litigation funds, including an entity forming part of the Therium group.
The Claimants sought an order that their liability for adverse costs should be several, rather than joint, and allocated pro-rata to the size of their original investments. Ingenious and certain of the financial advisers sought, in turn, an order that Therium provide security for the Claimants’ costs.
Following a three day hearing in November 2019 Nugee J has held that it is appropriate for the Claimants to have the benefit of several liability, pro-rata to their contributions. He noted that the amount of each claim was relatively small as a proportion of the whole, and the size of the claims varied significantly, so that it would not be appropriate for any one Claimant (or subset of Claimants) to be liable for all the Defendants’ adverse costs.
However, Nugee J then went on to hold that Therium should provide security for costs in relation to the Claimants it was funding. In doing so the Judge:
The judgment is here.
Simon Birt QC, Craig Morrison, Geoffrey Kuehne and Sophie Shaw represented the Defendants from the Ingenious group, instructed by Reynolds Porter Chamberlain LLP. Tim Lord QC and Andrew McIntyre are also instructed in the underlying proceedings.