Asertis Ltd v Bloch [2024] EWHC 2393 (Ch)

The High Court ordered the litigation funder Asertis Ltd to pay security for costs into court in proceedings where Asertis was backing the claimant. The application for security was brought under CPR 25.14, which permits the court to order security against a non-party who has contributed to the costs of litigation in return for a share of any recovery. The court examined Asertis’s financial position in detail, reviewing its balance sheet, revenue history, and capital resources. It found that Asertis did not have sufficient financial resources to provide confidence that it could meet an adverse costs order if the claim failed. The court also scrutinised the after-the-event insurance policy that Asertis had obtained, which was intended to provide an alternative source of costs protection for the defendant. However, the court found that the ATE policy contained material limitations that reduced its effectiveness as a guarantee of costs recovery. These limitations included coverage caps, exclusions, and conditions that could potentially allow the insurer to decline to pay in certain circumstances.

The court ordered Asertis to pay security equivalent to 60% of costs already incurred plus 70% of estimated future costs, a substantial sum reflecting the court’s assessment of the risk of non-recovery. The decision was significant for several reasons. It demonstrated that courts are prepared to probe the financial capacity of litigation funders and not simply accept their assurances of ability to pay. It also exposed the limitations of ATE insurance as a complete substitute for security, a point of considerable importance given that many funded claims rely on ATE policies to satisfy defendants’ concerns about costs recovery. The case sent a clear signal to the litigation funding market that funders must maintain adequate financial reserves and that thinly capitalised funders may face security for costs orders that could threaten the viability of their funded claims.