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Princo v Phillips, Chancery Division, 16 September 2003

25 September 2003
The issues

Costs – non-party – funding of action.

The facts

This was a claim brought by Phillips for alleged patent infringement against Aventi. The subject matter of the patent related to unlicensed discs made by Princo. Phillips was aware that Aventi obtained its supplies from Princo, but decided not to join Princo to the litigation. Princo paid the costs of the Defence of Aventi. That funding was relied on to defend the action. Princo eventually decided, becoming concerned as to the extent of the liability to refuse to continue the funding. Subsequently Aventi went into liquidation. The action collapsed. Princo were joined for the purpose of seeking costs.

The decision

1. It was clear from the Authorities (Murphy -v- Young & Co 1997 and Hamilton -v- Al-Fayed 2002) that a clear distinction had to be drawn between disinterested funders and funders whose interests would be advanced by a successful outcome to the litigation.

2. It was a precondition for the making of any order against a funder that without the funding, the litigation would not take place.

3. If the funder was a “disinterested funder” an order would not be made.

4. It was clear in this case that Princo had an interest in the outcome of the English proceedings. Princo was not disinterested. Moreover, the funding was necessary for the action to be defended and the action would not have been defended but for the funding. Princo should pay the costs of the action.

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