Judgment handed down in first post-PACCAR litigation funding dispute

01 Nov 2023

Cornerstone Climate, Commercial and Regulatory

The High Court has handed down judgment in Therium Litigation Funding I AC v Bugsby Property LLC [2023] EWHC 2627 (Comm), a freezing injunction application featuring arguments as to whether a litigation funding agreement was a damages-based agreement (DBA). It is the first occasion a court has considered such questions following the ground-breaking Supreme Court decision in PACCAR. Alistair Cantor examines the ruling and discusses the implications arising from it.

The applicant, Therium Litigation Funding I AC (“Therium”) had entered into a litigation funding agreement (“LFA”) with the respondent, Bugsby Property LLC, in relation to a claim against L&G. Under the LFA, Therium were to be paid out in the event of any monetary award: first, a sum equivalent to multiple of funds invested; and secondly an additional sum being 5% of any recovery above £36,569,295. The LFA also provided that any judgment or settlement funds obtained were to be held on trust until such time as they had been distributed in accordance with the ‘waterfall’ in the LFA – or, should a dispute over the correct distribution of the proceeds arise, until that dispute had been compromised or determined.

Bugsby succeeded in its claim at first instance, but achieved what it regarded as an unsatisfactory award, and appealed. Prior to the hearing of the appeal, it reached a financial settlement with L&G. By now, it had changed solicitors several times. Substantial settlement monies in the sum of £27,636,512 were transferred to its current solicitors. When those solicitors notified Therium that it intended to forward those settlement monies to Bugsby, Therium applied for an asset preservation/freezing injunction under section 44 of the Arbitration Act 1996.

Bugsby resisted the application on various grounds. The main relevant ground for present purposes related to the clause in the LFA which hypothetically entitled Therium to a percentage of sums awarded. Therium argued that only that particular clause constituted a DBA, and could be understood as an “agreement within an agreement”. It accepted that clause was unenforceable, but contended that the remainder of the LFA was not, relying on the Court of Appeal authority of Zuberi v Lexlaw Ltd [2021] EWCA Civ 16. The sums it claimed and wished to safeguard by way of a freezing injunction were due under other clauses of the LFA, specifically those entitling it to a multiple of sums invested. Bugsby meanwhile argued that, properly construed, the clauses of the LFA relied on by Therium were also DBAs, inter alia because they could only be paid out from actual recoveries.

The court found there was a serious question to be tried in respect of the above and granted the freezing injunction. It also found there was a serious question to be tried in relation to Therium’s alternative argument that any clauses that offended PACCAR the statutory requirements for DBAs could be severed so as to leave the remainder of the LFA enforceable. The judgment can be found here.


This decision will be of interest to anyone involved in funded litigation given the shockwaves PACCAR sent through the funding industry. Bugsby’s arguments that the clauses in Therium’s LFA entitling it to a multiple of sums invested fall squarely in the grey area left open by the PACCAR decision (see my previous article here). Many funders will have been hoping such multiplier clauses remain lawful following PACCAR, and presumably a number of funding agreements will have been restructured along those lines.

This decision will be of some comfort to them – but only limited comfort.  Since the application was for an injunction, the High Court has ruled only that there is a serious question to be tried as to whether such clauses are lawful or not, i.e. they cannot be said certainly to be unlawful, but they might be held as such following a full trial. Unfortunately, there won’t actually be a trial to provide that certainty in this case, because the underlying dispute looks set to head for arbitration. We therefore won’t be getting a binding public judgment settling the issue this time around. All those keenly hoping for a little certainty from the courts will have to wait for another dispute featuring these issues to be litigated.

About the Author

Alistair Cantor specialises in commercial and regulatory, property and housing law. He undertakes a broad range of drafting, advisory and advocacy work for private litigants and public authorities. He combines legal acumen with sound commercial expertise when advising his clients. Alistair has a unique specialism in enforcement law, having regularly acted in enforcement proceedings concerning high value and foreign judgments. He is a member of the cross-disciplinary practice group Cornerstone Climate and the Commercial and Regulatory practice group.