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Chung v Funafloat Ltd & Ors [2013] All ER (D) 46 (Feb) - 31/01/13


A Judge exceeded the ambit of his discretion in the way he dealt with costs where the unsuccessful claimant's after the event insurance was insufficient to pay the defendants' costs.

The claimant was unsuccessful, but his after the event insurance was limited to £250,000. Each of the successful defendant's (who would ordinarily be entitled to their costs from the claimant) had incurred costs of over £300,000.

Placing reliance on a letter from the claimant indicating that he had only brought D2 into the action as a result of D1's Part 20 claim, the Judge ordered D1 to pay D2's costs subject to an entitlement to indemnity from the claimant.

On appeal it was held that the Judge had placed too much emphasis on the fact that the claimants insurance was limited, and not enough on who had caused the costs to be incurred. The focus should not have been on who brought D2 into the action, but rather on who had caused the costs to be incurred. The claimant had made a substantial positive case against D2 and had scrutinised D2's conduct both during the course of litigation and at trial. That caused a significant proportion of the costs to be incurred. The correct order was to make costs follow the event directly.

The timescale for the relevant period under Part 36 was abridged in order to avoid prejudice whilst maintaining a trial date.


  • Court of Appeal (Civil Division)
  • Friday, 15 March 2013