Summer Case Law Watch
The summer has already produced several decisions with practical implications for litigation funding and insurance in the UK. From the CAT’s expectations around funding transparency to the treatment of funding costs following a statutory moratorium, here are three recent judgments worth noting, together with one developing costs dispute to watch.
Funding, insurance and the duty of candour in collective proceedings
In Sciallis v Fender Musical Instruments Europe Ltd and Another [2026] CAT 56, the issue went beyond the proposed class representative’s failure to secure funding. After negotiations with the proposed funder broke down in early 2023, neither the CAT nor the proposed defendants were informed. Instead, the funding position remained undisclosed for nearly three years while the claims remained on foot and the solicitors repeatedly declined to confirm the status of the arrangements.
The CAT found that conduct unreasonable to a high degree and ordered costs incurred from April 2023 to be assessed on the indemnity basis. More broadly, the judgment makes clear that funding and adverse-costs protection are central to the authorisation assessment, and that any material change relevant to authorisation or certification must be disclosed promptly and candidly.
Filing before funding is finalised
Four days later, the CAT applied those principles in JLP TCR Ltd v Scania and related proceedings [2026] CAT 59. The claims had been issued before funding and insurance were finalised because limitation was approaching, but the position was explained candidly to the Tribunal.
The CAT granted the amendment and service-out applications, while giving the applicants one month to finalise the outstanding funding conditions and warning that permission to serve out might be revoked if they were not satisfied. The contrast with Sciallis is useful. Filing before every arrangement is complete is not necessarily fatal, but transparency, evidence of genuine progress and prompt completion are essential.
Litigation funding and protected moratorium debts
In Re Cross Transport Ltd (In Administration) [2026] EWHC 1636 (Ch), the High Court considered the priority rules that apply where a company enters administration within 12 weeks of the end of a Part A1 moratorium. It held that the “super-priority” given to protected moratorium debts under paragraph 64A of Schedule B1 to the Insolvency Act 1986 does not amount to an absolute right to payment before the costs of pursuing litigation.
Administrators may enter into an arrangement under which a funder is repaid from litigation proceeds before those creditors, provided that doing so accords with the purpose of the administration and the administrators’ duties. The Court did not approve the commercial terms of any particular funding arrangement, and the protected moratorium creditors, although notified, did not participate in the application.
The decision does not establish a general priority for litigation funders in every administration, but it provides useful reassurance where litigation is a principal potential source of recovery.
One to watch: the reported costs and insurance position
The claims in Lawrence and others v Associated Newspapers Ltd [2026] EWHC 1637 (KB) were dismissed following a lengthy trial. At the subsequent costs hearing, Associated reportedly stated that its incurred costs were approximately £34.5 million, while the claimants stated that they had aggregate litigation insurance cover of £16.2 million.
Neither figure should be treated as the claimants’ final liability or the amount that will ultimately be met by their insurers. Costs remain subject to the Court’s determination and assessment, while the publicly available information does not establish how the policies are structured or allocated, or precisely how they would respond.
Until the consequential costs decision is published, the case is best viewed as a practical reminder to consider the amount and structure of cover, rather than as authority on the adequacy of litigation insurance.
Taken together, these developments reinforce three practical points:
Funding and insurance should be considered early.
Material changes must be communicated promptly and candidly.
The adequacy and terms of the protection matter just as much as its existence.