Court “has power” to order that claimant identify third-party funders backing £700m claim

RBS: application granted

RBS: application granted

The High Court has ordered a claimant to identify any ‘non-altruistic’ third-party funders backing his £700m claim against RBS, so that the bank can then apply to make them provide security for costs.

Mr Andrew Baker QC, sitting as a High Court judge, ruled that he had the “ancillary” power to make such an order.

With no evidence to the contrary, he drew the inference that Stuart Wall “must be litigating with the benefit of third-party funding”, given the scale of the case and his limited resources.

He was ruling in Wall v The Royal Bank of Scotland Plc [2016] EWHC 2460 (Comm), a case concerning the alleged mis-selling of an interest rate swap. RBS wanted to know the identity of any backers supporting the case in return for a share of the outcome, and, if they existed, then make a further application that they provide security for costs under CPR 25.14(2)(b).

Mr Baker QC concluded that he had the ancillary power to make the initial order as RBS could not seek security without knowing the identity of the funder(s) against whom any application should be made.

He continued: “Where the defendant does not know that identity, but the claimant does, ordering the claimant to reveal it to the defendant is doing no more than making an order that is necessary to make effective the primary power.”

The judge went on to dismiss that suggestion that such an order was an invasion of Mr Wall’s privacy under article 8 of the European Convention on Human Rights: “Article 8 is neither reason not to conclude that the ancillary power I have discussed above does indeed exist, nor reason not to exercise it if it would otherwise be proper to exercise it.”

He continued: “With the benefit of external funding, if RBS is correct that that is how matters presently appear, Mr Wall has embarked upon large, very high-value, public litigation, under a system of law that provides for the identity of third-party funders to become public, within that litigation, by virtue of section 51(1) of the 1981 [Supreme Court] Act and (if I am otherwise right about it) CPR 25.14.

“That to my mind means that the identity of Mr Wall’s funder(s) does not seem at all like an aspect of his private life as a person and UK citizen. Indeed, the suggestion that it does is very odd in circumstances where it is accepted that, were RBS in possession of a costs order today, the identity of Mr Wall’s funder(s) would be apt to come out for the purposes of section 51(1).”

Mr Baker QC said that so long as an application by RBS under CPR 25.14 – if it knew against whom to apply – would be pursued on proper grounds and have a serious prospect of success, “then it is a material prejudice to RBS to deprive it of the opportunity to make and pursue that application by allowing it to be kept out of knowing the identity of the proper respondent to it…

“This litigation is large and complex. It raises for investigation events spanning a period of at least six years. There will be expert evidence from up to five different expert disciplines. RBS estimates that to the conclusion of the trial its costs will exceed £9m (before VAT). On the evidence put before the court at this stage, Mr Wall appears to be an individual without the means to fund litigation of this magnitude, complexity or expense.

“With no evidence to the contrary to weigh in the balance, which is the position today, the inference I draw is that Mr Wall must be litigating with the benefit of third-party funding… There is no evidence from which to suppose that anyone would be willing to fund the litigation altruistically. The probability must be – absent, again, contrary evidence to put in the balance – that whoever is funding the litigation is doing so in return for a share in any proceeds.

“There is therefore good reason to suppose that the case does fall within CPR 25.14(2)(b) and an application thereunder by RBS would be made on proper grounds, subject to identifying the correct respondent(s).”

The claimant contended that his possible liability to RBS for costs was insured by after-the-event insurance cover, meaning there would be no question of any order for security under CPR 25.14

Making the order to identify any funders backing the case in return for a share of the damages, Mr Baker QC said there was “a serious argument” as to whether this was correct, meaning there was in turn “a serious basis for thinking that the court may order security for costs”.

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