High Court rejects funder’s bid for “mini-trial” of £14m claim

Rolls Building: Bids to curtail litigation fail

Litigation funder Vannin Capital has failed to obtain summary judgment of its £14m claim against RBS shareholders it backed who then successfully sued the bank.

Joanna Smith QC, sitting as a deputy High Court judge, said the fact that the application appeared to be “an attempt to persuade the court to conduct a mini-trial” was an “overarching reason” for its rejection.

“Far from requiring a decision on a short point of law or construction, it requires decisions (in Vannin’s favour) on the vast majority of the issues raised in the case,” she noted.

However, the judge also rejected an application by the shareholders for summary dismissal of the claim against them.

Ms Smith said the shareholders’ defence on ratification of the litigation funding agreements had a “realistic (as opposed to fanciful)” prospect of success.

“However, the question I must decide for the purposes of their application is whether Vannin in fact has no real prospect of arguing to the contrary.

“In light of the numerous issues (both factual and legal) that appear to me to require resolution in relation to this issue, as described in detail above, I am not so satisfied.”

The High Court heard in Vannin Capital v RBOS Shareholders Action Group and another [2018] EWHC 2821 (Ch) that RBS shareholders and former shareholders alleged “material misstatement” by the bank in the prospectus for a rights issue in April 2008.

The shareholder defendants were the RBS Shareholders Action Group (referred to as ‘AGC’), the first defendant, and the shareholders listed in a schedule to their particulars of claim (referred to as ‘the SG defendants’), the second defendant.

Ms Smith said the RBS rights issue litigation was settled in 2017 and the SG defendants received a “substantial sum” from RBS.

She said the proceedings concerned two litigation funding agreements entered into between Vannin and the AGC in relation to the RBS litigation. Vannin agreed to make available to two funds of up to £1.5m and £2m respectively, pro rata as part of a larger facility of £10m.

If the litigation was won or “a favourable settlement reached”, Vannin was entitled to a funding premium of £14m.

Vannin emailed AGC’s solicitors, Signature Litigation, in June 2017, seeking confirmation that on conclusion of the settlement they would be entitled to the funding premium, and followed it up with invoices in October. The SG defendants refused to pay.

Vannin sought summary judgment on their claim for £14m or summary dismissal of certain paragraphs in both defences.

The SG defendants sought summary dismissal of Vannin’s claim or of certain paragraphs in the amended particulars of claim.

Ms Smith said the AGC “appears presently to be acting as a litigant in person” and had filed no evidence in opposition to Vannin’s application.

Counsel for the SG defendants argued that Vannin’s application for summary judgment was nothing more than an attempted “smash and grab” and success for the litigation funder would represent a “scandalous windfall”.

Ms Smith said Vannin’s application against the 29 schedule 1 defendants, a subset of the SG defendants made up of institutional and large corporate shareholders, failed on the “first issue” of whether they had ratified the LFAs.

“In my judgment this is an issue that should be determined at trial when the court will have all the relevant facts available to it, together with full argument on the various complex legal issues”.

Ms Smith rejected an application by Vannin to amend its draft re-amended particulars of claim, and to strike out certain paragraphs in the SG defendants’ defence. However, she agreed that other paragraphs in the SG defendants’ and AGC’s defence should be struck out.

The judge also refused to allow the SG defendants to make certain amendments to their draft amended defence.

    Readers Comments

  • Paul R Hodgson says:

    I am one of the RBoS Shareholder Action Group. I did receive an interim payment in 2018, but have heard nothing since

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