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Claimant ordered to reveal identity of third party funder in Wall v RBS

The High Court recently ordered a claimant to reveal the identity of his third party funder(s) (TPF) in order to allow the defendant to apply for security for costs.  

The Judge stated the hearing "was being used as something of a test case for whether third party funders can remain anonymous [to defendants and the court]". The application which follows will bring into question whether the claimant's ‘after the event’  (ATE) insurance policy will defeat an order for security for costs.

The decision may be referred to in future cases as authority for claimants being ordered to reveal the identity of any TPF supporting the claim.

Can the court make the order sought?

Mr Wall brought claims, valued at circa £700 million, against RBS.  

Given the level of costs involved, RBS suspected Mr Wall would not be able to fund the claims himself.  He provided no evidence to the contrary and RBS concluded Mr Wall must have engaged a TPF.      

Under CPR 25.14, RBS, as defendant, may apply for an order against Mr Wall's TPF for security for costs in the event Mr Wall loses and is later ordered to pay RBS's costs of defending the claims. However, RBS would require the identity of the TPF in order to make such an application.

In its application last December, RBS sought the name and address of Mr Wall's TPF and confirmation as to whether it would receive a share of any recovery for its contribution to his legal costs (CPR 25.14(2)(b)).  

The decision to reveal TPF identity 

The Judge thought the matter was straightforward, as contended by RBS.  He was not persuaded by Mr Wall's arguments.

The Judge held (following Reeves v Sprecher et al) that the court had the power to grant the application because:  

  • there was good reason to believe funding falling within CPR 25.14(2)(b) was in place and so the court had power to grant a remedy by way of security for costs against the TPF; 
  • the court needed the identity of the TPF to exercise its power; and
  • ordering a claimant to reveal the identity of its funder is ancillary to the court's primary power (to grant the order for security for costs).

The Judge did not consider that the application involved any invasion or interference with Mr Wall's private life (Article 8.1 ECHR) – he commented, "were RBS in possession of a costs order today, the identity of Mr Wall's funder(s) would [be revealed in any event]".      

What are the implications of this decision? 

Ordinarily an ATE policy may not be considered sufficient security for costs.  This is because such a policy can be cancelled or voided.  

However, the Judge referred to two recent cases in which the ATE policy did defeat applications for security for costs – in Geophysical Service Centre v Dowell Schlumberger (ME) the ATE policy terms satisfied the court that the claimant could pay the costs.  

In NGM Sustainable Developments Ltd v Wallis the claimant's undertaking to notify the defendant of cancellation of the ATE policy was sufficient security. The question of being unable to pay costs didn't arise.  RBS argued that the case may be different with a TPF seeking to profit from a claim.  The Judge agreed that this was a serious and important argument which RBS should be allowed the opportunity to pursue.  

This decision illustrates that a defendant should not be denied the opportunity to pursue a security for costs application.  The court will not allow a claimant to defeat such an application by seeking to keep the identity of their funders anonymous.

Contributor: Catherine Zakarias-Welch

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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