THIRD PARTY FUNDING DISCLOSURE
the Commercial Court, part of the High Court, ordered the claimant to disclose the name and address of any party that had, or had agreed to, contribute to his costs in return for a share of any proceeds of the litigation.
CPR 25.14(2)(b) enables a court to order security for costs against such a third party funder.
Where there is reasonable belief that there is a third party funder and a serious, as opposed to speculative or fanciful, possibility that security for costs may be granted, then the court may order disclosure of the funder’s details so as to facilitate the application.
Thus the issue was whether the court had the power to order the claimant to disclose the identity of any third party funder, it being clear from CPR 25.14 that the court had the power to order security against a third party funder.
Although CPR 25.14 does not specifically provide for such disclosure, the court held that the rule conferred an “inherent, ancillary power” for the court so to do.
The claimant had initiated litigation worth £700 million in a legal system allowing for public identification of third party funders and therefore had no reasonable or legitimate expectation of privacy concerning any funder and this his right to private life under Article 8 of the European Convention on Human Rights was not engaged.
CPR 25.14 contained an inherent ancillary power to order a claimant to identify any third party funder so as to enable a defendant to seek security – see Reeves v Sprecher et al.  EWHC 3226 (Ch) and Raiffeisen Zentralbank Osterreich Ag v Crossseas Shipping Limited and others  EWHC 1381 (Comm).
The relevant conditions were satisfied here.
CPR 25.14 reads:-
“Security for costs other than from the claimant
(1) The defendant may seek an order against someone other than the claimant, and the court may make an order for security for costs against that person if –
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b) one or more of the conditions in paragraph (2) applies.
(2) The conditions are that the person –
(a) has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against him; or
(b) has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property which the claimant may recover in the proceedings; and
is a person against whom a costs order may be made.
(Rule 46.2 makes provision for costs orders against non-parties)”
The fact that the claimant had, or may have, after After-the-Event insurance which would defeat a security for costs application against him was not relevant in relation to a potential application for security for costs against a third party funder.
Paragraphs 41 and 42 of the judgment reads as follows:-
“41. There is, as it seems to me, a serious argument as to whether Mr Wall’s ATE insurance position will matter, in an application against third party funders under CPR 25.14, even if it would ‘see off’ a security for costs application against a corporate claimant following cases such as Geophysical Service Centre v Dowell Schlumberger (ME) Inc  EWHC 147 (TCC) and NGM Sustainable Developments Ltd v Wallis  EWHC 461 (Ch). On an application against a claimant, the court must balance the defendant’s desire to be paid its costs if it succeeds in the litigation against the fact that an impecunious claimant may be deprived of access to the court if security is required. RBS will submit, says Mr Mitchell, that the position is different in an application against a third party funder buying a stake in the claim or its proceeds: the application is then not against an impecunious claimant seeking to vindicate rights, but against a professional entity seeking to profit from the litigation of others and likely to be well able to secure the defendant’s costs. That seems to me a serious and important argument and RBS should have a proper opportunity to pursue it. Mr Davies suggested that it would be curious for RBS to be in a better position as regards security for costs, arising at least indirectly out of the impecuniosity of Mr Wall as claimant, than it would be in if OPG had sued, as an insolvent corporate claimant. As it presently strikes me, though, Mr Mitchell is not contending for RBS to be better off in that way, at all events if the proper comparison is drawn. The proper comparison is with the position if OPG were litigating in its own name, insolvent but funded such that CPR 25.14(2)(b) applied. RBS would then be in the same position, on its case, as regards security for costs from the funder; and it would be in either the same position, or a better position, as regards security for costs from the claimant, since it could at least apply for security from OPG (whether or not that application would succeed as a matter of discretion), whereas it cannot from Mr Wall.
- There is also, as it seems to me, a serious argument – that RBS should have a full opportunity to pursue – as to whether Mr Wall’s ATE insurance arrangements are such as would defeat a security for costs application against a corporate claimant. Those arrangements have been evolving, in the face of RBS’s pursuit of this application and the related threat of an application for security for costs under CPR25.14 if this application first succeeds. But even as they now stand, with improvements (as Mr Wall contends) since this topic was initially raised at the first CMC before Phillips J., in my judgment RBS has serious grounds for contending that they should not be treated as a complete answer to any security for costs application.”