Wall v The Royal Bank of Scotland Plc [2016] EWHC 2460
This case addresses a key question for both claimant and funder – to what extent can the funding arrangements remain confidential? In significant commercial proceedings, RBS applied in December 2015 for an order that the Claimant provide the name and address of any third party that was funding the litigation and confirm whether any such funder fell within the provisions of the CPR for the purposes of security for costs – ie whether such party “has contributed or agreed to contribute to [Mr Wall's] costs in return for a share of any money or property which [Mr Wall] may recover in the proceedings". It was evident that RBS considered that the case was a funded case and was wanting to tee up an application for security for costs. Possibly, it was also considering an application concerning champerty. Earlier on in the process when RBS threatened such an application, Mr Wall tried to defuse the attack by reference to his ATE policy which was said to immunise Mr Wall from the risk of a security for costs application. It is certainly not always the case that the ATE policy has that effect, and it was not in this case either – RBS continued its efforts to reveal any funder. The issue was still live in September 2016. The Court stated that such an application should be heard “the sooner the better”in these types of cases, in all likelihood at the first CMC if not sooner. RBS’s reasons for the order were centred around the need to know who it could seek security for costs against. Mr Wall’s somewhat optimistic argument against this was that there was no power to order it and to require him to provide the information sought at this stage would be an impermissible infringement of his right to respect for his private life under Article 8 of the ECHR. As to this, the Court held that “I can and do draw the inference that it will be, in fact, no skin off Mr Wall's nose at all if I make the order sought”. In consequence, the Court gave RBS the relief it sought primarily because it was clear from previous case law that “where the power exists to grant the remedy, there must also be inherent in that power the power to make ancillary orders to make that remedy effective” and so the Court could order disclosure of a funder if that made it possible for a defendant to rely on a power given in the rules in respect of security for costs. Of particular importance to funders when it came to the question of security for costs, the Court said that “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.”
A key issue from a funder’s perspective that comes out of this case was whether the application should ever have been challenged. Aside from the unnecessary costs that were incurred in defending what appeared to be a hopeless position, the impression given appeared unnecessarily defensive. It seemed commercially unrealistic that any funder could remain anonymous for long, and the approach seemed destined to annoy the Court. As it was on 7 July 2017 Mr Justice Knowles, sitting in the Commercial Court, refused RBS’s application for security for costs in the sum of £17.68 million (VAT exclusive) against Litfun Limited, Mr Wall’s third party funder. The claim was settled on confidential terms shortly afterwards, less than two months before a 12-week trial was due to be heard in the High Court.