Raiffeisen Zentralbank Osterreich Ag v Crossseas Shipping Ltd. & Ors

Section 51 of the Supreme Court Act 1981 gives the High Court power to order a non-party to pay litigation costs. That power carries an ancillary power to require a party or its former solicitors to disclose the identity of persons who financed the litigation. Disclosure identifies potential cost-paying parties; it does not determine whether a costs order will ultimately be made against them. The court retains a separate discretion at that later stage.

The claimant applied under section 51 of the Supreme Court Act 1981 for orders requiring the fourth defendant, Ajay Shah, and his former solicitors to disclose who had maintained his defence and appeal in earlier proceedings. Shah had not paid the judgment debt or assessed costs, and the evidence indicated that his disclosed assets could not have funded his litigation. Shah and his former solicitors did not oppose the application, although the solicitors sought a limited form of order reflecting their lack of information.

The issue was whether the court had power to compel disclosure of the identity of litigation funders and, if so, whether the discretion should be exercised.

1. The court had jurisdiction to make the order. Section 51 of the Supreme Court Act 1981 gives the High Court discretion over the payment of costs of and incidental to proceedings. Section 51(3) confers full power to determine by whom and to what extent costs are to be paid.
2. That statutory power would be ineffective unless the court also possessed an ancillary power to discover the identity of persons against whom a costs order might potentially be made. The reasoning of Potter LJ in Abraham v Thompson [1997] 4 AER 326 [CA] was directly applicable: a power to grant a remedy includes an inherent power to make ancillary orders necessary to make the remedy effective.
3. The disclosure order did not predetermine the making of any future costs order. Once potential funders were identified, whether to order them to pay costs would remain a matter for the court’s discretion at a second stage.
4. On the evidence, the only reasonable inference was that third parties, possibly family trusts, had maintained Shah’s defence. His disclosed assets did not provide a realistic source of funding. There were no countervailing circumstances against disclosure.
5. The amended order was therefore made. The claimant was awarded the costs of the application, summarily assessed at £17,000.