Automotive Latch Systems Ltd v Honeywell International Inc

The court’s ancillary jurisdiction under section 51 of the Supreme Court Act 1981 is not confined to ordering disclosure of litigation funders’ names. It extends to such further orders as are reasonably necessary to make the potential non-party costs jurisdiction effective. The appropriate order depends on the circumstances and may require a funded party to disclose the amount, terms, purpose and extent of funding. The jurisdiction is flexible and its exercise does not pre-empt the later decision whether to make a costs order against any funder. Duplication with later disclosure applications goes to discretion, not jurisdiction.

The claimant’s substantial claim had been dismissed, with costs ordered in favour of the defendant, some on an indemnity basis. The defendant contemplated an application under section 51 of the Supreme Court Act 1981 for costs against persons who had funded the claimant’s litigation.

The defendant sought an order requiring the claimant to provide a director’s witness statement identifying all funders, the amounts and terms of funding, their involvement in the proceedings, and their interests in the outcome. The central issue was whether the court’s ancillary jurisdiction extended beyond disclosure of funders’ names.

1. Jurisdiction. The court held that the power under section 51 of the Supreme Court Act 1981 would be ineffective unless the court could make ancillary orders sufficient to identify persons against whom a non-party costs order might properly be sought. That jurisdiction was not limited to disclosure of names. It could extend to further funding information where the circumstances required it.
2. Scope and limits. The power was ancillary to the statutory jurisdiction, rather than an exercise of the distinct inherent jurisdiction discussed in Bekhor v Bilton [1981] QB 923. The fact that earlier cases had ordered only disclosure of names did not establish a jurisdictional limit. The jurisdiction was flexible and capable of adaptation. An order against the funded party did not determine whether a later section 51 order should be made against any identified funder.
3. Discretion. On the evidence, the claimant’s accounts and other material gave rise to a prima facie case that shareholder loans had funded its legal costs. The information concerning funding was conflicting and disclosure of names alone would not adequately clarify the position. Requiring the claimant to provide a full and frank statement would reduce unnecessary joinder, disclosure applications and potentially irrecoverable costs. The court therefore ordered the claimant to provide the information sought.
4. The court refused to require the claimant’s solicitors to confirm the claimant’s statement. Their evidence was credible, and there was no conceivable purpose in making such an order against them.

No appeal was being pursued against the earlier judgment dismissing the claim. The present judgment concerned the defendant’s ancillary disclosure application in contemplation of possible section 51 costs proceedings.