RBS Rights Issue Litigation

The court may order disclosure of a commercial funder’s identity where the information is ancillary to the jurisdiction to order security for costs. The proposed application must be a real possibility on realistic grounds and have at least a realistic prospect of success. Commercial funders may stand in the front line of exposure because they can be treated as real parties, but the discretion must be exercised justly. Delay, practical choice, prejudice and the effect on an imminent trial are material considerations.

CPR 3.1 may, in an appropriate case, require disclosure of an ATE policy where genuinely necessary for proportionate and efficient case management. It should not be used merely to obtain enforcement information or to force an election concerning a speculative security application.

The judgment concerned an interlocutory application in group litigation arising from a rights issue claim. The first liability trial was imminent. Following settlements with most claimant groups, the remaining SG Group claimants alone faced future costs and had commercial third-party funding. The defendants sought disclosure of funders’ names and addresses and details of ATE insurance, to assess whether to seek security for costs.

The claimants argued that the application was premature, tactically motivated and too late to permit a proper choice between providing security and discontinuing. They also argued that the court lacked jurisdiction to compel ATE disclosure and that the policy was privileged. The issues were whether the court had power to order the information and whether it was just and proportionate to exercise that power before trial.

1. Funder information. The court had an inherent power ancillary to CPR 25.14 to order disclosure of the identity and address of a person who might fall within CPR 25.14(2)(b). The proposed security application had to be a real possibility on realistic grounds and have at least a realistic prospect of success.
2. Commercial funders. Under section 51 of the Senior Courts Act 1981, liability for costs by a non-party was not necessarily secondary to the claimant’s liability. A commercial funder who substantially funded or controlled litigation for its own benefit could be treated as a real party. In group litigation, ease of enforcement could justify treating it as in the front line, subject to the requirement that the discretion be exercised justly.
3. Timing. Security for costs was discretionary and could be sought at any stage, but delay could deprive the claimant of a real choice, cause hardship or suggest oppression. The court had to consider the funder’s position, the impact on the claimants, the changed risk profile and whether the application could be accommodated without disrupting the imminent trial. Disclosure of funder details was ordered in part.
4. ATE insurance. CPR 3.1(2)(m) could support disclosure of an ATE policy where genuinely necessary for proportionate and efficient case management. The power was not excluded by CPR 31 or CPR 44.15. An ATE policy was generally not relevant to substantive issues and was unlikely to be privileged as a whole, although parts revealing legal advice might require redaction.
5. The court declined to require disclosure of the ATE policy or an election not to rely on it. The request was principally directed to enforcement and an uncertain security application. Disclosure was likely to generate satellite disputes and risk the trial. The court invited confined submissions on further transparency concerning funding and ATE cover.