The High Court has ordered the remaining claimant group in the RBS Rights Issue Litigation to reveal the identity of those funding the litigation, so that the defendants can consider whether to apply for security for costs against them: [2017] EWHC 463 (Ch).

The court considered that it clearly had the power to make such orders (a power that was applied recently in Wall v RBS [2016] EWHC 2460 (2460) outlined here) and that it was appropriate to exercise the discretion in the circumstances of this case. 

Significantly, the judge dismissed a contention that the funders' liability to pay adverse costs was secondary, in the sense that they would not be ordered to pay costs unless the claimants did not pay, or were unlikely to pay. He commented that in the context of group litigation there is good reason to assume enforcement may be directed first against the funders – particularly where, as is usual in group litigation, each claimant is only liable for its individual proportion of the costs. As the judge put it, the funders "stand in the front-line".

The court declined, however, to order that the claimants disclose details of their after-the-event (ATE) insurance or disclaim any intention to rely on it in resisting an application for security for costs. Although the judge considered that the court had the power to order disclosure of ATE cover as part of its general case management powers, he concluded that here the primary objective of the application related to the defendants' ability to enforce any costs order, rather than case management.


These applications arose in the context of group litigation brought against RBS relating to a rights issue of shares in the bank announced in April 2008. The first trial on the basic questions of liability is due to commence on 8 May 2017. The scope of that trial has been considerably reduced in scope since the defendants reached full and final settlements in December 2016 with (effectively) all of the claimants in the proceedings other than a group represented by Signature Litigation (the "Claimants").

Further to a previous order made in the proceedings, if an order for costs is made against the claimants, each claimant will be severally (but not jointly) liable for a share of the defendants' costs pro rata to the amounts of their subscriptions in the rights issue. The settling claimants remain liable for their share of any such costs up to the date of the settlement, but the Claimants are solely liable for any adverse costs since that date – a liability which is potentially very substantial given the high costs in this complex litigation.

    The defendants applied on 7 February 2017 for an order requiring the Claimants to provide the following, to enable the defendants to consider whether to issue an application for security for costs either against the Claimants or their funders:

    1. The names and addresses of any third parties who fall within CPR 25.14(2)(b), ie parties against whom the court may order security for costs on the basis that they have contributed or agreed to contribute to the Claimants' costs in return for a share of the proceeds of the litigation.
    2. Either (i) a copy of any ATE policy held by the Claimants (redacted to conceal any privileged material) or alternatively (ii) confirmation that neither the Claimants nor their funders would seek to rely on such a policy in opposing any application for security for costs.

    With respect to the ATE policy, the defendants accepted that if the Claimants had adequate ATE cover for the defendants' costs, the defendants might not need to apply for security either from the Claimants or their third party funders – and that an adequate ATE policy is in any event likely to be treated as a complete answer to a security for costs application against a corporate claimant. The defendants said they required the information sought to be able to make an informed decision as to whether to apply for security, and prevent a potentially pointless application if it turned out the Claimants did have adequate ATE cover. They submitted that the court had power to order disclosure under its general case management powers at CPR 3.1.

    The Claimants objected to the applications. They contended that court should dismiss the applications unless and until the defendants had the settled intention to apply for security for costs unless provided with a suitable ATE policy, and had some realistic prospect of success in such an application. They said it was most unlikely that the defendants would proceed with an application for security, and that any such application would be hopeless at such a late stage of the action. In relation to the ATE policy, the Claimants also submitted that the court had no jurisdiction to compel disclosure before trial, including because the policy was not relevant to the adjudication of any substantive issue in the action and because it was privileged.


    The High Court (Mr Justice Hildyard) granted an order for limited disclosure in relation to the funders, but dismissed the application in relation to the ATE policy.

    Third party funders

    Hildyard J commented that it seemed clear there was a power necessarily inherent in CPR 25.14 to order disclosure about third party funders (as found in Wall v RBS, referred to above); indeed, he did not understand the Claimants substantially to dispute the existence of the power. The question was whether the court should exercise its discretion to make such an order before trial in this case.

    The judge said he was not persuaded that the court should require to be satisfied, as a condition of making such an order, that the applicants had unequivocally decided to bring an application for security for costs. However, he agreed that the applicant must, at least, demonstrate that such an application was a real possibility on realistic grounds and that it would have a realistic prospect of success.

    On the facts, the judge concluded that an application for security against the funders would not be so unrealistic that the defendants should be refused disclosure of their details. 

    The judge dismissed the Claimants' contention, in support of its argument that it would not be appropriate to make the order, that there was no basis for assuming the funders would be ordered to pay costs after trial unless costs were not paid (or not likely to be paid) by any particular claimant. He said there is nothing to suggest that a third party funder's liability to pay costs is secondary or dependent on the position of other parties; the court's discretion to make a third party costs order is not circumscribed in such a way. He added:

    "Indeed, in the context of a group litigation order, where the proceedings are often likely only to be made possible by funders, and where commercial funders stand to gain very considerable financial returns if the case succeeds, often far greater than any individual claimant, there is good reason to assume that enforcement may be directed first against the funders; and a fortiori where (as here, and as is usual) the GLO has resulted in several liability for costs, making enforcement against individual claimants awkward, at best. To that extent, they stand in the front-line."

    ATE policy

    Hildyard J refused this aspect of the application. He reviewed the conflicting authorities on the question of whether or not the court's case management powers under CPR 3.1 extend to ordering disclosure of an ATE policy. He referred to, among other cases, the decision of Thirlwall J (as she then was) in XYZ v Various [2014] 2 Costs LO 197 where, in the context of group litigation, she required the defendant to provide evidence as to whether it had insurance adequate to fund its participation to the completion of trial / any appeal – but not whether it had cover to meet any damages or costs award. The latter evidence would go to the ability of the claimants to enforce judgment and that, she said, was not a matter that affected case management.

    Hildyard J concluded that the court has power to order disclosure of an ATE policy under CPR 3.1 "when its disclosure is necessary to enable the Court proportionately and efficiently to exercise its case management function". In doing so, he disagreed with the decision of the Senior Master in Arroyo v BP Exploration Co (Colombia) Ltd [2010] EWHC 1643 (QB), which concluded that there was no such power.

    He further rejected the argument that an ATE policy is privileged, save to the extent that parts of it (such as, possibly, the amount of the premium) might attract legal advice privilege on the basis that they might give a clue to what legal advice had been given. Again, this was contrary to Arroyo in which the Senior Master held that an ATE policy was subject to litigation privilege on the ground that the policy and communications relating to it must be for the dominant purpose of conducting litigation.

    The question, the judge said, was whether on true analysis the defendants were seeking to invoke a case management power in aid of the proportionate, expeditious and efficient management of the proceedings, or whether they were in reality seeking disclosure with a view to enforcement or some other objective not amounting to case management in the proper sense.

    The judge went on to say that, although ATE policies do not usually fall within the ambit of disclosure as they are not relevant to the substantive issues, the Claimants' previous deployment of the policy, including to encourage the court to make a GLO, made it difficult for them to argue that the policies were entirely irrelevant in the context of case management. He said:

    "The Claimants are not like ordinary litigants whose funding arrangements are a private matter: they have put forward those arrangements to obtain procedural advantages."

    However, the judge concluded that it would not be appropriate to make the order in this case, commenting that the case management rationale was ancillary to defendants' primary objective of enforcement.

    Although he did not grant this aspect of the defendants' application, Hildyard J said he remained concerned about the position as to the Claimants' ATE cover, in light of inconsistent statements made in that respect, and about whether there was sufficient funding in place, given the serious consequences there could be for the Claimants if there were any shortfall. He said he thought it "appropriate and necessary that there should be more transparency as to the funding position and ATE cover", and invited submissions after judgment was handed down as to what else might be done or directed further to address those concerns.