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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Wall v The Royal Bank of Scotland Plc [2016] EWHC 2460 (Comm) (07 October 2016) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2016/2460.html Cite as: [2016] 5 Costs LR 943, [2016] WLR(D) 581, [2017] 4 WLR 2, [2016] EWHC 2460 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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STUART BARRIE WALL |
Claimant |
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- and - |
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THE ROYAL BANK OF SCOTLAND PLC |
Defendant |
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Andrew Mitchell QC and Tamara Oppenheimer (instructed by Dentons UKMEA LLP) for the Defendant
Hearing dates: 16, 19 September 2016
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Crown Copyright ©
Mr Andrew Baker QC : Introduction
Procedural History
RBS's Position
i) The power under CPR 25.14 to order a third party funder standing behind a claimant to secure the defendant's costs must carry with it the power to order the claimant to identify the funder.
ii) There is: (a) good reason to suppose that a third party funder or third party funders taking a stake in the claim does or do stand behind Mr Wall in this case; (b) a serious basis for thinking that the court may in this case require that funder or those funders to provide RBS with security for costs pursuant to CPR 25.14; (c) prejudice to RBS, therefore, if Mr Wall is not required to identify his funder(s), since without that information RBS cannot sensibly make its (properly arguable) application under CPR 25.14; (d) no prejudice to Mr Wall if he is required to provide the information sought at this first stage.
iii) Article 8 of the European Convention on Human Rights ("the Convention") does not stand in the way.
Discussion
Power Ancillary to CPR 25.14
"[13] The defendants' counsel accepts quite rightly that there is no express power anywhere in the Civil Procedure Rules or elsewhere to empower the Court to make such orders, but counsel submitted that the power to make such orders is a power which is necessary for the Court to have in order for it to be able to consider an application for the exercise of its express jurisdiction under CPR part 25.14. For, if the defendants do not know the identity of the admitted third party and do not know his or its address, and do not know whether that third party has entered into an agreement to contribute to the claimant's costs in return for a share of the proceeds of the litigation, then clearly the defendants are in no position to make an application under CPR 25.14.
[14] Counsel for the defendants relied on a dictum of Morison J in Raiffeisen Zentralbank Osterreich Ag -v- Crossseas Shipping Limited and others [2003] EWHC 1381 (Comm). At paragraph 7 of his judgment Morison J said this, and I quote:
'Section 51 of the Supreme Court Act 1981 confers on the High Court a discretion in relation to the payment of costs of and incidental to all proceedings commenced there. Subsection (3) confers on the High Court "full power to determine by whom and to what extent the costs are to be paid". This subsection gives the court power to order that a person who is not a party to the proceedings to pay costs and in a number of reported and unreported decisions it has been held that the court necessarily has an ancillary power to order a party to proceedings, or solicitors who have been on the record for that party, to disclose, to the opposing party, the name or names of those who financed the litigation for the benefit of that party.'
[15] And then the learned judge cited several previous cases and went on to say this:
'None of these authorities is entirely satisfactory, for a variety of reasons, but the reasoning of Lord Justice Potter in the Abraham case is directly applicable namely, "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". Therefore, since section 51 empowers the court to make an order for costs against a person who is not a party to the action, the power would be ineffective unless there was an inherent power to discover who such persons might be. It does not, of course, follow that once the identities are revealed the Court will go on to make an order against anyone who has been identified. That is a matter for the discretion of the court at the second stage. I am satisfied that I have the power to make the order which is sought.'
[16] Counsel for the defendants submits with considerable force that, by a parity of reasoning, the Court must have an implied power to order the disclosure of the identity of the third party funder of the claimant's litigation to the defendants, to enable the defendants to apply, if they think fit, for an exercise of the Court's new power under CPR 25.14."
"[23] In my judgment, it must be right that the Court has, as a power necessarily inherent in CPR 25.14, the power to order disclosure to the defendant in proceedings the identity and address of any third party who has entered into an agreement to fund the prosecution of the action against the defendant within the terms of CPR 25.14. But I am far from satisfied, despite counsel for the defendants' valiant efforts to persuade me, that the Court has any inherent power at this stage, in other words before the launching of any application under CPR 25.14, to order the disclosure to the defendants of the actual agreement between the claimant and the third party funder.
[24] It seems to me that a sight of the agreement or other information relating to its contents is not necessary to enable the defendants to mount an application for security against the third party under CPR 25.14.
…
[27] This is not in my judgment a stage at which the Court can properly pre-determine the question of such disclosure in the absence of the third party itself from the proceedings.
[28] On the other hand, I think that in the absence of any offer of such information from the claimant, the defendants would be entitled to an order from this Court at this stage for disclosure of the identity and address of the third party funder, and the disclosure of the answer to the question whether that third party funder falls within sub paragraph (2) of CPR25.14."
i) "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", per Ackner LJ in Bekhor v Bilton at 942. (I observe in passing that Morison J. in Raiffeisen referred to this as Potter LJ's reasoning in Abraham, but strictly it was the reasoning of Ackner LJ, in turn quoted by Potter LJ in Abraham);
ii) an order requiring a claimant to litigation to give the defendant the identity of a third party known to the claimant but not to the defendant, where the power exists within the litigation to grant a remedy against that third party, is such an ancillary order. That is the essential point of decision in Raiffeisen, supported, as I read it, by Abraham, although in Abraham the application for provision of information failed on the facts.
i) It was essential to the decision that there was at that time no power to order security for costs against third party funders, because that being so:
a) there could only be a question of staying proceedings by reference to the involvement of third party funders if the proceedings were an abuse of process, but there was no serious basis for supposing on the facts that there was or might be an abuse of process; and
b) s.51(1) of the 1981 Act did not assist the applicant defendants, because that only gave the court power to order a third party funder to pay costs to the defendant where the defendant first had an extant right to costs.
ii) There is power, ancillary to s.51(1), to order a claimant to reveal the identity of his third party funder(s), if necessary to enable a defendant with an established right to costs to make an application under s.51(1) against the funder(s) thus identified. Given (i)(b) above (and since abuse of process was not raised by the facts), until the defendant had an established right to costs, there was not yet any power available to the court to grant any remedy against the third party funder(s). Therefore, it was premature to be considering or exercising any power ancillary to such a power.
i) Where there is good reason to believe that a claimant has funding falling within CPR 25.14(2)(b), the court thereby has power to grant a remedy by way of security for costs against the funder(s) in question.
ii) For an application to be made for the court to exercise that power, it is necessary to identify the funder(s) in question against whom any application will be made.
iii) Where the defendant does not know that identity, but the claimant does, ordering the claimant to reveal it to the defendant is doing no more than making an order that is necessary to make effective the primary power (to grant a security for costs remedy under CPR 25.14).
iv) The court therefore has the power to grant the present application.
Article 8
The Facts / Discretion
Conclusion
Result