Can a third party funder remain anonymous?

28 November 2016

The claims

The Claimant, Mr Wall (W), brought claims against the Defendant, Royal Bank of Scotland Group (RBS), in relation to RBS’s dealings with a now insolvent group of companies owned and controlled by W. W brought the claims in his capacity as assignee of the group’s rights and/or as beneficiary of a trust as declared by the group’s liquidators.

The claims are said to be worth £700 million and involve allegations of mis-selling by RBS of an interest rate swap agreement that led to the artificial distressing and eventual collapse of the group.  The claims are currently set for trial in late 2017.

The application to reveal identity of the funder

RBS was concerned that should RBS succeed in defending the claim, W (as Claimant) would not be able to meet the normal costs order that the unsuccessful party pays the costs of the successful party.   The security for costs rules did not permit an application against W personally, so the only option was to look to his third party funders.

This hearing dealt with an application made by RBS for an order that W:

  1. provide the name and address of any third party or third parties who are funding the litigation on his side, and
  2. confirm whether any such third party funder falls within CPR 25.14(2)(b), i.e. whether such funder "has contributed or agreed to contribute to [W's] costs in return for a share of any money or property which [W] may recover in the proceedings".

CPR 25.14 empowers the court to order that funders who meet the conditions in that rule should provide security for costs to defendants. In short, RBS believed or suspected that this litigation was being funded by third party funder(s) taking a stake in the claim or its possible fruits in return for the funding. The purpose of this application was to discover the identity of any third party funder(s) in order for RBS to be able to make an application under CPR 25.14.

Issues for the court

The main issue for the court to decide was whether it had the power to make the order taking into account W’s argument that doing so would affect his rights under Article 8 of the European Convention on Human Rights (ECHR).

The decision

The Judge concluded that RBS had a proper basis to pursue an application under CPR 25.14.  RBS had a real prospect of success in an application for security for costs, and to deprive RBS of the opportunity to pursue it would be a “material prejudice”.  In order to make the application RBS required the identity of the third party funder.

The Judge continued that where the defendant does not know the identity of the funder, but the claimant does, then ordering the claimant to reveal it to the defendant is doing no more than is necessary to enable the defendant to exercise its right to make the application under CPR 25.14.

The judge went on to dismiss the suggestion that such an order was an invasion of W’s privacy under Article 8 of the ECHR. The court did not accept that Article 8 was engaged, as W had no reasonable or legitimate expectation of privacy in the identity of his funder.


The judge himself described this hearing as “something of a test case for whether third party funders can remain anonymous”. The judgment is certainly helpful to defendants in confirming that a claimant’s third party funders cannot avoid a security for costs application under CPR 25.14 simply by remaining anonymous.

However, perhaps more interesting than this judgment will be the outcome of RBS’ intended security for costs application. This is because that application will, amongst other things, raise the question of whether ATE insurance can defeat an application for security for costs.

Although this decision confirms that the identity of a funder can be ordered, it is worth bearing in mind that Reeves v Sprechter [2007] confirmed that the court has no power to order disclosure of the funding agreement itself.

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