High Court Orders Identity Of Funders To Be Disclosed To Facilitate An Application For Security For Costs

The Court has the power to make costs orders against non- parties under s 51 Senior Courts Act 1981 ("SCA") as long as it is just to do so. As funding litigation becomes ever more complex the body of case law is developing rapidly in this area. Only last year the Court of Appeal handed down two decisions permitting the exercise of that discretion in relation to a sole director and sole shareholder of the defendant1 and also public liability insurers 2, holding that they should being liable for costs even as non-parties to the respective actions.

Applications for security for costs can be made against non-parties under the ancillary provisions to s.51 SCA in CPR 25.14. Now the position has been considered where no actual costs order has been made previously in the action but where a party seeks security for costs. In the matter of Hellas Telecommunications (Luxembourg) 2017 3 the High Court has used its inherent or implied powers to require the disclosure of the identity of funders to litigation thereby enabling an application for security for costs under CPR 25.14 to be made and that adequate protection of the funders could be given by way of a confidentiality club.

The claimant was the liquidator of a company. The defendant sought an order for disclosure of the identities of any non-party funders of the litigation in order for it to make an application for security for costs. CPR 25.14 (2)(b)provides that a security for costs order can be sought against a person who has contributed or agreed to contribute to the claimant's costs in return for a share of money or property which may be recovered in the proceedings. The claimant argued that liquidators of a company do not fall within this class of persons. It further argued that the CPR does not contain either an express or implied power to disclose the identity of a non-party funder and details of the associated financial arrangement. The evidence was that some of the third party funders could be company creditors and therefore there was concern of material prejudice to the liquidators.

Snowden J held that there was an inherent or implied power in CPR 25.14 to enable the court to ensure an effective application could be made where litigation was funded by a non-party 4. This...