The opening passages of the judgment of H.H. Judge Keyser Q.C. in Dawnus Sierra Leone Limited -v- Timis Mining Corporation Limited  EWHC B19 (TCC) deal with the issue of disclosure of details of third party funding.
- A claimant defending a counterclaim can make an application for disclosure of the defendant’s third party funding in relation to a counterclaim.
- In the current case the defendant’s evidence was that the party providing the funding did not come within the criteria of 25.14 and the court could not make an order under that section.
- The court would not make an order for disclosure of the third party funder under its general powers, such an application at this stage amounted to a fishing expedition.
THE JUDGMENT ON THE CLAIMANT’S APPLICATION FOR DISCLOSURE OF THE THIRD PARTY FUNDER
Disclosure of identity of third party funder
By application notice dated 29 June 2016, the claimant seeks, among other things, an order that the defendant disclose the identity of the third party funder that is funding its litigation both here and in Sierra Leone and confirm in respect of each such funder whether he, she or it comes within the conditions set out in CPR r. 25.14(2)(b).
“(1) The defendant may seek an order against someone other than the claimant, and the court may make an order for security for costs against that person if –
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b) one or more of the conditions in paragraph (2) applies.
(2) The conditions are that the person …
(b) has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property which the claimant may recover in the proceedings; and
is a person against whom a costs order may be made.”
It is convenient to deal with this part of the application out of turn. The claimant’s reliance on r. 25.14 is really in the alternative to the application for security for costs against the defendant, on which I have not yet ruled. It also follows from that fact, and from the wording of paragraph (1) of the rule, that the claimant makes this particular application as being in the position of defendant to the counterclaim brought by Timis. For the purposes of considering the application under r. 25.14, I shall assume that the claimant is such a defendant.
The court is able to give efficacy to its power under r. 25.14 by making an order for disclosure such as the claimant seeks. However, in the present case the evidence that has been put in by the defendant and has not been contradicted is to the effect that its funding comes from two sources: first, its own resources; second, a third party who has received no agreement for a share of proceeds of the litigation, who has taken no security and who has received no fee for the lending. In those circumstances, it seems to me that there is simply no evidential basis on which I could properly order disclosure in furtherance of the court’s power under r. 25.14.
The alternative way in which the matter is put on behalf of the claimant is that the court has power under section 51 of the Senior Courts Act 1981 and Part 46 of the Civil Procedure Rules 1998 to make an order for costs against a third party, which may include in a given case a third party funder, and that for the purpose of giving efficacy to that power the court has an ancillary power to order disclosure of the identity of the third party funder and, where appropriate, the basis of the funding agreement.
In my judgment, the exercise of such an ancillary power at this stage would be clearly inappropriate. If hereafter the claimant were intending to seek an order for costs against a third party funder and there appeared to be grounds on which such an order might be made, of course the court would not be prevented from making a third party costs order because it lacked knowledge of the identity of the third party funder; it would, if it considered appropriate, make an order for disclosure of the identity of the funder and the basis on which the funding had been provided. However, I see no proper basis at all for making that kind of an order in advance of circumstances in which an application could be countenanced. To do so would be inappropriately intrusive and in the nature of a fishing expedition. So that part of the application in the application notice dated 29 June 2016 will be refused.
ARTICLES AND POSTS ON THIRD PARTY FUNDING
- BLP Funded parties in international arbitration beware: funding arrangement may need to be disclosed to opponent & ….
- Kluwer Arbitration Blog A trend towards mandatory disclosure of third party funding?
- BLP again Another investment tribunal grapples with disclosure of third-party funding information.
- Pinsent Masons Advice Note on Third party funding of litigation
- Law Society Gazette MoJ lifts threshold for naming third-party JR funders.
- International Law Office Court orders disclosure of funding arrangements
A related topic covered on this blog