When can security be ordered against non-party funders? Richard Highley & Deirdre Lyons Le Croy report
- Courts may now be prepared to order security for costs against third parties funding litigation for commercial reasons.
The decision of Hildyard J in The RBS Rights Issue Litigation [2017] EWHC 1217 (Ch), [2017] All ER (D) 173 (May) is a useful benchmark for defendants seeking security for costs on cases where litigation funding is present. The litigation involved applications for security against two different funders. It was a long-running case, involving exceptional levels of costs (£19.3m was sought as security), a very late application and multiple claimants with several (not joint) liability for costs under a group litigation order, making enforcing a costs order highly problematic.
A defendant may apply for a security for costs order against a non-party which contributes to the claimant’s costs in return for a share in the litigation proceeds but the court must be satisfied, in all the circumstances of the case, that it is just to do so (CPR 25.13(1)(a).
