The High Court declined to order early disclosure of who was funding Thema International Fund PLC’s litigation against HSBC Institutional Trust Services (Ireland) Limited, provided a senior Thema official gave two personal undertakings to protect HSBC’s position in any later costs application.
In a judgment delivered on 20 September 2011, Mr Justice Clarke considered HSBC’s application for information about the funding of the proceedings. HSBC relied on Thema shareholder communications from July and August 2010 indicating that the fund lacked adequate funding, and on a November draft notice suggesting the Irish proceedings were being pursued vigorously. Thema had said that “no third party is maintaining these proceedings” and denied entitlement to details of its funding arrangements.
The judge concluded from the evidence that one or more third parties were assisting Thema. He also found that any funder had a sufficient connection with Thema to take the funding outside maintenance and champerty. He did not identify the funder or decide that any particular person had provided funding.
Clarke accepted that Irish courts had jurisdiction, in an appropriate case, to make a costs order against a third-party funder who funded an impecunious litigant in furtherance of the funder’s own interest. But he distinguished such a funder from a professional funder investing in litigation for a share of the proceeds, which he said was not permitted under Irish law.
The judge rejected HSBC’s arguments that early disclosure was needed to identify the true adversary, pursue security for costs or preserve a possible future application for a funder costs order. He said the ordinary security-for-costs rules should not be bypassed by ordering a funder to provide security. Disclosure after the proceedings conclude could support a later costs application without giving HSBC an unnecessary litigation advantage while the case was ongoing.
The court therefore made no order, on condition that a senior Thema official personally undertook to inform any litigation funder in general terms about the court’s jurisdiction to make third-party funder costs orders, and to maintain proper records identifying the amount and source of any funding. The judgment did not order disclosure of the funder’s identity or funding terms at that stage.