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is the fact enforcement would be a 'complete nightmare' reason enough for security for costs?

5 May 2017

The Royal Bank of Scotland (RBS) is currently embroiled in a £12billion class action brought by its former shareholders over the bank’s fundraising before its 2008 government bailout. The action was issued by over 27,000 shareholders and while settlement has been reached with the majority of shareholders, the bank estimates that just under 9,000 shareholders want to progress matters to trial; which is due to start on 22 May.

The shareholder’s action is being funded by two third party funders and on Wednesday RBS issued an application against the remaining shareholders for security for costs.

The bank’s reason for seeking such an order was that attempting to recover legal costs of around £4,845 plus VAT from each of the remaining claimants “would be a complete logistical nightmare”. If the bank’s application is successful the third party funders will be ordered to pay a total of £11.6m into with Court or an escrow account pending the resolution of matters.

Whilst the court has discretion as to whether security should be granted or not, it will be interesting to see whether the bank’s application is successful given its justification for an order doesn’t fit with the recognised categories of circumstances in which security is usually awarded.

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