The issue of disclosure of financial resources relating to litigation is set to occupy more court time in Scotland following a recent judgment.

The topic surfaced again in connection with the ongoing and high-profile pelvic mesh litigation in Scotland.

The application involved US pharma company Endo. Following a corporate restructuring, liabilities for pelvic mesh claims were transferred to its women’s health division, Astora, in the US.

Subsequently Astora then volunteered that the relevant corporate entity in the US might be unable to meet damages and costs awards in the Scottish litigation. This may be connected to its closure of this division some years ago.

This resulted in an application by the claimants for Astora to disclose financial information and details of insurance cover so that the claimants could ascertain whether they were ‘good for the money’.

The court refused to order disclosure. As a general rule information on finances and insurance cover is private. The information was not relevant to resolving the dispute. Every defendant is entitled to mount a defence. This decision is broadly positive for defendants outside of Scotland who are faced with requests to disclose financial resources. It does demonstrate a heightened sensitivity of claimants involved in lengthy litigation, and if circumstances are different there may be mileage to try again. This also reflects other recent changes in Scotland which do and will increasingly require disclosure by claimants of their financial resources.

There are alternative options in Scotland where a party is worried about whether the other side will be able to pay damages and/or legal costs if unsuccessful. These are to seek security for costs (called caution), and less commonly to have a third party appointed within the jurisdiction who will be liable for expenses. However, these are only granted in exceptional circumstances. An application for disclosure is a creative but blunt instrument where there is no such basis.

Claimants are often on the receiving end of requests for disclosure of details of insurance or third party funding to cover a winning defendant’s legal costs.

Clearly, seeking information themselves would potentially create an own goal for the future. They distinguished their request here as particular to these circumstances. This does open up the possibility of future applications in a different situation.

Additionally, under the new group procedure rules in Scotland, the ‘representative party’ (lead claimant) when seeking permission has to demonstrate that they have financial resources available to meet any costs award. This has been the subject of some discussion before the Scottish court.

In due course, claimants will also have to disclose details of any third party funding, under new Scottish legislation which is not yet in force. The court would also be able to make any third party funder directly liable for payment of legal costs.

A copy of the recent judgement is here.

We have leading expertise in the new group procedure in Scotland. Please get in touch if you would like to discuss any of the points above.

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