THE COMPANY that set up the RBOS Shareholders Action Group has been ordered by a judge to hand over documents relating to the cost of bringing a £200 million case against Royal Bank of Scotland.
The action group was one of five such groups that launched legal proceedings against the bank over allegations that shareholders were duped into participating in a £12 billion rights issue at the height of the financial crisis.
The RBOS Shareholders Action Group ultimately accepted a £200 million settlement from the bank in June last year, but just £25m of that has been paid out to shareholders due to an argument about how much it cost to bring the action.
Read more: Legal spat hots up as RBS investors await share of £200m claim
Specifically, Manx Capital Partners, which joined the group as a claimant and succeeded the action group company as manager of the claims last year, had queried a payment of between £20m and £35m that the company claims is due to a firm called Evalusafety.
Evalusafety has an unknown link to the action group company and it is understood that the payment is being accounted for as a success fee related to bringing the case against the bank.
The action group company, which still goes by the name the RBOS Shareholders Action Group, had opposed Manx’s attempts to get the Evalusafety documentation on the basis that they contain privileged information.
Read more: Claimants face lengthy wait for RBS cash as legal cases pile up
During a High Court hearing regarding the matter earlier this week, Mr Justice Hildyard criticised that stance, noting that as Evalusafety is “claiming many millions of pounds in respect of services of which I’m personally unclear as to their nature” it would not be “proper” to keep the details from “the public eye”.
“One way or the other, it seems most unlikely that there’s any justification for not making them available, especially since the RBS litigation itself was a matter of some public interest and the disposal of the proceeds is bound to be a matter of interest if it’s not going to the investors whom RBS thought it was compensating,” he said.
Calling it a “cat’s cradle of a case”, Mr Justice Hildyard yesterday ordered the company to hand the paperwork over to an independent lawyer, who will determine whether the information is in fact privileged. If it is not, it will be passed to Signature Litigation, the law firm acting for the roughly 7,000 claimants in whose name the £200m settlement was made.
Signature Litigation is responsible for calculating the full cost of the action against RBS and deducting that from the £200m to arrive at the final sum that will be shared among the shareholders. It has refused to pay the money being claimed by Evalusafety until it sees proof that it was legitimately incurred.
Read more: Action group abandons RBS late-claimants plan
Even if the independent lawyer does pass the information on Evalusafety onto Signature Litigation it will be some time before investors receive their full share of the settlement.
This is because a litigation funder and a company that helped recruit members for the action group are both suing in a bid to recover fees they say they are owed from the £200m settlement.
Meanwhile, a hearing regarding whether the RBOS Shareholders Action Group company has the right to challenge Signature Litigation’s fees has been scheduled for October.
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