Wide Application of Costs Against Third Party
A claim had been made against charterers by the ship owners, and in turn by the charterers against their sub-charterers. Notice of motion were issued after arbitration awards were not accepted. When heard, costs awards were made, which were now appealed.
Held: The appeals were allowed. The court’s discretion when awarding costs as conferred by section 51(3) was wide. Lord Goff of Chieveley said: ‘thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised.’ The jurisdiction provided by this Section was not subject to any implied limitation that costs could only be awarded against those who were parties to the litigation. Non-parties could be ordered to pay costs where justice so required. Nevertheless, an order for the payment of costs by a non-party will always be exceptional, and a person or entity who had been ordered to pay such costs would be able to appeal against the order, even though he, she or it was not a party to the original action.
Lord Goff: ‘. . . it is not surprising to find the jurisdiction conferred under section 51(1), like its predecessors, to be expressed in wide terms. The subsection simply provides that ‘the court shall have full power to determine by whom . . . the costs are to be paid.’ Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. ‘ and
‘In the vast majority of cases, it would no doubt be unjust to make an award of costs against a person who is not a party to the relevant proceedings….. I do not, for my part, foresee any injustice flowing from the abandonment of that implied limitation. Courts of first instance are, I believe, well capable of exercising their discretion under the statute in accordance with reason and justice. I cannot imagine any case arising in which some order for costs is made, in the exercise of the court’s discretion, against some person who has no connection with the proceedings in question. If any problem arises, the Court of Appeal can lay down principles for the guidance of judges of first instance; or the Supreme Court Rules Committee can propose amendments to the Rules of the Supreme Court for the purpose of controlling the exercise of the statutory power vested in judges subject to rules of court. ‘
Judges:
Lord Goff of Chieveley
Citations:
[1986] AC 965, [1986] 2 WLR 1051, [1986] 2 All ER 409
Statutes:
Jurisdiction:
England and Wales
Citing:
Overruled – Forbes-Smith v Forbes-Smith and Chadwick CA 1901
W petitioned for judicial separation. H cross-petitioned for divorce, citing C as co-respondent. The actions were consolidated, W’s petition withdrawn, and a decree absolute of divorce granted to H. A costs order was made against C. On taxation, H . .
Overruled – Fairfax (John) and Sons v E C de Witt and Co CA 1958
. .
Appeal from – Interbulk Limited v Aiden Shipping Co Limited (The ‘Vimeira’) CA 1984
The court considered whether an arbitrator had a duty to raise a point missed by counsel.
Held: Robert Goff LJ: ‘In truth, we are simply talking about fairness. It is not fair to decide a case against a party on an issue which has never been . .
Cited by:
Cited – Murphy, and Murphy v Young and Co’s Brewery Plc, Sun Alliance and London Insurance Plc CA 20-Nov-1996
When an unsuccessful party has had its legal costs funded under legal expenses insurance, should the insurer be held liable to pay the successful party’s costs? The insurer had not instigated the litigation, nor controlled it, and could not be . .
Cited – Hamilton v Al Fayed and Others (No 2) CA 17-May-2002
The claimant had lost a libel action and been bankrupted. The defendant sought to recover his costs from those who had financially supported the claimant. He now appealed a dismissal of his request for contributions.
Held: An order for the . .
Cited – Individual Homes Ltd v Macbream Investments Ltd ChD 23-Oct-2002
The claimant had in the course of proceedings obtained an order requiring an employee of the third party to attend as a witness. That third party now sought to be joined so as to claim its costs.
Held: The Act and the rules allowed the court . .
Cited – Dymocks Franchise Systems (NSW) Pty Ltd v Todd and others (No. 2) PC 21-Jul-2004
PC (New Zealand) Costs were sought against a non-party, following an earlier determination by the Board.
Held: Jurisdiction to make such an order was not complete. Where the order sought was against a . .
Applied – Goldsworthy v Brickell CA 1987
The plaintiff had granted a tenancy of his substantial farm to the first defendant, and made him a partner. The first defendant later bought out the plaintiff who was in turn later reconciled with his only son who had previously had some . .
Cited – McDonald and Others v Horn and Others CA 8-Aug-1994
A court may make a pre-emptive award of costs to pension fund members who wished to sue the trustees. Hoffmann LJ said: ‘if one looks at the economic relationships involved, there does seem to me to be a compelling analogy between a minority . .
Cited – Arkin v Borchard Lines Ltd and others CA 26-May-2005
The court considered the costs aftermath of a huge claim undertaken on a no win no fee basis and failing. The funder of the claim complained at an award of costs against it.
Held: Those who fund litigation must accept that their risks extend . .
Cited – Goodwood Recoveries Ltd v Breen CA 19-Apr-2005
A claim against the defendant for money owed to someone else had been bought by the claimant of which Slater, a solicitor, was a director and shareholder. The claim was pursued in the name of the claimant by Slater as its solicitor and principal . .
Cited – BE Studios Ltd v Smith and Williamson Ltd ChD 2-Dec-2005
The claimant company had failed in its action. The court was asked to make a costs order personally against the principal director of the claimant who had controlled the litigation and funded it. He responded that no impropriety had been shown on . .
Cited – Ward and others v Sabherwal and others T/A Nath Bros. QBNI 13-Nov-2000
. .
Cited – M J Benyon and others v David Scadden and others EAT 14-Jun-1999
The tribunal had found that the claimants and their union had pursued their case, even though they recognised the weakness of the case, with the additional intention of persuading their employer to recognise their union, UNISON. Such behaviour was . .
Cited – Aparau v Iceland Frozen Foods Plc CA 12-Nov-1999
Where a case had been remitted by the EAT to a tribunal for reconsideration in respect of matters specified by the EAT, the tribunal’s consideration was to be limited to those matters remitted. It was not open to the tribunal to consider matters . .
Cited – B Hedden v Exeter Diocesan Board for Christian Care EAT 9-Mar-2000
EAT Unfair Dismissal – Reason for Dismissal . .
Cited – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis), Papadimitriou v Symes (A Bankrupt) Robin Symes Limited (In Administrative Receivership) Jean-Louis Domercq ChD 20-Oct-2004
Dr Zamar had given expert evidence in the principal proceedings. It was now said that that evidence had not been given in the proper way, and a remedy was now sought. . .
Cited – In Re Andrews CA 25-Feb-1999
The defendant and his son had been charged with offences relating to their joint business, and restraint orders were made. The son was convicted, but the defendant was acquitted and awarded his costs out of central funds. The taxing officer held . .
Cited – Capewell v Revenue and Customs and Another HL 31-Jan-2007
The defendant appealed against an order regarding the remuneration of a receiver appointed to administer a restraint order placed on the assets of the defendant under the 1988 Act on the basis of an allegation that the defendant had been involved in . .
Cited – Dolphin Quays Developments Ltd v Mills and others CA 17-May-2007
The owner had agreed to sell a long lease of an apartment to the defendant. Part of the price was to be by way of set off of an existing debt, but ths was not set out in the contract. The claimant bought the land and the benfit of the contract from . .
Applied – Knight v FP Special Assets Ltd 25-Jun-1992
(High Court of Australia) Two orders for the payment of costs had been made against the receivers and managers of the claimant in the action, Forest Pty Ltd, and the defendant to a counterclaim brought by the defendants to the action, Howe . .
Cited – Webster (the Parents) v Norfolk County Council and others CA 11-Feb-2009
Four brothers and sisters had been adopted after the parents had been found to have abused them. The parents now had expert evidence that the injuries may have been the result of scurvy, and sought leave to appeal.
Held: Leave was refused. . .
Cited – Masri v Consolidated Contractors International Co Sal and Others HL 30-Jul-2009
The claimant sought to enforce a judgment debt against a foreign resident company, and for this purpose to examine or have examined a director who lived abroad. The defendant said that the rules gave no such power and they did, the power was outside . .
Cited – BPE Solicitors and Another v Gabriel SC 17-Jun-2015
Application for directions in a pending appeal. The claimant alleged negligence against his former solicitors. After his successful claim was substantially overturned on appeal, he was made bankrupt.
Held: If the trustee adopted and pursued . .
Cited – The Conservative and Unionist Party v The Election Commissioner CA 23-Nov-2010
A losing candidate at a local election alleged corrupt and illegal practices relating to the entry of non-existent people on the electoral roll and using postal votes. The Election Commissioner found this proved and the election void, and awarded . .
Cited – The Conservative and Unionist Party v The Election Commissioner and Others Admn 19-Feb-2010
A local election result had been set aside for fraud in the winning Conservative candidate. The Commissioner made an order for costs against his party which was now challenged for lack of jurisdiction the Commissioner being functus officio, and the . .
Cited – Goknur v Aytacli CA 13-Jul-2021
Third Party Costs – Director of Insolvent Company
(Organic Village) The Court considered the circumstances Limited in which a director and shareholder of an insolvent company may be personally liable for some or all of that company’s costs liabilities incurred in unsuccessful litigation, pursuant . .
Cited – Travelers Insurance Company Ltd v XYZ SC 30-Oct-2019
Challenge to the making of a non-party costs order under section 51 of the Senior Courts Act 1981 against the product liability insurer of one of the defendants in litigation being managed under a Group Litigation Order (‘GLO’). Many of the . .
Cited – HB v PB FD 9-Jul-2013
Claim for costs against third party local authority, Croydon LBC after four day private law fact finding hearing. F said that M had fabricated illnesses both in herself and the child leading to the LA being asked to prepare a report. That report . .
Lists of cited by and citing cases may be incomplete.
Costs
Leading Case
Updated: 04 May 2022; Ref: scu.179731