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 claimants in the successful action were not insured, and Travelers, the defendant’s insurers resisted payment of their costs.
Held: Travelers’ appeal succeeded. It could not be shown that they had unjustifiably interfered. They had acted within the scope of actions taken to defend the action against the insured claimants’. Nor had they taken such control of the action as to have become the real defendant in it.
‘ the two bases under which an insurer might become liable to a non-party costs order identified in the Chapman case, namely by intermeddling or becoming the real defendant, do represent a principled approach to the engagement of this jurisdiction against liability insurers, which is much preferable to the quest for factors which may satisfy an elusive concept of exceptionality. Where the claim itself falls within the scope of the insurance, whether or not subject to limits of cover, the real defendant test will usually be the appropriate one to apply.’
‘First, the underlying question, whether the non-party has either become the real defendant in relation to an insured claim, or intermeddled in an uninsured claim, is fundamental to the exercise of the section 51 jurisdiction, in insurance cases. It is the conduct of the non-party which matters, rather than the mere rarity of the case.
Secondly, the Chapman principles are useful guidelines for establishing whether the liability insurer has become the real defendant in all but name, in a case where some part of the claim (including the claim for costs) is or may lie outside the limits of cover, so that the insured has at least a prima facie joint interest with the insurer in the outcome of the litigation.
Thirdly , the Chapman principles are not likely to be of assistance where the question is (as here) whether the liability insurers crossed the line in becoming involved in the funding and conduct of the defence of wholly uninsured claims, as opposed to claims where there is limited cover. In such cases the insurer may cross the line by conduct falling well short of total control, and without becoming the real defendant, if the insurer intermeddles in the uninsured claim in a manner which it cannot justify.
But, fourthly, where there is a connection between uninsured claims and claims for which the insurer has provided cover, it may well be that the legitimate interests of the insurer will justify some involvement by the insurer in decision-making and even funding of the defence of the uninsured claims without exposing the insurer to liability to pay the successful claimant’s costs. This is just such a case because of the very close connection between insured and uninsured claims, raising common issues to be tried together in test cases in group litigation, and the limited nature of Travelers’ involvement in the uninsured claims.
Fifthly, causation remains an important element in what an applicant under section 51 has to prove, namely a causative link between the particular conduct of the non-party relied upon and the incurring by the claimant of the costs sought to be recovered under section 51. If all those costs would have been incurred in any event, it is unlikely that a section 51 order ought to be made.
Sixthly, the non-disclosure of limits of cover by the defendant at the request of the insurer is unlikely to amount to relevant conduct, for as long as the law continues to make that non-disclosure legitimate.
Seventhly, asymmetry or lack of reciprocity in costs risk, as between the uninsured claimant and the defendant’s insurer, is unlikely on its own to be a reason for the making of a non-party costs order against the insurer where, as here, the asymmetry arises because a claimant sues an uninsured and insolvent defendant and incurs several-only costs liability in group litigation.’


Lord Reed, Deputy President, Lady Black, Lord Briggs, Lord Kitchin, Lord Sumption


[2019] UKSC 48, [2019] Costs LR 1915, [2019] Lloyd’s Rep IR 683, [2019] 1 WLR 6075, [2019] WLR(D) 599, [2020] 2 All ER 239, [2020] 1 All ER (Comm) 1007, (2020) 171 BMLR 1, UKSC 2018/0117


Bailii, Bailii Summary, WLRD, SC, SC Summary, SC Summary Video, SC 2019 Jun 11 am Video, SC 2019 Jun 11 pm Video


Senior Courts Act 1981 51


England and Wales


At first instanceXYZ v Travelers Insurance Company Ltd QBD 24-Feb-2017
Application for an order under section 51 Senior Courts Act 1981 that Travelers Insurance Company Ltd pay to the applicants the costs they incurred in their successful claims against Transform Medical Group (CS) Limited (in Administration) for . .
Appeal fromTravelers Insurance Company Ltd v XYZ CA 17-May-2018
The issue raised on this appeal is the liability for costs arising out of litigation concerning the supply of defective implants for use in breast surgery, which had been manufactured by PIP. The claims were made in group litigation under a Group . .
CitedAiden Shipping Co Ltd v Interbulk Ltd (The ‘Vimeira’) HL 1986
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 . .
See AlsoX Y Z v Various Companies (PIP Breast Implant Litigation) QBD 22-Nov-2013
. .
CitedNew Zealand Forest Products Limited v the New Zealand Insurance Company Limited PC 21-Jul-1997
(New Zealand) Proceedings had been instituted in five causes of action against a company and its director, whose costs were both covered by an insurance policy, and in the case of one of the causes of action against a third person not so covered. . .
CitedZurich Insurance Plc UK Branch v International Energy Group Ltd SC 20-May-2015
A claim had been made for mesothelioma following exposure to asbestos, but the claim arose in Guernsey. Acknowledging the acute difficultis particular to the evidence in such cases, the House of Lords, in Fairchild. had introduced the Special Rule . .
CitedCitibank NA v Excess Insurance Co Ltd 1999
A section 51 application was prompted by the reporting of the Chapman case, and decided by Thomas J specifically upon the basis that the continued defence of the quantum of the claim after judgment on liability had been conducted by the insurers . .
CitedDymocks Franchise Systems (NSW) Pty Limited v Todd and Todd, Bilgola Enterprises Ltd and Lambton Quay Books Ltd PC 7-Oct-2002
PC (New Zealand) The claimants asserted that the respondents had wrongly terminated their franchise licence. The agreement was subject to the New South Wales law requiring good faith, but the court had not had . .
CitedDeutsche Bank AG v Sebastian Holdings Inc and Another CA 21-Jan-2016
Appeal from Order joining party for purposes of third party costs order. . .
CitedGroom v Crocker 1939
An action by a client against a solicitor alleging negligence in the conduct of the client’s affairs, is an action for breach of contract. A solicitor is not entitled to payment of his costs by his client where his own negligence makes the work he . .
CitedSymphony Group Plc v Hodgson CA 4-May-1993
A section 51 non-party costs application should not be used as a substitute for the pursuit of a related cause of action against the non-party in ordinary proceedings. Nine rules were set out for allowing a costs order against someone who is not a . .
CitedGiles v Thompson, Devlin v Baslington (Conjoined Appeals) HL 1-Jun-1993
Car hire companies who pursued actions in motorists’ names to recover the costs of hiring a replacement vehicle after an accident, from negligent drivers, were not acting in a champertous and unlawful manner. Lord Mustill said: ‘there exists in . .
CitedMurphy, 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 . .
CitedTGA Chapman Limited; Benson Turner Limited v Christopher and Sun Alliance and London Insurance Plc CA 8-Jul-1997
A section 51 application was made because the cover was limited under the defendant’s liability policy and insufficient to pay all the damages, let alone any part of the costs, and the defendant was not worth powder and shot. Nonetheless the claim . .
CitedPalmer v The Estate of Kevin Palmer Deceased and others CA 6-Feb-2008
The judge had concluded that the insurers’ conduct of an unsuccessful defence was sufficiently self-motivated to make it the real defendant in all but name, and the Court of Appeal dismissed the appeal against an order that it be liable in costs as . .
CitedLegg and Others v Sterte Garage Ltd and Another CA 23-Feb-2016
Proceedings for damages for negligence and nuisance, and under the rule in Rylands v Fletcher . .
CitedDoe Dem Masters v Gray 1830
An order for costs was made in an action of ejectment against a parish council which had put a pauper into possession of the premises in question. Lord Tenterden CJ said: ‘In ejectment we can make the real party to the suit pay the costs.’ . .
CitedHayward v Giffard And Grove Cex 1838
The court refused to make an order for costs against a non-party though he was interested in its outcome.
Lord Abinger CB said: ‘If we were at liberty to consult equity and justice, we should probably make this rule absolute. But the authority . .
CitedForbes-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 . .
CitedMobbs v Vandenbrande And Wife, Late Youens Executrix Of Price 29-Jan-1864
Blackburn J said: ‘In ordinary cases, where there has been no abuse of its process, the court has no jurisdiction to order a person not a party on the record to pay costs.’ . .
CitedIn re Mills’ Estate CA 1886
The Practice Rules conferred a discretion as to costs only in cases in which before the Judicature Acts the courts would have had jurisdiction to make awards of costs. The Act of 1890 was intended to confer such jurisdiction in any case whatever. . .
CitedIn re Jones ChD 1870
The solicitor had engaged to indemnify the plaintiff against the costs of a ‘doubtful suit’ which failed. Lord Hatherley LC said that he thought it the duty of the Court to be anxious to see that solicitors not only performed their duty towards . .
CitedCoondoo v Mookerjee 1876
The award of costs in In re Jones was based on the court’s disciplinary jurisdiction over solicitors . .
CitedThe Attorney-General v The Skinners’ Company Ex Parte Watkins 15-Apr-1837
. .
CitedRegina v William Greene 11-Jan-1843
Relator proceedings were brought by an indigent plaintiff who had been procured to bring them by an attorney.
Lord Denman CJ said: ‘Nothing, however, is more certain than that this court has in several instances granted costs against persons . .
CitedAndrews v Barnes CA 12-Jun-1888
The parish vicar and his churchwardens brought an action to recover a small sum paid to the members of a local committee for charitable purposes, saying the gift had been made subject to a condition which it proved impossible to fulfil.
Held: . .
CitedSangar and Others v Gardiner And Others 22-Jun-1838
How payment of costs enforced by and against persons not parties to the suit. . .
CitedAmelia Leigh v James Rose SCS 19-Dec-1792
An attorney defending in an action for a person abroad, is not liable personally for the expenses awarded against his constituent. . .
CitedKnight 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 . .
CitedKerr v Employers’ Liability Assurance Co Ltd SCS 1902
An injured workman who had obtained an award of damages and expenses against his employer sought, after the employer became insolvent, to obtain an award of expenses against the insurer. It was accepted that, under the policy, the insurers had . .
CitedM’Cuaig v M’Cuaig SCS 5-Jan-1909
Lord President Dunedin observed: ‘The true test of whether a party is or is not dominus litis is probably whether he has or has not the power to compromise the action.’ and: ‘ . . the true interest in the cause, and by true interest I mean the . .
CitedMathieson v Thomson SCS 1853
Lord Rutherford said: ‘There may be some difficulty in defining exactly what is a dominus litis; but I confess that I very much agree with what has been laid down by your Lordship [Lord President McNeill, later Lord Colonsay], and with the . .
CitedGlobe Equities Ltd v Globe Legal Services Ltd and others and Other Actions CA 5-Mar-1999
A court which was considering ordering a third party, who was not party to the action, to pay costs in an action, should first be satisfied that it is just to do so in all the circumstances. There is no need to establish any exceptional . .
CitedDeutsche Bank AG v Sebastian Holdings Inc and Another CA 21-Jan-2016
Appeal from Order joining party for purposes of third party costs order. . .
CitedDymocks 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 . .
Lists of cited by and citing cases may be incomplete.

Costs, Insurance

Leading Case

Updated: 04 May 2022; Ref: scu.642833