Topic
Non-party costs refer to costs orders made against individuals or entities who are not directly a party to the litigation but have an involvement or interest in the case. Such orders are exceptional and are made under specific circumstances where the non-party's actions or involvement justify holding them financially responsible for some or all of the litigation costs. The underlying principle is that the court can exercise its discretion to prevent injustice and ensure fairness, particularly where the non-party has acted improperly or has financed the litigation for their own benefit.
Non-party costs orders may be considered in various situations, including:
The court's discretion to order non-party costs is governed by case law and the overriding objective of the Civil Procedure Rules to deal with cases justly. Key considerations include:
Company A, a small business, is sued by Supplier B for breach of contract. The litigation is funded and controlled by a major shareholder, Mr. X, who stands to gain personally from the outcome. Mr. X directs Company A's legal strategy, and the court finds that his decisions have unnecessarily prolonged the proceedings and increased costs.
After the trial, the court finds in favor of Supplier B and considers the application for costs. The judge, noting Mr. X's significant control and financial interest, orders him to pay part of Supplier B's costs, reasoning that he had effectively directed and benefited from the litigation despite not being a named party.
The court concludes that it is fair and just for Mr. X to bear some of the costs, given his substantial involvement and the benefits he sought to derive from the case. This non-party costs order ensures that Mr. X, rather than Company A alone, bears financial responsibility for the consequences of the litigation.
Non-party costs orders can be challenged or appealed. The non-party may argue that the order was unfair or that they were not adequately involved in the litigation to justify such an order. The appeal court will review the lower court's decision to ensure that the discretion was exercised properly and in accordance with legal principles.
Non-party costs orders are a tool used by the courts to ensure fairness and justice in the allocation of litigation costs. While they are not common, such orders are critical in cases where a non-party has a significant influence or interest in the proceedings. Understanding the circumstances and legal principles governing non-party costs orders is essential for anyone involved in litigation, as these orders can have substantial financial implications.