Pegler Ltd v Wang (UK) Ltd & Anor

When exercising the discretion to award costs against a non-party under Supreme Court Act 1981, section 51, the court must apply the relevant legal principles. A material consideration is whether the non-party’s conduct was undertaken for the benefit of the company and its creditors, rather than solely for its own benefit. The Court of Appeal will be slow to interfere with a costs discretion, but permission should be granted where it is reasonably arguable that the discretion was exercised without proper regard to those principles.

Pegler Ltd obtained judgment for approximately £9 million after pursuing a claim which had initially been valued at nearly £23 million. Wang (UK) Ltd defended the assessment of damages, with financial assistance from Wang Global BV. The Technology and Construction Court, before His Honour Judge Bowsher QC, made an order for costs against Wang Global BV as a non-party under section 51 of the Supreme Court Act 1981.

Wang Global BV applied for permission to appeal. The issue was whether the proposed appeal was reasonably arguable, particularly whether the judge had exercised the statutory costs discretion in accordance with the applicable legal principles.

1. Permission and approach. The application for permission to appeal was allowed. The Court of Appeal stated that it would be slow to interfere with a judge’s exercise of discretion on costs, including an order against a non-party under section 51 of the Supreme Court Act 1981.
2. Reasonably arguable ground. It was reasonably arguable that defending the damages assessment benefited Wang (UK) Ltd and its creditors. The reduction of the claim from nearly £23 million to £9 million, together with the legal advice received, supported that argument.
3. Relevant consideration. It was also reasonably arguable that Wang Global BV, in making loans to Wang (UK) Ltd, had acted properly in the interests of that company and its creditors, rather than merely to secure a benefit for itself. The court relied on Stocznia Gdanska SA v Latreefers as establishing that this was a relevant consideration when exercising the discretion to award costs against a non-party.
4. The proposed appeal therefore had a proper basis in the contention that the discretion had not been exercised in accordance with the applicable legal principles. Costs were ordered to be costs in the appeal.

• Court of Appeal (Civil Division): permission to appeal from the costs order of His Honour Judge Bowsher QC in the Queen’s Bench Division, Technology and Construction Court, was granted. Costs were to be costs in the appeal.