Palmeira Square Nos 2-6 Ltd v Van Hoogstraten

Costs may be ordered against a non-party under section 51 of the Supreme Court Act 1981 where, in all the circumstances, it is just to do so. The categories identified in Symphony Group Plc v Hodgson are illustrative, not exhaustive, and exceptional status is not a precondition to jurisdiction. The discretion remains fact-sensitive and must be exercised cautiously.

An appellate court must respect the trial judge’s evaluation of evidence and may interfere only for an error of principle, material factual misapprehension, failure to exercise discretion, or a decision plainly wrong. It must not substitute its own evaluation merely because it might have reached a different conclusion.

The respondent obtained orders in County Court proceedings against companies and individuals connected with the appellant. It later sought an order requiring the appellant, who was not a party, to pay costs awarded against those parties.

After a ten-day trial, Judge Coates rejected the conspiracy claim and refused the non-party costs application. McCombe J allowed the appeal, reconsidered the discretion afresh, and ordered the appellant to pay the relevant costs. The central issues were whether Judge Coates had erred in applying section 51 and whether the appellate court was entitled to substitute its own discretion.

1. Appeal allowed. McCombe J had not established any error that entitled him to reopen Judge Coates’s discretionary decision. His order was set aside and Judge Coates’s order restored.
2. Section 51 of the Supreme Court Act 1981 confers a broad discretion to determine by whom and to what extent costs are payable. The governing question is whether, in all the circumstances, it is just to order a non-party to pay costs. The approach in Symphony Group Plc v Hodgson supplies useful guidance, but its six categories are neither rigid nor closed. The court must proceed with considerable caution, particularly where the applicant could have joined the non-party.
3. The commercial reasons for transactions involving the parties were relevant because they bore on whether those parties were nominees acting for the appellant. Judge Coates had also considered financing, litigation conduct and delay in warning the appellant. She had therefore applied the correct legal approach.
4. The appellate jurisdiction under CPR 52.11 permits intervention where the lower court was wrong, including through an error of principle, disregard of principle, material misapprehension of fact, irrelevant considerations or failure to exercise discretion. It does not permit a fresh factual evaluation simply because the appellate judge would have drawn different inferences.
5. Judge Coates’s adverse findings about the appellant’s evidence did not require every issue to be decided against him. Misleading conduct at the hearing could justify costs of that hearing, but did not itself establish liability for costs of earlier litigation.
6. The court declined to consider the remaining grounds attacking McCombe J’s fresh exercise of discretion. Costs were ordered against the respondent, with an interim order for £50,000 payable within 28 days. Permission to appeal to the House of Lords and a stay were refused.

• Court of Appeal (Civil Division): Palmeira Square Nos 2-6 Ltd v Van Hoogstraten, [2002] EWCA Civ 417. Appeal allowed; McCombe J’s order set aside and Judge Coates’s order restored.
• High Court, Queen’s Bench Division: McCombe J allowed the appeal from Judge Coates and ordered the appellant to pay the relevant costs. No citation is stated in the judgment.
• Brighton County Court: Judge Coates dismissed the conspiracy claim and refused the application for non-party costs.