Gulf Azov Shipping Co Ltd & Ors v Idisi & Ors

A court may order a non-party to pay costs, but such an order remains exceptional. Assistance intended to secure legal representation or compliance with court orders will not normally justify liability. This remains so where the assistance enables a litigant to contest proceedings which would otherwise go by default.

An expectation of reward does not necessarily alter that position. The court must decide what is just on the individual facts. An intervener is at risk where the intervention is undertaken in bad faith or for an ulterior motive, but ancillary participation which merely facilitates legitimate funding does not by itself justify a costs order.

A deputy High Court judge ordered Mr Egbe, a Nigerian lawyer who was not a party to the substantive proceedings, to pay £421,857.89 of the successful claimants’ costs. Mr Egbe had funded aspects of the defendants’ representation and assisted them at a critical stage in complying with court orders and presenting their defence.

The Court of Appeal refused to admit fresh evidence challenging the findings about his funding. The appeal therefore concerned whether the findings already made justified the exceptional exercise of the jurisdiction to award costs against a non-party. A subsidiary issue concerned whether the later costs were caused by Mr Egbe’s intervention.

1. Appeal allowed. The findings concerning Mr Egbe’s conduct did not justify the exceptional order requiring him to pay the costs of the proceedings.

2. Section 51(1) of the Supreme Court Act 1981 confers a broad discretion to determine by whom and to what extent costs are paid. That jurisdiction extends to non-parties, although an order against a non-party is always exceptional.

3. Mr Egbe’s most significant act was providing funds which enabled the defendant to comply sufficiently with court orders, retain legal representation and obtain a determination on the merits. Arranging representation by reputable solicitors, encouraging his niece to assist, and giving information confirming the provision of funds were ancillary to that legitimate purpose. Taken together, those acts did not transform his involvement into conduct warranting a costs order.

4. Public policy recognises the desirability of third-party assistance which gives litigants the benefit of legal representation. Such intervention will not normally make the intervener liable for costs. An agreed or anticipated reward does not necessarily impose liability; the question remains what is just on the individual facts. Bad faith or an ulterior motive may, however, expose an intervener to liability for costs occasioned by the intervention.

5. The deputy judge had not found that Mr Egbe colluded in playing fast and loose with the court, acted from an improper motive, or acquired a personal interest in the litigation’s outcome. Nor was the order based on the later evidence given at the costs hearing or on knowledge that the defence was hopeless.

6. It was unnecessary to determine causation. The court nevertheless considered that the deputy judge had not adequately examined whether costs incurred after Mr Egbe’s funding ceased were attributable to him. The application for permission to appeal did not naturally cause the later costs of assessing damages or pursuing contempt proceedings. Had liability been established, the award would therefore have been reduced substantially.

1. Court of Appeal (Civil Division): Allowed Mr Egbe’s appeal and set aside the exceptional non-party costs order. The court also refused his application to introduce fresh evidence. [2004] EWCA Civ 292

2. Commercial Court: Mr Arthur Marriott QC, sitting as a deputy High Court judge, ordered Mr Egbe to pay £421,857.89 of the claimants’ costs under the court’s non-party costs jurisdiction. No citation is stated in the judgment.