Parker v Mowlem Plc & Ors

In a costs dispute arising from a preliminary insurance issue, the court may look beyond the formal parties to the issue and identify who had the real interest in its resolution. A claimant who restores an insolvent insured to the register, needs the insurance policy to make a claim worthwhile, and actively contests the insurer’s application may properly be ordered to pay the insurer’s costs. The insurer’s initiative in seeking the preliminary determination does not prevent that order. The court may also consider the parties’ relative and contingent interests. The claimant’s status as an innocent injured party does not determine costs, and the availability of another reasonable costs order does not show that the order made was wrong in principle.

The claimant brought a workplace injury claim against the main contractor, an intermediate subcontractor and his employer. The subcontractor was in liquidation and had no apparent asset apart from possible rights under a liability insurance policy. The claimant had it restored to the register so that he could pursue the claim and potentially enforce any judgment against the insurers under the Third Parties (Rights Against Insurers) Act 1930.

The insurers obtained a preliminary determination that they were not obliged to indemnify the subcontractor. That conclusion was not challenged. The issue on appeal was whether the County Court judge had properly exercised his discretion by ordering the claimant, rather than the subcontractor or the main contractor, to pay the insurers’ costs.

1. Appeal dismissed. The County Court judge had exercised his discretion as to costs on correct principles and had made an order that was rational and reasonably open to him.
2. Although the preliminary issue formally concerned the relationship between the subcontractor and its insurers, the subcontractor had no assets, representation or separate interest in the matter. The claimant had restored it to the register because its insurance rights were potentially the only means of recovering damages. There were therefore two live issues: whether the claimant could establish liability against the subcontractor, and whether the insurance policy provided a valuable asset to meet that liability.
3. The claimant could have adopted a neutral position on the insurers’ application. Having actively opposed the application, however, he could properly be treated as the unsuccessful party in the practical resolution of the issue. The insurers’ having initiated the application did not alter the fact that the claimant’s forensic steps had created the situation in which the issue arose.
4. The judge was entitled to order the claimant alone to pay the insurers’ costs. The main contractor’s interest was doubly contingent: it depended on its own liability to the claimant and on a contribution claim against the subcontractor. It was open to the judge to require the main contractor to bear part of the costs, but he was not obliged to do so.
5. The claimant’s injury and the insolvency or lack of insurance of the relevant companies were irrelevant to whether the costs discretion had been properly exercised. The order was affirmed and the appeal was dismissed.

• Court of Appeal (Civil Division) — On 11 April 2008, the court dismissed the appeal and affirmed the costs order: [2008] EWCA Civ 1022.
• Cambridge County Court — HHJ Yelton determined that the insurers were not bound to indemnify the subcontractor and ordered the claimant to pay the insurers’ costs. The indemnity decision was not challenged on appeal.