Centrehigh Ltd v Kare Amen & Ors

Applications for third-party costs orders under section 51 of the Senior Courts Act 1981 are ordinarily dealt with summarily. The court must do the best justice possible from the documents and witness statements, while keeping the satellite litigation proportionate and within proper bounds. Cross-examination is permissible in principle, but should be ordered only where it is necessary to resolve issues fairly and cannot be avoided through case management. A party is not ordinarily entitled to convert a section 51 application into a full trial of every disputed fact. Extensive disclosure, limited direct evidence, exploratory cross-examination and disproportionate additional cost may justify refusing permission.

The claimant sought a third-party costs order against the fourth and fifth defendants under section 51 of the Senior Courts Act 1981 and rule 48.2 of the Civil Procedure Rules 1998. The underlying litigation had proceeded largely by concession and default, leaving disputed issues concerning control, funding, conduct of the litigation and alleged asset transfers. The claimant wished to cross-examine eight defence witnesses at the forthcoming hearing. The central issue at this pre-trial review was whether that cross-examination should be permitted, or whether the application should remain a summary determination based on the existing documentary and witness evidence.

1. The application for cross-examination of the defendants’ witnesses was dismissed. No order was made permitting cross-examination of the claimant’s witnesses.

2. Third-party costs applications engage an exceptional, fact-sensitive jurisdiction. The ultimate question is whether an order is just in all the circumstances. The court must recognise that a non-party who funds and substantially controls litigation, or benefits from it, may be treated as the real party, but the present judgment concerned the procedure for determining that issue.

3. The procedure is ordinarily summary. The court may limit the hearing, cross-examination and issues, and may determine factual matters from witness statements and documents. It must achieve the fairest result reasonably possible without routinely providing the full pre-trial and trial procedures applicable to ordinary litigation.

4. The court had jurisdiction to permit cross-examination, as recognised in Greco Air Inc. v Tilling [2009] EWHC 115 (QB). That power must be exercised with regard to proportionality, the ancillary nature of the proceedings and the policy against satellite litigation becoming uncontrolled. Cross-examination may be appropriate where oral evidence is the only fair way to resolve an issue not determined in the underlying proceedings.

5. Here, the claimant had extensive disclosure from the liquidator, including material otherwise privileged, and specific disclosure from the defendants. The defendants had provided substantial first-hand evidence. The claimant’s proposed examination was directed to all eight witnesses and the whole range of factual disputes, and was largely exploratory rather than supported by a developed body of contradictory direct evidence. It would therefore create a full trial of the satellite litigation. The existing material was sufficient for the court to do justice as far as possible on a summary basis.

6. The claimant was permitted to serve a witness summary concerning Mr Dixon, whose earlier interview transcript was admissible hearsay. The judge hearing the substantive application would decide whether further oral evidence in chief should be elicited if Mr Dixon attended. Time for further claimant evidence was extended to 4.30 pm on 11 March 2013, and further information and disclosure concerning the amount of the costs claim were directed.