Weatherford Global Products Ltd v Hydropath Holdings Ltd & Ors

The court has jurisdiction under Senior Courts Act 1981, section 51, to order a non-party to pay litigation costs. The discretion is exceptional but fact-sensitive, and the governing question is whether, and to what extent, such an order is just. Relevant considerations include control of the litigation, financial benefit, funding, insolvency or impecuniosity of the litigating party, impropriety and speculative litigation. Funding is not a jurisdictional precondition, and control and funding need not both be present. A warning before the application is material but is not an absolute requirement or automatic ground for reducing the order.

Following judgment on liability in favour of Weatherford and other parties, Weatherford and the fourth to sixth parties applied to join Dr Stefanini and obtain a personal non-party costs order against him. Hydropath and Clearwell had failed to pay substantial interim costs payments.

The evidence showed that Dr Stefanini controlled both companies, directed the litigation, stood to benefit from it and funded a substantial part of the proceedings. The defence was not itself unreasonable, but the counterclaims were found to be speculative and to have generated costs that would not otherwise have been incurred. The central issue was whether it was just to make a personal costs order despite the absence of an advance warning.

1. The court allowed the applications against Dr Stefanini. He was ordered personally to pay Weatherford’s costs arising out of and connected with the defence of the counterclaim, and the costs of MSL and Messrs Clark and Lauretti incurred as defendants to the counterclaim. No order was made against him for Weatherford’s costs of pursuing its claim against Hydropath.

2. Section 51 of the Senior Courts Act 1981 gives the court full power to determine by whom and to what extent proceedings costs are to be paid. The jurisdiction is exceptional, but that means outside the ordinary run of litigation. The ultimate question is whether making the order is just in all the circumstances.

3. The categories of case are neither rigid nor closed. The court may consider whether the non-party controlled the litigation, funded it, was the real party interested in the outcome, stood to benefit from it, acted improperly or pursued speculative litigation. Funding is not a jurisdictional precondition. Control and funding are alternatives, although funding may be highly relevant to the exercise and extent of the discretion.

4. The absence of an advance warning is a material factor, but it is not a fixed prerequisite and does not necessarily require the court to refuse or reduce an otherwise justified order. Its weight depends on the facts, including whether a warning would realistically have altered the non-party’s conduct.

5. Dr Stefanini was the major shareholder, controlling mind and effective decision-maker for Hydropath and Clearwell. He controlled the defence and counterclaim, funded approximately half the litigation costs and stood to obtain the financial benefit. Hydropath was otherwise technically insolvent and Clearwell was financially dependent on it. The counterclaims were speculative, and their pursuit was substantially his decision. These factors made it just and fair to impose personal liability for the costs caused by those counterclaims.

Not stated in the judgment; this was a first-instance costs decision following the court’s earlier liability judgment.