Turvill v Bird & Ors

The discretion to order costs against a non-party under section 51(3) is broad and must be exercised justly. Earlier decisions identify relevant considerations but do not form a rigid rulebook.

Causation is normally relevant, although it is not an absolute precondition. A sufficient connection may arise where a non-party’s conduct deprives the successful party of a realistic opportunity to recover costs. Serious impropriety by a person who controlled the litigation, particularly conduct designed to remove an available source of recovery immediately before insolvency, can justify a non-party costs order.

The respondents obtained judgment against Swancote Developments Ltd and Chartland LLP over defects in their newly built home and associated personal injury claims. Before trial, those companies entered liquidation and the respondents’ judgment was effectively unenforceable.

The Recorder found that Mr Turvill controlled the companies’ litigation. He also found that Mr Turvill procured a prompt £40,000 settlement from Chartland’s insurer by representing that an all-party settlement was possible, then directed that the money be retained by the companies’ solicitors shortly before liquidation. The Recorder made a non-party costs order against him for £30,000.

Mr Turvill appealed, contending that his conduct did not engage the jurisdiction and that causation had not been established.

1. Appeal dismissed. Hamblen LJ, with whom Gross LJ agreed, held that the Recorder had properly exercised the discretion under section 51(3) of the Supreme Court Act 1981. An appellate court could interfere only for an error of principle or a decision outside the generous range of reasonable decisions.

2. The governing question was whether, in all the circumstances, it was just to make a non-party costs order. The authorities, including Petromec Inc v Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038, showed that the jurisdiction must not be over-complicated by treating illustrations as a rulebook. Relevant circumstances included control of the litigation, personal benefit, impropriety and causation.

3. Causation was generally required to some extent, but was not an inflexible precondition. It could concern loss of a realistic opportunity to recover costs as well as the incurring of further costs. The Recorder was entitled to find such a connection here.

4. The payment of insurance proceeds to meet a genuine liability to the solicitors was not unlawful, and Chartland was not obliged to offer the respondents the proceeds. However, Mr Turvill knew that Chartland was insolvent and likely to lose at trial. He secured the insurer’s settlement by a false representation concerning an imminent settlement, caused the proceeds to be diverted, and then proceeded towards liquidation. The result was to prevent the respondents acquiring rights against the insurer under the Third Parties (Rights Against Insurers) Act 1930.

5. The Recorder was entitled to regard the misleading conduct, including misleading evidence in the costs application, as serious impropriety. It deprived the respondents of a realistic opportunity to recover costs and made a £30,000 non-party costs order just. The order was within the range of reasonable discretionary decisions.

• Court of Appeal (Civil Division): Dismissed Mr Turvill’s appeal against the non-party costs order.
• Technology and Construction Court, Liverpool District Registry: Mr Recorder Singer made a non-party costs order requiring Mr Turvill to pay £30,000 towards the respondents’ costs following the underlying judgment of 20 October 2014.