Catalina London Ltd v Kapsokolis & Anor

An order for costs against a non-party under Senior Courts Act 1981, section 51, is a fact-sensitive discretionary remedy. The court must decide whether the order is just in all the circumstances, having regard to matters such as funding, control, personal benefit and causation. The applicant bears the burden of proving the essential facts on the balance of probabilities. No special summary-judgment standard applies. A non-party who assumes effective conduct of proceedings may become liable for costs incurred thereafter, but the court may allow reasonable time for a layperson to obtain legal advice before liability begins.

The appellant sought a non-party costs order against the second respondent following English proceedings to register and enforce a Greek judgment obtained by the first respondent. The registration order was set aside because the first respondent had died before it was made. The second respondent had participated in settlement discussions and later notified the court that he was the assignee of the judgment debt and sought an interruption or adjournment of the proceedings.

The issue was whether the second respondent had funded, controlled or effectively conducted the English proceedings, whether his conduct caused the costs claimed, and whether it was just to make a costs order against him.

1. Application of section 51. Section 51 of the Senior Courts Act 1981 gives the court a wide discretion to determine by whom and to what extent costs should be paid. The discretion must be exercised justly on the facts of the particular case. The guidance in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Costs) [2004] UKPC 39 identifies relevant factors, including funding, control and benefit, but does not impose a rigid checklist.
2. The applicant must establish the facts relied on. Where evidence is disputed, the ordinary civil standard applies: essential facts must be proved on the balance of probabilities. No different summary-judgment standard is required. The conduct of the non-party must also have caused the costs claimed, as recognised in Petromec Inc v Petroleo Brasileiro SA Petrobras [2005] EWHC Civ 1038.
3. The evidence did not establish that the second respondent funded or controlled the English proceedings before the first respondent’s death became known. The English solicitors had acted on instructions transmitted through the first respondent’s attorney and English-speaking lawyer. The second respondent’s participation in settlement discussions and correspondence did not make him the effective party.
4. After learning of the death, the second respondent notified the court and the appellant that he claimed an assignment of the judgment debt, sought an interruption or adjournment, and effectively assumed conduct of the proceedings. In that capacity he came within the potential scope of a non-party costs order. Bank of Scotland v Azam Qutb [2012] EWCA Civ 1661 showed the importance of knowledge that the non-party lacked authority, but the evidence here did not establish comparable earlier misconduct.
5. A limited costs order was therefore appropriate for costs incurred after the second respondent assumed conduct. The court allowed reasonable leeway for him, as a layperson, to obtain legal advice. The precise date and extent of the order were left for further submissions.

The judgment records that Deputy Master Partridge granted registration of the Greek judgment on 22 September 2015. Mrs Justice Nicola Davies subsequently set aside that order because the judgment creditor had died before registration and directed that the second respondent be added for the purpose of determining costs. The present judgment determined the resulting non-party costs application.