Bombardier Transportation UK Ltd v Merseytravel (No. 3: Costs) (Rev 1)

Costs against a non-party are exceptional only in the sense that they fall outside the ordinary run of litigation. The governing question is whether, in all the circumstances, it is just to make the order. The court must focus particularly on whether the non-party was the real party to the litigation, assessed by the nature and degree of its connection with the proceedings. Exceptional or unreasonable conduct is not a prerequisite. In procurement litigation, a successful tenderer opposing disclosure of its confidential tender documents may be liable for costs where its opposition causes the application and is unjustified. Confidentiality remains important, but allegations that disclosure is sought for commercial advantage require proper evidential support. The costs order should reflect the parts of the application on which the claimant succeeded.

Bombardier successfully applied to vary a consent order governing disclosure of highly sensitive material in a procurement challenge. The material included elements of Stadler’s successful tender. Merseytravel, the relevant authority, adopted a neutral position, while Stadler opposed the application through Merseytravel.

The substantive application was determined in [2017] EWHC 726 (TCC). The remaining issue was whether Stadler, although not a party to the proceedings, should pay Bombardier’s costs under section 51(3) of the Senior Courts Act 1981, and, if so, in what amount.

1. Costs against a non-party. The court applied the principles summarised in Dymocks Franchise Systems (NSW) Pty v John Todd and Others [2004] UKPC 39. An order against a non-party is exceptional only in the ordinary sense. The ultimate question is whether the order is just in all the circumstances. The jurisdiction is fact-specific, and the court should consider whether the non-party was the real party to the litigation.
2. The court also relied on Deutsche Bank AG v Sebastian Holdings Inc and another [2016] EWCA Civ 23. The critical consideration is the nature and degree of the non-party’s connection with the proceedings. The trial judge has a wide discretion, supported by Petromec Inc v Petrolio Brasileiro SA Petrobras [2006] EWCA Civ 1038 and Alan Phillips Associates Limited v Terence Edward Dowling [2007] EWCA Civ 64.
3. It was unnecessary to prove exceptional or unreasonable conduct. Nevertheless, Stadler’s conduct was unreasonable. It opposed disclosure which should have been agreed, caused the court time to be incurred, and made an unjustified allegation that Bombardier sought the material to obtain a competitive advantage. Merseytravel was neutral, so Stadler was plainly the real party to the application.
4. In procurement cases, successful tenderers must balance confidentiality against the fair disposition of an unsuccessful tenderer’s challenge. Where confidentiality rings are used, a non-party needs very good evidence before alleging that disclosure is sought for commercial advantage rather than for the purposes of the litigation.
5. The costs order was adjusted to reflect the unsuccessful part of Bombardier’s application. Stadler was ordered to pay Bombardier’s disclosure-application costs, summarily assessed at £35,000.