Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

Section 51 of the Senior Courts Act 1981 gives the court a broad discretion to make costs orders against non-parties where justice requires. The discretion is fact-sensitive. “Exceptional” means outside the ordinary run of litigation, not rare.

Family members who fund litigation are not automatically pure funders. The court must assess whether the funder controlled or benefited from the litigation, the nature and purpose of the funding, any causal connection with costs, warnings, and conduct affecting recovery. Causation is important but is not an absolute precondition. Conduct which helps make recovery from the litigating party difficult may independently support an order.

The claimants sought non-party costs orders under section 51 of the Senior Courts Act 1981 against Mrs Arip and her mother, Ms Asilbekova. Neither had been a party to the underlying fraud proceedings, in which judgment had been entered against Mr Arip and Ms Dikhanbayeva following a lengthy trial.

Mrs Arip had paid approximately £13.9 million towards the defence costs, while Ms Asilbekova had made a direct payment of £500,000. The claimants argued that funds had been transferred within the family and used both to fund the defence and to impede enforcement. The defendants maintained that they were pure funders acting from familial obligation. The central issue was whether, in all the circumstances, justice required costs orders against either or both non-parties.

1. The application was granted. The claimants were entitled to look to both Mrs Arip and Ms Asilbekova for payment of their costs of the litigation.

2. Section 51 confers a broad, fact-sensitive discretion. The only immutable principle is that the discretion must be exercised justly. The ordinary protection for pure funders is not an inflexible rule, particularly where the funder substantially controls or benefits from the litigation.

3. Mrs Arip was not a pure funder. The court found that the transfer of approximately US$181 million to her shortly after proceedings began had left Mr Arip dependent on her for funding. The timing, scale and circumstances supported the conclusion that the subsequent funding arrangements had been planned. She also funded the defence of Ms Dikhanbayeva, which could not be explained by spousal affection.

4. Mrs Arip benefited from the litigation because a successful defence would protect assets transferred to her and support the continuation of the family’s lifestyle. The court also found that asset movements had made enforcement more difficult. Causation was established in relation to costs incurred after her first payment, but causation was not a legal precondition to a section 51 order.

5. Ms Asilbekova’s direct payment was relatively small and, viewed alone, would not justify an order. However, the evidence showed that substantial funds had been parked with her, that Mrs Arip exercised practical control over her accounts, and that the funds were available as a family resource. Ms Asilbekova had assisted in the asset-dissipation arrangements and had received substantial sums without consideration. Those matters made an order just notwithstanding the limited direct funding.

6. The absence of a warning was relevant but carried little weight. The distinction between funding a claimant and funding a defendant was also relevant but not decisive. The court proceeded cautiously because the application was summary and the non-parties had not been witnesses at the original trial.

First-instance decision on applications for non-party costs orders. No appellate history is stated in the judgment.