Ventures Food Limited v Little Dessert Shop Limited

A non-party costs order is exceptional, but the court has a wide, fact-specific discretion under Senior Courts Act 1981, section 51 and CPR rule 46.2. The central question is whether it is just to treat the non-party as sufficiently connected with the litigation to bear costs. Control of the litigation, participation in framing and presenting the case, and serious litigation misconduct are important considerations, but they do not form a mandatory checklist. Findings of fraud or dishonest conspiracy should not ordinarily bind a non-party in a summary costs application unless the allegation was clearly pleaded and the non-party had a fair opportunity to answer it. Insolvency is not, by itself, a bar to a non-party costs order. The order was made against company controllers who abandoned litigation shortly before trial without proper notice, causing unnecessary costs.

Ventures Food Limited brought proceedings against Little Dessert Shop Limited concerning its occupation of premises and alleged entitlement under an express trust. The claim was dismissed at trial, and judgment was entered for Little Dessert Shop Limited on its counterclaim. Ventures Food Limited subsequently entered creditors’ voluntary liquidation.

Little Dessert Shop Limited applied under section 51 of the Senior Courts Act 1981 and CPR rule 46.2 for costs orders against Muhammad Khuram Shahzad Afzal and Abdul Naveed Afzal, who had controlled the claimant’s litigation. The application relied on alleged fabrication of documentary evidence and failures to progress or attend the proceedings. The central issues were whether the third parties could fairly be bound by findings made at the trial and whether their conduct made personal liability for costs just.

1. Jurisdiction and governing approach. Section 51 of the Senior Courts Act 1981 confers a wide power to determine by whom costs are to be paid. CPR rule 46.2 provides the procedural framework. The discretion remains fact-specific, and a non-party costs order is exceptional because it falls outside the ordinary case of parties pursuing litigation for their own benefit and at their own expense.
2. Connection with the litigation. The relevant question is whether the non-party had a sufficiently close connection with the proceedings to justify treating them as a party for the purposes of costs and to make the summary procedure fair. Control and funding may be relevant, but personal benefit, impropriety and bad faith are not mandatory cumulative requirements. The guidance in Goknur Gida Maddeleri Enerji Imalat Ithalat Ihracat Ticaret Ve Sanati AS v Aytacli was treated as useful guidance rather than a checklist.
3. Alleged fabrication. The court distinguished Oriakhel v Vickers. The third parties here controlled the litigation and were closely connected with it, unlike the witness in that case. Nevertheless, the trial finding that the email had been manipulated did not justify binding the third parties to a finding that they had conspired to fabricate it. That allegation had not been specifically pleaded or put to them with a fair opportunity to respond.
4. Litigation misconduct. The third parties controlled and pursued the claim, then abandoned it when funding ran out. They failed to instruct the expert, attend the pre-trial review, notify the defendant about cross-examination, or attend trial. Those failures breached the practical requirements of the overriding objective in CPR rules 1.1 and 1.3 and directly caused unnecessary expenditure.
5. It was therefore just to order the third parties jointly and severally to pay Little Dessert Shop Limited’s costs of the main action from 13 December 2021 through the trial. The order did not extend to costs arising from the unpleaded allegation of dishonest conspiracy.

The judgment records that the underlying claim was dismissed at trial and judgment was entered for Little Dessert Shop Limited on its counterclaim. The present judgment determined the subsequent application for costs against the two third parties. No appeal stage is stated.