PME v The Scout Association

A non-party costs order is an exceptional exercise of the court’s discretion. The central question is whether, in all the circumstances, it is just to make the order. A solicitor acting under a lawful CFA lite or capped CFA does not become the real party merely because the solicitor funds work, controls costs proceedings or benefits from recovery. CPR 44.16 concerns substantive claims made for the financial benefit of someone other than the claimant. It does not extend to a solicitor’s interest in recovering the claimant’s costs. QOCS may confer an indirect benefit on solicitors, but that consequence does not transfer the claimant’s costs liability to them. An order would be inconsistent with established authority and the proper use of such funding arrangements unless something more takes the solicitor outside the ordinary role of solicitor.

The claimant brought a personal injury claim which settled after acceptance of a Part 36 offer. A costs-only order was made, followed by detailed assessment and appeals. The claimant was ordered to pay costs arising from the assessment and appeals, but QOCS prevented enforcement without permission and the effect of Ho v Adelekun prevented set-off.

The defendant applied for a non-party costs order against the claimant’s solicitors, who acted under a capped CFA. The defendant argued that the solicitors were the real party because they controlled and funded the costs proceedings and stood to receive the benefit of any increased recovery. The central issues were the scope of CPR 44.16 and section 51 of the Senior Courts Act 1981, and whether justice required an order.

1. Jurisdiction. CPR 44.16 does not create a broader costs jurisdiction than section 51 of the Senior Courts Act 1981. It identifies categories of non-party who may be exposed within the QOCS regime. The reference to a claim made for another person’s financial benefit concerns the substantive claim, such as a subrogated or credit-hire claim, not the recovery or assessment of the claimant’s costs. The application concerning the appeal before Stewart J therefore had to be made in the appeal court.
2. Applicable principles. The discretion to make a non-party costs order is fact-specific and must be exercised justly. The solicitor’s status as the real party cannot be separated from the question whether the solicitor acted outside the ordinary role of solicitor. Flatman v Germany establishes that a solicitor doing no more than the legislation permits in funding a CFA case is not thereby acting outside that role or becoming a real party.
3. Application. BBK’s capped CFA was lawful. In pursuing the claimant’s costs, BBK was doing what solicitors commonly do under CFA lite and capped-CFA arrangements. The fact that the claimant had little direct interest in the detailed assessment, and that BBK stood to benefit from recovery, did not by itself justify an order. There was no allegation supporting wasted costs, misconduct or indemnity costs, and no reason to conclude that BBK’s conduct would have differed if the claimant had retained a greater financial interest.
4. QOCS and access to justice. Any reduced financial risk to solicitors was an indirect consequence of QOCS. It did not follow that solicitors should pay instead. Treating such orders as available whenever a solicitor under a CFA lite or capped CFA pursued costs would make exceptional orders routine and undermine established funding arrangements and access to justice.
5. Warning and delay. Although not necessary to the result, the court considered that a defendant intending to seek an order against a solicitor should ordinarily give notice, and that delay may be relevant. In all the circumstances it would not be just or consistent with authority to make the order. The application was dismissed.

The judgment describes earlier costs assessments and appeals, including an appeal dismissed by Stewart J on 12 December 2019. This judgment determined the defendant’s separate application for a non-party costs order.