Non-Party Cost Orders

Costs order made against family members, who had paid defendant’s costs 

Case summary

In Kazakhstan Kagazy Plc and others v Zhunus and others [2019] EWHC 2630 (Comm) the Court considered making a non-party cost order against two of the defendants in a fraud case. 

The claimant sought a non-party costs order against two of the defendants in this fraud case. Pursuant to section 51 of the Senior Courts Act 1981, the Court is given a wide discretion to determine by whom and to what extent the costs of proceedings are to be paid. Therefore, the Court can make orders for costs against non-parties to the proceedings. 

Key facts and decision

The defendants had been unsuccessful. The claimant sought an order that the mother-in-law and wife of the second defendant meet the costs of the case. The mother-in-law and wife argued that they were both “pure funders”  on the basis that they were related to the second defendant.

The court held that being a related to a party involved in proceedings did not per se prevent a non-party costs order from being made. The facts of the case must be considered.

The court determined that the second defendant was the beneficiary under a trust and that trust funds had been transferred to the wife, who in effect stepped into the shoes of the trustees. The defendant could therefore look to his wife as a source of funding. The court went on to hold that both mother-in-law and the wife lived extravagant life styles and that the sums they paid to the defendant’s solicitors were paid to protect that lifestyle. The wife and mother-in-law therefore stood to benefit from the litigation and were not “pure funders”. The court made the costs order against them both.

Significance 

Whilst this case is far from the norm, and relies very closely on the specific facts, it reinforces the Court’s jurisdiction to make a non-party costs order where those supplying the funds for litigation are closely connected to a party and will benefit in some way from the outcome of the case.

Should you have any questions in respect of the above or require more information about litigation costs generally, then please contact James Thornton or Katherine Hall from our Litigation and Dispute Resolution Team.

James Thornton – Head of Litigation and Dispute Resolution

Email: jthornton@fionabruce.co.uk

Tel: 01925 217026

Katherine Hall – Trainee Solicitor

Email: khall@fionabruce.co.uk

Tel: 01925 263273

The contents of this article do not constitute legal advice and are provided for general information purposes only.