NON PARTY COSTS ORDERS (T17)

What is a non-party costs order (NPCO)?

An order requiring someone who was not a substantive party to the litigation to pay some or all of its costs.

Example: A commercial funder is ordered to contribute towards the successful defendant’s costs.

What provides jurisdiction to make an NPCO?

Senior Courts Act 1981, s.51. The court’s discretion over who pays costs extends to appropriate non-parties.

Example: The defendant applies under s.51 for costs against a person funding the unsuccessful claimant.

What procedural safeguards does CPR 46.2 require?

The proposed non-party must be joined for costs purposes onlyand given a reasonable opportunity to attend the hearing at which the court considers the order.

Example: A director must have an opportunity to oppose an application seeking personal liability for the company’s litigation costs.

Does joinder for costs make the non-party liable for the substantive claim?

No. Joinder under CPR 46.2 is for determining costs liability, rather than automatically making the person a defendant to the underlying claim.

Example:An expert joined for costs purposes does not thereby become a defendant to the original clinical negligence claim.

What is the overriding question under Dymocks Franchise Systems v Todd [2004]?

Whether, taking account of all the circumstances, it is just to make the order. The jurisdiction is fact-sensitive.

Example: The court considers the non-party’s funding, benefit, control and conduct together rather than applying one factor mechanically.

What does “exceptional” mean in the general Dymocks approach?

Outside the ordinary run of cases in which parties litigate for their own benefit and at their own expense. It does not require circumstances that are extraordinary or unique.

Example: A commercially interested outsider financing litigation can bring the case outside the ordinary pattern.

What is a “pure funder”?

Someone with no personal interest, no expected benefit, who is not funding as a business, and who does not seek to control the litigation.

Example: A relative gives financial help without expecting repayment from damages or directing the case.

Are NPCOs generally made against pure funders?

Generally, no. Dymocks recognises that disinterested assistance promoting access to justice should ordinarily be distinguished from commercial or self-interested involvement.

Example:Helping a friend pay legal fees without seeking a return does not ordinarily justify an NPCO.

When may a funder be treated as a “real party” to the litigation?

Where it funds proceedings and also substantially controls them or stands to benefit from them, making the litigation serve its own purposes.

Example: A business finances a claim in return for a substantial recovery and directs its pursuit.

Must both control and financial benefit be established?

Not necessarily. Funding combined with substantial control oran expected benefit may support treating the non-party as a real party. The ultimate question remains justice in the circumstances.

Example: A commercial funder may face liability despite leaving daily decisions to the solicitors.

What is the distinction between facilitating access to justice and pursuing litigation for one’s own purposes?

A pure funder helps another person pursue their rights; a commercially interested funder may use the proceedings to obtain its own financial benefit.

Example: A charitable gift differs from funding provided for 30% of the recovery.

Does an NPCO always cover all the litigation costs?

No. The court determines the appropriate extent of liability, considering the basis for the order and the relevant costs.

Example: An order may cover only costs caused during a particular period or a proportion of appeal costs.

What does Travelers Insurance v XYZ [2019] establish about insurer liability?

An insurer’s involvement does not automatically justify an NPCO. The court must examine its role, the basis of liability and the connection between its conduct and the costs claimed.

Example: Defending insured claims does not necessarily make the insurer responsible for all costs of related uninsured claims.

Why was causation important in Travelers?

Where liability is based on unjustified interference, the applicant must connect that interference with the costs sought. Costs that would have arisen anyway ordinarily do not justify liability on that basis.

Example: If the same costs would have been incurred without the insurer’s disputed conduct, the causal foundation may be missing.

What was the outcome in Travelers?

The Supreme Court allowed the insurer’s appeal and set aside the NPCO. The circumstances did not justify imposing the uninsured claimants’ costs on the insurer.

Example: An inability to recover costs from an insolvent insured defendant does not itself make its insurer liable.

What is the principal guidance from Goknur v Aytacli [2021] concerning directors?

An applicant will usually need to show that the controlling or funding director sought personal benefit from the litigation, or acted with impropriety or bad faith. This is guidance within the overall discretion, rather than an exhaustive statutory test.

Example: A director pursuing a knowingly false defence for personal advantage may face an NPCO.

Is a director automatically liable because they controlled or funded an insolvent company’s litigation?

No. Directors commonly make litigation decisions for their companies. Control, funding and insolvency do not alone establish personal costs liability.

Example: A director honestly pursuing a claim for the company’s benefit is not automatically responsible when it fails.

Why distinguish the company’s benefit from the director’s personal benefit?

A company is a separate legal person. Conduct intended to benefit the company is not necessarily litigation pursued for the director’s own purposes.

Example:Trying to recover money owed to the company differs from using its proceedings to secure a separate personal advantage.

What was the outcome in Goknur?

The refusal to make an NPCO against the director was upheld. The necessary justification for personal liability had not been established.

Example: Even substantial involvement in unsuccessful company litigation does not dispense with the need to justify the order.

Can a credit hire company face an NPCO?

Yes. Its financial benefit, involvement and connection with the proceedings may justify an order, subject to the court’s discretion.

Example: A company seeking recovery of its hire charges through the claimant’s proceedings may be exposed to costs liability.

What did Select Car Rentals v Esure Services [2017] establish?

The court upheld an NPCO against the credit hire company. Its commercial interest and connection with the litigation justified the order on the facts. Ordinary industry arrangements did not confer immunity.

Example: A hire company cannot defeat an application simply by saying its contractual arrangements are standard practice.

Does financial benefit automatically make a credit hire company liable?

No. Financial benefit is relevant, but the applicant must still establish that making the order is just.

Example: Identifying a hire company as a beneficiary starts the analysis; it does not determine the outcome.

Does the claimant’s QOCS protection automatically protect the credit hire company?

No. The claimant’s protection and the non-party’s potential liability are separate questions.

CPR 44.16(3) expressly contemplates orders against third-party beneficiaries, subject to CPR 46.2.

Example: A defendant may seek an order against the hire company even where enforcement against the injured claimant is restricted.

Is it accurate to say later credit hire NPCO cases all favoured the hire companies?

No. Outcomes depend on the circumstances.

Tescher v Direct Accident Management [2025] confirms that a credit hire company can be the real financial beneficiary even though the claimant also benefits from the hire arrangement.

Example:The claimant’s receipt of a replacement vehicle does not eliminate the company’s commercial interest in recovering hire charges.

How does the basis for an NPCO against an expert differ from commercial funding cases?

It generally concerns a serious breach of the expert’s duty to the court causing unnecessary costs, rather than funding, control or a share of the recovery.

Example: An expert continues providing evidence despite knowing they cannot competently fulfil their role.

Is criticism of an expert sufficient for an NPCO?

No. The threshold is high: an unsuccessful opinion or ordinary criticism does not automatically justify an order. Serious failings, such as flagrant or reckless disregard of duties, and resulting unnecessary costs must be examined.

Example: An expert whose reasonable opinion is rejected at trial is not automatically liable for the opponent’s costs.

What happened in Thimmaya v Lancashire NHS Foundation Trust [2020]?

An NPCO was made against the claimant’s expert for costs arising after the point when he should have stopped acting because he was unfit to continue.

The court did not impose liability for every earlier criticism of his expertise.

Example: Liability focused on the unnecessary continuation of proceedings after withdrawal should have occurred.

What happened in Robinson v Liverpool University Hospitals NHS Trust [2023]?

The NPCO against the expert was overturned on appeal.

Criticisms did not establish the exceptional misconduct necessary, and the expert was qualified to address the relevant issues.

Example: Differences between the expert’s professional role and the treating clinician’s role did not automatically make the evidence improper.

Can a solicitor face an NPCO because of their own financial interest in proceedings?

Yes, where the circumstances justify treating the solicitor as acting beyond the ordinary professional role and pursuing a sufficiently substantial personal interest.

An ordinary entitlement to fees is not, by itself, enough.

Example: An appeal substantially pursued to preserve the firm’s own entitlement to fees may require closer examination.

What happened in Myatt v National Coal Board (No 2) [2007]?

Following unsuccessful appeals concerning unenforceable CFAs, the solicitors were ordered to pay 50% of the respondent’s appeal costs.

Their substantial financial interest justified a contribution, while the claimants also had an interest in the appeals.

Example: Liability was apportioned rather than placing every appeal cost on the solicitors.