PI Brief Update

Unsuccessful parties can be ordered to pay the costs involved in applications against a non-party: McCarthy v Jones & Anor [2023] EWCA Civ 589 - Anisa Kassamali, Temple Garden Chambers

07/06/23. The Court of Appeal considered an appeal against a decision that an unsuccessful party pay the costs involved in applications in relation to a non-party.

The Claimant was awarded a sum in excess of £1 million for breach of contract. During the course of the proceedings, he had applied to the Court for an order requiring a third party to preserve documents, and for an order allowing him to rely on documents disclosed in the proceedings for the purpose of pursuing that third party. It was envisaged that a third party application for disclosure would follow but, in the event, this was not necessary as the third party gave voluntary disclosure.

The Court ultimately ordered that the unsuccessful Defendant pay the costs of this application. That decision was appealed.

Decision

The Court of Appeal dismissed the appeal, holding that the decision regarding the Defendants’ payment of those costs fell within the wide ambit of his discretion. Lewison LJ handed down judgment (with which Baker and Elisabeth Laing LJJ agreed).

Lewison LJ held that the first instance judge would have been entitled to decide the issue either way. He summarised the merits of both parties arguments at [78]-[79]:

“78. [The Defendant’s counsel] argued with some force that [the Defendant] was not a party to the application itself; he did not cause costs to be incurred in making it; and the issue was in effect between [the Claimant] and [the third party]. It was unfair to require him to pay any part of the application against the [third party]. As regards that application he was in the same position as a third party against whom a third party costs order is sought. Such a person will not usually be liable unless he has in some way caused the costs to be incurred.

79. [The Claimant’s counsel], who argued this appeal on behalf of [the Claimant] pointed out that the trigger for the application was the discovery that [the third party] had been passing documents to [the Defendant]; that [the Defendant’s] disclosure of those documents was the trigger for the application; that the application was intended as a prelude to the making of an application for third party disclosure (which in the event turned out to be unnecessary) and that if a successful third party disclosure application had been made the costs of such an application would have been recoverable by the successful party in the underlying litigation. In addition, the judge reduced the recoverable costs by 10 per cent overall which in the context of this particular application could be attributed to such of the costs as were occasioned by the application under CPR Part 31.22.”

Having considered both sides of the argument, Lewison LJ held that the decision was one which fell within the judge’s ‘wide ambit’ of discretion. He concluded as follows at [80]: “There is, in my judgment, force in both sides of the argument. The judge could legitimately have taken either view. But the question is not whether we would have made the order that the judge did. It is whether the order was within the wide ambit of his discretion. Another judge might well have made a different order; but that is beside the point. I have not been persuaded that the order that the judge made fell outside the scope of his discretion.”

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