PT-2024-BRS-000056 - [2025] EWHC 2325 (Ch)

The jurisdiction to add a party to proceedings for costs-only purposes arises in this way. The court has power to make a costs order against a non-party, under section 51(3) of the Senior Courts Act 1981, as interpreted by the House of Lords in Aiden Shipping Co v Interbulk Ltd [1986] AC 965, and many subsequent decisions. But the jurisdiction to be exercised under section 51 is summary in nature, which means that it is not always suitable to be exercised.

In Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23, the bank was successful in litigation against a Turks and Caicos Islands company. It sought a non-party costs order against the sole shareholder and director of the company. The trial judge made the order, and the Court of Appeal affirmed his decision. Moore-Bick LJ, giving the judgment of the court (himself, Lewison and Simon LJJ) said:

“21.

… When an order for costs is sought against a third party, the critical factor in each case is the nature and degree of his connection with the proceedings, since that will ultimately determine whether it is appropriate to adopt a summary procedure of the kind envisaged in the authorities …

22.

… an application under section 51 does not involve the assertion of a cause of action; it is a request for the court to exercise a statutory discretion in relation to the costs of proceedings before it. Section 51 is now the source of the court's discretion to determine who shall bear the costs of proceedings, whether they are parties to the proceedings or third parties. In principle, therefore, one would expect the procedure in each case to be substantially the same and the order to reflect broadly similar matters, such as the conduct of the proceedings and the nature of the party's or third party's involvement. In our view there is a clear distinction to be drawn between the process by which the court makes an order for costs at the conclusion of a trial, whether that order involves the parties alone or one or more persons who are not parties, and separate proceedings against a third party consequent upon the outcome of the trial. In the former case, the ordinary rules of evidence do not apply, precisely because the person against whom an order for costs is sought has had a sufficiently close connection with the proceedings to justify the court's treating him as if he were a party.

23.

At an early stage in his opening [counsel for the applicant] identified a number of facts which, he submitted, [the non-party] could not, or had not attempted to, challenge and which were sufficient to establish that he was so closely involved in the litigation that there was no injustice in adopting a summary procedure for dealing with the Bank's application and holding him bound by the findings of fact made by the judge in the main action …

[ … ]

26.

In our view, the facts relied on by [counsel for the applicant] in this case are not seriously open to challenge …

27.

In those circumstances it is difficult to see on what basis it could be said that it was unjust in principle to adopt a summary procedure of the kind envisaged in Symphony v Hodgson or for the judge to exercise his discretion on the basis of his findings of fact in the main action. We therefore agree with the judge that the court is not concerned in this case with the scope or application of the rules of evidence which would be applicable if this were an independent claim brought against an unrelated third party … ”

Where a party to litigation wishes to make an application for a non-party costs order, it must first join the non-party for the purposes of costs. CPR rule 46.2 relevantly provides:

“(1)

Where the court is considering whether to exercise its power under section 51 of the Senior Courts Act 1981 (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to proceedings, that person must –

(a)

be added as a party to the proceedings for the purposes of costs only; and

(b)

be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.”

The power of the court to add a party to existing proceedings is contained in CPR rule 19.2(2), which provides:

“(2)

The court may order a person to be added as a new party if –

(a)

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b)

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”