What Is a Non-Party Costs Order?

A non-party costs order is an order requiring someone who was not formally a party to the proceedings to contribute to or meet the costs of litigation. It is one of the most powerful – and most carefully scrutinised – costs tools available in civil litigation.

The jurisdiction to make such an order derives from section 51 of the Senior Courts Act 1981, which gives the High Court and Court of Appeal a broad discretion to determine by whom and to what extent the costs of proceedings are to be paid. CPR 46.2 sets out the procedural requirements for making a non-party costs application, including the requirement to give the non-party notice and an opportunity to be heard before any order is made.

Non-party costs orders are not routine. The courts have consistently approached them with caution, recognising that they represent a significant departure from the general principle that costs liability falls on the parties to the litigation. But where the circumstances justify it, the jurisdiction is well established and increasingly relied upon – particularly in commercial litigation, group actions, and cases involving litigation funders.

The Statutory Basis: Section 51 of the Senior Courts Act 1981

Section 51 of the Senior Courts Act 1981 provides that the costs of an incidental to all proceedings in the High Court and Court of Appeal shall be in the discretion of the court. Critically, it gives the court power to make a costs order against a person who is not a party to the proceedings – a jurisdiction confirmed and developed through a substantial body of Court of Appeal and Supreme Court case law.

The leading authority remains Symphony Group plc v Hodgson [1994] QB 179, in which the Court of Appeal set out the principles governing the exercise of the section 51 jurisdiction. The court confirmed that while the jurisdiction is broad, it should be exercised with caution and only where there is a good reason to depart from the ordinary rule that costs orders are made against parties to the litigation.

Subsequent decisions – including Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39 and Travelers Insurance Company Ltd v WYZ [2019] UKPC 48 – have developed and refined those principles, particularly in the context of litigation funders, insurers, and those who substantially control proceedings for the purposes of costs.

When Will a Court Make a Non-Party Costs Order?

The courts have identified several categories of cases where a non-party costs order is most likely to be considered:

The “real party” to the litigation. Where a non-party has substantially controlled or funded the proceedings, directed the litigation strategy, and stood to benefit from a successful outcome, they may be treated as the real party to the litigation for costs purposes. A person who is substantially controlling proceedings from behind the scenes – whether as a funder, insurer, or otherwise – takes on a corresponding risk of an adverse costs order.

Litigation funders. Commercial litigation funders who finance claims in return for a share of the proceeds are an increasingly common target for non-party costs applications. Where a funder has exercised a degree of control over the proceedings and the funding party is unable to meet an adverse costs order, the courts may look to the funder to meet or contribute to those costs.

Insurers. Where an insurer has funded and controlled the defence of proceedings – effectively making them the real party defending the claim – they may be exposed to a non-party costs order If the insured loses. This was directly addressed in Travelers v WYZ, where the Supreme Court confirmed that insurers funding litigation are not automatically immune from non-party costs liability.

Solicitors and legal representatives. In limited circumstances, a solicitor who has acted in proceedings under a conditional fee agreement or other funding arrangement, and who has behaved improperly or in a manner that has caused the other party to incur costs, may be the subject of a non-party costs application. This is distinct from a wasted costs order under the Solicitors Act and CPR 46.8, though the two jurisdictions can overlap in practice.

The Procedural Requirements Under CPR 46.2

Before a non-party costs order can be made, CPR 46.2 requires that:

• The non-party must be added to the proceedings for the purposes of costs only
• The non-party must be given a reasonable opportunity to attend a hearing and be heard on the question of whether an order should be made against them
• The application should normally be made as soon as practicable and before the costs of litigation have been finally assessed.

The requirement to give the non-party proper notice and an opportunity to be heard is fundamental. Courts have set aside non-party costs orders where this procedural safeguard has not been observed, and practitioners should ensure that the CPR 46.2 process is followed carefully from the outset of any such application.

Access to Justice Considerations

One of the recruiting themes in non-party costs case law is the tension between the legitimate exercise of the section 51 jurisdiction and the principle of access to justice. Courts have been careful not to apply non-party costs orders in a way that would deter genuine funders or supporters from assisting parties who could not otherwise afford to pursue or defend legitimate claims.

This consideration has been particularly relevant in cases involving:

• After the event insurers funding personal injury and other claims
• Trade unions and membership organisations funding members’ litigation
• Litigation funders operating under commercial funding agreements

The courts have consistently held that the mere fact of funding litigation – without more – does not expose a non-party to a costs order. It is the degree of control exercised over the proceedings, the extent to which the non-party stood to benefit from a successful outcome, and the overall justice of the situation that will determine whether the jurisdiction is exercised.

Key Takeaways

• Non-party costs orders are made under section 51 of the Senior Costs Act 1981 and CPR 46.2
• The jurisdiction is broad but should be exercised with caution – it is a significant departure from the ordinary rule that costs liability falls on parties to the litigation
• The most common targets are those who have substantially controlled proceedings, litigation funders who have exercised control, and insurers who have funded and directed the defence
• CPR 46.2 requires the non-party to be given proper notice and an opportunity to be heard before any order is made
• Access to justice considerations mean that mere funding of litigation – without control or a direct interest in the outcome – is unlikely to justify a non-party costs order

Frequently Asked Questions

What is a non-party costs order?

A non-party costs order is a costs order made against someone who was not formally a party to the proceedings. The jurisdiction derives from section 51 of the Senior Courts Act 1981 and is exercised with caution, but is well established where a non-party has substantially controlled or funded the litigation and stands to benefit from its outcome.

Who can be subject to a non-party costs order?

Courts have made non-party costs orders against litigation funders, insurers who have controlled the defence of proceedings, individuals who have directed litigation as the real party behind a corporate claimant, and, in limited circumstances, solicitors acting under conditional fee agreements. The key question is whether the non-party was so involved in the proceedings that it is just to hold them liable for the costs incurred.

What procedure applies to a non-party costs application?

Under CPR 46.2, the non-party must be added to the proceedings for costs purposes and given a reasonable opportunity to attend a hearing and make representations before any order is made. Failure to follow this procedure can result in the order being set aside. Applications should be made as soon as practicable and ideally before costs have been finally assessed.

Does funding litigation automatically expose a non-party to a costs order?

No. The courts have made clear that the mere act of funding litigation does not expose a non-party to a costs order. Access to justice considerations mean that funders, insurers, and supporters are not automatically at risk. What matters is the degree of control exercised over the proceedings, the extent of the financial interest in the outcome, and whether it is just in all the circumstances to make an order.

How does a non-party costs order differ from a wasted costs order?

A wasted costs order under CPR 46.8 and the Solicitors Act is made against a legal representative – typically a solicitor – for costs caused by their improper, unreasonable, or negligent conduct. A non-party costs order under section 51 has a broader reach and can be made against any person who has funded or controlled the litigation, regardless of whether they are a legal representative.

Speak to Greener Costs Today

Non-party costs orders are technically complex, procedurally demanding, and require a thorough understanding of both the statutory jurisdiction and the developing case law. Whether you are pursuing a non-party costs application or defending against one, specialist costs law expertise is essential.

At Greener Costs, our costs lawyers advise solicitors on all aspects of costs liability – including non-party costs applications, wasted costs proceedings, and costs strategy in complex multi-party litigation. If you have a matter where a non-party costs order may be in play, we are here to help.

Get in touch today on 01204 263047 or email info@greenercosts.co.uk to speak with one of our specialist costs lawyers.