Karyn Coburn considers the Court of Appeal decision in Sony/ATV Music Publishing LLC and another v WPMC Ltd and another  EWCA Civ 2005 refusing to make a non-party costs order where an early warning had not been given to the non-party.
In September this year the Court of Appeal reviewed the principles for making a non-party costs order pursuant to Section 51 of the Senior Courts Act 1981, which gives civil courts the discretion and the power “to determine by whom and to what extent costs are to be paid”.
The Court noted the main principles were that:
- while a non-party costs order is to be regarded as ‘exceptional’, exceptional means no more than outside the ordinary run of cases where parties pursue / defend claims for their own benefit and at their own expense. The ultimate question is whether in all the circumstances it is just to make the order;
- generally an order will not be made against ‘pure funders’; and
- where a non-party also substantially controls or is to benefit from proceedings, justice will ordinarily require the non-party, as the ‘real party’ to the proceedings, to fund the successful party’s costs.
The Court emphasised that a material consideration in exercising its discretion was whether the non-party had been warned by the other party that they intended to make a non-party costs application, and at what stage that warning was given. In the instant case the warning was given after the substantive decision had been handed down and the time for an appeal had expired. The non-party asserted that if he had been warned at an earlier stage he would have acted differently by either placing the company he was funding into liquidation, accepting one of the settlement offers made during the course of the proceedings or raising further funds to appeal the substantive decision. The Court also considered that he could have incepted after the event insurance if he had been warned earlier. The Court accepted the non-party’s evidence and held that the failure to provide the warning at an earlier date was manifestly unfair. A failure to give an early warning to a non-party will not always be fatal, but in the context of the facts of this case it was. The non-party’s appeal against the costs order made in the court below was therefore allowed.
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