Non-Party Commercial Funder With “Significant Interest” Liable For Defendants’ Costs On Indemnity Basis.

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Background

The case of Maranello Rosso Limited v Lohomij BV & Ors concerned an unsuccessful claim brought by Maranello Rosso Limited (“MRL”), a Guernsey company, against multiple defendants arising from a failed scheme to purchase and sell a collection of vintage cars. The claim, issued in May 2020, alleged a conspiracy to injure MRL by unlawful means. The defendants successfully applied for summary judgment in September 2021, with the court holding the claims were largely compromised by a prior settlement agreement. MRL’s appeal was dismissed in December 2022. The claimant was ordered to pay the defendants’ costs at first instance and on appeal, but the defendants recovered nothing from MRL. This led to the present applications by certain defendants for non-party costs orders against Hamish Vans Agnew, who was alleged to have funded the litigation.

Costs Issues Before the Court

The key costs issues were whether the respondent, Mr Vans Agnew, should be liable for the defendants’ costs under section 51 of the Senior Courts Act 1981 as a non-party funder, and if so, to what extent. The court had to determine: (1) whether the respondent was a “pure funder” or had a commercial interest in the litigation; (2) whether his funding caused the defendants to incur costs; (3) whether any liability should be capped at the amount of funding provided (the “Arkin cap”); and (4) whether costs should be assessed on the indemnity basis.

The Parties’ Positions

The applicants argued the respondent was a commercial funder who provided £514,000 to MRL through a “vehicle sale agreement” and separate loans, representing 46.5% of MRL’s first instance costs. They contended the transaction was effectively litigation funding, as the respondent stood to gain a 10% success fee plus a Ferrari worth £1 if the claim succeeded – a potential 14-fold return. They sought full reimbursement of their first instance costs on an indemnity basis.

The respondent argued he was merely securing repayment of existing loans through the car purchase, with only £27,000 constituting genuine litigation funding. He maintained the defendants’ costs would have been incurred regardless of his involvement, as other funders contributed £1.4 million after his payments. He denied controlling the litigation or being a “real party” to it.

The Court’s Decision

The court found the respondent was not a “pure funder” but had a substantial commercial interest in the litigation’s outcome. The “vehicle sale agreement” was held to be a funding arrangement disguised as a sale, with the car acting as security. The respondent’s funding enabled the claim to proceed at critical stages, causing the defendants to incur costs.

The judge rejected applying the Arkin cap, given the respondent’s significant potential returns. He ordered the respondent to pay: (1) all of the applicants’ costs up to 6 May 2021 (when another funder contributed); and (2) one-third of costs thereafter, recognising other funders’ involvement in the later stages. The court awarded costs on the indemnity basis due to the respondent’s attempt to disguise funding as a car purchase and his close alignment with MRL’s conduct of the litigation.

The decision illustrates the courts’ willingness to look beyond formal structures to the economic reality of funding arrangements when exercising their discretion under section 51. It also demonstrates that funders with substantial commercial interests may face uncapped costs liabilities, particularly where their involvement is causally linked to the incurring of costs by the opposing party.

Liquidators Not Personally Liable For Costs Despite Erroneous Admission Of Foleys’ Proof Of Debt.

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Background

This matter concerns the liquidation of Saville Foley LLP (“the LLP”), involving two primary applications. The first application was submitted by Sanrose Investment Limited (“Sanrose”) on 3 August 2023, seeking the reversal of the decision by the LLP’s joint liquidators, Tyrone Courtman and Deviesh Raikundalia (“the Liquidators”) to admit the proof of debt submitted by Lawrence Foley and Jennifer Foley (“the Foleys”) for £502,428. Additionally, Sanrose sought a personal costs order against the Liquidators in case their application succeeded. The second application, dated 6 September 2023, was made by FWJ Legal Limited (“FWJ”), seeking the reversal or variation of the Liquidators’ decision to reject FWJ’s proof of debt dated 10 August 2023.

To provide context, the LLP was incorporated on 8 June 2011 to develop a property in Chelmsford, Essex (“the Property”). The initial members were the Foleys and the Savilles, with Foley Investments Limited (“FIL”), owned by the Foleys, eventually becoming one of the two designated members alongside Sanrose, owned by the Savilles. Despite numerous planning applications and agreements, the development was never completed, leading to significant discord and eventually to the winding-up of the LLP on 13 January 2021, ordered on Sanrose’s contributory petition.

The Liquidators, who were appointed on 1 February 2021, had to deal with the complexities arising from the claims submitted by the parties involved. These included Sanrose’s accepted loan proof of £450,000, FIL’s rejected proof of £450,000, and the Foleys’ accepted proof of £502,428. The dispute largely stemmed from the intricate financial interactions and contributions towards the aborted development project. Against this backdrop, the court was invited to determine the validity and accuracy of the Liquidators’ decisions regarding these proofs and the overall handling of costs incurred in these proceedings.

Costs Issues Before the Court

The court faced several key cost-related questions. Primarily, whether the Liquidators’ decision to accept the Foleys’ proof of debt was correct, which would determine whether Sanrose’s application to reverse that decision should succeed. Additionally, the validity of the Liquidators’ rejection of FWJ’s proof of debt, which depended significantly on the interpretation of the Deed of Assignment and Charge (“DOA”) between FWJ and FIL, was scrutinized. Finally, the issue of whether a personal costs order against the Liquidators was warranted, based on their conduct during the decision-making process, also needed to be resolved.

The Parties’ Positions

Sanrose, represented by Mr Nathan Webb, argued that the Liquidators had erred in admitting the Foleys’ proof of debt. They contended that the proof in question was not properly substantiated and that the evidence overwhelmingly supported the view that any outstanding sums were owed to FIL, not the Foleys personally. They suggested that inconsistencies and errors in financial documentation further supported this position, and they sought to have the decision reversed and costs awarded against the Liquidators personally for procedural failings.

The Foleys, representing themselves, struggled to clearly articulate their claim but appeared to assert that they were personally owed a debt due to their initial property contribution and other associated costs. They maintained that various payments and transactions with the Savilles equaled a legitimate personal investment in the LLP, qualifying them for such a debt.

FWJ, represented by Mr Adam Deacock, submitted that their claim should be recognised by virtue of the DOA with FIL, which they contended assigned FIL’s rights in the LLP’s liquidation to FWJ. They argued that the intent of the DOA encompassed any liquidation scenario, not limited to a member’s voluntary liquidation, raising questions about contractual interpretation.

The Liquidators, though adopting a largely neutral stance, defended their process and substantive rationality of the decisions made, particularly the acceptance of the Foleys’ proof of debt. They explained this was based on viewing the contributions made by the Foleys as loans and personal investments, aligning with the evidence available in various financial records and correspondence.

The Court’s Decision

In its analysis, the court determined that the Liquidators’ decision to admit the Foleys’ proof of debt must be reversed. The evidence suggested that any ongoing financial claim was more properly ascribed to FIL, not the Foleys personally. This conclusion was supported by the historical accounts, contractual documents, and previous legal positions stated by the parties. Consequently, the court ruled that FIL was the proper creditor, entitled to a debt of £450,000, and therefore should participate in the distribution of the LLP’s assets in liquidation.

Regarding FWJ’s claim, the court reasoned that the DOA between FWJ and FIL effectively assigned FIL’s rights in the LLP’s liquidation to FWJ, despite the specific reference to a member’s voluntary liquidation. By interpreting the DOA within its broader context and the factual backdrop of the compulsory liquidation, the court recognised FWJ’s entitlement to prove in the liquidation based on their rights under the DOA.

On the question of a personal costs order against the Liquidators, the court found no evidence of bad faith or irrational conduct. It was noted that the Liquidators acted in a quasi-judicial capacity and made decisions based on their professional judgment and available evidence. The procedural approach, including the meeting with Mr. Foley, was not deemed improper or indicative of bias. As such, a personal costs order against the Liquidators was not warranted.

In summary, the court’s decisions clarified the proper allocation of debts among the parties involved, affirming the rights of FIL and FWJ within the liquidation process while exonerating the Liquidators from personal costs liability due to the absence of misconduct or unreasonable behavior on their part.`

When Can A Liquidator Be Held Personally Liable For Costs?

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Introduction: The Liquidator’s Role and the Specter of Personal Costs

When a company faces insolvency, a liquidator steps in to manage its affairs. This crucial role involves realising assets, investigating the company’s dealings, and distributing proceeds to creditors. Naturally, this process incurs costs – from the liquidator’s own fees to legal and administrative expenses. Generally, these are paid from the insolvent company’s assets. The Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016) provide the framework for these costs. 

However, a significant concern for any insolvency practitioner is the possibility of being held personally liable for these costs. This blog post explores the principles and practices surrounding a liquidator’s personal liability for costs in UK insolvency proceedings.

The “Exceptional” Nature of Personal Liability

It’s a cornerstone of UK insolvency law that holding a liquidator personally liable for costs, especially litigation costs, is an exceptional measure. This protection is vital. Liquidators often pursue complex and contentious claims. If they constantly faced personal financial ruin for performing their duties, finding willing professionals would be challenging, and those who did accept might be overly cautious, harming creditors’ interests.

The law strives to balance protecting liquidators acting properly with providing recourse against those who demonstrate misconduct.

The General Rule: Costs are Paid from the Insolvent Estate

Insolvency Expenses: A Priority

The IA 1986 and IR 2016 stipulate that costs properly incurred in a winding-up are paid from the company’s assets, prioritised over most other claims. These include legal fees, accountancy costs, valuation expenses, the liquidator’s remuneration, and asset realisation costs. If reasonable and for the estate’s benefit, these are usually priority claims.

The Liquidator’s Indemnity

A liquidator acting correctly is generally entitled to an indemnity from the company’s assets for costs incurred, including litigation costs. This is crucial for enabling them to pursue claims for creditors’ benefit.

However, this indemnity isn’t absolute. Costs must be “reasonably incurred” and for the “benefit of the estate”. Doubts about the “appropriateness, fairness or reasonableness” of sums claimed can be resolved against the office-holder. Remuneration should reflect the “value of the service rendered,” not just time spent. Negligence or misconduct can jeopardise this indemnity. The Practice Direction on Insolvency Proceedings (PDIP) provides further guidance on remuneration applications.  

Even if costs are legitimate estate expenses, the actual availability of assets is key. Adverse costs orders against the company in liquidation rank as an expense, potentially depleting funds before the liquidator’s own remuneration for that litigation is met.

Personal Liability as a Non-Party: A High Bar to Clear

A liquidator directs litigation for the company but isn’t usually a personal party. However, courts can make costs orders against non-parties, which is how a liquidator might become personally liable.

The Court’s Power: Section 51 Senior Courts Act 1981

Section 51 of the Senior Courts Act 1981 grants courts wide discretion over costs, including against non-parties. CPR 46.2 outlines the procedure, requiring the non-party to be joined for costs purposes and given a chance to be heard. This discretion must be exercised “justly”.

Exceptional Remedy: Protecting the Public Function

A non-party costs order is an “exceptional” remedy. This was highlighted in Symphony Group PLC v Hodgson QB 179. For liquidators, this exceptionality is rooted in public policy: they perform a vital public function, and routine personal liability would undermine the insolvency system.

The Metalloy Supplies Test: “Impropriety or Bad Faith”

The Court of Appeal in Metalloy Supplies Ltd v M A (UK) Ltd BCC 165 established that personal liability for a liquidator arises only from their “impropriety or bad faith”. In Metalloy, no such conduct was found.  

What Constitutes “Impropriety” or “Bad Faith”?

These terms aren’t rigidly defined. “Bad faith” implies dishonesty or malicious intent. “Impropriety” is broader, suggesting conduct unacceptable for a liquidator, a serious deviation from professional standards – more than mere negligence. The Hong Kong case Super Speed Limited (in Liquidation) v Bank of Baroda affirmed that “impropriety,” not just “unreasonableness,” is needed. Pursuing purely speculative litigation or acting for personal gain rather than creditor benefit could be deemed improper.  

Security for Costs: The Primary Recourse

Metalloy Supplies also stressed that defendants sued by an impecunious company (like one in liquidation) should primarily seek security for costs. Failure to do so can weaken a later application for a personal costs order against the liquidator.  

This high “impropriety” threshold prevents overly defensive liquidations, encouraging robust action for creditors. Security for costs applications act as a filter, reserving personal orders for genuinely blameworthy conduct.

When Else Might a Liquidator Face Personal Costs? Judicial Considerations

Beyond the “impropriety or bad faith” test for non-party costs orders (NPCOs), other factors can influence a liquidator’s personal cost exposure.

Unreasonable Conduct and the “Perversity” Test

Courts are reluctant to interfere with a liquidator’s commercial judgment. Intervention requires the liquidator to have “done something so utterly unreasonable and absurd that no reasonable man would have done it” – the “perversity” test from Re Edennote, affirmed in Re Edengate Homes (Butley Hall) Ltd EWCA Civ 626. This is a “formidable test”. While mainly for substantive decisions (like asset sales), perverse conduct in litigation could support personal costs liability, likely overlapping with impropriety. 

Litigation for Personal Gain

If litigation is pursued for the liquidator’s personal benefit (e.g., to generate fees) rather than for the company or creditors, this strongly indicates impropriety and can lead to personal costs or denial of indemnity. The Irish case of United Power Limited saw a provisional liquidator personally liable for costs of an unsuccessful application to increase his own remuneration, deemed self-serving. Similarly, in the Australian case Australia’s Residential Builder Pty Ltd (in liquidation) v Wiederstein (No.2), an appeal pursued solely to meet the liquidator’s fees resulted in personal costs.

Broader Misconduct

General misconduct can also lead to personal costs or loss of indemnity. The “Ballyrider Principles” (from Irish law, but reflecting UK concepts) suggest indemnity can be denied for misfeasance, bad faith, serious negligence, unfitness for office, or dishonesty. Section 212 IA 1986 allows action against office-holders for misfeasance. Australian examples (often sharing common law roots) include unreasonably defending proceedings, rejecting sensible settlements, provoking litigation through self-interest, or causing unnecessary costs through poor communication.

Litigating in the Liquidator’s Own Name

A distinction exists when a liquidator sues in their own name (e.g., for wrongful trading under s.214 IA 1986 or misfeasance under s.212 IA 1986 ). Here, they are a direct party. The rule “costs follow the event” (CPR 44.2(2)(a)) applies more directly, making them prima facie personally liable if unsuccessful. While indemnity from company assets is expected, it can be lost through misconduct.

Specific Contexts: Environmental Liabilities

In areas like environmental protection, liquidators might face personal statutory liabilities, for instance, for remediation costs if their actions or omissions regarding environmental hazards are deemed unreasonable.

These considerations span a spectrum from “unsatisfactory” conduct (which may not be enough for intervention, as in Re Edengate Homes ) to “unreasonable” conduct, “perversity,” and ultimately “impropriety or bad faith.” 

Losing the Shield: Denial of Indemnity from Company Assets

Even without a direct NPCO, a liquidator’s finances are hit if denied indemnity from company assets for costs incurred.

Why Might Indemnity Be Denied?

Indemnity relies on proper conduct for the estate’s benefit. It can be denied for:

  • Misfeasance or breach of duty: Abusing powers, breaching fiduciary duties, or negligence causing loss.
  • Bad faith: Dishonest or improperly motivated actions.  
  • Serious negligence: Culpable negligence, though simple errors in judgment might be excused. 
  • Unreasonable cost incurrence: Unnecessary or excessive costs.
  • Actions for personal benefit: Prioritising personal gain over the estate’s interests. 

Denial of indemnity means the liquidator cannot use company funds to cover costs for which they are liable.

The Practical Problem: Insufficient Assets

A major risk is when the insolvent company lacks assets to cover all liquidation costs, including adverse costs orders. Even with impeccable conduct, an indemnity is worthless without assets to back it. If the liquidator is personally liable for costs (e.g., from losing a case brought in their own name, or an NPCO), they bear any shortfall. This risk drives the use of litigation funding and creditor indemnities.  

Practical Steps for Liquidators to Mitigate Personal Cost Risks

Liquidators must be diligent in managing the risk of personal liability.

1. Thorough Pre-Litigation Assessment: Rigorously assess the merits of any legal action, including potential costs, prospects of success, asset availability, and net benefit to creditors. Obtain comprehensive legal advice. 

2. Document Decisions Clearly: Meticulously record all significant decisions, especially regarding litigation, including rationale and advice received. This is vital if conduct is later challenged.   

3. Anticipate Security for Costs Applications: Be prepared for defendants to seek security for costs when the company is the claimant.

4. Explore Funding and Indemnities: If estate assets are insufficient, actively seek litigation funding or specific indemnities from interested creditors. Scrutinise funding agreements for adequate protection against adverse costs. Consider After The Event (ATE) insurance. 

5. Avoid Conflicts of Interest and Personal Benefit: Never pursue litigation primarily for personal gain (e.g., fee generation) rather than genuine creditor benefit.

6. Act Reasonably and Proportionately: Conduct litigation reasonably, consider sensible settlement offers, and avoid vexatious tactics. Unreasonable refusal to settle or pursuing hopeless cases can lead to adverse costs.  

These steps are essential for defending against allegations of impropriety or unreasonable conduct.

Conclusion: Balancing Protection and Accountability

UK law makes personal liability for liquidators an exceptional outcome. Costs are generally paid from the insolvent estate. An NPCO against a liquidator typically requires “impropriety or bad faith” (Metalloy Supplies Ltd). Security for costs is the primary defendant recourse.  

Liquidators acting honestly, diligently, reasonably, and in creditors’ best interests are generally well-protected. Proper procedure, careful advice, transparent decisions, and good records are key.

The law balances the public interest in enabling liquidators to perform their duties effectively against the need for accountability and remedies for misconduct.

Regarding Sanrose Investment Ltd v Foley & Ors, its precise impact on this area awaits further detailed legal reporting and analysis.

The legal framework empowers liquidators to act robustly for creditors while incorporating safeguards against improper conduct, maintaining the integrity of the insolvency regime.

Table 1: Key UK Case Law on Liquidator Personal Liability for Costs

Case Name & Citation Court Year Core Principle(s) Regarding Liquidator Costs Liability Snippet(s)
Metalloy Supplies Ltd v M A (UK) Ltd [1997] BCC 165 Court of Appeal 1996/7 Personal liability exceptional; requires “impropriety or bad faith.” Security for costs is the standard remedy. Public policy protects liquidators.
Symphony Group PLC v Hodgson [1994] QB 179 Court of Appeal 1994 Orders for costs against non-parties are exceptional. (Cited in Metalloy)
Re Wilson Lovett & Sons [1977] 1 All E.R. 274 High Court 1977 When a liquidator acts in their own name, personal liability for costs follows standard procedures (indemnity usually expected). (Cited in Metalloy)
Re Edengate Homes (Butley Hall) Ltd [2022] EWCA Civ 626 Court of Appeal 2022 “Perversity” test for court interference with liquidator’s decisions (so utterly unreasonable and absurd no reasonable liquidator would have done it).
Goknur v Aytacli [2021] EWCA Civ 1037 Court of Appeal 2021 NPCO against director of insolvent company rare; may apply if director is “real party” seeking personal benefit; impropriety/bad faith relevant.

 Table 2: Thresholds for Scrutiny of Liquidator’s Conduct Regarding Costs/Decisions

Test/Threshold Primary Context Key Case Authority (UK, if available) Description/Application Snippet(s)
Impropriety or Bad Faith Non-Party Costs Order against liquidator for litigation brought by the company. Metalloy Supplies Ltd Serious misconduct, dishonesty, or improper use of position. High threshold. Negligence generally insufficient.
Perversity Challenge to a liquidator’s commercial or administrative decision. Re Edengate Homes Decision so utterly unreasonable and absurd that no reasonable liquidator would have made it. Very high bar.
Litigation for Personal Benefit/Self-Interest NPCO or denial of indemnity. Goknur v Aytacli (directors, analogous for liquidators) Liquidator is the “real party” to the litigation, seeking personal gain rather than creditor/company benefit. Can demonstrate impropriety.
Misconduct leading to Denial of Indemnity Liquidator seeking to recover costs from the insolvent estate. (Principles, Ballyrider – Irish, illustrative) Includes misfeasance, bad faith, serious negligence, unfitness, dishonesty, or incurring costs unreasonably or not for estate benefit.

Common Defence Costs | No Division Required Between Co-Defendants Where One Party Foots The Bill

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The High Court’s decision in Rollerteam Ltd v Siddiqi addresses a fundamental but frequently misunderstood aspect of costs recovery: where multiple defendants benefit from a costs order but only one party has discharged the solicitors’ bills, who has the right to recover those costs?

Background

The underlying proceedings arose from a protracted family dispute concerning the Sherlock Holmes Museum in Baker Street, London. On 10 January 2019, Tariq Siddiqi commenced proceedings against five defendants claiming £4,149,911.84 in damages for alleged blackmail, harassment and libel. The defendants were represented by RPC under a joint retainer arrangement.

On 24 May 2019, following applications for strike out and summary judgment, Warby J made comprehensive orders in the defendants’ favour. He dismissed Siddiqi’s applications, granted summary judgment for the Second to Fifth Defendants, and struck out the claim save for the harassment allegations against the First Defendant. Crucially, he ordered Siddiqi to pay all five defendants’ costs of four separate applications, to be assessed on the standard basis if not agreed, with a payment on account of £39,938.52.

The Critical Payment Dynamic

What emerged during the subsequent detailed assessment proceedings was that whilst all five defendants had benefited from Warby J’s costs order, only the Fourth Defendant (Rollerteam) had actually paid RPC’s bills. The other defendants, despite being named beneficiaries of the costs order, had discharged no liability to the solicitors and therefore had no costs to recover.

This arrangement is more common in practice than many appreciate. In family business disputes, partnership litigation, or group actions, it frequently occurs that one party agrees to bear the legal costs on behalf of all co-defendants, whether for reasons of financial capacity, strategic control, or simple necessity when other parties become uncooperative or insolvent.

The Detailed Assessment

Following directions from Costs Judge Rowley in December 2022, the defendants were required to commence detailed assessment proceedings by 15 February 2023. Only Rollerteam served a Notice of Commencement, claiming costs of £82,432.78. The other defendants could not do so – having paid nothing to RPC, they had no bills to serve.

On 27 April 2023, the Costs Judge made an unless order requiring Rollerteam to serve a revised bill that would indicate, where work was done jointly for multiple defendants, what proportion was claimed on behalf of Rollerteam specifically.

Rollerteam duly served a revised bill totalling £75,228.43. However, rather than attempting to apportion costs between the five defendants, they argued in detailed Assessment Notes that since RPC had represented all defendants under a joint retainer, and the costs orders were in favour of all defendants, there was no realistic basis for apportionment. They claimed 100% of the common costs, with only a 10% reduction for work done exclusively for the First Defendant on the harassment claim.

The bill stated explicitly that “100% of the costs incurred in relation to the injunction application, the disclosure application, the strike-out application and the amendment application were incurred for the benefit of the fourth defendant, just as 100% of those costs were incurred for the benefit of the first, second, third and fifth defendants.“

The Costs Judge’s Decision

On 15 August 2023, Siddiqi applied to strike out Rollerteam’s revised bill for non-compliance with the unless order. Following a hearing on 17 November 2023, Costs Judge Rowley granted the application, finding material non-compliance and striking out the bill entirely, assessing Rollerteam’s recoverable costs at zero.

The Costs Judge held that since only Rollerteam was seeking costs recovery, any work done for the defendants generally needed to be “divided appropriately so that only the costs for which the fourth defendant is liable are sought from the claimant.” He concluded that the bill failed to reflect “realistic sums that may be recoverable for one of five defendants” and that the costs draftsman had wrongly attempted to circumvent the apportionment requirement.

The Appeal

Rollerteam appealed to the High Court.

On 17 March 2025, Mr Justice Rajah allowed the appeal. The Judge held that Rollerteam had complied with the unless order by clearly identifying that all work was done jointly for multiple defendants and stating that it claimed 100% of that work for its own benefit (save for the specified 10% reduction).

More significantly, the Judge clarified the fundamental principle governing recovery of common costs in joint retainer cases. The correct approach is not to assume automatic apportionment based on the number of defendants, but to ask whether the common costs would have been reasonably incurred by the paying defendant in any event to defend itself from the claimant’s allegations.

Legal Principles Established

The judgment establishes several important principles:

  • Where defendants are represented under a joint retainer but only one party discharges the solicitors’ bills, that party is entitled to commence detailed assessment proceedings in its own name and recover the costs it has paid, without requiring participation from the non-paying co-defendants.
  • Common costs need not be divided between multiple beneficiaries of a costs order where those costs would have been necessarily incurred for the paying party’s own defence regardless of the number of co-defendants involved.
  • Following the principle established in Haynes v Department for Business, Innovation and Skills, costs such as court fees, conferences with counsel, and legal research that would have been incurred whether defending one client or multiple clients should be recoverable in full by the paying party.
  • Courts should interpret unless orders pragmatically, focusing on whether the required information has been provided rather than whether the claiming party’s approach appears “realistic” to the judge.

Practical Implications

For practitioners, the decision provides important guidance:

  • When preparing bills in multi-defendant cases, focus on explaining why common costs were necessary for the client’s own defence rather than attempting artificial mathematical apportionment between co-defendants.
  • Where representing the paying defendant in a joint retainer situation, emphasise that the question is not how many parties benefited from the work, but whether the costs would have been incurred in any event for that client’s own protection.
  • Ensure bills respond directly to the specific requirements of case management orders, but do not feel compelled to accept assumptions about apportionment that may not reflect legal principle.

Conclusion

Rollerteam Ltd v Siddiqi clarifies an area where costs practice has often been unnecessarily complex and provides welcome guidance for the many cases where multiple defendants share representation but only one party bears the financial burden. The decision confirms that the party who actually discharges solicitors’ bills under a joint retainer is entitled to recover those costs without artificial reduction, provided they were reasonably necessary for that party’s own defence.

The judgment serves as a reminder that costs recovery should be governed by practical realities and legal principles rather than superficial mathematical divisions that bear no relation to the work actually required or the liabilities actually incurred.

Non-Party Costs Order Application Denied Due to Significant and Unexplained Delay

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Background

The legal proceedings stem from a complex and lengthy pharmaceutical litigation involving several hundred claimants against GlaxoSmithKline UK Limited concerning its anti-depressant medication Seroxat. The claim, originally commenced on 30 April 2004, represented a substantial group litigation alleging the medication was defective and had caused harm to the claimants.

The litigation’s procedural history reveals significant challenges and transformations. Initially publicly funded, the claim underwent dramatic changes when the Legal Services Commission discharged the public funding certificate in November 2010, following counsel’s advice questioning the claim’s merits. This decision precipitated a significant reduction in claimant numbers, with 369 discontinuing their claims while 124 challenged the decision.

By January 2015, a review panel had conclusively rejected the claimants’ challenge, effectively terminating their public funding. The litigation’s landscape shifted dramatically when Fortitude Law entered as legal representatives for 102 claimants in July 2015, signalling new funding arrangements involving discussions with external funders and insurers.

A pivotal moment occurred on 19 November 2015 when Brit UW Limited issued an after-the-event (ATE) legal expenses policy to the claimants. This policy, providing potential cost protection up to £750,000, became a critical factor in the court’s deliberations about whether the proceedings could continue.

The trial, which commenced on 29 April 2019 before Lambert J, was effectively concluded within three days when a fundamental issue regarding the claimants’ case on defect was decided in the defendant’s favour. By 7 May 2020, the claimants submitted to judgment, with only costs arguments remaining unresolved.

Lambert J’s order on 3 July 2020 was particularly significant, ordering the claimants to pay costs on an indemnity basis and setting a crucial deadline of 31 July 2020 for any non-party costs order (NPCO) applications. This deadline became the focal point of the current legal dispute.

Costs Issues Before the Court

The primary costs issue centred on the defendant’s application for an extension of time to pursue a non-party costs order (NPCO) against Brit UW Limited, the ATE insurer. The critical questions were whether the original order carried an implied sanction for non-compliance and, if not, whether the court should exercise its discretion to grant a substantial time extension.

The Parties’ Positions

The defendant argued that no implied sanction existed in Lambert J’s original order, and therefore the application should be assessed under the overriding objective rather than the stringent Denton test. They contended that until Brit’s communication on 25 May 2023, there was no apparent need for an NPCO application.

Conversely, Brit argued that the order carried an implied sanction, necessitating the application of the Denton test. They emphasized the defendant’s significant delay, lack of urgency, and failure to proactively manage the potential NPCO application within the originally prescribed timeframe.

The Court’s Decision

The court comprehensively rejected the defendant’s application, finding that while no strict implied sanction existed, the defendant had failed to demonstrate a justifiable reason for the extensive delay. The judgment highlighted the defendant’s slow progression, missed opportunities to seek timely extensions, and lack of urgency in pursuing the potential NPCO.

Crucially, the court emphasized that the original order was designed to expeditiously resolve residual litigation matters. The defendant’s failure to promptly consider and address the potential NPCO application, despite known complexities surrounding the ATE insurance, was a significant factor in the court’s decision to refuse the time extension.

Part 20 Defendant Ordered To Pay 1/3rd Of Defendant’s Costs Of Defending The Action

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In Alison Healey (Widow And Executrix of the Estate of Simon Andrew Healey, Deceased) v Mr Daniel McGrath [2024] EWHC 1360 (KB) (07 June 2024), the High Court apportioned liability and costs between Ramsay Health Care UK Operations Limited and Mr Daniel McGrath, a consultant surgeon, following the death of a patient, Mr Simon Healey. The central issues were the extent of each defendant’s responsibility for the negligence and whether Mr McGrath (the Part 20 Defendant) should contribute to Ramsay’s costs of defending the main claim, which Ramsay had settled with the deceased’s widow. The court found Mr McGrath 75% liable for the damages and claimant’s costs, and exercised its discretion under Section 51 of the Senior Courts Act 1981 to order him to pay one-third of Ramsay’s costs in the main action, considering factors such as his primary responsibility and unsatisfactory conduct in the proceedings.

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Non Party Costs Orders | Court Of Appeal Decision

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In the case of an insolvent company involved in litigation which has resulted in a costs liability that the company cannot pay, a director of that company may be made the subject of such an order. Although such instances will necessarily be rare (Taylor v Pace Developments [1991] BCC 406), s.51 orders may be made to avoid the injustice of an individual director hiding behind a corporate identity, so as to engage in risk-free litigation for his own purposes (Re North West Holdings PLC and Anr [2001] EWCA Civ 67). Such an order does not impinge on the principle of limited liability: Dymocks; Goodwood; Threlfall.

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Costs Of Interested Parties In Procurement Challenges

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Under what circumstances can an Interested Party to a procurement challenge recover its costs, specifically where that party has not participated at all in any of the substantive hearings?

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Costs Orders Against Litigation Friends | Court of Appeal Decision

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In June 2019 Mr Justice Morgan examined a long line of authority ranging in date from 1727 to 1921 to determine important issues as to the circumstances in which litigation friends can or should be ordered to pay other parties’ costs, and where orders for costs might be made in their favour.

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