Costs Orders Against Litigation Friends | Court of Appeal Decision

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.

Our analysis of Mr Justice Morgan’s decision can be found here.

That decision insofar as it related to the determination of a litigation friend’s potential costs liability has now been overturned by the Court of Appeal:

“On the basis of the cases of which he was aware, the Judge observed in paragraph 43 of the Costs Judgment that there was “really only one case (Morgan v Morgan) which provides any support for the proposition that the court will not make an order for costs against the litigation friend of a child defendant in the absence of gross misconduct”. The Judge was unaware, however, of Reynolds v Mead and Hooper v Mackenzie. Those decisions seem to me to confirm that a defendant’s guardian ad litem would not be required to bear costs unless he had been guilty of gross misconduct”

The Court has confirmed the position on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend:

i) At any rate where a litigation friend has not previously given an undertaking to pay the costs at issue, the power to make an order for costs against a litigation friend derives exclusively from section 51 of the 1981 Act;

ii) When deciding whether an order should be made against a litigation friend under section 51, the “ultimate question” is “whether in all the circumstances it is just to make the order”;

iii) It will typically be just to order a claimant’s litigation friend to pay costs if such an order would have been made against the claimant himself had he not been a child or protected party, but it remains the case that the Court is exercising a discretion and entitled have regard to the particular circumstances;

iv) There is no presumption that a defendant’s litigation friend should bear costs which the defendant would have been ordered to pay if not a child or protected party. That the litigation friend controlled the defence of a claim which succeeded will not of itself generally make it just to make an adverse costs order against the litigation friend. Factors that might, depending on the specific facts, be thought to justify such an order include bad faith, improper or unreasonable behaviour and prospect of personal benefit. If a director causes his company to litigate “solely or substantially for his own benefit” (to quote Lord Brown in Dymocks), that may point towards a costs order against him. The fact that a litigation friend stands to gain a substantial personal benefit must also, I think, be capable of weighing in favour of a costs order against him.

Further guidance was also given as to in what circumstances based on the nature of their participation in the proceedings parties should be treated as claimants for the purposes of CPR 21.4(3).

GLOVER V BARKER & ORS [2020] EWCA CIV 1112

Where a litigation friend has not previously given an undertaking to pay the costs at issue in accordance with CPR 21.4(3)(c), the power to make an order for costs against a litigation friend derives exclusively from section 51 of the Senior Courts Act 1981.
When deciding whether an order should be made against a litigation friend under section 51, the “ultimate question” is “whether in all the circumstances it is just to make the order.
It will typically be just to order a claimant’s litigation friend to pay costs if such an order would have been made against the claimant himself had he not been a child or protected party, but it remains the case that the Court is exercising a discretion and entitled have regard to the particular circumstances.
There is no presumption that a defendant’s litigation friend should bear costs which the defendant would have been ordered to pay if not a child or protected party. That the litigation friend controlled the defence of a claim which succeeded will not of itself generally make it just to make an adverse costs order against the litigation friend. Factors that might, depending on the specific facts, be thought to justify such an order include bad faith, improper or unreasonable behaviour and prospect of personal benefit. The fact that a litigation friend stands to gain a substantial personal benefit is also potentially capable of weighing in favour of a costs order against him.

COSTS ORDERS AGAINST LITIGATION FRIENDS : CPR 21.4(3) : CPR 21.7 : CPR 21.9(6) : SECTION 51(3) OF THE SENIOR COURTS ACT 1981

Aiden Shipping Co Ltd v Interbulk Ltd [1986] 1 AC 965

Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39

Hamilton v Al Fayed (No 2) [2003] QB 1175

Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613

Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23

XYZ v Travelers Insurance Co Ltd [2019] UKSC 48

Slaughter v Talbot (1739) Barnes 128

Dyke v Stephens (1885) 30 Ch D 189

Slingsby v Attorney-General (1916) 32 TLR 364

Rutter v Rutter [1921]

Morgan v Morgan (1865) 11 Jur NS 233

Bamford v Bamford (1845) 5 Hare 203

Vivian v Kennelly (1890) 63 LT 778

Reynolds v Mead, The Times, 5, 6 and 10 December 1895

Hooper v Mackenzie, The Times, 23 January 1901

Eady v Elsdon [1901] 2 KB 460

Re PC (An Infant) [1961] Ch 312

Northampton Health Authority v Official Solicitor [1994] 1 FLR 162

GFN SA v Bancredit Cayman Ltd [2009] UKPC 39, [2010] Bus LR 587

Gilbert v Endean (1878) 9 Ch D 259

BARKER V CONFIÀNCE LTD & ORS (COSTS ORDERS AGAINST LITIGATION FRIENDS) | KEY OBSERVATIONS AND FINDINGS

Is there a general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay?

“In my view, it remains the case that liability for costs should typically be imposed on a claimant’s litigation friend, but with the important caveat that, when deciding whether to make such an order, the Court is exercising a discretion and entitled to have regard to the particular circumstances of the case.” [62]

“Unlike the Judge, however, I do not consider there to be a general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay. My reasons include these: [63]

i) The pre-CPR authorities indicate that a defendant’s guardian ad litem was not treated in the same way as a plaintiff’s next friend or guardian for costs purposes. On the basis of the cases of which he was aware, the Judge observed in paragraph 43 of the Costs Judgment that there was “really only one case (Morgan v Morgan) which provides any support for the proposition that the court will not make an order for costs against the litigation friend of a child defendant in the absence of gross misconduct”. The Judge was unaware, however, of Reynolds v Mead and Hooper v Mackenzie. Those decisions seem to me to confirm that a defendant’s guardian ad litem would not be required to bear costs unless he had been guilty of gross misconduct;

ii) Distinctions between a defendant’s litigation friend and a claimant’s also emerge from the CPR. While a claimant’s litigation friend must supply an undertaking as to costs in accordance with CPR 21.4(3)(c), the CPR, unlike the FPR, impose no such requirement on a defendant’s litigation friend. Mr Cloherty sought to dismiss CPR 21.4(3)(c) as “simply akin to requiring some security for costs where a claim is brought by a litigation friend”, but an undertaking in compliance with CPR 21.4(3)(c) creates only a personal obligation and, even if security were conferred, the fact would remain that it had been thought right to differentiate between a claimant’s litigation friend (who has to give an undertaking) and a defendant’s (who need not). It is significant, too, that, by virtue of CPR 21.2 and 21.3, the general rule is that a claim simply cannot proceed against a child or protected party unless a litigation friend is appointed. A step taken before a child or protected party has a litigation friend has no effect unless the court orders otherwise, CPR 21.3(4) explains;

iii) There is force in Mr Saoul’s policy argument. Children and protected parties who are being sued need litigation friends both so that their rights are protected and because the litigation cannot otherwise proceed. Yet there must be a risk that, if a defendant’s litigation friend were usually vulnerable to an adverse costs order, that would deter suitable individuals from taking on the role. Mrs Talbot Rice downplayed the potential difficulties on the footing that, if no one else is able and willing to act for a child or protected party, the Official Solicitor will step in, but the Official Solicitor is not willing to accept a case unless there is adequate provision for payment of her own costs. More than that, a general principle that a defendant’s litigation friend should bear the claimant’s costs of a successful claim would, on the face of it, expose the Official Solicitor to the prospect of a costs order against her if the claim succeeded, yet it seems most unlikely that the Official Solicitor would wish to run that risk. Mrs Talbot Rice also pointed out that CPR 21.2(3) gives the Court a discretion to permit a child to conduct proceedings without a litigation friend, but exercise of that power would only rarely provide an adequate solution in the case of a child and could never do so with a protected party;

iv) Where a director causes a company to defend a claim unsuccessfully, he is unlikely to be ordered to pay costs personally in the absence of “some impropriety or bad faith on his part” even if he provided the company with funding, unless at least he can be seen to have acted for his own benefit, notably through a shareholding. It is not easy to see why a defendant’s litigation friend should be in a worse position. While the litigation friend might be said to have controlled the defendant’s participation in the litigation, the same might be said of the company director. That tends to suggest that a defendant’s litigation friend who does not stand to benefit substantially should generally escape liability for a claimant’s costs unless guilty of impropriety or bad faith;

v) Authorities addressing the position of the Official Solicitor also provide support for the view that there is no general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay. Far from the Official Solicitor being ordered to pay a claimant’s costs where a defendant on whose behalf she has acted has failed, the cases show that a claimant (or other applicant) may be ordered to pay the Official Solicitor’s own costs, and that even where the claimant/applicant has not asked the Official Solicitor to become involved. In Re PC (An Infant), Buckley J drew attention to the fact that the Official Solicitor’s appointment was “a sine qua non to the proceedings going on and being effectively disposed of” and, in Northampton Health Authority v Official Solicitor, Bingham MR agreed that there was a general principle that, where parties have become involved in a situation in which it has become necessary to seek the assistance of the Official Solicitor, it is not unreasonable for him to ask that they should meet or contribute towards the cost of his intervention. Such points find an echo to an extent in Mr Saoul’s policy argument. Of course, the Official Solicitor might be thought to be in a somewhat different position from, say, a parent acting as litigation friend for a child, but there is also a distinction in terms of the relief at issue. The question in the Official Solicitor cases is whether a successful claimant/applicant should be ordered to pay the costs of the litigation friend of a defendant/respondent. The question where someone other than the Official Solicitor has acted as litigation friend will be whether the litigation friend should have to bear the claimant’s costs;

vi) CPR 21.9(6) does not imply that a defendant’s litigation friend should be held liable for costs. That provides for the liability of a litigation friend for costs to continue until a notice stating that the appointment has ceased has been served. As, however, the Judge said in paragraph 32 of the Costs Judgment, the rule “shows that there can be cases in which a litigation friend is liable for costs but the rule itself does not define what those circumstances are”. I agree;

vii) CPR 44.2(2) is not in point because that deals with costs as between parties, not with when costs orders should be made against non-parties.

Was the Judge wrong in his conclusions on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend?

Drawing the threads together, it seems to me that the position in relation to costs orders against litigation friends in civil litigation can be summarised as follows: [64]

i) At any rate where a litigation friend has not previously given an undertaking to pay the costs at issue, the power to make an order for costs against a litigation friend derives exclusively from section 51 of the 1981 Act;

ii) When deciding whether an order should be made against a litigation friend under section 51, the “ultimate question” is “whether in all the circumstances it is just to make the order”;

iii) It will typically be just to order a claimant’s litigation friend to pay costs if such an order would have been made against the claimant himself had he not been a child or protected party, but it remains the case that the Court is exercising a discretion and entitled have regard to the particular circumstances;

iv) There is no presumption that a defendant’s litigation friend should bear costs which the defendant would have been ordered to pay if not a child or protected party. That the litigation friend controlled the defence of a claim which succeeded will not of itself generally make it just to make an adverse costs order against the litigation friend. Factors that might, depending on the specific facts, be thought to justify such an order include bad faith, improper or unreasonable behaviour and prospect of personal benefit. If a director causes his company to litigate “solely or substantially for his own benefit” (to quote Lord Brown in Dymocks), that may point towards a costs order against him. The fact that a litigation friend stands to gain a substantial personal benefit must also, I think, be capable of weighing in favour of a costs order against him.

“It follows that, in my view, the Judge was mistaken in thinking that, “the court should apply the general approach that, as regards costs, the litigation friend is expected to be liable for such costs as the relevant party (if they had been an adult) would normally be required to pay” and so erred in principle.” [65]

Should the Judge have concluded that Tom and Freya were (or should be treated as) “claimants” for the purposes of CPR 21.4(3) and so have proceeded on the basis that Ms Glover had given an undertaking in respect of the respondents’ costs?

“While the Twins’ Application was pending, Ms Glover was repeatedly pressed to provide an undertaking pursuant to CPR 21.4(3)(c) on the basis that Tom and Freya were “claimants” for the purposes of the rule. Ms Glover denied that Tom and Freya were “claimants” and refused to give an undertaking. She has explained in a witness statement that, had the Court imposed a requirement for an undertaking as a pre-condition of her being Tom and Freya’s litigation friend, she would have had no choice but to decline to give the undertaking and therefore not act as their litigation friend, since she could not afford to meet an adverse costs order.” [69]

“Mr Barker’s respondent’s notice proceeds on the basis that Tom and Freya should be seen as “claimants” for the purposes of CPR 21.4(3)(c). That being so, the argument goes, Ms Glover should be treated as if she had given an undertaking in accordance with CPR 21.4(3)(c).” [70]

“However, the simple fact is that Ms Glover never entered into any undertaking. She cannot be held liable on an undertaking that was not given.” [71]

Was the Judge wrong to conclude that Tom and Freya should properly be treated as claimants so as to engage a principle that their litigation friend should be liable for costs?

“On balance, it seems to me that the nature and circumstances of Tom and Freya’s participation make it appropriate to apply the approach adopted in relation to defendants’ litigation friends rather than that adopted in relation to claimants’ litigation friends… The Twins’ Application represented an attempt to remedy what had gone wrong. Initially, Tom and Freya specifically asked to be joined as defendants. That head of relief was not pursued beyond the first hearing of the application, but it remains the case that Tom and Freya were responding to the Main Proceedings and their exclusion from them…. it appears to me that it is the approach governing costs orders against litigation friends of defendants that ought to be applied; and I have already said that, on that basis, I would not consider costs orders against Ms Glover to be appropriate.” [80]

Link to Judgment

BARKER V CONFIÀNCE LTD & ORS (COSTS ORDERS AGAINST LITIGATION FRIENDS) | FULL CASE DETAILS AND DECISION

This appeal raised important issues as to the circumstances in which litigation friends should be ordered to pay other parties’ costs.

It followed an earlier determination that costs orders should be made against the appellant, Ms Susan Glover, who had acted as litigation friend to her children Tom and Freya Barker (“Tom” and “Freya”).

Ms Glover appealed against that decision.

Relevant Background

The main proceedings

In the main proceedings, Mr Barker had applied for orders which would, in effect, free him from the provisions of a trust and sub-trust which had been declared. His case in those proceedings was that the trust and sub-trust failed by reason of the operation of a condition to which the trust was subject, alternatively, should be set aside for mistake.
Mr Barker joined as defendants to the main proceedings, the trustee (Confiànce Ltd), one of his five children (Euan Barker) but not Tom and Freya, a representative employee beneficiary under the trust and other adult beneficiaries.
Euan was intended to be a representative defendant for Mr Barker’s five children (including Tom and Freya).
At all times the five children were under 18.
Euan acted by a litigation friend, a solicitor Ms Meek, and she instructed leading and junior counsel.
After some negotiations, a settlement was agreed by all of the adult parties giving Mr Barker most of what he sought to achieve in those proceedings.
As the settlement was to bind minor beneficiaries, the parties asked the court to approve the settlement.
At a hearing on 25 July 2014, Asplin J appointed Euan as a representative defendant to represent all of Mr Barker’s five children and she approved the settlement on behalf of the five children.

The application of 27 June 2017

On 27 June 2017, Tom and Freya, acting by their mother, Ms Glover, as their litigation friend, applied for various orders, namely:

i) an order adding Tom and Freya as Defendants to the main proceedings;

ii) an order lifting a stay of the main proceedings, which stay had been ordered on 25 July 2014;

iii) an order revoking or varying the order of 25 July 2014 which approved a settlement of the main proceedings;

iv) an order directing that the order of 25 July 2014 approving the settlement of the main proceedings was not binding on Tom and Freya.

There was no court order providing for Ms Glover to act as a litigation friend for Tom and Freya.
Accordingly, Ms Glover acted as a litigation friend without a court order in reliance on CPR 21.4(3) which provides:

“(3) If nobody has been appointed by the court or, in the case of a protected party, has been appointed as a deputy as set out in paragraph (2), a person may act as a litigation friend if he—

(a)  can fairly and competently conduct proceedings on behalf of the child or protected party;
(b)  has no interest adverse to that of the child or protected party; and
(c)  where the child or protected party is a claimant, undertakes to pay any costs which the child or protected party may be ordered to pay in relation to the proceedings, subject to any right he may have to be repaid from the assets of the child or protected party.”

CPR 21.5(3) and (4) required Ms Glover to file and serve a certificate of suitability stating that she satisfied the conditions in CPR 21.4(3).

Ms Glover did not at any stage give an undertaking of the kind referred to in CPR 21.4(3)(c).

Reference had been made at various stages during the course of the application dated 27 June 2017 to the fact that Ms Glover had not given an undertaking of this kind including, on 10 August 2017, when the solicitors for Mr Barker wrote to the solicitors for Ms Glover and asked her to give such an undertaking.

On 16 August 2017, the solicitors for Ms Glover replied that she was not obliged to give such an undertaking as Tom and Freya were not claimants within CPR 21.4(3)(c).

The application of 27 June 2017 was considered at three separate hearings over four days on 3 October 2017, 30 and 31 July 2018 and 5 October 2018.
At an early stage, the relief sought by the application was limited to an order directing that the order of 25 July 2014 was not binding on Tom and Freya.
On 8 November 2018, Mr Justice Morgan handed down judgment dismissing the application.

The High Court applications

The High Court judgment dealt, first, with four applications which had been made arising out of the application of 27 June 2017.

One of the four applications was made before judgment was handed down on 8 November 2018 and the other three were made following judgment.

The judgment also dealt with applications which were made by some of the parties for orders for costs against Tom and Freya; those applications were dealt with as consequential matters arising from my earlier judgment.

Euan’s Application of 23 July 2018

On 23 July 2018, Euan applied for an order that he cease to be a party to the application of 27 June 2017.
Euan had initially acted in relation to the application of 27 June 2017 by a solicitor, Ms Meek, as his litigation friend and, by order of 3 October 2017, she was replaced as litigation friend by Euan’s mother, Deborah Barker.
Euan also applied for an order pursuant to CPR 46.2, that Ms Glover be added as a party to these proceedings for the purposes of costs only and for an order, pursuant to section 51 of the Senior Courts Act 1981, that Ms Glover pay his costs of that application.
He further applied for an order that Tom and Freya do pay his costs of the application dated 27 June 2017.

Confiànce’s Application of 23 July 2018

On 27 February 2019, Confiànce Ltd (“Confiànce”) applied for an order pursuant to CPR 46.2, that Ms Glover be added as a party to the proceedings for the purposes of costs only and further applied for an order, pursuant to section 51 of the Senior Courts Act 1981, that Ms Glover pay its costs of the application dated 27 June 2017.
As a matter consequential on the earlierearlier judgment, Confiànce also applied for an order that its costs of the application dated 27 June 2017 be paid by Tom and Freya.

Ms Meek’s Application of 20 March 2019

On 20 March 2019, Ms Meek (who had been separately joined as a respondent to the application of 27 June 2017) applied for an order pursuant to CPR 46.2(1) that Ms Glover be added as a party to these proceedings for the purposes of costs only.
She then applied for an order, pursuant to section 51 of the Senior Courts Act 1981, that Ms Glover pay her costs of the application of 27 June 2017.
She also applied for an order that Tom and Freya do pay her costs of the application dated 27 June 2017 but she did not press that application at the hearing in relation to costs.

Mr Barker’s Application of 29 March 2019

On 29 March 2019, Mr Barker applied for an order pursuant to CPR 46.2(1)(a), that Ms Glover be added as a party to these proceedings for the purposes of costs only and further applied for an order, pursuant to section 51 of the Senior Courts Act 1981, that Ms Glover pay his costs of the application dated 27 June 2017.
Mr Barker did not seek an order for costs against Tom and Freya.

The decision below | MR JUSTICE MORGAN:

50. Having regard to the substance of the application of 27 June 2017, I consider that Tom and Freya acting by their litigation friend started the legal process which led to the costs being incurred. By the time they made that application, having regard to what had happened on 25 July 2014, they were not merely defending proceedings that had been brought against them but they were initiating a challenge to the pre-existing state of affairs based on new allegations which they were advancing. On this basis, even if there is a special rule that the court will not order a litigation friend of a defendant to pay the costs of a successful claimant, in the absence of gross misconduct, I conclude that such a rule would not apply to the circumstances of the application of 27 June 2017.

51. I am aware that on the first day of the hearing of the application dated 27 June 2017, leading counsel who then appeared for Tom and Freya accepted a suggestion from the court that the only relief they needed was a determination that the order of 25 July 2014 was not binding on them. I do not regard that change of position on the part of leading counsel for Tom and Freya as altering the substance of the application and how the application should be assessed for the purposes of applying the alleged special rule as to orders for costs against a litigation friend for a defendant.

52. The applicants for costs submitted that Tom and Freya were “claimants” within the meaning of CPR 21.4(3)(c). The applicants for costs then submitted that Ms Glover ought to have given an undertaking to pay any costs which Tom and Freya were ordered to pay and that I should proceed on the basis that she had given such an undertaking. Mr Saoul submitted that Tom and Freya were not “claimants” within the meaning of this rule. I consider that it is not necessary to decide whether Tom and Freya qualified as “claimants” for the purposes of CPR 21.4(3)(c) and, if so, whether I should treat Ms Glover as having given an undertaking when she in fact had not done so. Even if this case does not come within this rule, the existence of the rule does not preclude the court having regard to all the circumstances of the case in order to decide how to exercise its discretion as to costs.

Conclusion as to the liability of a litigation friend for costs

53. When considering whether to make an order for costs against a litigation friend, who has acted for an unsuccessful child party, the court should apply the general approach that, as regards costs, the litigation friend is expected to be liable for such costs as the relevant party (if they had been an adult) would normally be required to pay. The governing rule is that the court has regard to all the circumstances of the case and it is open to the litigation friend to point to any circumstance as to their involvement in the litigation which might justify making a different order for costs from that which would normally be made against an adult party.

…

Conclusions as to Ms Glover

96. I am now in a position to arrive at my conclusions as to the applications for costs against Ms Glover. For this purpose, I will apply the ordinary rules as to the costs payable by an unsuccessful party, treating a litigation friend for such a party in the same way as the party.

97. I conclude that Mr Barker and Confiànce have established that it is just for their costs to be paid by Ms Glover.

98. I next consider the application for costs by Euan acting by his litigation friends, first Ms Meek and then Deborah Barker. Euan’s application is based on the fact that he was only a necessary party whilst Tom and Freya were pursuing the parts of the application of 27 June 2017 for orders lifting the stay imposed by the order of 25 July 2014 and revoking or varying that order. In due course, Tom and Freya indicated that they were not pursuing that relief but were instead only seeking an order that the order of 25 July 2014 was not binding on them. When that became clear, Euan did not incur further costs, apart from the need to incur the costs of applying to recover his earlier costs.

99.

I conclude that Euan has made out his claim to costs on the basis on which it was put. I should add a word of explanation in this respect. Euan is a party and is entitled to his costs. In the event, Euan did not himself retain solicitors and incur legal costs. However, the practice in a case involving a litigation friend is not to apply the indemnity principle so as to hold that Euan has incurred no costs and so is not entitled to recover costs. Instead, the costs incurred by the litigation friend (who will have retained the relevant solicitor) are considered to be the costs of the party. Another way of analysing the matter might involve holding that the litigation friend is entitled to an indemnity from the party for whom they were the litigation friend and, in that way, the party does incur the liability for the costs in question. As I understand it no difficulty of that kind arises in the present case and I need not consider the point further.

100. I will qualify my conclusions as to Euan’s costs in one respect. I do not see why Ms Glover should pay the costs incurred by Euan (acting through his litigation friends) in connection with the application to remove Ms Meek as his litigation friend and to replace her with Deborah Barker. Ms Glover was not responsible for that application being made and did not oppose it when it was made.

101. This conclusion as to Euan’s costs is subject to my earlier decision that 10% of his costs should be disallowed by reason of the conduct complained of in relation to the main proceedings and the hearing of 25 July 2014.

102. Euan has applied for his costs to be assessed on the indemnity basis. I am not persuaded that this is a case outside the norm which would justify such an order. I am not persuaded that there is any reason why Euan should be allowed to recover more costs than the costs which are reasonable costs, reasonably incurred, and which are proportionate to the matters in issue which involved him.

103. Finally, I consider Ms Meek’s application for costs as a separate respondent to the application of 27 June 2017. Having dealt with the earlier arguments concerning Ms Meek, I conclude that she has established that it is just for her costs to be paid by Ms Glover.

The Appeal | LORD JUSTICE NEWEY:

The issues

29. The appellant’s notice and respondents’ notices appear to me to give rise to the following principal issues:

i) Was the Judge wrong in his conclusions on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend?

ii) Should the Judge have concluded that Tom and Freya were (or should be treated as) “claimants” for the purposes of CPR 21.4(3) and so have proceeded on the basis that Ms Glover had given an undertaking in respect of the respondents’ costs?

iii) Was the Judge wrong to conclude that Tom and Freya should properly be treated as claimants so as to engage a principle that their litigation friend should be liable for costs?

iv) Was the Judge wrong to rely on unpaid costs orders in other proceedings when reaching his conclusions on costs?

v) Should the Judge anyway have held Ms Glover liable to pay the respondents’ costs under the general discretion as to costs conferred by section 51 of the Senior Courts Act 1981 (“the 1981 Act”)?

30. I shall take these issues in turn.

31. It is to be noted that no one challenges the Judge’s decision not to make costs orders against Tom and Freya and that neither Confiance nor Euan has suggested that Mr Barker should be responsible for their costs.

Issue (i): Was the Judge wrong in his conclusions on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend?

32. As I have said, the Judge concluded that, “When considering whether to make an order for costs against a litigation friend, who has acted for an unsuccessful child party, the court should apply the general approach that, as regards costs, the litigation friend is expected to be liable for such costs as the relevant party (if they had been an adult) would normally be required to pay”. The Judge accordingly applied “the ordinary rules as to the costs payable by an unsuccessful party, treating a litigation friend for such a party in the same way as the party”.

33. Mr Daniel Saoul QC, who appeared for Ms Glover with Mr Stephen Hackett, took issue with the Judge’s approach. A defendant’s litigation friend, he argued, will not generally be ordered to pay costs. The true position, he submitted, is that an order will not be made against such a litigation friend unless there has been misconduct on his part. That conclusion is supported by both pre-CPR authorities and policy considerations. If defendants’ litigation friends were usually vulnerable to adverse costs orders, that would have a chilling effect on the willingness of suitable individuals to take on the responsibility of acting as such a litigation friend and so both compromise the protection of the rights of children and protected parties who are sued and create significant difficulties for the administration of justice. That litigation friends of defendants are in a significantly different position to those of claimants is, moreover, apparent from CPR 21.4(3)(c), which requires a claimant’s litigation friend, but not a defendant’s, to undertake to pay any costs which the child or protected party might be ordered to pay in relation to the proceedings.

34. In contrast, Mr Adam Cloherty, appearing for Mr Barker, Mrs Elspeth Talbot Rice QC, appearing for Confiance, and Miss Constance McDonnell QC, appearing for Euan, all supported the Judge. Among the points advanced were these. The proposition that a defendant’s litigation friend is not liable to pay costs in the absence of misconduct is not supported by the old case law and, in any event, is inconsistent with the broad discretion as to costs now conferred on the Court by section 51 of the 1981 Act. That a defendant’s litigation friend should generally be liable for costs where the defence has failed is sound in principle. A person becoming a litigation friend must appreciate that his conduct will directly impact on other parties and the costs they incur. Should no one be able and willing to act for a defendant, the Official Solicitor will step in and, further, the Court has a discretion to permit a child to conduct proceedings without a litigation friend. CPR 21.4(3)(c) is simply akin to requiring some security for costs where a claim is brought by a litigation friend, and CPR 21.9(6) points to a defendant’s litigation friend being liable for costs.

Section 51 of the Senior Courts Act 1981

Power to make costs orders in civil proceedings is nowadays conferred by section 51 of the 1981 Act, which replaced the comparably worded section 5 of the Supreme Court of Judicature Act 1890. Section 51 of the 1981 Act provides:

“(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in—

(a)  the civil division of the Court of Appeal;
(b) the High Court;
(ba)  the family court; and
(c)  the county court,

shall be in the discretion of the court.

(2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings ….
(3) The court shall have full power to determine by whom and to what extent the costs are to be paid ….”

36. In Aiden Shipping Co Ltd v Interbulk Ltd [1986] 1 AC 965, the House of Lords held that there was no basis for implying into section 51 of the 1981 Act a limitation to the effect that a costs order could only be made against a party. Lord Goff said at 975 that it was “not surprising to find the jurisdiction conferred under section 51(1), like its predecessors, to be expressed in wide terms”. He continued:

“The subsection simply provides that ‘the court shall have full power to determine by whom . . . the costs are to be paid.’ Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to a establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. Such a policy appears to me, I must confess, to be entirely sensible. It comes therefore as something of a surprise to discover that it has been suggested that any limitation should be held to be implied into the statutory provision which confers the relevant jurisdiction.”

37. The Privy Council considered the circumstances in which a costs order should be made against a non-party in Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39, [2004] 1 WLR 2807. Lord Brown, giving the judgment of the Board, said this:

“25. A number of the decided cases have sought to catalogue the main principles governing the proper exercise of this discretion and their Lordships, rather than undertake an exhaustive further survey of the many relevant cases, would seek to summarise the position as follows. (1) Although costs orders against non-parties are to be regarded as ‘exceptional’, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such ‘exceptional’ case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against. (2) Generally speaking the discretion will not be exercised against ‘pure funders’, described in para 40 of Hamilton v Al Fayed (No 2) [2003] QB 1175, 1194 as ‘those with no personal interest in the litigation, who do not stand to benefit from it, are not funding it as a matter of business, and in no way seek to control its course’. In their case the court’s usual approach is to give priority to the public interest in the funded party getting access to justice over that of the successful unfunded party recovering his costs and so not having to bear the expense of vindicating his rights. (3) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is ‘the real party’ to the litigation, a concept repeatedly invoked throughout the jurisprudence …. (4) Perhaps the most difficult cases are those in which non-parties fund receivers or liquidators (or, indeed, financially insecure companies generally) in litigation designed to advance the funder’s own financial interests. Since this particular difficulty may be thought to lie at the heart of the present case, it would be helpful to examine it in the light of a number of statements taken from the authorities ….

29. In the light of these authorities their Lordships would hold that, generally speaking, where a non-party promotes and funds proceedings by an insolvent company solely or substantially for his own financial benefit, he should be liable for the costs if his claim or defence or appeal fails. As explained in the cases, however, that is not to say that orders will invariably be made in such cases, particularly, say, where the non-party is himself a director or liquidator who can realistically be regarded as acting rather in the interests of the company (and more especially its shareholders and creditors) than in his own interests….

33. … The authorities establish that, whilst any impropriety or the pursuit of speculative litigation may of itself support the making of an order against a non-party, its absence does not preclude the making of such an order.”

38. With regard to the position of a company director, Lord Brown cited Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613. In Metalloy, Millett LJ said at 1620:

“[An costs order against a non-party] may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit …. It is not, however, sufficient to render a director liable for costs that he was a director of the company and caused it to bring or defend proceedings which he funded and which ultimately failed. Where such proceedings are brought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for costs could be made against a director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be eroded and the principle that such orders should be exceptional would be nullified.”

39. Dymocks was taken to contain “an authoritative statement of the modern law” in Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23, [2016] 4 WLR 17, at paragraph 62. However, “the appellate courts have struggled to identify principles applicable across the board to the exercise of the jurisdiction to make a costs order against a non-party, save at the very highest level of generality” (to quote Lord Briggs in XYZ v Travelers Insurance Co Ltd [2019] UKSC 48, [2019] 1 WLR 6075, at paragraph 28). In XYZ v Travelers Insurance Co Ltd, Lord Briggs did not attempt a comprehensive reassessment of the generally applicable principles. The case was rather “an occasion to consider, in more granular detail, the principles which ought to apply to that distinct part of the broad spectrum of non-parties occupied by liability insurers” (paragraph 30).

CPR provisions

40. The Civil Procedure Rules introduced the term “litigation friend”.

41. CPR 21.2 states that a “protected party” (i.e. a party, or intended party, who lacks capacity to conduct the proceedings) must have a litigation friend to conduct proceedings on his behalf and that a child must have one unless the Court makes an order under CPR 21.2(3) permitting the child to conduct proceedings without a litigation friend. Absent an order under CPR 21.2(3), the only steps which a person can take in proceedings against a child or protected party who does not yet have a litigation friend are issuing and serving a claim form and applying for the appointment of a litigation friend (see CPR 21.3) and, by CPR 21.3(4), “Any step taken before a child or protected party has a litigation friend has no effect unless the court orders otherwise”.

42. Assuming that a litigation friend has not been appointed by the Court, a person may become a litigation friend without any Court order by, among other things, filing and serving “a certificate of suitability stating that he satisfies the conditions specified in rule 21.4(3)” (see CPR 21.5). CPR 21.4, headed “Who may be a litigation friend without a court order”, provides:

“(1) This rule does not apply if the court has appointed a person to be a litigation friend.

(2) A deputy appointed by the Court of Protection under the 2005 Act with power to conduct proceedings on the protected party’s behalf is entitled to be the litigation friend of the protected party in any proceedings to which his power extends.

(3) If nobody has been appointed by the court or, in the case of a protected party, has been appointed as a deputy as set out in paragraph (2), a person may act as a litigation friend if he—

(a) can fairly and competently conduct proceedings on behalf of the child or protected party;

(b) has no interest adverse to that of the child or protected party; and

(c) where the child or protected party is a claimant, undertakes to pay any costs which the child or protected party may be ordered to pay in relation to the proceedings, subject to any right he may have to be repaid from the assets of the child or protected party.”

43. CPR 21.6 deals with the appointment of a litigation friend by the Court. An application for such an appointment may be made either by a person wishing to be so appointed or by a party (see CPR 21.6(2)) and, where no one has become a litigation friend for a child or protected party who is a defendant, the claimant is generally obliged to make such an application if he wishes to take a step in the proceedings (see CPR 21.6(3)). CPR 21.6(5) stipulates that the Court “may not appoint a litigation friend under this rule unless it is satisfied that the person to be appointed satisfies the conditions in rule 21.4(3)”.

44. CPR 21.9 explains that, where a child who is not a protected party has a litigation friend, the litigation friend’s appointment ceases when the child reaches the age of 18. By CPR 21.9(4), the child in respect of whom the appointment to act has ceased must serve notice on the other parties stating, among other things, whether or not he intends to carry on the proceedings. CPR 21.9(6) provides:

“The liability of a litigation friend for costs continues until—

(a) the person in respect of whom his appointment to act has ceased serves the notice referred to in paragraph (4); or

(b) the litigation friend serves notice on the parties that his appointment to act has ceased.”

45. CPR Part 44 contains, as its heading indicates, “General Rules about Costs”. CPR 44.2(2) states that, if the Court decides to make an order about costs, “the general rule is that an unsuccessful party will be ordered to pay the costs of the successful party”.

Family Procedure Rules provisions

46. The Family Procedure Rules 2010 (“the FPR”) contain comparable provisions.

FPR 15.2 imposes a requirement for a protected party to have a litigation friend to conduct proceedings on that party’s behalf and allows a person to become a litigation friend either pursuant to a Court order or without one. There are, however, noteworthy distinctions between CPR 21.4 and FPR 15.4, to which CPR 21.4 corresponds. FPR 15.4 is in these terms:

“(1) This rule does not apply if the court has appointed a person to be a litigation friend.

(2) A person with authority as a deputy to conduct the proceedings in the name of a protected party or on that party’s behalf is entitled to be the litigation friend of the protected party in any proceedings to which that person’s authority extends.

(3) If there is no person with authority as a deputy to conduct the proceedings in the name of a protected party or on that party’s behalf, a person may act as a litigation friend if that person—

(a) can fairly and competently conduct proceedings on behalf of the protected party;

(b) has no interest adverse to that of the protected party; and

(c) subject to paragraph (4), undertakes to pay any costs which the protected party may be ordered to pay in relation to the proceedings, subject to any right that person may have to be repaid from the assets of the protected party.

(4) Paragraph (3)(c) does not apply to the Official Solicitor. (‘deputy’ is defined in rule 2.3).”
Whereas, therefore, CPR 21.4(3)(c) provides for a litigation friend to give an undertaking as to costs if acting for a claimant, FPR 15.4(3)(c) is not so qualified: an undertaking is required whatever the status in the proceedings of the protected party. Further, FPR 15.4, unlike CPR 21.4, specifically exempts the Official Solicitor from the requirement to give such an undertaking (see FPR 15.4(4)).

48. Likewise, there are circumstances in which a child must have a litigation friend (see FPR 16.5) and, in such a case, a person may act as a litigation friend only if he “undertakes to pay any costs which the child may be ordered to pay in relation to the proceedings, subject to any right that person may have to be repaid from the assets of the child” (FPR 16.9(2)(c)). Here, “the Official Solicitor, an officer of the [Children and Family Court Advisory and Support] Service or a Welsh family proceedings officer” is excused from the need to give an undertaking by FPR 16.9(3).

49. While FPR 28.2 provides for parts of CPR Part 44 to apply to costs in proceedings governed by the FPR, FPR 28.3(2) specifically disapplies CPR 44.2(2) (embodying the principle that costs follow the event). Further, FPR 28.3(5) states that “the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party”.

Authorities on the position of a next friend or guardian ad litem

50. Before the advent of the CPR, a child could bring proceedings by a “next friend” (or, in the law French of earlier cases, a “prochein amy” or “prochein amie”) or, sometimes, a guardian and could defend by a “guardian ad litem”.

51. Where a claim by a child failed, the next friend or guardian would commonly have to bear the defendant’s costs. In Slaughter v Talbot (1739) Barnes 128, the Court considered that “by the uniform practice of all the Courts the prochein amie is liable to costs”. In Beavan v Beavan (1862) 31 LJNS 166, a guardian who had instituted divorce proceedings on behalf of a 16 year old who had married a rather older prostitute was ordered to give security for the wife’s costs, the Judge Ordinary, Sir Cresswell Cresswell, holding at 166 that “the guardian, as she had instituted the suit, was liable for the wife’s costs”. In Dyke v Stephens (1885) 30 Ch D 189, Pearson J observed at 190 that a next friend “is not a party to the action, he is put there simply to protect the interest of the infant, and to shew that the interest is of such nature that he is willing to guarantee costs, and in making himself liable for costs he is in no way a party to the action”. In Slingsby v Attorney-General (1916) 32 TLR 364, an order for costs was made against the guardian of an infant petitioner, counsel for the guardian recognising in submissions at 367 that “it was usual where an action was brought by an infant plaintiff to order the next friend personally to pay the costs”. In Rutter v Rutter [1921] P 136, it was “not disputed that by the practice of the King’s Bench and Chancery Divisions the next friend of an infant plaintiff is liable for the costs of the suit”, but it was argued on behalf of the guardian of the infant husband whose petition had failed that “no such status as that of next friend is known in the Divorce Division where the rules provide that an infant must sue by his guardian” (see 140). Having, however, referred to Beavan v Beavan and Slingsby v Attorney-General, Horridge J said at 142:

“These two decisions are direct decisions that the person who acts as guardian to an infant petitioner is liable for the respondent’s costs of the proceedings. I am glad that the cases so decide, because I think that is the right rule. In my opinion the same rule that applies in the Chancery and King’s Bench Divisions ought to apply in the Divorce Division and for the same reasons.”

A note in the then current edition of the Annual Practice stated at 249, “The object of having a next friend is to give security for costs to the defendant”.

52. The position in relation to the guardian ad litem of a defendant was significantly different. In Morgan v Morgan (1865) 11 Jur NS 233, where a widow had succeeded in a dower claim, Kindersley V-C declined to make an order for costs against the guardian ad litem of the infant defendant. Kindersley V-C noted that “the question is, whether a guardian ad litem becomes liable to costs by raising such a defence as would, upon the authority of Bamford v. Bamford, make an adult defendant so liable” and, having looked into that question, held:

“I think it is impossible in this case to order the guardian ad litem to pay these costs. I do not mean to say there could not be such a case of gross misconduct as to render him liable to do so, but that is not the case here; and your client, Mr Chitty, is much in the same position as a plaintiff suing a pauper defendant.”

53. Bamford v Bamford (1845) 5 Hare 203, to which Kindersley V-C referred, was another dower case in which no order for costs was made. Wigram V-C said at 205 that, on a bill to assign dower, “the rule is that no costs shall be given on either side”, but that:

“If the defence in this case had been made without any just ground, or had been founded upon a statement which the Defendants knew, or with reasonable diligence could have known, was untrue, I should have thought the Plaintiff entitled to the costs occasioned by such defence.”

54. The Judge considered the relationship between Bamford v Bamford and Morgan v Morgan in the Costs Judgment. He said this in paragraph 39:

“In his first judgment, the Vice-Chancellor [in Morgan v Morgan] was not in any doubt as to the authority of Bamford v Bamford. He indicated that if the child defendant in Morgan v Morgan had been an adult, the Vice-Chancellor would have made an order for costs against him. The only matter he needed to inquire into was as to the position of the litigation friend. His subsequent ruling is to be understood as a finding that he would not make an order for costs against the litigation friend of a child defendant even where he would have made an order for costs against an adult defendant. He referred to an exception for a case of gross misconduct but that exception is much more narrowly expressed than the test in Bamford v Bamford as to when costs could be ordered against an unsuccessful defendant in a dower suit. Although the Vice-Chancellor concluded his judgment by saying that there would be no order for costs ‘according to the ordinary rule in dower suits’, I do not take him to be reversing his earlier statement that, applying Bamford v Bamford, he would have made an order for costs against an adult defendant in that case.”

I agree.

55. In Vivian v Kennelly (1890) 63 LT 778, Hannen P made an order for costs in favour of a successful plaintiff against both an infant defendant and her guardian ad litem. However, in Reynolds v Mead, The Times, 5, 6 and 10 December 1895, where there was extensive citation of authority, counsel for the successful plaintiff agreed with Gorell Barnes J that the order in Vivian v Kennelly was made “on the ground of the guardian’s misconduct” (see 6 December) and Gorell Barnes J subsequently decided that there should be no order as to costs in the case before him (see 10 December). Gorell Barnes J similarly declined to make an order for costs against the guardian ad litem of an unsuccessful defendant in Hooper v Mackenzie, The Times, 23 January 1901, the report of which records him as saying:

“The question was argued at length in Reynolds v Mead …. In the course of argument, … Morgan v Morgan was cited as authority for the proposition that a guardian ad litem was not liable in costs unless there had been gross misconduct on his part. I shall make no order as to costs ….”

56. Specific consideration was given to the position of the Official Solicitor. In Eady v Elsdon [1901] 2 KB 460, where the Official Solicitor had been assigned guardian ad litem to the defendant on the application of the plaintiff, the plaintiff was ordered to pay the Official Solicitor’s costs even though he had won. In Re PC (An Infant) [1961] Ch 312, Buckley J considered the principle indicated by such cases as Eady v Elsdon to be applicable notwithstanding the fact that “the suggestion that the Official Solicitor should act as guardian ad litem of the infant originated not from the applicant, but from the court”: “[i]t was necessary that the infant should be represented by a guardian ad litem for the purpose of these proceedings and it appeared that the only person suitable and available was the Official Solicitor” so “[t]he appointment of the Official Solicitor as guardian ad litem was … a sine qua non to the proceedings going on and being effectively disposed of” (see 317-318). In Re G (Minors) [1982] 1 WLR 438, Ormrod LJ, giving the judgment of the Court of Appeal, distinguished between custody cases, where the Official Solicitor “is much more than a mere guardian ad litem”, and cases where the Official Solicitor “was acting as guardian ad litem to an infant who was made a defendant in ordinary litigation in which the infant had to be made a defendant to enable the plaintiff to proceed with his action” (see 442). In the latter class of case, Ormrod LJ explained at 442, “a plaintiff is obliged by R.S.C., Ord. 80, r. 6, to apply to the court for the appointment of a guardian ad litem and may not proceed with his action until a guardian ad litem is appointed”, but “[n]o such provision applies to either wardship proceedings or proceedings concerning children under the Matrimonial Causes Act 1973” where “[t]he child is not a necessary party and the case can, and usually does, proceed without making the child a party to the proceedings”. These authorities, therefore, had no application to the case before the Court and decisions such as Eady v Elsdon did not apply. There is, Ormrod LJ said at 443, “no rule of practice in wardship and custody cases which requires the court to order a plaintiff in wardship proceedings to pay the Official Solicitor’s costs, unless there are special reasons to the contrary”, but neither is there any rule of practice in such cases that the parties should pay their own costs, unless there are special reasons to the contrary: section 51 of the 1981 Act “gives the trial judge an unfettered discretion over costs”. In Northampton Health Authority v Official Solicitor [1994] 1 FLR 162, Bingham MR endorsed a passage from an unreported judgment of Sheldon J in which he had summarised the law as follows:

“In my judgment, however, when a decision has to be made whether or to what extent a local authority or any other party should be ordered to pay the Official Solicitor’s costs, it matters not whether the proceedings in which the question arises are matrimonial proceedings, wardship cases or adoption applications; whether his intervention is invited by the court, requested by the parties, or prescribed by regulation. In each case, in my opinion, the decision lies in the unfettered discretion of the trial judge, to be exercised in accordance with similar general principles. One of these, in my view, is that, as the parties, in whatever circumstances, have become involved in a situation in which it has become necessary to seek the assistance of the Official Solicitor, it is not unreasonable for him to ask that they should meet or contribute towards the cost of his intervention. In some cases there may be factors or considerations which will lead the court to refuse such a request.”

The Official Solicitor as litigation friend post-CPR

57. Guidance endorsed by the Official Solicitor and the President of the Family Division was issued in 2010 in respect of cases involving protected parties in which the Official Solicitor is invited to act as guardian ad litem or litigation friend. While “[t]he guidance is primarily concerned with proceedings relating to children, including welfare cases”, it “also has a general application” (White Book, paragraph 21.5.1). As regard public and private law children’s cases, the guidance refers to the “severe budgetary constraints” to which the Official Solicitor is subject and explains that, before accepting a case, the Official Solicitor will need “confirmation that there is security for the costs of legal representation”. In a similar vein, paragraph 3.4 of PD 21 states that, where it is sought to appoint the Official Solicitor as a litigation friend, “provision must be made for payment of his charges”. “Charges” must in this context be understood to refer to costs of legal representation (White Book, paragraph 21.7.2).

Discussion

58. The jurisdiction to make a costs order against a non-party, whether a litigation friend or any other third party, nowadays derives from section 51 of the 1981 Act. This proved to be common ground. Mr Saoul submitted that the question whether Ms Glover should be ordered to pay costs has to be seen through the lens of section 51, and the other counsel agreed.

59. In Dymocks Franchise Systems (NSW) Pty Ltd v Todd, Lord Brown spoke of the “ultimate question” being “whether in all the circumstances it is just to make the order”. In a similar vein, Moore-Bick LJ observed in Deutsche Bank AG v Sebastian Holdings Inc at paragraph 62 that the “only immutable principle” which applies in relation to the exercise of the power to order a non-party to pay costs is that “the discretion must be exercised justly”.

60. As, however, XYZ v Travelers Insurance Co Ltd shows, more specific principles may be applicable to a “distinct part of the broad spectrum of non-parties”. That, to my mind, is the case with the “part of the broad spectrum” occupied by litigation friends. The guidance given “at the very highest level of generality” (to quote Lord Briggs in XYZ at paragraph 28) in Dymocks Franchise Systems (NSW) Pty Ltd v Todd as to the circumstances in which a costs order should be made against a non-party is not obviously apt for litigation friends. The Dymocks case did not involve a litigation friend and so Lord Brown had no reason to consider the position of litigation friends or factors that might be special to them.

61. In practice, the Court may not often need to consider whether to make an order under section 51 of the 1981 Act against a litigation friend of a claimant. By virtue of CPR 21.4(3)(c) and 21.5, a person must give an undertaking as to costs to become a litigation friend without a Court order. Likewise, CPR 21.6(5) bars the Court from appointing anyone as a litigation friend who does not satisfy “the conditions in rule 21.4(3)”, and one such condition, in the case of a litigation friend of a claimant, is that an undertaking as to costs is given. A claimant’s litigation friend will commonly, therefore, be answerable for costs as a result of having given an undertaking without the Court making an order for costs against him pursuant to section 51.

62. Supposing, however, that a question arises as to whether to order a claimant’s litigation friend to pay a defendant’s costs of an unsuccessful claim (say, because no order for costs is thought appropriate against the claimant himself with the result that an undertaking to pay “any costs which the child or protected party may be ordered to pay”, as required by CPR 21.4(3)(c), does not bite), it seems to me that it will usually be appropriate to make such an order if an order would have been made against the claimant himself had he not been a child or protected party. That would reflect both the sense of CPR 21.4(3)(c) and pre-CPR authority. As long ago as 1739, a “prochain amie” was liable to costs by “the uniform practice of all the Courts” and subsequent cases show that the practice endured. The Judge considered that nothing in the 1981 Act or the CPR undermined the reasoning in the earlier cases or called for it to be reconsidered (see paragraph 31 of the Costs Judgment).

In my view, it remains the case that liability for costs should typically be imposed on a claimant’s litigation friend, but with the important caveat that, when deciding whether to make such an order, the Court is exercising a discretion and entitled to have regard to the particular circumstances of the case.

63. Unlike the Judge, however, I do not consider there to be a general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay. My reasons include these:

i) The pre-CPR authorities indicate that a defendant’s guardian ad litem was not treated in the same way as a plaintiff’s next friend or guardian for costs purposes. On the basis of the cases of which he was aware, the Judge observed in paragraph 43 of the Costs Judgment that there was “really only one case (Morgan v Morgan) which provides any support for the proposition that the court will not make an order for costs against the litigation friend of a child defendant in the absence of gross misconduct”. The Judge was unaware, however, of Reynolds v Mead and Hooper v Mackenzie. Those decisions seem to me to confirm that a defendant’s guardian ad litem would not be required to bear costs unless he had been guilty of gross misconduct;

ii) Distinctions between a defendant’s litigation friend and a claimant’s also emerge from the CPR. While a claimant’s litigation friend must supply an undertaking as to costs in accordance with CPR 21.4(3)(c), the CPR, unlike the FPR, impose no such requirement on a defendant’s litigation friend. Mr Cloherty sought to dismiss CPR 21.4(3)(c) as “simply akin to requiring some security for costs where a claim is brought by a litigation friend”, but an undertaking in compliance with CPR 21.4(3)(c) creates only a personal obligation and, even if security were conferred, the fact would remain that it had been thought right to differentiate between a claimant’s litigation friend (who has to give an undertaking) and a defendant’s (who need not). It is significant, too, that, by virtue of CPR 21.2 and 21.3, the general rule is that a claim simply cannot proceed against a child or protected party unless a litigation friend is appointed. A step taken before a child or protected party has a litigation friend has no effect unless the court orders otherwise, CPR 21.3(4) explains;

iii) There is force in Mr Saoul’s policy argument. Children and protected parties who are being sued need litigation friends both so that their rights are protected and because the litigation cannot otherwise proceed. Yet there must be a risk that, if a defendant’s litigation friend were usually vulnerable to an adverse costs order, that would deter suitable individuals from taking on the role. Mrs Talbot Rice downplayed the potential difficulties on the footing that, if no one else is able and willing to act for a child or protected party, the Official Solicitor will step in, but the Official Solicitor is not willing to accept a case unless there is adequate provision for payment of her own costs. More than that, a general principle that a defendant’s litigation friend should bear the claimant’s costs of a successful claim would, on the face of it, expose the Official Solicitor to the prospect of a costs order against her if the claim succeeded, yet it seems most unlikely that the Official Solicitor would wish to run that risk. Mrs Talbot Rice also pointed out that CPR 21.2(3) gives the Court a discretion to permit a child to conduct proceedings without a litigation friend, but exercise of that power would only rarely provide an adequate solution in the case of a child and could never do so with a protected party;

iv) Where a director causes a company to defend a claim unsuccessfully, he is unlikely to be ordered to pay costs personally in the absence of “some impropriety or bad faith on his part” even if he provided the company with funding, unless at least he can be seen to have acted for his own benefit, notably through a shareholding. It is not easy to see why a defendant’s litigation friend should be in a worse position. While the litigation friend might be said to have controlled the defendant’s participation in the litigation, the same might be said of the company director. That tends to suggest that a defendant’s litigation friend who does not stand to benefit substantially should generally escape liability for a claimant’s costs unless guilty of impropriety or bad faith;

v) Authorities addressing the position of the Official Solicitor also provide support for the view that there is no general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay. Far from the Official Solicitor being ordered to pay a claimant’s costs where a defendant on whose behalf she has acted has failed, the cases show that a claimant (or other applicant) may be ordered to pay the Official Solicitor’s own costs, and that even where the claimant/applicant has not asked the Official Solicitor to become involved. In Re PC (An Infant), Buckley J drew attention to the fact that the Official Solicitor’s appointment was “a sine qua non to the proceedings going on and being effectively disposed of” and, in Northampton Health Authority v Official Solicitor, Bingham MR agreed that there was a general principle that, where parties have become involved in a situation in which it has become necessary to seek the assistance of the Official Solicitor, it is not unreasonable for him to ask that they should meet or contribute towards the cost of his intervention. Such points find an echo to an extent in Mr Saoul’s policy argument. Of course, the Official Solicitor might be thought to be in a somewhat different position from, say, a parent acting as litigation friend for a child, but there is also a distinction in terms of the relief at issue. The question in the Official Solicitor cases is whether a successful claimant/applicant should be ordered to pay the costs of the litigation friend of a defendant/respondent. The question where someone other than the Official Solicitor has acted as litigation friend will be whether the litigation friend should have to bear the claimant’s costs;

vi) CPR 21.9(6) does not imply that a defendant’s litigation friend should be held liable for costs. That provides for the liability of a litigation friend for costs to continue until a notice stating that the appointment has ceased has been served. As, however, the Judge said in paragraph 32 of the Costs Judgment, the rule “shows that there can be cases in which a litigation friend is liable for costs but the rule itself does not define what those circumstances are”. I agree;

vii) CPR 44.2(2) is not in point because that deals with costs as between parties, not with when costs orders should be made against non-parties.

64. Drawing the threads together, it seems to me that the position in relation to costs orders against litigation friends in civil litigation can be summarised as follows:

i) At any rate where a litigation friend has not previously given an undertaking to pay the costs at issue, the power to make an order for costs against a litigation friend derives exclusively from section 51 of the 1981 Act;

ii) When deciding whether an order should be made against a litigation friend under section 51, the “ultimate question” is “whether in all the circumstances it is just to make the order”;

iii) It will typically be just to order a claimant’s litigation friend to pay costs if such an order would have been made against the claimant himself had he not been a child or protected party, but it remains the case that the Court is exercising a discretion and entitled have regard to the particular circumstances;

iv) There is no presumption that a defendant’s litigation friend should bear costs which the defendant would have been ordered to pay if not a child or protected party. That the litigation friend controlled the defence of a claim which succeeded will not of itself generally make it just to make an adverse costs order against the litigation friend. Factors that might, depending on the specific facts, be thought to justify such an order include bad faith, improper or unreasonable behaviour and prospect of personal benefit. If a director causes his company to litigate “solely or substantially for his own benefit” (to quote Lord Brown in Dymocks), that may point towards a costs order against him. The fact that a litigation friend stands to gain a substantial personal benefit must also, I think, be capable of weighing in favour of a costs order against him.

65. It follows that, in my view, the Judge was mistaken in thinking that, “the court should apply the general approach that, as regards costs, the litigation friend is expected to be liable for such costs as the relevant party (if they had been an adult) would normally be required to pay” and so erred in principle.

66. In the present case, it is not suggested that Ms Glover acted in bad faith and she did not stand to gain a substantial personal benefit from the Twins’ Application. The Judge noted that “if Tom and Freya did make a financial recovery as a result of these proceedings (and further proceedings) then there could be an element of an indirect benefit to Ms Glover”, since such a recovery would have alleviated the financial burden on her and perhaps enabled Tom and Freya to pay back debts she had incurred. He also, however, observed that the proceedings against Confiance which were contemplated “would have been for the benefit of Tom and Freya and not directly for the benefit of Ms Glover” and, as Mr Saoul pointed out, the period over which the financial burden on Ms Glover could have been eased would have been attenuated by the fact that Tom and Freya were already turning 16 when the Twins’ Application was issued. As for improper or unreasonable behaviour, the respondents argued that the Twins’ Application had poor to non-existent prospects of success and was speculative at best. In this connection, Mr Cloherty drew attention to paragraph 81 of the Costs Judgment, in which the Judge said that, by the time the Twins’ Application was initiated, Ms Glover “knew or ought to have known of the difficulties she would have to overcome” but “nonetheless went ahead”. He further relied on Lord Brown’s reference in Dymocks to “the pursuit of speculative litigation” being capable of supporting the making of an order against a non-party. To my mind, however, the Twins’ Application was not so obviously flawed as to justify a costs order against Ms Glover. A key element in the Judge’s analysis in the Principal Judgment was that section 28 of the IHTA was to be construed in the way that the Court of Appeal thought was probably correct in the Negligence Claim, but the Court of Appeal’s judgments were not available until December 2017, by which time the Twins’ Application had not only been issued but had its first hearing day. Beyond that, the matter was the subject of sustained argument by leading counsel at a hearing extending over, in all, several days and the Judge spoke of the Twins’ Application having to overcome “difficulties” rather than of its being hopeless. Nor do I consider that the fact that costs orders made in favour of Mr Barker and Confiance in the Twin Benefits Proceedings have not been satisfied provides a sufficient reason to impose liability for costs on Ms Glover in the present context. Ms Glover was never herself a party to the Twin Benefits Proceedings or under any liability in respect of their costs. While, moreover, Ms Glover may have been a director and shareholder of Twin Benefits, the company was “used as a vehicle … in order to insulate Mr Baxendale-Walker from a potential costs liability” and it was he who provided the funding and “the bulk of the instructions” and who exercised substantial control (see Birss J’s judgment of 25 October 2017, quoted in paragraph 12 above). An order for costs was, accordingly, made against Mr Baxendale-Walker. No such order was either made or sought against Ms Glover.

67.

In all the circumstances, it seems to me that, should Tom and Freya be viewed as defendants, costs orders against Ms Glover would not be appropriate.

Issue (ii): Should the Judge have concluded that Tom and Freya were (or should be treated as) “claimants” for the purposes of CPR 21.4(3) and so have proceeded on the basis that Ms Glover had given an undertaking in respect of the respondents’ costs?

68. This issue arises from a respondent’s notice served on behalf of Mr Barker, but it was not the subject of significant elaboration either in Mr Cloherty’s skeleton argument or in his oral submissions. I can dispose of it shortly.

69. While the Twins’ Application was pending, Ms Glover was repeatedly pressed to provide an undertaking pursuant to CPR 21.4(3)(c) on the basis that Tom and Freya were “claimants” for the purposes of the rule. Ms Glover denied that Tom and Freya were “claimants” and refused to give an undertaking. She has explained in a witness statement that, had the Court imposed a requirement for an undertaking as a pre-condition of her being Tom and Freya’s litigation friend, she would have had no choice but to decline to give the undertaking and therefore not act as their litigation friend, since she could not afford to meet an adverse costs order.

70. Mr Barker’s respondent’s notice proceeds on the basis that Tom and Freya should be seen as “claimants” for the purposes of CPR 21.4(3)(c). That being so, the argument goes, Ms Glover should be treated as if she had given an undertaking in accordance with CPR 21.4(3)(c).

71. However, the simple fact is that Ms Glover never entered into any undertaking. She cannot be held liable on an undertaking that was not given.

72. A further point is that CPR 21.4(3)(c) contemplates an undertaking to pay “any costs which the child or protected party may be ordered to pay”. In the present case, no costs order was made against the parties for whom Ms Glover acted, Tom and Freya. An undertaking of the kind envisaged in CPR 21.4(3)(c) could not, therefore, have served to impose any liability on her.

Issue (iii): Was the Judge wrong to conclude that Tom and Freya should properly be treated as claimants so as to engage a principle that their litigation friend should be liable for costs?

73. The Judge concluded that, even if there were a “special rule that the court will not order a litigation friend of a defendant to pay the costs of a successful claimant, in the absence of gross misconduct”, it would not apply because “Tom and Freya acting by their litigation friend started the legal process which led to the costs being incurred” and “they were not merely defending proceedings that had been brought against them but they were initiating a challenge to the pre-existing state of affairs based on new allegations which they were advancing” (see paragraph 22 above).

74. Mr Saoul challenged the Judge’s analysis. He argued that, although the Twins’ Application had been initiated by Tom and Freya, they had done so only because they had been wrongly deprived of the opportunity to participate in the proceedings as defendants in the first place. They were essentially seeking to be placed in the position they would have been in had they been joined at the outset, as they should have been. To treat them as claimants in circumstances where they had issued an application to vindicate their rights as defendants would be artificial and fail to reflect the substance of their position. It would be perverse, Mr Saoul said, if Mr Barker’s misconduct enabled him to obtain a costs order against Ms Glover.

75. Mr Cloherty, Mrs Talbot Rice and Miss McDonnell likewise argued for substance over form, but to contrary effect. Tom and Freya, they submitted, were in substance in the position of claimants. By issuing the Twins’ Application, they instigated the process that led to the costs at issue being incurred. More than that, although they originally asked to be added as defendants to the Main Proceedings, that head of relief was abandoned at an early stage.

76. We were referred in this context to GFN SA v Bancredit Cayman Ltd [2009] UKPC 39, [2010] Bus LR 587. The question there was whether liquidators could obtain security for costs against companies appealing against decisions on proofs of debt. The Privy Council concluded that it was proper to award security for costs. Lord Neuberger said in paragraph 31 that “it must be right, at least as a general rule, that, when deciding whether a particular application is an ‘action, suit, or other … proceeding’ or an ‘action or other proceedings’, the court must look at the substance of the application as opposed to its strict form”. He went on in paragraph 32:

“In my judgment, viewed in the light of these principles, the applications in the present case were originating applications falling within the expressions I have just quoted. They brought before the court issues which were not previously before the court, and which would not otherwise have been before the court; and, although brought in the context of a winding up ordered by, and under the ultimate supervision of, the court, these applications were essentially free-standing.”

Lord Scott similarly considered, at paragraph 22, that “it is the substance of the ‘proceedings’ rather than their form that is important” and said in paragraph 27 that the applications with which the Board was concerned were “unquestionably … in substance originating applications”.

77. The respondents to the present appeal stressed paragraph 24 of Lord Scott’s judgment, in which he said this:

“Another possible example of the necessity of having regard to substance rather than form might arise in the case of an application to set aside a compromise of an action on the ground of misrepresentation or concealment of material facts. Such an application would usually be made in a new action and there could be no question but that the new action would constitute ‘proceedings’ for the purposes both of section 74 [of the Cayman Islands Joint Stock Companies Act 1857 (as revised)] and of Order 23 [of the Grand Court Rules 1995]. But, if the original action were technically still on foot, the application to set aside the compromise could be made by interlocutory motion in the still existing action: see Gilbert v Endean (1878) 9 Ch D 259 and the remark of Jessel MR, at p 266, that the object of the motion was to decide ‘a substantial question between the parties’. In such a case the applicant would be in the position of a plaintiff and the respondent in the position of a defendant whatever their respective roles in the existing action. The ability of the court to entertain an application by the respondent for security for costs of the applicant’s application to set aside the compromise could surely not be denied on the ground that the application was not in form an originating process and so did not constitute ‘proceedings’ for section 74 or Order 23 purposes.”

The Twins’ Application, it was argued, was closely analogous to the “application to set aside a compromise of an action on the ground of misrepresentation or concealment of material facts” postulated by Lord Scott and Tom and Freya should similarly be treated as claimants.

78. However, Lord Neuberger, with whom Lord Rodger, Baroness Hale and Sir Jonathan Parker concurred, specifically stated, in paragraph 34, that he would prefer to leave entirely open questions such as whether and if so when it is possible or appropriate to order security for costs in connection with an application to set aside a compromise of an action. Moreover, the issue on this appeal differs significantly from that before the Privy Council in GFN SA v Bancredit Cayman Ltd. In GFN, the Privy Council was concerned with whether a particular type of application was an “action, suit, or other … proceeding” or an “action or other proceeding”. In the present case, what ultimately matters is what impact Tom and Freya’s role should have on the exercise by the Court of its discretion under section 51 of the 1981 Act. It will be apparent from what I have already said that, in my view, a litigation friend for an ordinary claimant should typically bear the costs of a successful defendant while costs liability should be imposed on an ordinary defendant’s litigation friend much less often. Where, however, a party for whom a litigation friend acts is neither a conventional claimant nor a conventional defendant, the Court’s decision on the litigation friend’s liability for costs need not be governed by simple characterisation of the party as claimant or defendant. The Court should consider whether the nature and circumstances of the party’s participation point to application of, on the one hand, the approach adopted in relation to claimants’ litigation friends or, on the other hand, that adopted in relation to defendants’ litigation friends before arriving at an overall conclusion as to how it should exercise its discretion on the particular facts.

79. In the present case, the Judge did not approach matters in quite that way but rather asked himself whether Tom and Freya were “claimants” on the one hand or “defendants” on the other by considering “whether … the party acting by a litigation friend had started the process which led to the costs being incurred”. That being so, we must, I think, consider the position for ourselves.

80.

On balance, it seems to me that the nature and circumstances of Tom and Freya’s participation make it appropriate to apply the approach adopted in relation to defendants’ litigation friends rather than that adopted in relation to claimants’ litigation friends.

Although it was Tom and Freya who made the Twins’ Application, the “foundation” for the application was “conduct of Mr Barker (and others)” of which the Judge disapproved (paragraph 79 of the Costs Judgment). Mr Barker “adopted an approach to the litigation which he considered was in his best interests” and “the other parties and their advisers went along with that approach” (paragraph 66). The result was that the Main Proceedings were “deliberately concealed” from Tom, Freya and Ms Glover (paragraph 72), they were “deliberately not inform[ed] … of a proposed compromise so as to prevent them expressing their views upon that compromise” (paragraph 69), “information relevant to the court’s decision was deliberately withheld from the court” (paragraph 73) and a representation order was used “as a means of keeping Tom and Freya (and Ms Glover) in the dark as to what was happening” (paragraph 71). The “natural consequence” was that Ms Glover “has harboured a strong sense of injustice and a belief that Tom and Freya have been unfairly treated” (paragraph 76). The Twins’ Application represented an attempt to remedy what had gone wrong. Initially, Tom and Freya specifically asked to be joined as defendants. That head of relief was not pursued beyond the first hearing of the application, but it remains the case that Tom and Freya were responding to the Main Proceedings and their exclusion from them. If, as was hoped, success in the Twins’ Application had enabled them to mount a claim against Confiance for breach of trust, they would clearly have been claimants in that context. What was at issue in the Twins’ Application itself, however, was whether Tom and Freya were bound by a compromise of which they had not been informed in order to prevent them expressing views on it. In the circumstances, whether or not Tom and Freya would have been regarded as “claimants” for security for costs purposes in accordance with GFN SA v Bancredit Cayman Ltd, it appears to me that it is the approach governing costs orders against litigation friends of defendants that ought to be applied; and I have already said that, on that basis, I would not consider costs orders against Ms Glover to be appropriate.

81. All in all, there is no sufficient justification for costs orders against Ms Glover.

Issue (iv): Was the Judge wrong to rely on unpaid costs orders in other proceedings when reaching his conclusions on costs?

82. The conclusions I have arrived thus far mean that this issue falls away. It was raised in the appellant’s notice as an alternative to Ms Glover’s other grounds of appeal. Since Ms Glover succeeds, in my view, on those other grounds (see issues (i) and (iii)), I do not need to address this point. Further, I have considered the unpaid costs orders in paragraph 66 above.

Issue (v): Should the Judge anyway have held Ms Glover liable to pay the respondents’ costs under the general discretion as to costs conferred by section 51 of the Senior Courts Act 1981?

83. The respondents each contended by way of respondent’s notice that, were the Judge to have been mistaken in thinking that a child’s litigation friend should generally be liable for the costs which the child would have been required to pay if adult, costs orders should have been made against Ms Glover anyway under section 51 of the 1981 Act. By the time of the hearing, however, it was common ground that section 51 does not provide an independent basis for imposing liability on Ms Glover: the position is rather that any order against Ms Glover would be made pursuant to section 51. It follows that this issue does not require separate consideration.

Conclusion

84. I would allow the appeal and set aside the costs orders which the Judge made against Ms Glover.

Lord Justice Moylan:

85. I agree.

Lord Justice Patten:

86. I also agree.

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30th September 2020

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Costs orders against Litigation Friends, CPR 21.4.(3), CPR 21.7, CPR 21.9(6), CPR 46.2, Litigation Friend, Senior Courts Act 1981

Costs Orders Against Litigation Friends | Court of Appeal Decision

GLOVER V BARKER & ORS [2020] EWCA CIV 1112

BARKER V CONFIÀNCE LTD & ORS (COSTS ORDERS AGAINST LITIGATION FRIENDS) | KEY OBSERVATIONS AND FINDINGS

Is there a general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay?

“Unlike the Judge, however, I do not consider there to be a general principle to the effect that a defendant’s litigation friend should be liable for such costs as the child or protected party would normally be required to pay. My reasons include these: [63]

Was the Judge wrong in his conclusions on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend?

Should the Judge have concluded that Tom and Freya were (or should be treated as) “claimants” for the purposes of CPR 21.4(3) and so have proceeded on the basis that Ms Glover had given an undertaking in respect of the respondents’ costs?

Was the Judge wrong to conclude that Tom and Freya should properly be treated as claimants so as to engage a principle that their litigation friend should be liable for costs?

BARKER V CONFIÀNCE LTD & ORS (COSTS ORDERS AGAINST LITIGATION FRIENDS) | FULL CASE DETAILS AND DECISION

Relevant Background

The main proceedings

The application of 27 June 2017

The High Court applications

Euan’s Application of 23 July 2018

Confiànce’s Application of 23 July 2018

Ms Meek’s Application of 20 March 2019

Mr Barker’s Application of 29 March 2019

The decision below | MR JUSTICE MORGAN:

The Appeal | LORD JUSTICE NEWEY:

The issues

Issue (i): Was the Judge wrong in his conclusions on the law as to the presumed general liability of litigation friends for costs, and in particular the liability of a defendant’s litigation friend?

Authorities on the position of a next friend or guardian ad litem

The Official Solicitor as litigation friend post-CPR

Issue (ii): Should the Judge have concluded that Tom and Freya were (or should be treated as) “claimants” for the purposes of CPR 21.4(3) and so have proceeded on the basis that Ms Glover had given an undertaking in respect of the respondents’ costs?

Issue (iii): Was the Judge wrong to conclude that Tom and Freya should properly be treated as claimants so as to engage a principle that their litigation friend should be liable for costs?

Issue (iv): Was the Judge wrong to rely on unpaid costs orders in other proceedings when reaching his conclusions on costs?

Issue (v): Should the Judge anyway have held Ms Glover liable to pay the respondents’ costs under the general discretion as to costs conferred by section 51 of the Senior Courts Act 1981?

Conclusion

Lord Justice Moylan:

Lord Justice Patten:

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