THIRD PARTY COSTS ORDERS : THIRD PARTY FUNDERS
Mr & Mrs Thomson’s son, John (J), a former pupil at Berkhamsted Collegiate School (BCS), had brought a claim for damages against BCS for failure to take proper measures to prevent him from being bullied whilst he was at the school. Two weeks into the trial, J discontinued his claim and BCS sought its substantial costs in defending the action which it alleged was wholly misconceived. J was unemployed and the costs of his litigation had been met by his parents (P). Accordingly, BCS wished to claim its costs from P pursuant to the Supreme Court Act 1981 s.51 and CPR r.48.2. Pursuant to that application BCS sought orders requiring P to file and serve disclosure statements setting out correspondence between them and J’s solicitors, experts and counsel; in addition they sought orders against J with respect to disclosure and his claim of legal professional privilege.
On 2nd October 2009 Mr Justice Blake held that…
(1) Before considering whether it was necessary to make the Orders sought by BCS, the Court needed to consider when a third party costs order was likely to be made in cases such as the instant one. The law as to third party costs was sufficiently stated in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Costs) (2004) UKPC 39, (2004) 1 WLR 2807and the following principles were relevant: (i) such an order was exceptional (ii) the application should normally be determined by the trial judge (iii) pure funders with no personal interest in the litigation would not normally have the discretion exercised against them, Hamilton v Al-Fayed (Costs) (2002) EWCA Civ 665, (2003) QB 1175 applied (iv) it was relevant but not decisive that the defendant had warned the non-party of the intention to seek costs or the non-party’s funding had caused the defendant to incur costs it would not otherwise have had to incur (v) the conduct of the non-party in the course of the litigation was of relevance (vi) in a family funding context courts had been reluctant to impose third party costs orders against those family members who assisted a party for philanthropic and disinterested reasons and (vii) the inherent strength of the application was always a relevant factor, Dymocks applied. In this case, P were not merely funders but were directly concerned with the facts of the claim and played an active role in the litigation. There was substance to the suggestion that the litigation was speculative as to its prospects of success. It was doubtful that it would have been funded if T had not made funds available themselves. Accordingly, an application for third party costs had a reasonable prospect of success. The only doubt was over whether P gained a benefit from the litigation and sought to control its course.
(2) BCS could only demonstrate the element of control if it knew what communications P had had with the solicitors, counsel and experts in the case. Restricting the period of time during which the disclosure was required reduced the scale of the disclosure sought and any practical difficulties.
(3) J had claimed legal professional privilege but it did not normally exist in communications between a solicitor and third parties that were not immediately connected with that third party’s witness statement or the giving of legal advice to the claimant. An analysis of the documents was required to determine which attracted privilege. The correspondence sought was likely to be probative and not privileged in its entirety and it was not disproportionate for the material to be sought.