Against non-party

Oriakhel v (1) Vickers (2) Groupama Insurance Co Ltd (3) Khan (4) Graham Coffey & Co (a firm) [2008] EWCA Civ 748, 4 July

The claimant in a fraudulent conspiracy with the first named defendant (V) brought a road traffic accident claim for damages against him. V’s insurers contended that the claim was bogus and were joined as second defendant (G) to contest the claim and to counterclaim. The judge dismissed the claim as fraudulent. At the trial, a Mr Khan (K) gave evidence that the judge disbelieved, concluding that he too was involved in the conspiracy. G then joined K as a party for the purpose of seeking a costs order against him, which the judge refused to make under the mistaken belief that it had to be shown that the non-party was a funder or controller of the litigation before a non-party costs order could be made. Nevertheless, on appeal, the Court of Appeal refused to make a non-party costs order against K on the grounds it would be exceptional for an order to be made against a non-party where the applicant had a cause of action against the non-party and could have joined him as a party to the original proceedings. Before the trial G contended that K was a dishonest conspirator. If he had been made a defendant to the counterclaim, he would have had full opportunity of taking legal advice, adducing such evidence and documents as might support his defence and considering his own position. G remained free to sue K for his part in the dishonest conspiracy and, if it succeeded, the costs of successfully defending the primary claim would be recoverable damages flowing from the conspiracy. K had not been given notice of the claim at any time when he could have taken legal advice and, if necessary, deployed further material by way of his defence and, if so advised, applied to be joined as a party. Where a non-party has effectively controlled the primary litigation it would be bound by the result. But K did not have such a close connection with the primary claim that he was bound by the result. Witness immunity was yet another reason why the court should not exercise its discretion to award costs against K.