20 April, 2018
This decision is of interest because the term ''interested non party" has been widely interpreted to include insurers, KAUR -v- SIKH GURDWARA PERTH (INC) [No 2] [2018] WASC 99 (Kaur), Mr Justice Le Mierre considered whether an “interested non party” was liable to pay the successful defendant’s costs. This decision is of interest to insurers, because the term “interested non party” has been widely interpreted to include insurers.
What is an interested non-party?
In the Supreme Court of Western Australia a party to a case is required by Order 9A r2(1) of the Rules of the Supreme Court of Western Australia to notify the Principal Registrar and each other party of the identity of any person who is an “interested non party”. An interested non party means a person, other than a practitioner for the party, who provides funding or other financial assistance to the party for the purposes of conducting the case and exercises direct or indirect control or influence over the way in which the party conducts the case. Although there have been no cases which have decided the issue, the term “interested non party” has been widely interpreted as including insurers.
In what circumstances will the Court order a non party to pay costs
Section 37 of the Supreme Court Act 1935 (WA) empowers the Supreme Court to determine by whom costs are to be paid. It provides jurisdiction to the Court to make costs orders against non parties.
Mr Justice Le Miere identified a number of cases which discuss when the Court should exercise its discretion to make a costs order against a non-party. The principles can be set out as follows:
- It is in the interest of justice. In other words in the circumstances of the case it is just and equitable for the interested non-party to pay the defendant’s costs;
- Generally a costs orders against non-parties should be granted “sparingly” and only when “exceptional circumstances” make such an order “reasonable and just”. However exceptional 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 non party’s connection with the proceedings and the incurrence of costs. It is relevant whether the proceedings are initiated and controlled by a person who, though not a party, has a direct personal financial interest in, or derives a potential benefit from the result. Merely funding litigation is not ordinarily sufficient to justify a costs order against a non-party but an order against a non-party may be justified if the funder is supporting the litigation to promote its own interest or to secure its own benefit. Where the non-party is the “real party” playing an active part in the conduct of the litigation and / or with an interest in the subject of the litigation – a non party costs order is much more likely;
- There must be a connection between the non-party and the incurrence of costs. If the costs would have been incurred without the non party’s involvement, the non party should not ordinarily be liable for them;
- It is not a precondition that the unsuccessful party is impecunious. However whether the person who would otherwise be liable for the costs order can meet a costs order is a relevant factor.
- Whether the non-party has been warned that an application for a costs order against it, would be made.
Mr Justice Le Mierre decides not to order costs against the interested non-party
In Kaur, the defendant, the party seeking the costs order against the interested non-party, did not advance any reason why the “interested non-party” should pay its costs beyond the facts established by the Order 9A notice. Further, it asserted that it should be inferred from the Order 9A notice that but for the funding from the interested non-party the plaintiff did not have the financial resources themselves to conduct the case. Mr Justice Le Mierre said he was unable to draw that inference. Further Mr Justice Le Miere said two further factors weighed against the exercise of his discretion namely:
- That the defendant did not give notice or warning to the interested non-party that it would be seeking a costs order against it; and
- The defendant did not apply for a security for costs order against the plaintiff.
While he made the caveat that those factors are not determinative, he said in the absence of evidence of the financial position of the plaintiff and the interest, if any, of the interested non-party in the litigation he said those factors weighed against him exercising his discretion to make a costs order against the interested non-party.
Conclusion
While in this case, His Honour decided not to exercise his discretion to make a costs order against an “interested non party”, it is clear that such an order can be sought and obtained on the happening of certain circumstances. However His Honour made it clear in his reasoning that a party cannot soley rely on the facts established by an Order 9A notice to obtain a costs order against an interested non party.
As a consequence of this decision, it may become more common for a party to put an opponent's “interested non-parties” on risk to pay their costs and to seek further financial information (including relevant insurance policies) concerning the funding and decision-making in the litigation.
For further information, please contact:
Jonathan Wyatt, Partner, Clyde & Co
jonathan.wyatt@clydeco.com
