Local Government - November 2009
Litigation – costs
Funding, Third Party Costs Orders, Education
Claims
John Thomson v Berkhamsted Collegiate School and (1) Ian Thomson
and (2) Gracinda Thomson (interested parties) QBD (Blake J)
2 October 2009
Executive summary
The Court provided useful guidance on a complex issue which
often presents Defendants and insurers with a difficult decision –
is there merit in trying to recover costs from a third party who
has funded a failed action brought by a Claimant without means or
is this simply throwing good money after bad?
Facts
The Claimant sought damages in negligence from his former school
for failing to take appropriate steps to prevent him from being
bullied. The claim was discontinued two weeks into the trial
leaving the school with a costs liability of around £250,000. The
Claimant was ordered to pay this but could never realistically
satisfy the Order. The Claimant’s action had been funded by his
parents. They were added as interested parties under CPR 48.2 when
the claim was discontinued. It was the Defendant’s intention to
pursue them for its costs pursuant to Section 51 of the Supreme
Court Act 1981.
The decision
The matter came before the Court for a disclosure hearing with
the Defendant requesting sight of any correspondence between the
parents and solicitors, experts and Counsel instructed in the
proceedings. In determining the disclosure point the Court reviewed
the thorny issue of when a third party costs Order is likely to be
made.
The Judge made it clear that a non-party costs Order would
always be exceptional, will not be justified in cases where the
party has merely, without more, funded the claim and that the Court
has rightly been reluctant to impose such Orders on
well-intentioned family members.
Nevertheless the Judge was satisfied that this was a case where
the school had reasonable prospects of obtaining an Order against
the parents. The reasons cited can be considered to be of wider
application:
- There was evidence to suggest that at times the parents had
also been considered the clients of the Claimant’s solicitor.
- The parents had intervened in the litigation and sought to
control it.
- There was a suggestion of evidential input and manipulation by
the parents.
- It was arguable the parents had an agenda of their own.
- The litigation was speculative as to its prospects of success
and it was very doubtful it would have been funded if the parents
had not made funds available form their own resources.
- The parents had been warned of the school’s intention to seek
costs from them.
In light of the Judge’s findings as to the prospects of success
of the costs Application he was also willing to make the disclosure
Order, indicating that documents sought were likely to be
“probative and not privileged”.
Comment
Defendants often find themselves forced to defend speculative
but very expensive claims brought by individuals that cannot
possibly satisfy an adverse costs Order. On occasions, and quite
commonly in failure to educate and bullying claims, a family member
will fund the action in the absence of alternative funding options.
If such funding is simply a philanthropic gesture then a
Defendant’s recovery options arguably remain limited. However, this
is frequently not the case and third parties, family members or
otherwise, who have an agenda of their own should tread carefully
even if they have no financial interest in the outcome of the
litigation. Further, if there is evidence to suggest that the third
party is asserting control over the litigation, this case is a
welcome reminder they cannot simply claim legal privilege in an
attempt to frustrate the disclosure of documents that might prove
this.
For further information about Weightmans or to discuss any of
the issues in this update please contact Peter Wake, Associate at
Weightmans on 0151 242 6866 or at peter.wake@weightmans.com