Oriakhel v Vickers and Others

Waller LJ, when granting permission to appeal in this case, said:

“The question whether a dishonest witness, alleged to be a party to a conspiracy to bring a dishonest claim, might be ordered to pay costs is worthy of consideration by the Court of Appeal.”

Following the refinement of the issues during the course of argument I do not think that is quite the question we have to decide. Specifically we have to decide whether, on the facts of this case, HHJ Copley's refusal, by a judgment of 17 ^th August 2007, to make a costs order against a Mr Mohammed Munaver Khan, was wrong. That question is more fact sensitive than that identified by Waller LJ. In particular it involves the following further factors (a) whether the witness could himself have been or be sued for the dishonest conspiracy, (b) whether the witness was warned that an application for costs would be made against him before he gave evidence in that litigation, (c) whether the witness is bound by any of the findings of fact in that litigation, and (d) whether the real cause of the claimed costs was not the giving of the false evidence by the witness but his taking part in the dishonest conspiracy itself.

The Law

The jurisdiction to make an order for costs against a someone who was not actually a party to a piece of civil litigation (“a non-party costs order”) is provided by s.51 of the Supreme Court Act 1981:

“(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 … shall be in the discretion of the court…. (3) The court shall have full power to determine by whom and to what extent the costs are to be paid.”

In Aiden Shipping v. Interbulk[1986] A.C. 965 the House of Lords made it clear that, contrary to what had previously been thought, the language of the section extended to non-party costs orders – there was jurisdiction to make such orders. The House also clearly laid down via the single speech of Lord Goff that the exercise of that jurisdiction should be “in accordance with reason and justice” and that it would be for this Court:

“to lay down principles for the guidance of judges of first instance for the purpose of controlling the exercise of the statutory power vested in the judges.” (see pp. 980–981).”

Following a series of individual decisions about non-party cost orders, this Court via the leading judgment of Balcombe LJ in Symphony Group v Hodgson[1994] QB 179, first classified the cases where non-party costs orders had been made under a series of heads and went on to lay down some general guiding principles.

Balcombe LJ's classification of the decided cases was as follows:

(1) Where a person has some management of the action, e.g. a director of an insolvent company who causes the company improperly to prosecute or defend proceedings [citations omitted] It is of interest to note that, while it was not suggested in any of these cases that it would never be a proper exercise of the jurisdiction to order the director to pay the costs, in none of them was it the ultimate result that the director was so ordered.

(2) Where a person has maintained or financed the action. [detail omitted]

(3) In Gupta v. Comer [1991] 1 Q.B. 629 this court approached the power of the court to order a solicitor to pay costs under Ord. 62, r. 11 as an example of the exercise of the jurisdiction under section 51 of the Act of 1981.

(4) Where the person has caused the action. [detail omitted].

(5) Where the person is a party to a closely related action which has been heard at the same time but not consolidated —as was the case in Aiden Shipping itself.

(6) Group litigation where one or two actions are selected as test actions [citation omitted].

He added:

“I accept that these categories are neither rigid nor closed. They indicate the sorts of connection which have so far led the courts to entertain a claim for costs against a non-party.”

In providing guidance, he said:

“In my judgment the following are material considerations to be taken into account, although I do not suggest that there may not be others which are relevant.

(1) An order for the payment of costs by a non-party will always be exceptional: see per Lord Goff in Aiden Shipping at 980F. The judge should treat any application for such an order with considerable caution.

(2) It will be even more exceptional for an order for the payment of costs to be made against a non-party, where the applicant has a cause of action against the non-party and could have joined him as a party to the original proceedings. Joinder as a party to the proceedings gives the person concerned all the protection conferred by the rules, as to e.g. the framing of the issues by pleadings; discovery of documents and the opportunity to pay into court or to make a Calderbank offer ( Calderbank v. Calderbank[1976] Fam. 93); and the knowledge of what the issues are before giving evidence.

(3) Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non-party an opportunity to apply to be joined as a party to the action under Ord.15, r. 6(2)(b)(i) or (ii).

Principles (2) and (3) require no further justification on my part; they are an obvious application of the basic principles of natural justice.

(4) An application for payment of costs by a non-party should normally be determined by the trial judge: see Bahai v. Rashidian [1985] 1 W.L.R. 1337.

(5) The fact that the trial judge may in the course of his judgment in the action have expressed views on the conduct of the non-party constitutes neither bias nor the appearance of bias. Bias is the antithesis of the proper exercise of a judicial function: see Bahai v. Rashidian [1985] 1 W.L.R. 1337, 1342H, 1346F.

(6) The procedure for the determination of costs is a summary procedure, not necessarily subject to all the rules that would apply in an action. Thus, subject to any relevant statutory exceptions, judicial findings are inadmissible as evidence of the facts upon which they were based in proceedings between one of the parties to the original proceedings and a stranger: see Hollington v. F. Hewthorn & Co. Ltd.[1943] K.B. 587; Cross on Evidence, 7th ed. (1990), pp. 100–101. Yet in the summary procedure for the determination of the liability of a solicitor to pay the costs of an action to which he was not a party, the judge's findings of fact may be admissible: see Brendon v. Spiro [1938] 1 K.B. 176, 192, cited with approval by this court in Bahai v. Rashidian [1985] 1 W.L.R. 1337 1343D, 1345H. This departure from basic principles can only be justified if the connection of the non-party with the original proceedings was so close that he will not suffer any injustice by allowing this exception to the general rule.

(7) Again, the normal rule is that witnesses in either civil or criminal proceedings enjoy immunity from any form of civil action in respect of evidence given during those proceedings. One reason for this immunity is so that witnesses may give their evidence fearlessly: see Palmer v. Durnford Ford[1992] Q.B. 483, 487. In so far as the evidence of a witness in proceedings may lead to an application for the costs of those proceedings against him or his company, it introduces yet another exception to a valuable general principle.

(8) The fact that an employee, or even a director or the managing director, of a company gives evidence in an action does not normally mean that the company is taking part in that action, in so far as that is an allegation relied upon by the party who applies for an order for costs against a non-party company: see Gleeson v. J. Wippell & Co. Ltd. [1977] 1 W.L.R. 510, 513.

(9) The judge should be alert to the possibility that an application against a non-party is motivated by resentment of an inability to obtain an effective order for costs against a legally aided litigant. The courts are well aware of the financial difficulties faced by parties who are facing legally aided litigants at first instance, where the opportunity of a claim against the Legal Aid Board under section 18 of the Legal Aid Act 1988 is very limited. Nevertheless the Civil Legal Aid (General) Regulations 1989 (S.I. 1989 No. 339/89), and in particular regulations 67, 69, and 70, lay down conditions designed to ensure that there is no abuse of legal aid by a legally assisted person and these are designed to protect the other party to the litigation as well as the Legal Aid Fund. The court will be very reluctant to infer that solicitors to a legally aided party have failed to discharge their duties under the regulations —see Orchard v. South Eastern...