Non-Party Costs Order

September 19th, 2019 by James Goudie KC

In Aldemir v Cornwall Council (2019) EWHC 2407 (Admin) Swift J held that Magistrates acting pursuant to their appeal jurisdiction under Section 181(2) of the Licensing Act 2003 had the power to make a non-party costs order in favour of the licensing authority whose decision was appealed.  However, in this case the procedure followed when the costs orders were made was found to be flawed.  Swift J said:-

“23. …  an application for costs against a non-party is a course of action that is out of the ordinary and can, as was the case here, lead to significant financial consequences. It is important that such an application is heard and determined in accordance with a fair procedure. There is no need for anything elaborate; there are no particular hard and fast rules; but the principles of natural justice must be observed. The person against whom the application is made must have fair notice of the application and the grounds on which it is made, and a fair opportunity to respond to the application.

24. … I appreciate that any application for costs may be conditional on the outcome of the substantive issue, but where a party intends if successful on the substantive issue, to make a non-party costs application, there is no reason why it cannot or should not give notice of that intention well in advance of the moment the application falls to be made. Similarly, although the precise grounds of any such application may be finally formulated only after the reasons for the substantive decision have been given, it may in many instances, well in advance of that, be possible to indicate in general terms the nature of the grounds that are to be relied on. If such notice is given, it is perfectly possible that an application may be made and considered at the time the judgment is handed down. However, if prior notice is not given it is likely that the hearing of a non-party costs application will need to be delayed for a short time to allow the non-party a fair opportunity to consider and respond.

“26. In most if not all cases it will be good practice for the grounds on which a non-party costs application is made to be reduced to writing; to be provided to the respondent to the application before the application is made; and for the application to be heard and determined only after the non-party has had the chance to consider the grounds and respond to them. …”

As to the reasonableness of making a costs order, Swift J said:-

“28. … any application for a non-party costs order should entail careful consideration in particular of the principles set out in the decision of the Privy Council in Dymocks Franchise Systems (NSW) PTY Ltd v Todd and others [2004] 1 WLR 2807 per Lord Brown at paragraphs 25-28; as further considered in the judgment of the Court of Appeal in Deutsche Bank AG v Sebastian Holdings Inc. [2014] 4 WLR 17 per Moore-Bick LJ at paragraphs 15-22, 30-31, and in particular 61-62. The power to make costs orders under section 181(2) of the 2003 Act is a broadly formulated power. The overriding principle is that this power must be exercised justly. …”

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