One of the more interesting areas of costs work that I undertake from time to time, is that of applications for non party costs orders (NPCOs). I have been undertaking work in this area for many years, and have watched the number of such applications ebb and flow, over the years. For the last couple of years, the number of applications have been on the increase, particularly in the field of credit hire. The reasons are not hard to discern.
Prior to 2013, credit hire claimants usually had the benefit of ATE insurance to cover their costs liabilities, and in the unusual case, where a credit hire claim failed, a costs order would be made against the claimant, and whether willingly or grudgingly an ATE insurance provider could be expected to pay out on the policy and discharge the claimant’s adverse liability in costs to the motor insurer backing the defendant.
Since 2013, as most of these claims involve not only a claim for credit hire, but a small claim for personal injury, the claimants in these cases, may not have ATE insurance because they have Qualified One Way costs shifting protection (QOCS). Thus to the motor insurers discomfort, even where there defence of a claim proves to be vindicated at trial, without some way of circumventing QOCS protection they will be stuck with an irrecoverable liability for costs.
Hence, the motor insurers have pursued the credit hire companies for NPCOs. The premise of their argument is very simple: just as a credit hire company can expect to benefit from a successful claim for credit hire brought by a claimant, the company’s customer, so it is argued they should share in the pain, when a claim for credit hire is defeated at trial. If they stand to benefit, when the claim is won, then they should pay adverse costs if it is lost.
The principles which govern the making of NPCOs are complex and sometimes not easily to be reconciled. In practical terms, classes of case where an NPCO may be sought, fall broadly into a taxonomy, of where the non party, is a real party, where there is officious intermeddling with a case, where there has been misconduct, or where a non party has acted as a commercial funder, seeking to support a case and share in the proceeds, as the price for their funding of the litigation.
Last week, I had the privilege of attending the Court of Appeal with the junior brief for a credit hire company, led by Ben Williams KC, accompanied by Matt Waszak for another credit hire company, to face the arguments of Roger Mallalieu KC, in the conjoined appeals of Tescher v Direct Accident Management Limited and Axa Insurance UK Plc v Spectra Drive Limited. In each case, the judge in the court below, had refused to make a NPCO against the hire company. The motor insurers have taken these cases to the Court of Appeal.
Judgment has now been reserved in the cases.
If you have an interest in this area, then the Court of Appeal hearings were recorded and are available to watch via the link below.
https://www.youtube.com/channel/UCFgPCUoTErOfzpbk8wIJybg