Supreme Court makes costs order against a non-party’s insurers

Litigation between two parties was, it was held, due to an error for which a non-party (a solicitor) was responsible. It was argued that the solicitor (and hence his insurers) should pay all of the parties’ costs. The solicitor’s insurers raised certain defences:

  1. A court should be wary before making a costs order against a non-party. The Supreme Court held that it  is “by no means unusual to make an order for costs against a party who was funding the litigation or who was responsible for the litigation”. Here, the insurers funded the litigation because the insurers had accepted liability for the claimant’s costs of the two appeals and the solicitor has been responsible for the whole problem giving rise to the litigation.
  2. It was not the solicitor’s fault that the defendant chose to fight this case. The Supreme Court held that it was both foreseeable to the solicitor and his insurers that the defendant would contest the claim and it was not unreasonable for it to do so (especially since it won in the High Court and Court of Appeal).

Accordingly, the insurers were ordered to pay all the costs of the parties.