In a recent decision, the High Court has made a non-party costs order against a law firm’s professional indemnity insurer, in circumstances where the insurer had effectively relinquished control of the defence of the litigation: Various Claimants v Giambrone & Law  EWHC 34 (QB).
The decision illustrates that the court’s discretion to order costs against non-parties under section 51 of the Senior Courts Act 1981 is a broad one and that each case ultimately turns on its own facts. The decision follows closely on the back of the Court of Appeal’s decision last year awarding costs against a non-party insurer in Travelers Insurance Company Ltd v XYZ  EWCA Civ 1099. In that case, the fact that the insurer had some control over the proceedings was a factor in favour of the adverse costs order. The present decision shows, however, that control is not a precondition to an insurer being made liable for adverse costs. The key requirement appears to be that the insurer will benefit from its arrangement with the insured and has a stake in the successful outcome of the proceedings.
For more information on the decision, please see our Insurance and re-insurance disputes e-bulletin.