FREE CHAPTER from ‘A Practical Guide to Non-Party Costs Orders’ by Charles Shwenn


Lord Briggs in Travelers Insurance Co Ltd v XYZ [2019] UKSC 48 said:

It is evident (from the Aiden Shipping case), and obviously right, that it is a pre-requisite for the making of a costs order against a non-party that the person sought to be made liable has some relevant connection with the proceedings in question.”1

The caselaw discloses at least three broad and potentially-overlapping approaches to assessing the non-parties’ connection with proceedings: the most well-known and intelligible is where a non-party may be said to be “the real party” to the litigation; secondarily, and relatedly, where a non-party is “a real party” to the litigation; and finally, it seems, where a non-party may be said to have “unjustifiably intermeddled” with the litigation. These three categories may not be exhaustive and, as will be seen in the chapters that follow, provide only a starting point.

The Real Party

If a non-party can be said to be “the real party” to litigation, it will ordinarily be just to make a non-party costs order against them instead of the nominal party. The court here is concerned with ensuring that the costs burden falls on the correct person and preventing a person who is not a party to the proceedings escaping costs liability that is properly theirs.2

Though the concept had been applied before, in Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, Lord Brown offered the following seminal definition of when the courts might view a person as “the real party”:

Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is ‘the real party’ to the litigation, a concept repeatedly invoked throughout the jurisprudence…”3

Dymocks was a decision of the Privy Council, but the dictum of Lord Brown has been applied by courts consistently since being handed down. In Deutsche Bank A.G. v Sebastian Holdings Inc. and Alexander Vik [2016] EWCA Civ 23, the Court of Appeal confirmed that the decision “contains an authoritative statement of the modern law.”4 However, the court has also warned against treating this definition as completely comprehensive.

Specifically, if the party can still be described as “the real party” but the funding element is missing or at least cannot be resolved, it seems that this will not prevent a court from making an order on “the real party” basis. In Petromec Inc. v Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038 the Court of Appeal warned:

to read the words ‘and funds’ as imposing some requirement without the presence of which the discretion should not be exercised is to treat the words of Lord Brown as if they are a statute, which they most emphatically are not.”5

Additionally, it is worth noting that the motivation behind a non-party’s involvement is an important consideration. This can be seen reflected in the caselaw on impropriety (as to which see Chapter 3), insurers in limits of cover cases (see Chapter 4) and company directors (see Chapter 7 and, specifically, the dictum of Millett LJ in Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613, at 1620).

The facts of Deutsche Bank offer a good illustration of “the real party” principle, as qualified by Petromac, in action.

The Deutsche Bank case is one of a long-running saga of litigation between the parties. Sebastian Holdings Inc. (‘Sebastian’) was a shell company incorporated in the Turks and Caicos Islands. It was used as a personal investment vehicle for Alexander Vik who was, at the relevant times, its sole shareholder and sole director.

The litigation related to Sebastian’s accounts with Deutsche Bank for trading in foreign currencies, shares and financial products. In January 2009 Deutsche Bank began proceedings against Sebastian to recover approximately US$250m due principally in respect of amounts owed on the closing out of various trading positions. Sebastian brought a counterclaim for approximately US$8bn in respect of the losses it alleged it had suffered as a result of the bank’s breaches of contract in forcing it to close out certain open positions contrary to its wishes.

The matter came before Cooke J who gave judgment for the bank on its claim in the sum of US$243,023,089 and dismissed Sebastian’s counterclaim. Sebastian was ordered to pay 85% of the bank’s costs, which amounted to about £60m. Sebastian, which was said to have no assets, failed to pay anything in respect either of the judgment debt or the costs.

The bank then made an application for a non-party costs order against Mr Vik personally on the basis that:

Mr Vik owned and controlled Sebastian, that he had directed the litigation on its behalf, that he had funded the litigation, or had made funds available to enable Sebastian to pursue it, that it had been conducted for his personal benefit and that therefore he was the ‘real party’ to the litigation.”6

In the first instance decision, which was upheld by the Court of Appeal, Cooke J could not decisively determine the issue of funding, however said:

I do not need to reach this conclusion in relation to funding because, in my judgment, the other elements which I have found are more than sufficient to justify making an order for costs against Mr Vik personally.

[Sebastian] SHI was Mr Vik’s ‘trading company’ and his ‘creature’ company. Whilst it was treated by [Deutsche Bank] DBAG as a corporate entity with legal personality… it was always seen as Mr Vik’s company and DBAG looked to him in respect of all matters save for those trading decisions which he had entrusted to third party managers… the reality was that proceedings were pursued because it was Mr Vik who stood to gain or lose in the event of SHI’s success or failure in the action. He was therefore the ‘real party’ to the dispute and to the action…”7

As in this example, the concept of “the real party” has proven to be a relatively straightforward test to understand and apply. Some reflection of the concept of “the real party” is to be found in CPR 25.13(2)(f) which provides for a security for costs order to be made where “the claimant is acting as a nominal claimant” (see Chapter 3). Both jurisdictions are, of course, concerned with ensuring that an order for costs is ultimately met.

A Real Party

In Dymocks, having set out when a party may be considered “the real party”, Lord Brown continued, citing Australian authority:

Nor, indeed, is it necessary that the non-party be ‘the only real party’ to the litigation…, provided that he is ‘a real party in … very important and critical respects’ (see Arundel Chiropractic Centre Pty Ltd v Deputy Comr of Taxation [2001] HCA 26 at [37]…).”8

However, there is an important distinction to be made between a party who is “the real party” and one who is “a real party in very important and critical respects”. Both concern the connection the non-party has with the litigation and employ almost identical language, but the tests are different.

The standard required under the “the real party” approach is easily intelligible: it asks the court to evaluate the extent to which the non-party is, in substance but not form, the party nominally engaged in the proceedings. In contrast, the concept of “a real party in very important and critical respects” is not so clear. If more than one non-party could be liable for costs as “a real party”, it leaves unanswered the standard expected for a non-party to qualify, in a way that the “the real party” test does not. As Lord Sumption recognised in Travelers: “non-parties may well have a more or less direct commercial interest in the outcome but do not thereby assume the risks associated with contested litigation.”9

Leveson LJ considered the matter in Flatman v Germany (Law Society intervening); Weddall v Barchester Health Care Ltd (Same intervening) [2013] 1 WLR 2676, approving the judgment of Eady J below:

Thus, as Eady J put it, if a funder is ‘a real party’ in the sense that he has an interest in the outcome of the litigation it may not matter that it would be inappropriate to describe that funder as ‘the real party’. Eady J went on:

‘It may suffice, depending upon the circumstances, that the funder has something to gain alongside the nominal party…’”10

What appears to be critical in cases where a non-party cannot be said to be “the real party” is a close examination of the nature of the interest he has in the litigation, which need not necessarily be financial.11 The court will often be interested in why the non-party involved himself. From this, it can make a determination as to whether imposing liability is just; for example, and as will be seen later, it seems that certain motivations, such as bargain12 and self-interest13 will often result in a non-party costs order. Conversely, disinterested philanthropy will generally not.14 More generally, Moore-Bick LJ in Deutsche Bank said this of a non-party under consideration:

the critical factor in each case is the nature and degree of his connection with the proceedings, since that will ultimately determine whether it is appropriate to adopt a summary procedure of the kind envisaged in the authorities…”15

The best practical understanding of the connection necessary under the “a real party” approach will be gained by examining its application, discussed more fully in Part 2. It is clearly a more flexible and open-ended approach than that of “the real party”. This breadth ensures that, beyond the basic requirement to be just, the discretion afforded to judges in this jurisdiction remains largely unfettered.

Unjustifiable Intermeddling

In contrast to these approaches, where a non-party has “unjustifiably intermeddled” in litigation, the court may be receptive to a non-party costs application in respect of costs incurred by the intermeddling.

The concept of “unjustifiable intermeddling”, has not been as widely employed as that of “the real party” or “a real party”. Indeed, until recently, it was assumed that it applied only in the context of liability insurers (see Chapter 4). It seems, however, that the concept may have wider application.

In Travelers, a case concerning liability insurers, Lord Briggs cited with approval the case of Murphy v Young & Co.’s Brewery Plc. [1997] 1 WLR 1591, also an insurance case. In Murphy, Phillips LJ drew on the law of maintenance and champerty in the following terms:

In Giles v. Thompson [1994] 1 AC 142, 164 Lord Mustill suggested that the current test of maintenance should ask the question whether:

there is wanton and officious intermeddling with the disputes of others in where the meddler has no interest whatever, and where the assistance he renders to one or the other party is without justification or excuse.’

Where such a test is satisfied, I would expect the court to be receptive to an application under section 51 that the meddler pay any costs attributable to his intermeddling.”16

Though Murphy concerned insurers and the dictum of Phillips LJ had generally been applied in that context, his lordship certainly did not couch his analysis in terms restricting its application to insurance cases. In citing this dictum, however, Lord Briggs in Travelers confirmed that the intermeddling principle was “by no means limited to insurers”.17 It is clear from his concurring judgment that Lord Sumption adhered to the same view.18

Lord Briggs set out some definable features of the intermeddling principle in his leading judgment:

This is a principle derived from the English law about maintenance and champerty…. Its starting assumption is that non-parties usually, although not invariably, have no legitimate interest in becoming involved in the litigation of others. It does not render involvement of any kind objectionable, but only involvement which is (in old-fashioned language) wanton and officious, for which the non-party cannot demonstrate some justification or excuse.

This basis for the costs liability of the non-party does not necessarily depend upon showing that it has taken control of the litigation, or done anything approaching becoming the real defendant in it. Nor is there any fixed benchmark which will establish whether involvement has become a form of intermeddling. In every case the nature and extent of the non-party’s involvement will have to be measured against the alleged justification or excuse for it.

If the non-party has not gone beyond the confines of those contractual obligations and attendant rights in framing its involvement… liability as an intermeddler may be very hard to establish.19

A broader analysis of the caselaw also shows that, although not necessarily using the same taxonomy, courts have been willing to apply20 and make awards based on a non-party’s unjustified intermeddling outside of the insurance context. One example is found in cases involving solicitors, who may be made subject to a non-party costs order if they act “outside of the role of a solicitor” in their conduct of a case, per Tolstoy-Miloslavsky v Aldington [1996] 1 WLR 736, as interpreted by Myatt v National Coal Board and another (No 2) [2007] 1 WLR 1559 and Flatman v Germany (Law Society intervening); Weddall v Barchester Health Care Ltd (Same intervening) [2013] 1 WLR 2676 at 2691 (as to which, see Chapter 9). Similarly, in R (on the application of Laird) v Secretary of State for The Home Department (QBD (Admin), Unreported, 8th April 2014 and 25th February 2016), Simler J indicated that a McKenzie friend who went beyond their proper role may have a non-party costs order made against them.

Nevertheless, whilst arguably a more straightforward approach, it must be recognised that the law on non-party meddlers outside of the insurance context is nascent; how it develops and is applied largely remains to be seen.21


1 Travelers Insurance Co Ltd v XYZ [2019] UKSC 48, at paragraph 27 per Lord Briggs.

2 See, for example, Threlfall v ECD Insight Ltd and another [2013] EWCA Civ 1444, at paragraph 13: “…in deciding whether or not to make such an order, the court is not fettered by the legal realities. It is entitled to look to the economic realities. It is in this sense that many of the cases pose the question whether the non-party is ‘the real party’ in the case.”

3 Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, at paragraph 25 per Lord Brown.

4 Deutsche Bank A.G. v Sebastian Holdings Inc. and Alexander Vik [2016] EWCA Civ 23, at paragraph 61 per Moore-Bick LJ. But cf. paragraph 25 of that judgment where the definition in Dymocks appears to be treated as if it is conjunctive.

5 Petromec Inc. v Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038.

6 Deutsche Bank A.G. v Sebastian Holdings Inc. and Alexander Vik [2016] EWCA Civ 23, at paragraph 3 per Moore-Bick LJ.

7Deutsche Bank A.G. v Sebastian Holdings Inc. and Alexander Vik [2014] EWHC 2073 (Comm), at paragraphs 92 and 85.

8 Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, at paragraph 25 per Lord Brown.

9 Travelers Insurance Co Ltd v XYZ [2019] UKSC 48, at paragraph 113 per Lord Sumption.

10 Flatman v Germany (Law Society intervening); Weddall v Barchester Health Care Ltd (Same intervening) [2013] 1 WLR 2676, at 2686 per Leveson LJ.

11 See, for instance, trade union cases (Chapter 10).

12 See, for instance, commercial funding cases (Chapter 6) and particularly ChapelGate Credit Opportunity Master Fund Limited v Money and others [2020] EWCA Civ 246.

13 See, for example, liability insurers in limits of cover cases (Chapter 4).

14 See, for example, pure funder cases (Chapter 3).

15 Deutsche Bank A.G. v Sebastian Holdings Inc. and Alexander Vik [2016] EWCA Civ 23, at paragraph 21 per Moore-Bick LJ.

16 Murphy v Young & Co.’s Brewery Plc. [1997] 1 WLR 1591, at 1601 per Phillips LJ.

17 Travelers Insurance Co Ltd v XYZ [2019] UKSC 48, at paragraph 36 per Lord Briggs.

18 Travelers Insurance Co Ltd v XYZ [2019] UKSC 48, at paragraphs 113 – 117 per Lord Sumption.

19 Travelers Insurance Co Ltd v XYZ [2019] UKSC 48, at paragraphs 54 – 55 per Lord Briggs.

20 Floods of Queensbury Ltd and another v Shand Construction Ltd and others [2001] All ER (D) 153 (Apr); In re RBS Rights Issue Litigation [2017] 1 WLR 4635 (Note in this latter case at page 4658, Hildyard J appears to have elided the “a real party” and intermeddling tests).

21 Ibid. and cf. Popely and another v Popely and others [2020] EWHC 667 (Ch), at paragraph 11 per HHJ Hacon (sitting as a Deputy Judge of the High Court).