Non-party costs order

Adris and others v Royal Bank of Scotland (Cartel Client Review Ltd and others, additional parties) [2010] All ER (D) 156 May, [2010] EWHC 941 (QB); NLJ 28 May p767

W was the sole share-holder in Cartel Client Review Ltd (CCR), an authorised claims management company. A firm of solicitors, CCLS run by B, who was a sole practitioner entered into an agreement with CCR in respect of the pursuance of claims relating to credit agreements with banks said to be unenforceable by reason of non-compliance with the Consumer Credit Agreement Act 1974. CCLS was responsible for obtaining after the event (ATE) insurance, but failed to do so. The banks applied for non-party costs orders against CCR and CCLS who were joined as additional parties. It was conceded that CCR should be jointly and severally liable with the relevant claimant for any costs order. The issues were whether to make a non-party costs order against CCLS or W personally, or both, pursuant to s51(3) of the Supreme Court Act 1981. It was contended that if the clients had been told that CCLS had failed to secure ATE insurance they would have been unlikely to instruct CCLS to progress the claim; and that CCLS were in a real sense controlling the litigation since decisions were being taken without proper instructions from the client. It was further submitted that W was the real party to the litigation, justifying piercing the corporate veil to expose him personally to costs.