The standard rule is that the winner has a substantial part of his costs paid by loser; however the court has jurisdiction under section 51 of the Senior Courts Act 1981 to order costs of litigation to be paid by a non-party to the dispute.
Non-party costs orders came into being following the House of Lords decision of Aiden Shipping v Interbulk Ltd (1986). There is no hard and fast rule; however, the court will only make a non-party costs order in exceptional circumstances and “where the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them”, Dymocks case.
The power of the court to make non-party costs orders is unfettered and will be subject to the facts of the particular case; examples of circumstances of non-party costs being made are against insurers, those involved in companies, witnesses, family and friends and professional funders.
If you are considering funding litigation on behalf of another and/or taking a commercial interest in the litigation then you will need to carefully consider with your advisors the potential risk of a non-party cost order being made against you.
To quote Shak:
Neither a borrower nor a lender be, for loan oft loses both itself and friend ...and you may end up paying the other sides costs.
Please call or email Mike Shepherd with any questions on 020 7288 4757