Insurance companies and lawyers involved in litigation where at least one party has insurance backing should be particularly aware of the courts’ powers to make non-party costs orders under section 51 of the Supreme Court Act 1981. The courts are showing an apparently increasing disposition, when a losing defendant’s own resources and insurance cover are inadequate, to make such orders against his insurers.
Traditionally, the courts would only exercise their section 51 discretion in ‘exceptional circumstances’. Yet the recent Court of Appeal decision in Kylie Palmer v Estate of Kevin Palmer and others [2008] suggests that, in the insurance context, the circumstances may not have to be very ‘exceptional’ at all and the frequency of such orders seems likely to rise.
