NASSAU, BAHAMAS- CG Atlantic General Insurance Ltd has been ordered to pay $10,000 in non-party costs after the Supreme Court found that the insurer “effectively controlled key aspects of litigation that led to wasted legal expenses,” before withdrawing from proceedings when coverage issues were later discovered.
The ruling delivered on June 4, 2026 by Registrar Renaldo Toote arose from a motor vehicle negligence claim filed by EkralE Ltd. and Godfrey Bethell against Carl McDonald and Tyrese Chisholm. The Court was required to determine whether an insurer, though not a named party, should bear costs arising from a failed application to set aside default judgment and related interlocutory steps.
The underlying claim stemmed from a collision on November 22024 at approximately 11:45 p.m. on Tonique Darling Highway. The second claimant, Mr. Bethell, was travelling westbound when Mr Chisholm allegedly attempted to overtake another vehicle, crossed into the opposing lane, and collided head-on with Mr. Bethell’s vehicle. Proceedings were filed on 18 November 2025 seeking damages in negligence. A statutory notice to insurers was issued to CG Atlantic General Insurance Ltd, which “acknowledged service on December 2, 2025.”
On December 19, 2025, default judgment was entered against the Defendants after no defence was filed. Shortly thereafter, Baycourt Chambers, acting on instructions said to originate from the insurer, filed an application to set aside the default judgment on the basis that the First Defendant had “a good arguable defence and a real prospect of successfully defending the claim.”
That application remained pending until March 2026, when Baycourt Chambers sought leave to withdraw, stating it had been informed that insurance coverage did not extend to the circumstances of the accident, including allegations that the Second Defendant was driving without a valid licence.
The Claimants argued that the insurer was the “real driving force behind the litigation conduct,” submitting that CG Atlantic General Insurance Ltd “instructed and funded counsel, directed litigation strategy, caused the set-aside application to be filed, failed to ensure compliance with case management directions, and later withdrew after coverage issues emerged,” leaving them with wasted costs of $20,365 relating to the interlocutory proceedings.
In determining the issue, the Court confirmed that it had jurisdiction under section 30(1) of the Supreme Court Act, which gives it “full power to determine by whom and to what extent costs are to be paid.” It relied on Aiden Shipping Co Ltd v Interbulk Ltd, Dymocks Franchise Systems (NSW) Pty Ltd v Todd, and Travelers Insurance Company Ltd v XYZ, which collectively establish that non-party costs may be awarded where a third party funds, controls, or effectively directs litigation causing costs to be incurred.
The Court emphasized that insurers are not automatically liable for costs simply because they fund a defence under a policy. However, it stated that liability may arise where an insurer goes beyond ordinary participation and becomes the “real party in substance” or causes costs through improper control or intervention. The “decisive issue,” the Court noted, is whether it is just to make the order and whether the non-party’s conduct caused the costs claimed.
On the facts, the Court accepted there was a credible basis for concluding that CG Atlantic General Insurance Ltd exercised effective control over the relevant interlocutory steps, including the decision to pursue the set-aside application. The Court further noted that counsel withdrew only after coverage issues were identified, by which time the Claimants had already incurred costs preparing to oppose the application and attend a hearing that did not proceed.
The Court rejected the argument that a separate formal application was required, finding that “procedural fairness was satisfied” because the issue was raised at hearing, submissions were exchanged, and the insurer was given a full opportunity to respond. It also rejected claims that prejudice was not established, finding that the Claimants had incurred “identifiable wasted costs,” suffered delay in enforcing default judgment, and faced procedural uncertainty caused by the insurer’s conduct.
While the Court accepted that the jurisdiction for a non-party costs order was engaged and that the circumstances justified such an order, it declined to award indemnity costs, holding that the conduct did not meet the high threshold required for such an award. Costs were therefore assessed on the standard basis.
The Claimants had sought $20,365, but the Court found the recoverable costs should be confined to the specific interlocutory steps caused by the insurer’s involvement. Taking a broad assessment approach, it fixed the final figure at $10,000.
The Court therefore ordered CG Atlantic General Insurance Ltd to pay $10,000 as a non-party in respect of wasted costs arising from the set-aside application, withdrawal application, and related proceedings.
