Contractors Joined as Third Parties Can Recover Their Costs

A contractor working on a public road in Paralimni was pulled into a personal injury action it had nothing to do with. The claim was against the municipality. The municipality, having obtained an order to do so, brought in the Republic of Cyprus and the contractor as third parties, on the basis that responsibility for signage and for observing safety rules lay with them and not with the municipality.

The action was dismissed. The plaintiff had failed to prove any negligence against the municipality, and the third party proceedings fell away with it. The contractor had been in the case for years, had instructed advocates, and had defended itself throughout. The trial court then held that costs should not follow the event and that each third party should bear its own.

On 29 July 2026 the Supreme Court set that order aside. The judgment was added to the public database on 11 September 2026.

Who this matters to

Contractors and subcontractors are joined as third parties more often than most businesses, and usually for structural reasons rather than because a case has been built against them. A joint venture carries out works assigned by a government department, something happens on or near the site, and whoever is sued first looks down the chain for someone to pass the liability to. The same pattern catches:

• Main contractors and members of a consortium on public works.
• Subcontractors, plant hirers and traffic management providers.
• Developers and project managers named in claims brought against a municipality or a utility.
• Employers and occupiers joined on an allegation of shared control of a site.

What went wrong at first instance

The trial court found the plaintiff had not proved negligence against the municipality and dismissed the action. It then went on to consider what would have happened had that finding been reversed on appeal, and concluded that any liability would have been shared between the two third parties.

It also considered whether it could add the third parties as defendants of its own motion, decided it could not, and recorded that if the plaintiff had applied to do so the application might possibly have been granted and the conclusion on contributory negligence might have been different. On that basis it declined to award the contractor its costs.

The appeal court identified two errors in that chain.

First, on the evidence there was nothing to place any responsibility on the contractor. No acceptable evidence disclosing any liability or negligence on its part had been produced. The municipality, which had joined it, led no evidence supporting its own pleaded allegations of fault; its single witness did not address the circumstances of the accident at all, and its evidence went only to disclaiming its own responsibility. A hypothetical finding of shared liability between the third parties, in those circumstances, was simply wrong.

Second, having decided that it could not join the third parties as defendants of its own motion, the judge was required to deal with costs on the footing that the contractor remained a third party. What might have happened had the plaintiff made an application that was never made was not a legitimate factor in the exercise of the discretion.

The rules that were applied

The general rule is that costs follow the event unless there is good reason to depart from it, and an appellate court may interfere where a material factor was left out of account in the exercise of the discretion.

For costs as between a third party and the other parties, the court has a specific power: it may decide all questions of costs between them, may order any one or more of them to pay the costs of any other, and may give such directions as to costs as the justice of the case may require. In exercising it the court looks, among other things, at whether joining the third party was justified in the circumstances, and whether any liability was in fact proved against it.

The court restated the nature of the procedure itself. Third party practice is an entirely separate and independent proceeding from the pre-existing action. The defendant stands as plaintiff against the third party, and the third party stands as defendant. The third party becomes a party with the same rights of defence as if it had been sued in an ordinary action, but it is not a defendant to the plaintiff's claim unless the plaintiff makes it a co defendant.

That last point is the one that decided the case. If the third party claim is a separate action, then a third party who wins it is a successful party, and the ordinary consequence is that it recovers its costs from the party who brought it.

Where the same argument lives now

This case was decided under the rules as they stood when the action was brought. The equivalent machinery under the Civil Procedure Rules 2023 is the additional claim in Part 21, and the argument translates without difficulty.

Regulation 21.3(1) treats an additional claim as if it were a claim for the purposes of the rules, so the costs regime applies to it in its own right. Regulations 21.6 and 21.7 give the routes by which a defendant brings a contribution or indemnity claim against an existing party or a new one, with or without leave depending on timing. Regulation 39.2(1) carries the general rule, that the unsuccessful party is ordered to pay the successful party's costs. And regulation 39.2(3)(b) provides that conduct includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue.

If anything the position is now more favourable to a contractor in this situation, because the reasonableness of raising an allegation is written into the discretion as an express factor rather than being drawn from case law.

What this means in practice

Being joined as a third party is not a formality and should not be treated as one. It is a claim against your business, and the fact that it is parasitic on somebody else's litigation does not reduce your exposure or your costs.

1. Record the evidential vacuum as it happens. The appeal succeeded because the transcript showed that the joining party led no evidence of fault against the contractor. That is only usable later if somebody notes at the time that nothing was put to the witnesses on the point.
2. Do not let the costs question drift. Costs as between a third party and the other parties are a distinct question with a distinct power attached to them. Ask for the order expressly and on the correct basis, namely that the additional claim is a claim and you succeeded on it.
3. Challenge hypothetical reasoning on costs. An order that denies a successful party its costs because the case might have been run differently is open to appeal, and was set aside here.
4. Say so in writing early. A letter at the outset, putting the joining party on notice that it will be asked for costs if it never supports its allegations, costs nothing and shapes the discretion later.

The contractor recovered its costs of the third party proceedings, to be assessed by the Registrar, together with 1,000 euro plus VAT for the appeal. Those are years of costs recovered from an order that had denied them entirely. Site records, contractual allocation of responsibility for signage and traffic management, and the conduct of the party who joined you all decide this kind of dispute, which is where construction and litigation and arbitration work overlap.

Questions we are asked

Sources

• Lois Builders Ltd v. Municipality of Paralimni, Civil Appeal 90/2017, Supreme Court of Cyprus, 29 July 2026
• Civil Procedure Rules 2023, 13/2023, CyLaw index

This article is provided for general information purposes only and does not constitute legal advice.

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Nicosia · Published 12 September 2026