CIBC Mellon Trust Company & Anor v Wolfgang Otto Stolzenberg & Ors

CIBC Mellon Trust Company & Anor v Wolfgang Otto Stolzenberg & Ors

A shareholder who is not a director and who funds, controls, and directs litigation by a company for his own interests may be ordered to pay costs awarded against the company where the circumstances are exceptional. In this case, Mr Cavazza acted purely for his own financial interests, controlled the litigation, and the companies had no means to pay the costs. The judge at first instance was correct to order him to pay the set aside application costs, but erred in refusing to order him to pay the costs assessment costs, as the claimants were justified and required by the rules to pursue detailed assessment once the set aside applications were made.

Parties
Claimants: CIBC Mellon Trust Company and Daimler Chrysler Canada Inc; Defendants: Wolfgang Otto Stolzenberg and others (including Mora Hotel Corporation NV, Chascona NV, Paolo Cavazza)
Jurisdiction
England and Wales
Judgment Date
24 May 2005
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal, Cross Appeal, and Applications Regarding Costs Orders
Outcome
Appeal allowed; cross-appeal dismissed
Legal Topics
Non Party Costs Orders, Shareholder Liability for Costs, Costs Assessment, Litigation Funding, Corporate Personality
Civil Procedure Company Law Non Party Costs Orders Shareholder Liability for Costs Costs Assessment Litigation Funding Corporate Personality

Case Brief

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Parties

CIBC Mellon Trust Company and Daimler Chrysler Canada Inc

Claimants

Wolfgang Otto Stolzenberg and others (including Mora Hotel Corporation NV, Chascona NV, Paolo Cavazza)

Defendants

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal, Cross Appeal, and Applications Regarding Costs Orders

Legal Issues

  1. 1 Whether a shareholder who is not a director and who funds, controls, and directs litigation for his own interests can be ordered to pay costs awarded against the company
  2. 2 Whether the judge at first instance erred in exercising discretion regarding costs assessment costs and set aside application costs
  3. 3 Whether the pursuit of detailed costs assessment was justified and necessary

Ratio Decidendi

A shareholder who is not a director and who funds, controls, and directs litigation by a company for his own interests may be ordered to pay costs awarded against the company where the circumstances are exceptional. In this case, Mr Cavazza acted purely for his own financial interests, controlled the litigation, and the companies had no means to pay the costs. The judge at first instance was correct to order him to pay the set aside application costs, but erred in refusing to order him to pay the costs assessment costs, as the claimants were justified and required by the rules to pursue detailed assessment once the set aside applications were made.

Court Disposition

Appeal allowed; cross-appeal dismissed

Orders

  • Mr Cavazza (56th Defendant) to pay the claimants’ costs of and occasioned by the detailed assessment proceedings against the 10th and 38th Defendants.
  • Mr Cavazza to pay the costs of the appeal and the application dated 6 February 2004, subject to detailed assessment if not agreed.