BE Studios Ltd. v Smith & Williamson Ltd.

BE Studios Ltd. v Smith & Williamson Ltd.

A director who funds and controls litigation by an insolvent company for his own benefit, and who stands to gain personally from its success, may be ordered to pay the successful party's costs under section 51(3) of the Supreme Court Act 1981, even in the absence of impropriety or bad faith. The litigation was speculative, and BES was not the real party interested in the result; Mr Dickens was.

Parties
Claimant: B. E. Studios Ltd; Defendant: Smith & Williamson Ltd; Second Claimant (joined for Costs Application): Mr Christopher Dickens
Jurisdiction
England and Wales
Judgment Date
02 December 2005
Procedural Posture
Civil / Post Trial Costs Application
Outcome
Application granted
Legal Topics
Non Party Costs Orders, Directors' Liability for Costs, Speculative Litigation, Company Insolvency
Civil Procedure Company Law Non Party Costs Orders Directors' Liability for Costs Speculative Litigation Company Insolvency

Case Brief

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Parties

B. E. Studios Ltd

Claimant

Smith & Williamson Ltd

Defendant

Mr Christopher Dickens

Second Claimant (joined for Costs Application)

Procedural Posture

Civil / Post Trial Costs Application

Legal Issues

  1. 1 Whether a director who funds and controls litigation by an insolvent company should be liable for the defendant's costs under section 51(3) of the Supreme Court Act 1981
  2. 2 Whether impropriety or bad faith is a prerequisite for a non-party costs order against a director
  3. 3 Whether the litigation was speculative and for the director's own benefit

Ratio Decidendi

A director who funds and controls litigation by an insolvent company for his own benefit, and who stands to gain personally from its success, may be ordered to pay the successful party's costs under section 51(3) of the Supreme Court Act 1981, even in the absence of impropriety or bad faith. The litigation was speculative, and BES was not the real party interested in the result; Mr Dickens was.

Court Disposition

Application granted

Orders

  • Mr Dickens to pay 4/5ths of the defendant's costs on the standard basis, to the extent not paid by BES