A costs order against liquidator of company in litigation is only rarely to be given. The court should ask who is the ‘real’ party to the litigation.
Millett LJ said: ‘[An order] may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit … It is not, however, sufficient to render a director liable for costs that he was a director of the company and caused it to bring or defend proceedings which he funded and which ultimately failed. Where such proceedings are brought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for costs could be made against a director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be eroded and the principle that such orders should be exceptional would be nullified. The position of a liquidator is a fortiori. Where a limited company is in insolvent liquidation, the liquidator is under a statutory duty to collect in its assets. This may require him to bring proceedings. … If he brings the proceedings in the name of the company, the company is the real plaintiff and he is not. He is under no obligation to the defendant to protect his interests by ensuring that he has sufficient funds in hand to pay their costs as well as his own if the proceedings fail.’
Times 12-Dec-1996,  1 WLR 1613,  EWCA Civ 670,  EWCA Civ 671,  BCC 165,  1 Costs LR 85
England and Wales
Cited – Dymocks Franchise Systems (NSW) Pty Ltd v Todd and others (No. 2) PC 21-Jul-2004
PC (New Zealand) Costs were sought against a non-party, following an earlier determination by the Board.
Held: Jurisdiction to make such an order was not complete. Where the order sought was against a . .
Cited – BE Studios Ltd v Smith and Williamson Ltd ChD 2-Dec-2005
The claimant company had failed in its action. The court was asked to make a costs order personally against the principal director of the claimant who had controlled the litigation and funded it. He responded that no impropriety had been shown on . .
Cited – Dolphin Quays Developments Ltd v Mills and others CA 17-May-2007
The owner had agreed to sell a long lease of an apartment to the defendant. Part of the price was to be by way of set off of an existing debt, but ths was not set out in the contract. The claimant bought the land and the benfit of the contract from . .
Cited – Lingfield Properties (Darlington) Ltd v Padgett Lavender Associates QBD 18-Nov-2008
Application for non-party costs order against litigation funder. The third party denied that he was a person against whom an order could be made, and denied his formal involvement in the companies funding the litigation.
Held: Such an order . .
Cited – Goknur v Aytacli CA 13-Jul-2021
Third Party Costs – Director of Insolvent Company
(Organic Village) The Court considered the circumstances Limited in which a director and shareholder of an insolvent company may be personally liable for some or all of that company’s costs liabilities incurred in unsuccessful litigation, pursuant . .
These lists may be incomplete.
Updated: 16 July 2021; Ref: scu.83673