Lloyd LJ said: ‘There is only one immutable rule in relation to costs, and that is that there are no immutable rules.’
Lloyd LJ baulked at the suggestion that every director who funded and controlled litigation on behalf of an insolvent company was liable to make a non-party costs order: ‘But it could not be right that in every such case he should be made personally liable for the costs, even if he knows that the company will not be able to meet the plaintiff’s costs, should the company prove unsuccessful. That would be far too great an inroad on the principle of limited liability. I do not say that there may not be cases where a director may not properly be liable for costs. Thus he might be made liable if the company’s best defence is not bona fide, as, for example, where the company has been advised and there is no defence, and the proceedings are defended out of spite, or for the sole purpose of causing the plaintiffs to incur irrecoverable costs. No doubt there will be other cases. But such cases must necessarily be rare. In the great majority of cases the directors of an insolvent company which defends proceedings brought against it should not be a personal risk of costs. ‘
 BCC 406
Supreme Court Act 1981 51
England and Wales
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 – Symphony Group Plc v Hodgson CA 4-May-1993
Nine rules were set out for allowing a costs order against someone who is not a party to the action. Such orders should be exceptional. The normal rule is that witnesses in either civil or criminal proceedings enjoy immunity from any form of civil . .
Cited – Weatherford Global Products Ltd v Hydropath Holdings Ltd and Others TCC 10-Oct-2014
Application by successful party to join a third party so as to make costs order against him. . .
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.237247