Tuesday 13 July 2021

UK: England and Wales: company litigation, non-party costs orders and company directors

Judgment was delivered today by the Court of Appeal in Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Ticaret Ve Sanayi AS v Aytacli [2021] EWCA Civ 1037. The decision is noteworthy because of what is said about the circumstances in which, under section 51 of the Senior Courts Act 1951, a director of a company may be personally liable for some - or all - of the company's costs liabilities in unsuccessful litigation.

Lord Justice Coulson delivered the only reasoned judgment (with which Dingemans and Lewison LJJ agreed) in which, after setting out a summary of the guidance provided by cases (para. [40]), he stated: "...without being in any way prescriptive, the reality in practice is that, in order to persuade a court to make a non-party costs order against a controlling/funding director, the applicant will usually need to establish, either that the director was seeking to benefit personally from the company's pursuit of or stance in the litigation, or that he or she was guilty of impropriety or bad faith. Without one or the other in a case involving a director, it will be very difficult to persuade the court that a s.51 order is just" (para. [41]).

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