Transomas Limited & Anor v Kheri Trading Limited & Ors
[2024] EWHC 1349 (Ch)
Paper Mache Tiger Limited v Lee Mathews Workroom Pty Ltd (in Liquidation)
17 February 2023
[2023] EWHC 338 (Comm)
High Court
A company sued another company, which later went bankrupt. The winning company tried to make the bankrupt company's owner pay their legal fees. The judge said no, because the owner didn't personally benefit from the lawsuit, and the bankrupt company's actions weren't deliberately bad enough to warrant making the owner pay.
Key Facts
- •Paper Mache Tiger Ltd (PMT) obtained a £718,790 judgment against Lee Mathews Workroom Pty Ltd (LMW), which was subsequently liquidated.
- •PMT applied for a non-party costs order (NPCO) against Lee Mathews (Ms Mathews), the sole director and shareholder of LMW.
- •LMW had sold its assets to another company owned by Ms Mathews before liquidation.
- •LMW's conduct during the litigation was questioned by PMT, alleging misleading statements and obstructive tactics.
- •The court considered whether Ms Mathews was the 'real party' to the litigation and whether LMW engaged in serious misconduct.
Legal Principles
An NPCO is exceptional and only made if just in all circumstances. The touchstone is whether the director was the 'real party' to the litigation.
Goknur v Aytacli [2021] EWCA Civ 1037
In insolvent company litigation, a director may be subject to an NPCO to avoid injustice, but this doesn't impinge on limited liability.
Dymocks Franchise Systems (NSW) Pty Limited v Todd and others [2004] UKPC 39
Factors such as control and funding of litigation, and personal benefit to the director, are indicia, not a checklist, for a just NPCO.
Systemcare (UK) Limited v Services Design Technology [2011] EWCA Civ 546
If litigation was for the company's benefit, impropriety or bad faith on the director's part is needed to justify an NPCO.
Symphony Group plc v Hodgson [1994] QB 179
The NPCO jurisdiction is highly fact-specific; disputed facts are balanced considering proportionality and justice.
Asprey Capital Limited v Rediresi [2023] EWHC 28 (Comm)
Outcomes
The application for a non-party costs order was dismissed.
The court found Ms Mathews was not the 'real party' to the litigation; LMW's actions, while potentially questionable, did not constitute serious misconduct causing PMT to incur unnecessary costs.
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