Transomas Limited & Anor v Kheri Trading Limited & Ors
[2024] EWHC 1349 (Ch)
Hilden Developments Limited v Phillips Auctioneers Limited & Anor
21 June 2023
[2023] EWHC 1506 (KB)
High Court
A brother sued another brother over a painting through a shell company. The brother who lost had to pay the other brother's legal fees. The court decided that the shell company's director, who secretly funded the lawsuit as part of a family fight, must also pay the fees because he was really the one behind the case.
Key Facts
- •Hilden Developments Limited (HDL), a BVI company, claimed ownership of a Damien Hirst painting sold by Robert Tibbles.
- •Robert Tibbles won the trial, establishing his ownership of the painting: [2022] EWHC 541 (QB).
- •HDL failed to pay Robert Tibbles' substantial court costs.
- •Robert Tibbles applied for a non-party costs order against Sebastian Tibbles, HDL's director and sole shareholder.
- •Sebastian Tibbles funded HDL's litigation and was heavily involved in its strategy.
- •HDL had no assets beyond the painting claim.
- •The litigation was part of a larger family feud involving multiple lawsuits.
Legal Principles
Jurisdiction to make non-party costs orders resides in the court's discretion under section 51 of the Senior Courts Act 1981 and CPR r 46.2.
Senior Courts Act 1981, section 51; CPR r 46.2
Non-party costs orders are exceptional, typically made when the non-party is the 'real party' to the litigation, controlling, benefiting from, or acting in bad faith.
Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613; Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39; Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Tiracet ve Sanayi AS v Aytacli [2021] EWCA Civ 1037; Paper Mache Tiger Limited v Lee Mathews Workroom Pty Ltd [2023] EWHC 338
Limited liability is not undermined when a director acts bona fide in a company's best interest; impropriety or bad faith are key considerations.
Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613; In re North West Holdings plc (In Liquidation) (Costs) [2001] EWCA Civ 67
Outcomes
Non-party costs order against Sebastian Tibbles.
Sebastian Tibbles was deemed the 'real party' to the litigation, directing its strategy, funding it, and personally benefiting from its pursuit beyond HDL's interests. His actions were driven by the wider family feud, not solely HDL's benefit.
Sebastian Tibbles liable for 100% of costs from 15 October 2021 onwards; 50% of costs before that date.
This reflects the timing of a Part 36 offer and acknowledges potential difficulties a reasonable director might have faced early in the proceedings due to the complex funding arrangements regarding the painting's purchase.
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