Frasers Group PLC v Saxo Bank A/S & Anor
[2023] EWHC 3105 (Comm)
SFL Ace 2 Company Inc. v DCW Management Limited & Ors
29 November 2024
[2024] EWHC 3074 (Comm)
High Court
A company sued another, winning the case. They then tried to make other companies pay their legal bills, claiming these companies secretly funded the losing side. The judge refused to allow the winning company to demand more documents to prove their claim. They had enough evidence already, and the request for more was too broad and like searching for something without a clear reason. The judge only allows this sort of thing in rare situations.
Key Facts
- •SFL ACE 2 COMPANY INC. (Claimant) sought a third-party costs order against DCW Management Limited, David James Ambrose, Mitchell Brenner, Allseas Global Logistics Limited, and DKT Allseas Shipping Limited (Third to Fifth Defendants).
- •Claimant's costs were £268,483.32.
- •The underlying case involved an alleged guarantee of charterer obligations.
- •Mitchell Brenner (Third Defendant) was a director and shareholder of the Charterer.
- •Claimant alleged an 'Asset Stripping Scheme' by the Third to Fifth Defendants to make the Defendant judgment-proof.
- •This scheme involved granting a charge to Brenner, transferring shareholdings to Notus Investments Limited, and appointing administrators.
- •Claimant sought disclosure of communications and documents to support their third-party costs claim.
- •The Third to Fifth Defendants argued they were 'pure funders' with no control over the litigation and that the disclosure request was disproportionate.
- •The Claimant argued that the disclosure was necessary for a fair determination of the costs application.
Legal Principles
The ultimate question on a non-party costs order application is whether it is just in all circumstances; it is fact-specific.
Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807 at [25]-[29]
Non-party costs orders are made against those who substantially control or benefit from the proceedings.
Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807
Non-party costs applications are summary procedures, typically without disclosure or cross-examination.
Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17
Disclosure in non-party costs applications is exceptional and requires a high test of necessity.
Systemcare (UK) Ltd v Services Design Technology Ltd [2011] 4 Costs L.R. 666; Thomson v Berkhamsted Collegiate School [2010] C.P. Rep 5
Factors to consider for disclosure in non-party costs applications include the strength of the application, potential value of documents, privilege, and proportionality.
Thomson v Berkhamsted Collegiate School [2010] C.P. Rep 5
A company is a separate legal person from its shareholders and directors; piercing the corporate veil is exceptional.
Goknur Gida Maddaleri Enerji Imalet Ithalat Ihracat Ticaret ve Sanati AS v Aytacli [2021] EWCA Civ 1037
CPR 31.14 allows disclosure where a document is mentioned in a witness statement.
CPR 31.14
Outcomes
Claimant's application for disclosure was dismissed.
The court found the disclosure sought was too broad, speculative, and disproportionate to the summary nature of the non-party costs application. The court considered the existing evidence sufficient to determine the application and that granting the disclosure would lead to an inappropriate fishing expedition.
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