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.