Housemaker Services Ltd and another v Cole and another

Company – Claim. The Chancery Division dismissed the defendants' application for a non-party costs order to be made against the second claimant former director of the first claimant company, who had been joined to the proceedings for the purpose of seeking costs against him. The court held that, in order to make it just to order a director to pay the costs of unsuccessful company litigation, it was necessary to show something more, for example, that the claim had not been made in good faith, or for the benefit of the company, or it might be that the claim had been improperly conducted by the director. The mere fact that a director, who controlled the company's litigation, also funded the claim was not enough, in the ordinary case, to justify a non-party costs order against him if the company's case failed. The court held that the second claimant's behaviour in controlling, funding and, ultimately, hoping to benefit from the claim being made by the company had not gone beyond the ordinary case of the director and shareholder of a company pursuing a legal claim.

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