Summary

The court considered the principles upon which a costs order might be made against a third party where it was said that he was the driving force behind the litigation, and further considered whether it was appropriate to make an order for costs against a trustee company which was a party to the proceedings, but did not wish to take, and did not take, any active part in them. Timothy Harry appeared for the trustee company which successfully resisted an order for costs being made against it. There has been no previous authority which has directly dealt with the issue of whether a trustee, joined as a necessary party to proceedings, but which takes no active part in them, can be held liable for the costs of them.

Facts

The litigation was started as long ago as 2001. The third party (John Popely) brought a claim alleging fraudulent breach of fiduciary duty against his brother, Ronald. John became bankrupt, and the action was continued by his sons who were substituted for John. The action was an unusual "double derivative" one in that permission was given to the sons to bring the claim on behalf of a company, the third defendant, shares in which were held by a trustee company, based in St Vincent and the Grenadines, the second defendant.

The action failed, and Ronald then sought a costs order against John, and against the trustee company.

Held

The former application succeeded because it was held that John substantially controlled the litigation, but the other application against the trustee company failed, essentially because the trustee company consistently took the position that it did not wish to take any part in the proceedings so as to avoid any risk as to costs, and did not take any part in them, which was said by the court to be a stance wholly understandable on the part of a trustee.

Timothy Harry was instructed by RadcliffesLeBrasseur