Our Trust and Probate Litigation team acts for Robert Tibbles in proceedings brought as a result of a dispute over the ownership of Damien Hirst’s ‘Beautiful tropical, jungle painting (with pink snot). After a trial before Deputy High Court Judge Geraint Webb KC (the “Judge”) in January 2022, the court ruled that Robert had full title to the painting and rejected in full the claims of his father, Nigel, and twin brother, Sebastian. Nigel and Sebastian brought their claim indirectly through an offshore company. For a full summary of the main proceedings, please see our summary here.
Robert then asked the Judge to order that Sebastian, rather than the claimant, Hilden Developments Ltd (the “Offshore Company”), pay the costs of the main proceedings even though he was not a party to the original trial. In these subsequent non-party cost proceedings (Hilden Developments Ltd v Phillips Auctioneers Ltd & Anor  EWHC 1506 (KB) (the “Non-party Cost Judgment”)) heard in May 2023, the Judge awarded a non-party cost order against Sebastian personally as the “real party to the litigation”. Geoff Kertesz and Catriona Abraham acted for Robert in this case and explain the judgment here.
Why was a costs order granted?
At the time the main proceedings began, the Offshore Company had no assets, no bank account and had never filed any accounts. Sebastian was the sole shareholder and director and was added as a party to the subsequent non-party cost application. As the Offshore Company had no assets, the main proceedings must have been funded by a third party. After attempts were made on Robert’s behalf to uncover this information, Sebastian admitted shortly before the substantive hearing in the non-party cost proceedings to having personally funded the claim from the beginning.
Before and throughout the legal proceedings, Sebastian threatened his brother with aggressive personal emails. The Judge took these emails as evidence that Sebastian was not acting as a conscientious director of the Offshore Company in the main proceedings and was, instead, mounting a personal attack on Robert. Key to this decision were Sebastian’s repeated attempts to use the English court proceedings brought against Robert as leverage in simultaneous actions ongoing overseas.
Under s51 Senior Courts Act 1981, English courts “shall have full power to determine by whom and to what extent the costs are to be paid”. The Judge found that in this case Sebastian, rather than the Offshore Company, was the “real party to the litigation” and that it was in the “interests of justice” to make a costs order against Sebastian personally for 50% of the costs of the main proceedings incurred before a without prejudice save as to costs offer made by Robert, and 100% of the costs thereafter.
It is expected, though not required in every instance, for a party to warn a third party at an early stage that they may be subject to a non-party cost application. Sebastian argued that he was not given sufficient notice of the potential personal liability for the costs ordered against the Offshore Company.
However, Robert had raised the possibility of a non-party cost order twice, not only in pre-action correspondence but also ahead of a hearing in May 2023 to deal with matters consequential to the judgment of the main proceedings. The Judge deemed this more than ample warning, to the extent he suggested that “repeated warnings might be perceived to be intimidatory.”
The Non-Party Cost Judgment, at paragraphs 18-28, provides a helpful summary of the applicable case law relating to non-party cost applications. The Judge echoed previous judicial warnings against over reliance on case law, given the court’s wide discretion under s.51 of the Senior Courts Act 1981. However, the key relevant cases are explored in the Non-Party Cost Judgment, making it a useful tool for practitioners considering making a non-party cost application, particularly as there is not a great deal of case law in this area.
Geoff Kertesz says: “This case demonstrates that the court may consider company directors to be acting as individual agents where they are demonstrably pursuing a personal agenda, rather than acting in the company’s interests. In such cases, a non-party costs order may be appropriate and should be considered at an early stage.”
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