Ashborder BV & Ors v Green Gas Power Ltd & Ors

A pending application for permission to appeal may be dismissed rather than withdrawn where dismissal provides a final and unequivocal end to the matter, particularly after the underlying appeal has been compromised.

Where a person acts, or purports to act, for a company without authority after provisional liquidators have been appointed, the court may order that person to pay the other parties’ costs. A prior warning is highly relevant but is not a jurisdictional precondition to a third-party costs order. The court retains a broad costs discretion and must weigh both the unauthorised conduct and any mitigating circumstances.

The claimants brought proceedings against three defendant companies. Two defendants were in provisional liquidation and the third had subsequently been compulsorily wound up. Mr John Garratt maintained an application for permission to appeal a decision of Etherton J in the High Court Chancery Division, despite objections that he lacked authority to do so.

The proposed appeal had been compromised. Mr Garratt sought to withdraw the permission application, while the claimants and provisional liquidators sought its dismissal and costs against him personally. The Court of Appeal therefore considered whether the application should be dismissed or withdrawn and, if dismissed, whether and to what extent Mr Garratt should pay the costs.

1. Disposition. The application for permission to appeal was dismissed. Dismissal was preferable to withdrawal because it provided the claimants, defendants and provisional liquidators with a firm and complete end to the matter, without requiring adverse findings about Mr Garratt’s conduct.
2. Authority to act. Once provisional liquidators had been appointed, Mr Garratt had no authority to pursue or make the permission application, or to do anything else on behalf of the defendant companies, unless authority had been conferred by the provisional liquidators. The court relied on the discussion in Pacific & General Insurance Company Limited v Hazell [1997] BCC 400.
3. Third-party costs. In circumstances where a person purports to act for a company without authority, the court will ordinarily order that person to pay the other parties’ costs and will normally do so on an indemnity basis. The applicable power remains discretionary. Symphony Group Plc v Hodgson was treated as establishing that an early warning is an important consideration, but not a firm rule or jurisdictional requirement.
4. Application of discretion. Mr Garratt’s access to legal advice, the warning given on 20 January, subsequent references to his potential costs liability, and his knowledge by late January that the appeal had been settled justified a costs order. Mitigating circumstances justified limiting the claimants’ recoverable costs to those incurred from 28 January. The claimants were awarded £9,947 and the provisional liquidators £8,086.

• Court of Appeal (Civil Division): On 11 May 2005, the application for permission to appeal was dismissed and costs were ordered against Mr Garratt.
• High Court, Chancery Division: Mr Justice Etherton had given the decision from which permission to appeal was sought; its citation was not stated in the judgment.