I-Remit Incorporated v Far East Express Remittance Ltd & Ors

A third-party costs order is exceptional only in the sense that it falls outside the ordinary run of litigation. The controlling question is whether, in all the circumstances, justice requires the order. Relevant factors include control of the litigation, substantial funding, personal benefit from success, the interests actually being pursued, and serious impropriety in the conduct of the case. Directors and shareholders do not become liable automatically merely because they control the company and may benefit indirectly. The court must examine whether they were acting for the company and its creditors, or principally for themselves. Where individuals control and substantially fund litigation by an effectively dormant insolvent company for their own benefit, an order for the successful party’s costs may properly cover all costs, even if the individuals funded only part of the company’s legal expenses.

I-Remit Incorporated obtained judgment for £379,462 against Far East Express Remittance Limited after the company’s defence and counterclaim failed. The company subsequently entered creditors’ voluntary liquidation. Its sole shareholders and directors, Lalaine Ong Ubando and Adan Mejia Ubando, controlled the litigation and were alleged to have funded it and pursued it for their personal benefit.

I-Remit applied under section 51 of the Supreme Court Act 1981 for a third-party costs order. The issues were whether the respondents’ control, funding, personal benefit, asset transfers, lack of notice, absence of an application for security, and alleged dishonesty made an order just, and whether any order should be limited to the amount of funding provided.

1. Jurisdiction and governing approach. The application was granted under section 51 of the Supreme Court Act 1981. Following Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39, the jurisdiction is fact-specific. “Exceptional” means outside the ordinary run of cases, and the ultimate question is whether an order is just in all the circumstances.
2. Control, funding and benefit. Control of litigation, substantial funding and a personal financial benefit from success commonly justify an order. The respondents controlled the defence and counterclaim. The company’s business had been reduced to a virtually dormant state, leaving no substantial body of creditors or shareholders apart from them. Funding through companies they owned or substantially controlled was materially equivalent, for present purposes, to personal funding. The respondents were therefore the real beneficiaries of success and were not realistically acting principally in the interests of the company and its creditors.
3. Other grounds. The alleged asset transfers were not established on the summary evidence. The court nevertheless found that Mrs Ubando’s deliberately untruthful evidence provided an additional powerful ground against her. No equivalent finding was established against Mr Ubando. The absence of notice of the proposed application and the absence of an application for security for costs were not material factors against an order on these facts.
4. Extent of order. The case was distinguished from Arkin v Borchard Lines Ltd [2005] 1 WLR 3055, where a commercial funder who did not control the litigation was liable only up to the amount funded. Here, control and personal benefit accompanied substantial funding. Causation was satisfied because the costs arose from the respondents’ decision to defend and counterclaim and their indirect funding of that decision.
5. Disposition. Mr and Mrs Ubando were ordered to pay all of I-Remit’s assessed costs of the action.

First-instance application under section 51 of the Supreme Court Act 1981. No prior appellate decision is stated in the judgment.