Rajvel Construction Ltd v Bestville Properties Ltd

A court may order costs personally against a director or other non-party where that person's failure to make full and frank disclosure causes a separate application and its costs to be incurred. The jurisdiction is discretionary and does not depend on a finding of dishonesty or deliberate concealment. Misleading evidence, supporting submissions that could not properly have been made had the true position been disclosed, and a direct causal link to the additional costs may constitute sufficient impropriety. An appellate court will not interfere where the first-instance judge had jurisdiction and exercised the discretion on a proper basis.

A claimant company brought proceedings in the Technology and Construction Court for approximately £200,000 for building works. On an initial application for security for costs, evidence from its director and shareholder indicated that neither the company nor the director could fund security, and the application was refused.

After the respondent discovered evidence of further assets, it sought a rehearing or renewed application. The judge ordered security for costs and made a personal costs order against the director for the costs of the second application, finding that the original evidence had failed to give full and frank disclosure and had misled the court. The appeal concerned whether the personal costs order was within the judge's jurisdiction and whether the discretion had been properly exercised.

Lord Justice Stanley Burnton gave the judgment of the court. Lord Justices Lloyd and Rix agreed.

1. The appeal was dismissed. There was no challenge to the order requiring security for costs. The appeal concerned only the personal order for the respondent's costs of the second application.
2. The court had jurisdiction and a full discretion to order costs personally against the director. The second application and its costs were caused by the failure to disclose the assets and resources available to him on the first application. Had the true position been disclosed, the submissions that the company and director could not fund security could not properly have been made, and the security order would have been made at the earlier hearing.
3. A finding of dishonesty, deliberate lying or deliberate concealment was unnecessary. The original witness statement was misleading because it did not provide full and frank disclosure. That failure amounted to impropriety where it was used to support a submission that caused a separate set of costs to be incurred.
4. The first-instance judge was entitled to find that the court had been misled and that the litigation would not be stifled because the director could provide security. The Court of Appeal saw no basis for concluding that the judge lacked power or wrongly exercised his discretion. Any disagreement about whether the impropriety should be described as being at the high end did not affect the order.

1. Court of Appeal (Civil Division): dismissed the appeal against the personal costs order.
2. Queen’s Bench Division, Technology and Construction Court: His Honour Judge Wilcox ordered security for costs on the renewed or reheard application and ordered the director personally to pay the respondent’s costs of that application.