Transomas Limited & Anor v Kheri Trading Limited & Ors

A non-party costs order against a company director is exceptional, but the question remains whether it is just in all the circumstances. The central inquiry is whether the director was the real party to the litigation. Control and funding are relevant indicators, but personal benefit, bad faith or serious impropriety may independently justify the order. Insolvency is not a prerequisite. The jurisdiction is summary and should remain proportionate, with disputed matters generally resolved on the documents. Where a director pursues litigation for personal objectives, advances abusive or misconceived allegations, breaches procedural orders, or causes a company to incur costs contrary to its interests, justice may require personal liability under section 51 of the Senior Courts Act 1981 and CPR 46.2.

The applications concerned whether Jackie Kaur should be personally liable for costs incurred in two related proceedings. Transomas Limited and Transomas Investments Limited had pursued a Hotel Claim concerning ownership of the Westbourne Hotel and had defended a Redemption Claim brought by Kheri Trading Limited. The Hotel Claim was abandoned at trial and dismissed. The Redemption Claim trial had previously been vacated after the Hotel Claim was issued.

At a consequentials hearing, indemnity costs were ordered against the Companies and Jackie was joined as a party for costs purposes. The issue was whether the circumstances justified making Jackie personally liable as a non-party.

1. Application granted. It was just to make a non-party costs order against Jackie Kaur in respect of both the Hotel Claim and the Redemption Claim.
2. The jurisdiction arose under sections 51(1) and 51(3) of the Senior Courts Act 1981 and was reflected in CPR 46.2. The fact that such orders are exceptional means that they fall outside the ordinary run of litigation, rather than that an additional legal test applies. The ultimate question is justice in all the circumstances.
3. The guidance in Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Ticaret ve Sanayi As v Aytacli [2021] EWCA Civ 1037 was relevant. There was no mandatory checklist. The court could consider control and funding, but personal benefit was particularly important. Personal benefit or serious impropriety or bad faith could suffice; both were unnecessary. Insolvency was not a prerequisite.
4. The jurisdiction was summary in nature. The court had to balance proportionality and justice and prevent satellite costs litigation expanding beyond reasonable bounds. The guiding principle was that the discretion must be exercised justly, as stated in Deutsche Bank v Sebastian Holdings [2016] EWCA Civ 23.
5. Jackie was the real party to both proceedings. The evidence showed that she controlled and funded the litigation, pursued a personal strategy concerning her family’s estate, sought personally to benefit from recovery of the Hotel, advanced serious and misconceived allegations, introduced apparently abusive claims, breached procedural orders and ultimately refused to represent the Companies at trial. Her conduct caused substantial additional costs and was inconsistent with the Companies’ interests.
6. It would also be unfair for Mitch and Jag, as substantial ultimate shareholders in the Companies, indirectly to bear the costs. The approach in Goldberg London Limited v Primelodge Developments Limited [2023] Costs LR 469 supported that conclusion. Jackie was therefore ordered personally to pay the relevant costs.

This was a first-instance costs decision. The judgment records that the Hotel Claim had been dismissed at trial and that, at a consequentials hearing on 24 November 2023, indemnity costs were ordered and Jackie Kaur was joined for costs purposes. The present hearing determined her personal liability for those costs.