Hideko Suzui v Kayoko Suzui

The claimant, a director and equal shareholder of three restaurant companies, issued proceedings under section 388(1)(b) Companies Act 2006 and/or the common law seeking production or inspection of company bank statements, books of account, management accounts, cheque stubs, contracts and tax returns for a multi-year period. The defendant initially agreed but later refused, and produced the outstanding documents only after proceedings were issued. The judge concluded that documents remained outstanding at the time the claim was issued, that the claimant was entitled to pursue the requests and that, had the court been asked to exercise its discretion under section 388, an order would have been made. The court declined to resolve competing allegations of dishonesty without cross-examination, applying the principle that witness evidence cannot be dismissed unless wholly incredible. Applying CPR 44.2, the court exercised its discretion to award costs to follow the event on the standard basis, with detailed assessment to follow.

Background and relief sought. The claimant, one of two sister directors and equal shareholders of three companies operating Japanese restaurants, applied on 4 July 2023 under section 388(1)(b) Companies Act 2006 and/or the common law for production or inspection of documents for the period 1 January 2015 to date. The documents sought included bank statements, all books of account and management accounts, cheque stubs, contracts and tax returns. The defendant initially resisted, filed an acknowledgement of service and later produced documents after proceedings were issued.

Procedural posture. This hearing concerned the issue of costs arising from the application; the substantive application had been effectively conceded by the defendant after issue but before final hearing. An earlier order dated 10 October 2023 directed that the costs issue be listed for hearing.

Issues framed by the court.

• Whether the defendant had failed to produce documents requested and therefore costs should follow the event.
• Whether serious allegations made after production of documents (that the claimant had transferred significant company funds) justified refusing the claimant’s costs on the basis that the claim was unmeritorious or abused the court’s process.
• Whether the court should reduce any costs award or depart from the usual rule that costs follow the event, and whether indemnity costs were appropriate.

Reasoning and subsidiary findings. The judge found on the evidence that documents requested had not been provided at the time the claim form was issued and that only after proceedings were commenced did the defendant supply the outstanding records. The defendant’s later allegations of dishonesty and unlawful transfers were serious but contested; the judge considered the authorities and held it was inappropriate on the papers to resolve those factual disputes without cross-examination, noting the law that witness statements should not be dismissed unless wholly incredible. The judge accepted that the claimant would have succeeded in obtaining the order for production under section 388 had the court been asked to exercise its discretion on the merits. Applying CPR 44.2, the judge exercised her discretion to order that costs follow the event on the standard basis and refused to award indemnity costs. The judge indicated that the costs of the costs hearing would likewise follow the event and sent costs for detailed assessment unless agreed.

The court ordered that costs should follow the event and be assessed on the standard basis. The reasoning was that the defendant had failed to provide documents requested before issue, only complied after proceedings were issued, and the claimant was entitled to pursue the requests and would have obtained an order under section 388(1)(b) Companies Act 2006. The court refused to resolve contested allegations of dishonesty on the papers and therefore did not treat those allegations as a basis to withhold costs; indemnity costs were not awarded.