Loudmila Bourlakova & Ors v Oleg Bourlakov & Ors

The court has jurisdiction to make costs orders involving non-parties, including orders in favour of a non-party, but such orders are exceptional and require careful consideration of where the justice of the case lies.

An interim funding arrangement should not be approved where it would impose a substantial upfront liability on an estate, confer repayment priority on the funder and materially encumber estate assets, particularly where beneficiaries have conflicting interests and the estate has no crystallised assets or administrator in the jurisdiction.

The applications concerned the funding and continued appointment of Mr Nicholas Jacob as representative of the estate of the First Defendant in complex proceedings. The Claimants sought to lift the stay and either approve an agreed funding arrangement or discharge Mr Jacob. Mr Jacob sought to continue as representative, with his costs funded by Edelweiss Investments Inc through an interim costs and funding structure.

The proposed arrangement included costs orders in favour of Mr Jacob and Edelweiss, repayment from the estate, interest, priority over proceeds and directions concerning frozen funds in the Bahamas. The central issue was whether the court had power to make the proposed orders and, if so, whether exercising that discretion would serve the justice of the case.

1. Jurisdiction. The court accepted that section 51 of the Senior Courts Act 1981 and Civil Procedure Rules 1998, Part 46.2 permitted, in principle, a costs order in favour of Mr Jacob against Edelweiss, subject to his joinder, a costs order in favour of Edelweiss against the Estate to the extent of funding provided, and further costs orders between the parties.
2. Such an order required circumspection because it would be both pre-emptive and concerned with a non-party. The authorities gave little guidance beyond identifying the justice of the case as the central question.
3. The proposed order should not be made. It would create a substantial liability against the Estate at interest, give Edelweiss priority over realised estate assets and do so while potential beneficiaries had differing views, other beneficiaries were unidentified, the Estate had no crystallised assets in the jurisdiction and there was no administrator here. The proposal therefore did not meet the justice of the case.
4. The representative’s role was not equivalent to that of an administrator, but it overlapped with an administrator’s powers within the narrower context of the proceedings. Mr Jacob could in principle take steps to demand and compel payment of costs awarded to the Estate. The court did not decide whether the wider enforcement powers in the draft order exceeded his authority.
5. The court would not order the Claimants to agree to payment from funds frozen by the Bahamian court. That would improperly interfere with party autonomy and with the orders of another competent court.
6. The applications were adjourned. The parties were given one final opportunity to agree a simpler funding regime by 25 April 2025. The court reserved power to approve, amend or reject any proposal, discharge Mr Jacob, continue the stay or make a different funding order.