Simon Halabi v Michael Gaymer

A director who funds and controls litigation for an insolvent company is not ordinarily liable for the company’s costs merely because of that role. A non-party costs order may be justified where the director is the real party in important and critical respects. Personal benefit is wider than collateral financial gain and may include reputational, family or other personal interests. The court may infer it from the economic reality, the director’s control and conduct, funding arrangements, and the significance of the subject matter. A bare denial of personal interest is not conclusive. On a statutory costs application, ordinary trial rules about cross-examination do not apply rigidly, although fairness and proportionality remain important. Appellate intervention requires an identifiable legal, logical or factual flaw.

Simon Halabi appealed against a non-party costs order made by HHJ Murch sitting in the County Court at Luton on 9 July 2025. The order was made against him under Senior Courts Act 1982 section 51 and CPR rule 46.2 after litigation concerning a lease of golf-course land and unpaid costs orders against Mentmore Greenland Ltd, a company associated with the Halabi family.

The first-instance judge found that Mr Halabi was the real party to the litigation because he had controlled and funded the proceedings and had wider personal and family interests in preserving the lease. Mr Halabi argued that he had no beneficial interest in the company, no personal interest in the litigation and no personal financial benefit. The Respondent’s Notice raised additional allegations of abusive and improper conduct. The central issue was whether the judge had made an error of law or fact in treating Mr Halabi as the real party and making the costs order.

The appeal was dismissed. The court found no error of law, failure in logic or insupportable factual conclusion in the exercise of the section 51 discretion.

1. Appellate restraint. The court applied the approach in Re Sprintroom Ltd [2019] EWCA Civ 932 [2019] BCC 1031. An appellate court must not conduct the evaluative balancing exercise afresh. It should intervene only where an identifiable flaw undermines the decision. The first-instance judge was particularly well placed to assess the litigation and draw inferences from the evidence, although that did not make the decision immune from review.
2. Director-focused non-party costs orders. The principles in Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Ticaret ve Sanayi As v Aytacli [2021] 4 WLR 101 were applicable. Control and funding of an insolvent company’s litigation do not alone justify an order. Usually, the applicant must establish personal benefit from the litigation or serious impropriety or bad faith. The serious-impropriety route did not need to be determined because the personal-benefit route was made out. The real-party approach in Dymocks Franchise Systems (New South Wales) Pty Limited v Todd & Ors [2004] 1 WLR 2807 was applicable.
3. Personal benefit. Personal benefit is not limited to financial gain. The court relied on Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17 and Re North West Holdings plc (in liq.) [2001] EWCA Civ 441 [2002] BCC 441 in recognising reputational and other personal interests. A beneficial interest in the company or its success would not, without more, make a director the real party, as confirmed by Trafalgar Multi Asset Trading Co Ltd (in liquidation) v Hadley [2023] EWHC 2670. Here, the cumulative evidence justified findings of personal interest, control and conduct for family purposes.
4. Evidence and cross-examination. An application under section 51 is a statutory costs application, not an action asserting a cause of action, and ordinary trial rules of evidence do not apply as such. The court applied Deutsche Bank AG v Sebastian Holdings Inc and treated the strict trial rule in Griffiths v TUI (UK) Ltd [2025] A.C. 374 as inapplicable in its ordinary form. Fairness and proportionality nevertheless remained relevant. A bare assertion that the director had no personal interest did not prevent the judge from evaluating the evidence, particularly where the issue was known to be challenged and supporting evidence could have been provided.
5. Disposition. The Respondent’s Notice allegations were not determined because the appeal failed on the principal ground and those issues had received limited argument. The appeal was dismissed.

1. High Court (Insolvency and Companies List): On 2 September 2026 the court dismissed Mr Halabi’s appeal and upheld the non-party costs order.
2. County Court at Luton: On 9 July 2025 HHJ Murch made a non-party costs order against Mr Halabi under Senior Courts Act 1982 section 51 and CPR rule 46.2. No citation for that decision was stated in the judgment.