Leeds United Association Football Club Ltd and Leeds United Football Club Ltd (Formerly Leeds United 2007 Ltd) v Phone-in Trading Post Ltd (Trading as Admatch)

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: (Steel, Jones and Bennett, JJ.A.)
• Judgment Date: 09 June 2011
• Date: 09 June 2011

COURT OF APPEAL

(Steel, Jones and Bennett, JJ.A.)

Civil Procedurecostscosts against non-party

The first plaintiff brought proceedings in December 2005 seeking payment of 190,400 owed to it by the defendant. The defendant was a dormant Jersey company with no assets, which was owned and controlled by its director and represented by him in these proceedings. It admitted the debt (the money had been transferred to other companies owned by the director) but claimed that it should be set off against a greater sum allegedly owed by the first plaintiff to an associated company of the defendant. The first plaintiff was placed into administration and its rights against the defendant were transferred to the second company.

On January 19th, 2011, the Royal Court ordered the defendant to comply with certain orders by February 23rd, failing which its answer would be struck out and the plaintiffs would be entitled to judgment. The defendant applied unsuccessfully for leave to appeal against that order. The plaintiffs sought an award of costs against the director on the indemnity basis. They submitted that such an award was justified because the defendant had failed to comply with various court orders; the defence of the case was for the sole benefit of the director; and the defendant had not appointed legal representatives. The plaintiffs also referred to the defendant's conduct at Royal Court hearings after the application for leave to appeal was dismissed.

Held: (1) A costs order would be made against the director personally for the costs of and incidental to the application for leave to appeal. Under art. 16 of the Court of Appeal (Jersey) Law 1961, the court had full power to determine by whom and to what extent the costs were to be paid. In the exercise of its discretion to make an order for costs against a non-party, the court would consider the following guiding principles: (i) costs orders against non-parties were exceptional, in that they involved considerations outside the ordinary cases in which parties pursued or defended claims for their own benefit and at their own expense. Such cases were fact specific and the ultimate consideration was justice as between the litigant seeking the order and the person against whom it was sought; (ii) costs orders would not generally be made against a mere funder of litigation, i.e. a person with no personal interest in the litigation, who did not stand to benefit from it, was not funding it as a matter of business...