- April 28, 2016
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
Only named parties to litigation are generally exposed to potential liability for legal costs in the event of failure. However, in one exceptional case involving a ‘Banksy’ mural, the High Court peeked behind the corporate veil and made a costs order against a non-party who was the real driving force behind the proceedings.
The mural, which had been painted on the wall of a commercial building and was valued at up to £470,000, had been removed by the property’s corporate tenant. An arts foundation, as assignee of the landlord’s title to the mural, later obtained a court order against the tenant and its bosses requiring its return.
The foundation’s costs of the proceedings came to over £200,000. However, when it sought to recover that sum from the tenant, it emerged that the latter was hopelessly insolvent. It had been so throughout the proceedings and subsequently went into voluntary liquidation with a deficit of almost £12 million.
In those circumstances, the foundation sought to recover its costs from the tenant’s sole shareholder although she had not been a party to the proceedings. The Court found that it was an exceptional case in which such an order was justified. The shareholder had, amongst other things, funded the defence of the action, which was undertaken principally for her benefit. She had been actively and closely involved in the proceedings and, in reality, was a party in all but name.