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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> PR Records Ltd v Vinyl 2000 & Ors [2008] EWHC 192 (Ch) (15 January 2008) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2008/192.html Cite as: [2008] EWHC 192 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		15th January 2008

The application

1. MR JUSTICE MORGAN: This is an application by PR Records Limited ("PR")against Mr Adrian Owlett for an order under CPR Rule 48.2 that Mr Owlett do pay the costs of PR Records Limited in relation to the action brought by it against Vinyl 2000 Limited and against Mrs Susan Owlett. Mr Owlett was not a party to those proceedings. Putting the matter in other words, PR seeks a non-party costs order against Mr Owlett under Rule 48.2.
2. This matter was before me in June and July of this year. What had happened up to that point was that PR had applied under Rule 48.2 to join Mr Owlett as a party to the action for the purpose of the court then hearing an application for a non-party costs order against Mr Owlett. PR's application to join Mr Owlett came before Master Teverson, and on 13^th September 2006 he gave a reasoned decision which resulted in him refusing to join Mr Owlett as a party. PR appealed against the decision of Master Teverson. They obtained permission to appeal from Lindsay J, and I heard the appeal.
3. On 18^th July 2007 I allowed the appeal. I joined Mr Owlett as a party for the purpose of an application under Rule 48.2. On 27^th July 2007 I gave directions as to the hearing of the application. The application itself was heard before me on 14^th and 15^th January 2008. At the hearings in June and July and at this hearing yesterday and today PR was represented by Mr Deacon of counsel. At the hearings in June and July Mr Owlett was represented by counsel, but at this hearing yesterday and today he has appeared in person.

The background

4. It is necessary to refer to some of the relevant background to the present application. Fortunately I can take a great deal of this background from the judgment which I gave on 18^th July 2007. I will assume that anyone who wishes to follow what I am saying in the present judgment will have available to him or her the judgment I earlier gave, so I will not quote in extenso what I said in that earlier judgment.
5. In paragraphs 4 to 12 of my earlier judgment I described in a little detail the background matters which had given rise to litigation; to the two actions which were brought into existence, one called "the share action" and the other called "the PR action"; I described what were the issues in the PR action; I described the company voluntary arrangement in relation to PR; I described the course of the trial before a deputy judge, Mr Simon Berry QC, resulting in judgment being handed down on 2^nd December 2003. As described in my earlier judgment, the result of the two actions was favourable to PR and unfavourable to the various defendants. The defendants were Mr and Mrs Owlett in the share action and Vinyl 2000 and Mrs Owlett in the PR action.
6. In paragraph 12 of my earlier judgment I referred to various matters of comment that were made by the deputy judge when giving his judgment on that occasion.
7. In paragraph 15 of my earlier judgment I referred to the figures which PR had incurred by way of costs which were the subject of an assessment by the costs judge. In particular, PR's costs in the PR action were assessed in the sum of some £46,000, and that sum has not been paid. The parties to the PR action, namely Vinyl 2000 and Mrs Owlett, were ordered to pay that sum. No order was made against Mr Owlett on the basis that he was not a party to the PR action, hence this present application.
8. In my earlier judgment beginning at paragraph 24 I referred to the decision of Master Teverson on 13^th September 2006 and the reasons which appeared to him to be to be sound for declining to add Mr Owlett as a party to enable an application under Rule 48.2 to be considered.
9. I should also refer to paragraph 28 of my earlier judgment. I do so because that paragraph described the Respondent's Notice drafted by counsel who was then appearing for Mr Owlett. He took a number of points in the Respondent's Notice which it is material for me to have in mind before I dispose of the application today. Indeed Mr Owlett had the advantage in June when the matter was argued of counsel making detailed submissions on these points, and I have been able to remind myself of those submissions and bear them in mind when considering what to do today. It is for that reason that I refer to some of the points made as described in paragraph 28 of the earlier judgment.
10. One point which is there referred to is that there was delay in this case between the handing down of judgment on 2^nd December 2003 and the making of the application under Rule 48.2 in April 2006. Another point mentioned in that paragraph is that counsel appearing for Mr Owlett emphasised that the funding in the present case by Mr Owlett was properly to be regarded as the funding of Mrs Owlett's defence and involved raising funds from the jointly owned matrimonial home. Counsel on behalf of Mr Owlett contended that a case of funding of that kind was very different from the type of case where a non-party costs order was appropriate.
11. It was also put in the Respondent's Notice and later argued in some detail that there was no causal link between the funding by Mr Owlett of Vinyl 2000 and the costs incurred by PR, because PR would have incurred those costs in any event in meeting the defence being put forward by Mrs Owlett.
12. So those are matters which I draw attention to and which I will consider in the course of dealing with the present application.
13. In my earlier judgment I then considered the point that was then the live point as to the approach of the court when asked to join a non-party for the purposes of a Rule 48.2 application. Beginning at paragraph 48 I applied what I held to be the right approach to the facts of this case. It is relevant to go there, because in that part of the judgment I dealt with the question of delay between September 2003 and April 2006. I accepted that there was a lengthy period of time in question. I was not completely satisfied that PR had wholly explained how they had permitted or allowed that passage of time to go by, but at paragraph 50 I drew attention to the fact that counsel for Mr Owlett had not been able to submit that there was prejudice caused by reason of the delay, and my conclusion at the end of paragraph 50 is that I would not decline to join Mr Owlett as a party by reason of the delay which has occurred in this case.
14. In that earlier judgment I then, I hope, concisely endeavoured to summarise the principles which would apply at what I called the second stage, which is the current stage I am now concerned with: whether I should or whether I should not make a non-party costs order.
15. The legal principles which apply to such an application are perhaps still emerging, but there is, happily, a good deal of certainty as to what those principles are. The primary source of principle is the decision of the Privy Council in Dymocks Franchise Systems & Todd [2004] 1WLR 2807. In paragraph 55 of my earlier judgment I attempted to summarise the principles as stated in the Dymocks case.
16. There has been perhaps a suggestion by the Chancellor in the case of Dolphin Quays Development Limited v Mills [2007] 4 All ER 503 at paragraph 28 that there may be something in the Privy Council decision in Dymocks Franchise Systems, a decision not of an English court as such, which is at variance with decisions of the English courts. I do not detect any such disparity in the statement of principle which is relevant to the present case. The Chancellor may have been right that there was a different approach in the case of a receiver acting for a company involved in proceedings, but I do not detect any difference in the case of a shareholder or director, which is the type of case with which I am concerned. I also draw attention to the fact that the Court of Appeal has specifically rejected a submission that the Privy Council decision does not contain a correct statement of English law. I refer for that purpose to the decision of the Court of Appeal in Petromec v Petroleo Brasilieros SA Petrobras [2006] EWCA Civ 1038 and, in particular, to paragraph 15 in the judgment of Longmore LJ.
17. Accordingly, for present purposes, I will adopt and apply the statements of principle of the Privy Council in the Dymocks case.
18. In my earlier judgment I also referred to two other cases. The first of those was Total Spares & Supplies Limited v Antares SRL [2006] BPIR 1330. I summarised the point made in the Total Spares case at paragraph 58 of my earlier judgment. The Total Spares case is an unusual case in relation to the line of authority. The point there was different from the normal point which is raised in these cases; the normal point being to do with control and funding of litigation. In the Total Spares case the matter complained of against the non-party a transfer of assets so as to make the defending party judgment proof. David Richards J regarded that feature as sufficient by itself to justify a non-party costs order on the grounds that such an order was a just order to make. I will need to refer briefly to that concept later in this judgment.
19. Finally, in my earlier judgment I referred to the decision of Judge Coulson (as he then was) in Jackson v Thakrar [2007] EWHC 626 (TCC). That case was urged upon me in June of this year by counsel then appearing for Mr Owlett and I ought to indicate what the case decided and the assistance it gives me in coming to my conclusion in the present case.
20. In Jackson v Thakrar the learned judge declined to make a non-party costs order. In the course of a very full and obviously carefully considered judgment he dealt with four different topics. The first topic was that of causation. The judge did not have cited to him apparently the decision of David Richards J in the Total Spares case dealing with causation. Judge Coulson treated causation as a necessary matter which had to be established. He held on the facts of the Jackson v Thakrar case that the funding, by the wife of a bankrupt, of the bankrupt's counsel to appear at a hearing had not caused the other party, the trustee in bankruptcy, to incur any additional costs. Having made that finding on causation, that was the end of the application for a non-party costs order, although the judge went on to deal in detail with the other points that had been argued before him.
21. At section 2 of his judgment the judge reflected on the fact that the funder was the wife of the party funded and he referred, I find helpfully, to the earlier cases about family funding and he referred to the concept of a pure funder and circumstances in which a person would be regarded as a pure funder and not so regarded. On the facts of that particular case he held that the wife was effectively a pure funder of her bankrupt husband, motivated to act in the way she did from natural love and affection and not from some other interest of her own which was being pursued. The judge dealt briefly with an allegation that the conduct of the proceedings was not bona fide or, alternatively, was in some way improper. He rejected that finding.
22. The judge in section 3 of his judgment dealt with the fact that the wife did have some connection with one of the company parties and he held that that connection, whilst it existed, was not the reason she had acted the way she had done.
23. Finally, the learned judge dealt with the question of discretion. The way he dealt with it is a useful reminder that ultimately this is a discretionary matter for the court. The court does not act without regard to principle. It is a discretion which is to be exercised in accordance with established principles, and often if one considers the right factors they will point to the right answer which the court then ought to adopt.
24. The factors in the Jackson case which persuaded the judge to exercise his discretion against the making of an order were these. The application which had led to the costs being incurred was principally an application by another party altogether. That other party stood to gain or lose a great deal on the success of the application. That other party was a substantial party worth in excess of £30 million. The judge plainly regarded the justice of the case as being one where that substantial party should bear the costs and it was not right that others should.
25. In paragraph 43 of his judgment he said, in terms, that the involvement of the bankrupt funded by the wife amounted to something of a "sideshow", as he called it, and that allowed him to really put on one side the funding as a relevant matter.
26. In paragraph 44 of his judgment, the learned judge distinguished between a case where the party being funded was an offensive party, i.e. bringing a claim and pursuing that claim, and a defensive party who is brought to court by another and then seeks to defend itself. I see the force of the judge's distinction. I would not myself elevate it into a distinction which means one answer applies in one case and one answer applies in another. It is not a "be all and end all" in that sense, but it may be a relevant consideration, this being, after all, a fact sensitive jurisdiction.
27. Having looked at those authorities, and having said, I hope, nothing controversial or unusual, I can now identify the matters I need to consider for the fair disposal of this present application. I will list them, first of all, and then I will deal with them in turn.
28. The first matter is Mr Owlett's role in respect of the control of the litigation. The second matter is to ask if Mr Owlett stood to benefit personally from the conduct of the Defence and Counterclaim in the PR action. It will be remembered that he was not a party, and so one has to ask oneself: would he benefit personally and, if so, in what way? The next question is that of funding: did Mr Owlett fund Vinyl 2000? Did Mr Owlett fund Mrs Owlett? The next question is that of causation: did Mr Owlett's funding cause PR to incur costs? I will take with that question subordinate questions as to whether the causation applied for a period only or for the entire period of the litigation, and whether all of the costs incurred by PR are to be treated in the same way.
29. I will then deal briefly, as we will see, with the question whether the defence and counterclaim in the PR action is bona fide. I will also deal with the question whether there was any other relevant impropriety, and I have in mind an allegation of non-disclosure of documents in the PR action. I will also deal briefly with the allegation made against Mr Owlett that he caused Vinyl 2000 to dissipate its assets, and comment on the evidence I have on that point.
30. When I deal with those matters, that will enable me to look very much more in the round, asking myself these questions. Is this case exceptional? Is it just to make the order which is sought? Is there any other reason which, as a matter of discretion, ought to persuade me to make the order or not to make the order?
31. Having set the scene in that way, I now deal with the first topic, i.e. that of control of the litigation.
32. I referred earlier to there being two actions: the share action and the PR action. This application is only in the PR action, but the share action and the PR action moved forward together and were the subject together of a single trial resulting in a single judgment, and some of the information I have about the share action throws light upon the questions I have to address in relation to the PR action.
33. In the share action the defendants were Mr and Mrs Owlett, and it is easy to find that Mr and Mrs Owlett controlled the defence of the share action. This is not a case of Mrs Owlett being a wholly uninvolved person. I feel sure that she was active and concerned and thoughtful about the way in which the matter should go forward. But if I had to say as between Mr and Mrs Owlett which of the two was likely to be the more dominant party in matters of business and in legal matters, I have no hesitation in saying that Mr Owlett would have been the more dominant of the two.
34. In the PR action Mr Owlett was not a party. The defendants were Vinyl 2000 and Mrs Owlett. I need therefore to investigate the issue of control of Vinyl 2000. As regards shares, Mr and Mrs Owlett's position was that they were 50% shareholders each in Vinyl 2000. They certainly conducted themselves on that basis and the decisions of Vinyl 2000 were taken on that basis, although now we have the result of the share action we can retrospectively see that the true legal position all along was that Mr Bulmer owned 50% of the shares of Vinyl 2000 and Mr and Mrs Owlett, or possibly Mr and Mrs Owlett and an employee Mr Whitting, between the two or three of them owned 50% of the shares of the company, Vinyl 2000. But that did not matter at the time. Mr and Mrs Owlett approached the matter on the basis that they between them owned the entire shareholding of Vinyl 2000. Mr and Mrs Owlett were both directors of Vinyl 2000 at all material times.
35. Again one can reach the clear conclusion that the decisions made on behalf of Vinyl 2000 as regards the litigation to which it was a defendant were made by Mr and Mrs Owlett and predominantly by Mr Owlett. Therefore, the control of the defence and counterclaim in the PR action was exercised by Mr and Mrs Owlett and predominantly Mr Owlett.
36. The next question I have to address is whether Mr Owlett stood to benefit from the defence and counterclaim. Again the conduct of the parties in relation to the share action throws light upon the decision in relation to the PR action. In the share action the claim was against Mr and Mrs Owlett. What was under attack was 50% or possibly more of the shareholding in the company. Vinyl 2000 had ceased trading by the time the proceedings started. Mr Owlett might have taken the view that he could allow the company to be wound up and he need not go to the expense of defending the share action. Mr Owlett did not take that view. He explained in the course of his submissions to me today that he wanted to defend and win the share action. If he also defended and won the PR action, then he would be able, he felt, to reactivate Vinyl 2000. That company was his livelihood. It paid him his salary. He obviously saw it as a benefit to him to defend his shareholding in the share action. If I had asked the question (which I do not have to ask) whether Mr Owlett defended the share action for his own personal benefit, there would be no hesitation in saying, "Of course, in his capacity as shareholder he saw the defence of that action as being for his personal benefit."
37. I now turn to the PR action, and I need, strictly, to consider what was happening in the PR action in three separate categories.
38. The first category concerns the defence of the claim brought by PR against Vinyl 2000. The second category is the counterclaim by Vinyl 2000 against PR. The third category is the defence of the claim by PR against Mrs Owlett.
39. As to the first of these, Vinyl 2000 wished to defeat PR's claim. Mr Owlett saw that as a benefit to Vinyl 2000 and, consistently with my reasoning in relation to the share action, the benefit to Vinyl 2000 amounted also to a benefit to him as a shareholder in that company.
40. As to the counterclaim in the PR action, the counterclaim was, in my judgment, principally being put forward by way of defence, the defence being set off. One can therefore treat that defence in the same way as the other defences. They were being run for the benefit of Vinyl 2000 and indirectly for the benefit of Mr Owlett as a shareholder. I am not sure I can go much further in saying that the counterclaim was perceived as being of benefit to Mr Owlett personally. I think it is likely that Vinyl 2000 and Mr Owlett did not expect to see very much, if anything, from the counterclaim. At the relevant time PR was the subject of a CVA, and although the matter has not been explored factually or legally at the hearing today, it may be that that CVA would have been a barrier to Vinyl 2000 recovering much, if anything, on a successful counterclaim.
41. It is pointed out that one part of the counterclaim was for £40,000 said to be due to Vinyl 2000 for Mr Owlett's own services. If that had succeeded, then, as a matter of company law, there would have to be some accounting between Vinyl 2000 and Mr Owlett. I am quite clear, however, that that was not regarded as a matter of much importance, perhaps for two reasons: (1) it was not envisaged that there would be a recovery on the counterclaim; and (2), more significantly, Vinyl 2000 was really Mr and Mrs Owlett's company and their livelihood. Whether the funds were in the company or in Mr and Mrs Owlett personally may have been a matter of lesser significance, as it so often is with family companies.
42. I turn then to the third category of claim in the PR action. This is the claim on the guarantee against Mrs Owlett. That was obviously a matter of great concern to Mrs Owlett. It was a matter of no less concern to Mr Owlett. It was obviously very upsetting and disturbing to both of them. Of course, in purely legal terms a judgment against Mrs Owlett would not be a judgment against Mr Owlett. It could be enforced against her assets but it could not be enforced against his assets. But her principal asset appears to have been the jointly owned matrimonial home and, in practice, enforcement against her share in the matrimonial home would have had an inevitable impact on Mr Owlett. So in that indirect way Mr Owlett was concerned to defend his wife, but also thereby to prevent harm to his own personal position.
43. Those are my findings on the possibility of benefit to Mr Owlett personally by reason of the defence and counterclaim in the PR action. I now turn to the question of funding.
44. The facts in relation to the funding are not completely straightforward, but it has been of great assistance to me to have a summary of those facts as they were presented in the skeleton argument of counsel for Mr Owlett prepared for the hearing in June of this year. I can take the matter very shortly in this judgment by saying that sums of money were raised from the interest of Mr and Mrs Owlett in the jointly owned matrimonial home. The burden of that fund raising was borne equally by Mr and Mrs Owlett. The first transaction was dated December 2001 and it was by way of a charge to secure payment of £50,000 in respect of legal costs. The second transaction was in June 2002. It will be remembered that the trial began in December 2002 and continued on a date or dates in 2003, resulting in a draft judgment in August 2003 and a handed down judgment in December 2003.
45. Taking those facts as to funding on their own, they threw up certain possibilities. Was it right to regard Mr Owlett as funding only himself and, therefore, not funding the company or Mrs Owlett? Was it right to regard Mr Owlett as funding himself and Mrs Owlett but not funding the company? Would that last point make a difference if it were established? Those questions, as it happens, do not need to be resolved, because I enquired of Mr Owlett in the course of his submissions, "Who were you funding?" and he made it clear that Mr and Mrs Owlett together were funding, in the PR action, the company and Mrs Owlett. It did not occur to him – this is not a criticism, it is entirely understandable and natural – to distinguish the separate interests of himself, Mrs Owlett and the company when he had to make his decision to raise money to deal with the defence and counterclaim in the PR action.
46. So the answer that comes is a relatively straightforward one: Mr and Mrs Owlett jointly were funding the company and Mrs Owlett, the two defendant parties in the PR action. I do not think it is right to say that funding only began at a point in time and only, therefore, consider a non-party costs order for part of the period during which legal costs would have been incurred. Nor do I think it right to say that Mrs Owlett severally funded half of the costs, so that during the time those costs were being expended PR was not being put to the burden of costs by reason of Mr Owlett's conduct. The corollary of that would be to say that Mr Owlett was then exclusively liable for the costs incurred by PR in the later period of time. The reason I do not take that view is that it seems to me to be quite artificial. Mr and Mrs Owlett jointly funded the defending parties throughout, and the order which I am being asked to make is rather in line with that. I am being asked to make an order that the defending parties and Mr Owlett be jointly and severally liable for the costs throughout, and it seems to me that, if all the other criteria are met, it is not right to make an order other than on the basis of joint and several liability throughout.
47. I now go to the question of causation. Having made the finding that Mr and Mrs Owlett funded the defence and counterclaim in the PR action, I do find that the running of the defence and counterclaim caused PR to incur the costs in bringing its claim to a successful conclusion. Whether or not causation is an essential matter that must be established, I find in this case that it has been established.
48. I will take stock at that point before I deal with other matters. I have now made my findings in relation to the control of the litigation, the benefit to Mr Owlett, the funding by Mr Owlett, and the causation of costs being incurred by PR. I have also referred to the established authorities. I have also made the point that, although this is a discretionary matter, I ought to exercise my discretion in accordance with established principle rather than do what strikes me personally as being fair in a particular case.
49. In accordance with established principle, my findings on the matters thus far all point in one direction. It is not a case of there being conflicting signals. They all go the same way, and the way in which they go is in favour of making an order against Mr Owlett.
50. Having reached that point, I think I can deal with other matters more shortly. The reason I do is that these other matters were highly contentious, involved a considerable amount of detail and, in some respects at least, it is not possible on a summary application of this kind to make definitive, certain, confident rulings. However, I will indicate the extent to which I can make findings and the extent to which I cannot make findings.
51. It was suggested to me that some of the defences and the counterclaim made by the defending parties in the PR action were very thin indeed and must have been understood to be very thin indeed, and in that way it was suggested that the defence and counterclaim could not be regarded as bona fides pursued. I am not prepared to make that finding. Whether the issues, when examined in an 11-day trial, turned out to be thin does not of itself establish a lack of bona fide. I do not regard them as put forward without bona fides. I do not regard them as knowingly spurious or knowingly speculative. I would not make an adverse finding against Mr Owlett in relation to that point.
52. It was also submitted in considerable detail and considerable force that the defending parties in the PR action had not disclosed all the documents they could have done, in particular in relation to invoices, and that, if they had disclosed those documents, time could have been saved and agreements might have been capable of being reached. I am not going to make a finding on that. I did not myself (as I have indicated) conduct the 11-day trial. I have not examined the disclosure which was given and the circumstances in which it was given. It is to be remembered that the judge at the trial did not go into matters of quantum in all respects but decided matters of principle. My suspicion is that there was some non-disclosure. It might even have been knowing non-disclosure, but I do not go so far as to say it was. It is possible there were some limited costs additionally incurred as a result of non-disclosure. I regard this in the round as being, at best, a make weight point. There may have been additional costs resulting from the non-disclosure which should be the subject of a special order, but, even so, I would not regard that as enough on its own to justify the order which is today sought, which is that Mr Owlett do become jointly and severally liable for all of the costs of the PR action.
53. The next point I deal with is the suggestion that over a period beginning in October or November 2000 Mr Owlett was responsible, possibly he and Mrs Owlett together were responsible, for transferring away substantial funds from Vinyl 2000 for the benefit of Mr and Mrs Owlett or one of them. The figure that was quoted in June of this year and quoted again today was £184,000. Certainly in June I regarded that as an important matter that needed to be investigated, indeed such that I could not hope to short circuit matters by deciding the case finally in June or July of this year. Indeed, when Lindsay J gave permission to appeal, he also had noted the dissipation of assets point as a matter that needed to be investigated, and that led him to grant permission to appeal.
54. The difficulty about this part of the case is that the present application is a summary application. A second difficulty is that PR itself says it does not have a complete picture of what has happened, and whilst it can identify its suspicions and the grounds for its suspicions, it does not pretend that it knows with certainty what the full facts are. In the Total Spares case Richards J referred to the difficulty of investigating such matters on a summary application. The case before him he regarded as straightforward. The case before me is not so straightforward. The way it looks to me at the moment on the inadequate material I have is that this is not a case of dissipation of assets and, in particular, it is not a case of dissipation of assets for the purpose of making Vinyl 2000 judgment proof. What, on the material I have seems to me to have happened is that Mr and Mrs Owlett continued to pay themselves salaries, initially at the rate of £39,000 per annum, later at a somewhat reduced rate, and they took a sum of money which might be £22,000 but could conceivably be £29,000 from the company over a period. It has not been argued before me whether that was something they were entitled to do, if that is all they did, and I am not going to make any findings about whether they were entitled to do it or not. It seems to me in the circumstances, having reached the findings which I have on the more conventional matters relevant to an application of this sort, that I will simply leave my discussion there without attempting to make findings on material that is not complete.
55. Having dealt with those matters which were contentious in that way, I now have to look at the matter in the round. I ask myself: is this case an exceptional one? Is it just to make the order sought? Are there any residual points on discretion that I should bear in mind? The word "exceptional" has perhaps been a badly chosen word in this context, because although the word exceptional is frequently used, the reported authorities, first of all, are generally examples of the jurisdiction being exercised and, secondly, they contain statements that one should not read too much into the word "exceptional". I refer in particular to paragraph 25 of Lord Brown's speech in the Dymocks case. where he says:

"Although costs orders against non-parties are to be regarded as "exceptional", exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such "exceptional" case is whether in all the circumstances it is just to make the order."

56. It could be said that there is nothing exceptional about this case. Vinyl 2000 was a little family company owned, run and directed by Mr and Mrs Owlett, and it is not at all exceptional for a director of such a company to fund the defence of such a company for his own benefit. That is not exceptional, because such a director is really equating the company with himself and, in my judgment, it is not unjust where the company's defence fails causing the opposing party to incur substantial costs for such a director to follow through the logic of his own thinking and be liable for the costs which have been incurred.
57. Again, there is nothing exceptional about a husband funding the defence of a wife, and as Coulson J (as he now is) in his decision makes clear, sometimes that would be treated as a case of pure funding. I do not regard this as a case of pure funding, because, as I have said, Mr Owlett had a quite clear personal benefit which he was seeking to secure by reason of his use of the jointly owned matrimonial home for the purpose of funding. So that is what I say about exceptional.
58. As to the justice of the result, I fear from Mr Owlett's point of view that, in the light of my findings previously in this judgment, all of the pointers go the same way that, in accordance with the established principle (and, I would add, the established practice shown in the cases), the order which is sought against him is one which it is conventionally treated as just to make. Sometimes litigants feel that making an order for costs against a party is rather kicking a party when it has failed, kicking a man when he is down; but that is not the sort of consideration that I can take into account in a jurisdiction of this kind. As I say, that observation is sometimes made in relation to orders against parties. The fact that it can be made here in relation to Mr Owlett, who is a non-party, does not seem to me to bear upon the decision that I should reach.
59. Finally, is there any other discretionary matter that should persuade me not to make the order which is sought? The answer is, I find none.
60. The overall result is that I regard this as a proper case, in accordance with established principle and practice, on the findings I have made, to make a non-party costs order against Mr Owlett. I will hear counsel as to any drafting that might be appropriate as regards the expression of such an order.
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