Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Ticaret Ve Sanayi AS v Aytacli [2021] EWCA Civ 1037
The underlying litigation related to the quality of orange juice. Goknur (the appellant) rejected stock provided by Organic Village, it then issued proceedings and Organic Village counterclaimed. Hudson Morgan obtained a costs order against an insolvent company and Mr Aytacli was director of the Organic Village.
Hudson Morgan Williams made an application for a non-party costs order in the sum of £249,605.43 against Mr Aytacli. The point of law which aroses on appeal concerned the circumstances in which a director and shareholder of an insolvent company may be personally liable for some or all of that company’s costs liabilities incurred in unsuccessful litigation, pursuant to s.51 of the Senior Courts Act 1981. The particular question was whether it was enough to show that a director controlled and funded the company’s conduct of the litigation or whether, in order for a s.51 order to be made, it was also necessary to show either that he or she benefited (or sought to benefit) personally from that litigation, or acted in bad faith or was responsible for impropriety of some kind.
Court of Appeal gives guidance on when a non-party costs order will be made against directors or shareholders of an insolvent company engaged in litigation.
