BVI Case Notes, February 2015

Third party costs order: Does the Court have power to permit service of application out of the jurisdiction?

BVIHC (COM) 105OF2014: Hornbeam Corporation v Halliwel Assets Inc, Panikos Symeou, Marigold Trust Company Limited (18 December 2014)

Introduction

In circumstances where a defendant obtains a costs order against a company but it is well known that an individual who, though not a party to the proceedings, is the ultimate beneficial owner of the company and is the real party interested in the outcome of the suit or was the person responsible for bringing the proceedings, the defendant may want to make that individual liable for his costs. Can you obtain an order to serve this non-party out of the jurisdiction? This was the question the BVI Court addressed in this decision.

Facts

Both the claimant and second and third defendants were shareholders in the first defendant. The claimant initiated injunction proceedings against the 2nd and 3rd defendants to prevent them from convening an extraordinary general meeting. This injunction was eventually abandoned. The claimant also initiated proceedings to appoint a provisional liquidator over the first defendant but this was dismissed. The court ordered the claimant to pay the 2nd and 3rd defendants' costs of the injunction application and the provisional liquidator appointment application. Both the claimant and the 2nd and 3rd defendants initiated proceedings to join an individual who was resident abroad and was the ultimate beneficial owner of the claimant to be joined to the respective proceedings and to be made liable for the costs awarded against the claimant. The 2nd and 3rd defendants applied for an order seeking service out of the jurisdiction on the individual.

Outcome

The Court considered whether it had jurisdiction to allow service out of the jurisdiction on an individual who is not a party to the proceedings. The Court noted that the courts of England and Wales often exercise the jurisdiction to make non-parties liable for costs but noted that in the BVI, the Court does not have inherent power to grant permission to serve out. The claim must either fall within one of the gateways outlined in the Eastern Caribbean Civil Procedure Rules (CPR) or the power must be conferred by statute. The court noted that the only rule in the CPR which comes close to permitting service out on the basis of a statutory provision is rule 7.3(10) which permits service out of a claim which is made under an...