Raiders Of The Director's Wallet*

(*a cautionary tale for directors about non-party costs awards in litigation)

Housemaker Services Limited & another v Cole & another [2017] EWHC 924 (Ch)

Mr Wayne Williams ran a building company - he was the sole director. Over the period 2010 to 2011 his company sent three invoices to some customers for work carried out. The customers disputed the invoices and did not pay them. Nothing much unusual in this. Sometime later Mr Williams got his solicitors to start the process of recovering the invoiced costs from the customers, but unbeknownst to him and the solicitors, the company had been struck off the companies register in November 2014 and no longer existed. That is unusual, but not the main point of the story.

Once Mr Williams had become aware that his company had been struck off, he applied for it to be brought back from the dead and restored to the register. After that he had to apply to Court for an order to vary the limitation period (i.e. the time period by which a claim must be brought, or else it expires) to enable the company to be able to sue for its invoiced costs as by that time the claims for the unpaid invoices were very old. The company failed in that attempt and so the customers did not have to pay the invoices.

The customers also got an award of costs against the company, but were worried that it was unable to pay them. As a result they asked the Court to join Mr Williams to the case (which it did) so that the Court could then be asked to consider whether Mr Williams should also be made to pay costs to the customers.

Most people are unaware that a Court has the power to make an award of costs in litigation against anyone, but for company directors especially this can be a very unwelcome surprise as they can find themselves in the firing line without realising it. This wide power to award costs is used only in exceptional circumstances and there are various factors...