The High Court ordered James Glynn and Kevin McCabe to pay costs to three defendants after their claims were dismissed, and refused their request for an indemnity from two defendant companies.
In a judgment on costs delivered on 21 December 2007, Ms Justice Finlay Geoghegan applied the usual rule that costs follow the event. She had ruled on 5 October that the plaintiffs could not pursue their pleaded claims as a derivative action, which would have sought relief for alleged wrongs to the companies. The plaintiffs had also said they were no longer pursuing their personal claims. They accepted that their claims against all defendants had to be dismissed.
The first and second defendants, Johnathan Owen and Allan Owen, had been represented jointly until 20 November 2006 and later appeared in person. The court ordered the plaintiffs, jointly and severally, to pay those defendants’ costs up to that date. It also ordered payment of their expenses for defending the proceedings as lay litigants on later dates. The third defendant, Stephen Leyland, was awarded the costs of the proceedings against the plaintiffs jointly and severally.
Costs of hearings on applications for directions were ordered to be costs in the cause, in line with Commercial List practice. The plaintiffs’ motions for interlocutory injunctive relief, enforcement of a settlement and contempt had been brought but not heard; each had been adjourned to the substantive hearing. Their costs were also made costs in the cause. The costs and expenses were to be taxed if the parties could not agree their amount.
The fourth and fifth defendants, Fatstrippa Holdings Company and Fatstrippa Corporation Limited, sought limited costs for entering appearances and responding to the settlement motion. The judge made no costs order in their favour, finding no case for one, and said they must bear their own costs.
The plaintiffs also asked the companies to indemnify them against the costs orders. The judge agreed with principles stated in the English case Wallersteiner v Moir (No. 2), under which a shareholder may in certain circumstances obtain an indemnity for costs of a failed derivative action. She said that would require reasonable grounds for bringing the action and probably an early court filter. Here, the plaintiffs had not sought permission to proceed derivatively and had opposed having that entitlement decided as a preliminary issue. The court therefore refused the indemnity.