Unlawful Detention Compensation Claim

Gulf Azov Shipping Co Ltd & Ors V Chief Humphrey Irikefe Idisi & Ors (2004)

Assisting a party to litigation with funding in order to instruct solicitors and to discharge costs liabilities, which allowed that party's case to continue to be heard, was not intervention in those proceedings that justified the making of a third party costs order.

Application by the claimants that the fourth and fifth defendants, ('E' and 'O' respectively), should pay a substantial part of X's costs of the action against the first three defendants pursuant to CPR 48.2 and s.51 Supreme Court Act 1981. X had issued proceedings in the UK against the first defendant ('Idisi') and two of his companies for damages for the unlawful detention of X's vessel and crew in Nigeria for almost two years in 1997. In breach of several orders made by the Nigerian courts, Idisi had caused the vessel and crew to be forcibly taken. X were successful in claiming judgment for over US $7 million.

X contended that E and O funded the first three defendants for specific periods during the litigation and that the first three defendants could not have continued their defence without this assistance. Accordingly X argued that the greater part of their costs in the litigation had arisen because of this funding and assistance.

The application sought to make E and O jointly and severally liable. E, a lawyer, contended that he had assisted Idisi with a foreign exchange swap of £56,000 and organised a loan to Idisi of US $350,000 which had been transferred through his own account but argued that he had not personally funded the litigation from his own assets.

O also denied his involvement in the funding of the litigation but admitted he had lent £50,000 to Idisi. Idisi had been involved in a contempt of court proceedings whereby sums due to be paid to his account were redirected to O's account to avoid sequestration. Idisi had identified E and O as two of three men who had funded his litigation.

HELD: (1) A funder to litigation was exposed to a costs order where he had controlled or directed the conduct of the litigation in a manner which had resulted in undue expense or hardship to the successful party.

(2) On the evidence there was no doubt that the sums were provided to Idisi from E's own resources. E was also closely involved with the conduct of Idisi's defence particularly during a critical hearing for Idisi. He had permitted his niece, one of his employees, to be actively involved in the conduct of the litigation. E was one of three men who assisted Idisi financially from June 1999 to February 2000.

(3) It was probable that E, an experienced lawyer, would also have given advice to Idisi as to how his litigation in England should be conducted. E must have realised that Idisi's conduct in Nigeria in detaining the vessel and crew was plainly unlawful and that he had no defence to the claim. It was unlikely that E would have gone to so much trouble without substantial benefit.

(4) O seemed to have colluded with Idisi with respect to Idisi's payments being paid into O's account. O was not only one of the three men funding Idisi's defence but he also collaborated in a serious contempt of court by Idisi by helping him put that money, which would otherwise have been sequestered, beyond the reach of the court. In so doing, he benefited himself through the payments to his account.

(5) E and O were not pure funders in the context of the test set out in Hamilton v Fayed & Ors (2002) 3 All ER 641 and were not therefore exempt from s.51 orders.

(6) There was no evidence that E and O acted in collusion. The costs orders should be several but not joint. Costs orders would be made against both E and O in equal amounts.

Application allowed.

Civil Procedure

CA (Lord Phillips of Worth Matravers MR, Tuckey LJ, Jacob LJ) 15/3/2004

LTL 15/3/2004 (Unreported elsewhere)

Document No.: AC0105695