Court closes escape route for avoiding costs.

Companies that lose court cases can no longer escape having to pay costs by declaring themselves bankrupt or transferring their assets elsewhere, following a landmark case in the High Court.

A British plumbing business called Antares Ltd sued an Italian company called Antares SRL for breach of a franchise agreement. Shortly before the trial, the Italian firm transferred most of its assets to another company called Antares for Water and Fire (AWF). Then, after losing the case it agreed to be struck off the Italian Companies Register. That meant Antares Ltd in Britain was unable to recover the costs it had been awarded by the court.

It then decided to ask the court to rule that the third company (AWF), which had connections to Antares SRL, should be liable for the costs. Mr Justice Richards agreed that the transfer of assets had been done merely to prevent the British firm from being able to recover costs and damages. He then ruled that the third company, AWF, should pay those costs.

Gary Dickie a Partner at Andersons Solicitors comments “The judgment is an important development because in previous cases it had been considered that if costs were to be awarded against a third company in this way then it needed to be shown that such a company had caused those costs to have been incurred. Mr Richards said that causation will still be an important factor but cannot be considered to be a necessary pre-requisite in awarding costs against a third party”

Gary believes that the ruling is also important because it shows that courts are prepared to take steps to prevent a firm trying to thwart a judgment made against them. It is likely to prove very significant at a time when transferring assets from one company to another across national borders is becoming more commonplace.

Gary Dickie is a Partner at Andersons Solicitors in Nottingham. He can be contacted on gdickie@andersonsolicitors.co.uk or tel: 0115 988 6728.

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