In May 2010 a claim was brought by the seller of a business against its purchasers. Shortly before trial the 1st Defendant went into voluntary liquidation and the 2nd and 3rd Defendants (who were directors of the 1st Defendant) then acted in person until they instructed new solicitors very shortly before the trial. Prior to the liquidation the same solicitors had acted for all three Defendants. The Claimant was successful in its claim against the 2nd and 3rd Defendants, the claim against the 1st Defendant being voided as a result of its voluntary liquidation.
The Claimants sought recovery of all their costs against all three Defendants as Directors.
The conduct of the 2nd and 3rd Defendants as directors of the 1st Defendant was such that the court made them personally liable for costs. Even though they were only directors of the 1st Defendant.
Points of significance:-
1. Just because you are a Director you cannot escape liability if you behave sufficiently badly to remove yourself from corporate protection.
2. If a Director does not reasonably believe that defending a claim on behalf of a company is in the best interest of that company, he may be liable for costs if he is responsible for filing a Defence on its behalf.
Wilmots Litigation – Solicitors for the Claimants