Pegler Ltd v Wang (UK) Ltd [2000] EWHC Technology 137

Wang Global sought permission to appeal against a costs order made against it as a non-party under section 51 of the Supreme Court Act 1981. The Court of Appeal granted permission, finding it arguable that the judge below had not properly applied legal principles when exercising his discretion on non-party costs.

Facts

Pegler Ltd brought an action against Wang (UK) Ltd regarding the assessment of damages, claiming nearly £23 million. Wang (UK) Ltd defended the action, and the claim was ultimately reduced to £9 million at trial. Wang Global BV, the parent company, had made loans to Wang (UK) Ltd to enable it to defend the proceedings. Following the judgment, a costs order was made against Wang Global as a non-party under section 51 of the Supreme Court Act 1981. Wang Global applied for permission to appeal this costs order.

Issues

Principal Legal Issue

Whether the trial judge correctly exercised his discretion in making a costs order against Wang Global as a non-party, particularly considering whether Wang Global was acting in the interests of Wang (UK) Ltd and its creditors rather than seeking to benefit itself.

Judgment

The Court of Appeal granted permission to appeal. Lord Justice Keene, giving the lead judgment, acknowledged the court’s general reluctance to interfere with a judge’s discretion on costs but found the appeal reasonably arguable.

“I can see that it is possible to contend successfully that Wang Global, in making the loans to Wang (UK), was acting properly in the interests of Wang (UK) and its creditors, rather than simply seeking to secure a benefit for itself.”

The court noted that defending the action had reduced the claim from £23 million to £9 million, and that the legal advice received beforehand had suggested an even lower figure. Lord Justice Keene observed:

“Although the award by the judge was a matter for his discretion, in my view it is arguable, and properly so, that that discretion was not exercised, as it should have been in accordance with the legal principles applicable in such a case, in the present matter.”

Legal Principles

The court referred to the case of Stocznia Gdanska SA v Latreefers (Court of Appeal, 9th February 2000) as authority for the proposition that when exercising discretion to award costs against a non-party under section 51, it is relevant to consider whether the non-party was acting in the interests of the defendant company and its creditors, rather than simply securing a benefit for itself.

Implications

This decision confirms that courts must carefully apply established legal principles when making costs orders against non-parties. The mere fact that a parent company funded litigation for a subsidiary does not automatically justify a costs order against the parent; the court must consider the purpose and effect of that funding, including whether it was designed to benefit the subsidiary and its creditors.

Verdict: Permission to appeal granted. Costs to be costs in the appeal.

Source: Pegler Ltd v Wang (UK) Ltd [2000] EWHC Technology 137