Mar 2016
BERMUDA
SUPREME COURT
COSTS – INDEMNITY COSTS – THIRD PARTY COSTS ORDER – DISCLOSURE OF UNIDENTIFIED LITIGATION FUNDERS – ORDER 11 RULE (1)(C) – JURISDICTION
This was a case which sought to ascertain whether a Defendant (“D1”) was entitled to costs on an indemnity basis from a Plaintiff that had brought unmeritorious litigation, and whether an interested third party, Mr. Memarian, should be liable for costs as a third party funder of the litigation. Kawaley CJ awarded indemnity costs on the basis that Mr. Memarian had incorporated the Plaintiff Company for the specific purpose of commencing the original unmeritorious litigation in order, the court inferred, to provide a judgment-proof special purpose vehicle for avoiding adverse cost orders.
Kawaley CJ found that proceedings had been commenced where no funding was available from the Plaintiff for meeting the costs of D1, and that in earlier, ex parte, proceedings where the Plaintiff secured an injunction against another (unrepresented) Defendant (D6) and leave to serve out on D1 and D6, Mr. Memarian gave an implied representation that he was willing to meet the Plaintiff’s financial obligations in relation to litigation generally. He found that if the Plaintiff had litigated in a manner designed to evade the Rules of Court, as the evidence suggested, it would amount to a misuse of the Court’s processes. When the hearing of D1’s costs application resumed nearly six weeks later, no further instructions had been given on the matter to the Plaintiff’s Counsel. Kawaley CJ therefore awarded costs to D1 on the indemnity basis because the Plaintiff had obtained and defended the, ex parte, order in a manifestly abusive fashion, in that the case was unmeritorious and that the Plaintiff itself had been specifically formed to pursue the present litigation under immunity from the costs regime under the Rules of the Supreme Court.