Commercial Court rules on third-party costs and freezing relief

Non-party cannot be held liable for third-party costs
Court grants Black Swan freezing relief

Recent cases out of the BVI Commercial Court deal with issues including third-party costs and the applicability of Black Swan freezing relief in support of foreign derivative claims.

Non-party cannot be held liable for third-party costs

The liquidator in an appointment of liquidator proceedings applied to the court for a costs order against a third-party objector, seeking the full costs of its application. The objector submitted that it was in fact a non-party and as such common law rules, as well as the Eastern Caribbean Supreme Court's Civil Procedure Rule 64.10, applied since non-party costs awards are exceptional in the territory.

Further, the party seeking the appointment of a liquidator had not joined the client, therefore it was a sole party in the application and should not be indemnified for its costs merely because the non-party's conduct within the proceedings was closely linked.

The objector submitted in the alternative, that the non-party could only be liable for costs insofar as it had added to the extra burden of costs. The court agreed and assessed the extra burden of costs to have been a de minimis amount incurred as a result of attendance on the day of the hearing. The applicant was seeking $180,000 and the court awarded $4,000 only.

The judgment is now an authority for the proposition that a non-party cannot be liable for costs in proceedings where it has not been joined – over which it had neither control nor influence – and which were not being conducted with its approval or for its benefit.

In this case the court was persuaded that the objector's involvement had little real impact, hence the minimal costs awarded. From a tactical point of view it helps greatly to know that as a third-party objector, one can arguably remain vigilant and serve an application and evidence later in the day only where strictly necessary and be insulated as a non-party knowing that the only costs one should be liable for would be those that added to the costs flowing from one's own application.

Court grants Black Swan freezing relief

The Commercial Court recently granted a Black Swan freezing injunction in support of a foreign claim in which part of the relief abroad was sought derivatively. This is believed to be the first example in the British Virgin Islands of the Black Swan jurisdiction being used to support a foreign derivative action.

For further information on this topic please contact Jonathan Addo, Phillip Kite, Claire Robey or Andrew Thorp at Harney Westwood & Riegels by telephone (+1 284 494 2233), fax (+1 284 494 3547) or email (jonathan.addo@harneys.com, phillip.kite@harneys.com, andrew.thorp@harneys.com or claire.robey@harneys.com).