Costs Order Against Director

Secretary of State for Trade and Industry v Backhouse (CA LSG 1 March)

Two companies were ordered to be wound up, the judge having found that no proper books of account had been kept, that the businesses of the companies were intertwined with the defendant personally, who treated the companies’ moneys as his own and that a savings scheme marketed through the companies lacked intrinsic merit. After judgment the Secretary of State warned the defendant for the first time that he intended to apply for a costs order against him personally. The judge ordered the defendant to pay the costs personally because he had defended to protect his own reputation and position without seriously considering the interests of the companies or their creditors.