RFS Capital LLC & RFS Capital BV v MD7 Europe & Michael Gianni

Reference: 06/10/2009

Court: Queen's Bench Division

Judge: Master Eyre

Date of judgment: 6 Oct 2009

Summary: Slander - Malicious falsehood - Causing loss by unlawful means - Notice of discontinuance - Costs - Non-party liability for costs - s.51(3) Supreme Court Act 1981 - CPR 48.2

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Instructing Solicitors: EMW Picton Howell LLP for the Ds; Gibson & Co for the Cs


The parties were involved in the business of selling financing structures for the leasing of wireless masts used by mobile phone network providers. The Cs alleged that the Ds had caused them to lose £30m worth of business because D2, D1’s Chief Executive, was alleged to have made an oral statement to a potential client. The Ds denied making the statement. Seven months after commencing the claim the Cs served a Notice of Discontinuance. At this stage the Ds had incurred in excess of £72,000 in costs. It transpired that the Cs were insolvent and that shortly before the Notice of Discontinuance had been served, assets valued at US$3m had been withdrawn by Zedonix NV (the owner of the Cs) from them. Zedonix was owned by Raoul Witteveen (“RW”).


Whether Zedonix NV and RW ought to be made jointly and severally liable for the costs incurred by the Ds in defending the claim brought against them.


Zedonix NV and RW were jointly and severally liable for those costs because: RW caused the claim to be brought; he funded the litigation; any damages awarded as a result of it would have benefitted him; the action was “of the most speculative kind imagineable”; and it was RW who caused the action to be discontinued.


This is a rare example of a costs order being made against a non-party for the costs of a claim. Whilst the court has the power to make such orders they are difficult to secure because the party to whom costs are owed will rarely know or have evidence in regard to who, if anyone, had been directing and funding the litigation “behind the scenes”.