6 December 2016Print This Post

The court will not be used as “weapon of war”, judge warns family in costs row

High Court: parties lost sight of the sensible way forward

High Court: parties lost sight of the sensible way forward

The modern court will not allow itself to be used as a “weapon of senseless war”, a judge has warned a family locked in a bitter costs dispute.

Catherine Newman QC, sitting as a deputy High Court judge, said the Kaneria respondents, including brothers Prakash and Kiranchandra, had gone “too far in seeking their pound of flesh” from another brother, Dilip.

She said they had “lost sight of the sensible way forward”, which was to “face up to the fact that they are the net debtor, not the net creditor” and implement a set-off between the value of Dilip’s shares in a family company and the costs he owes them following a failed legal action.

Ms Newman went on: “It is not the court’s job to assist one party in putting needless economic pressure on the other, which is what I judge is going on here.”

The judge said valuation of an “important asset” of the company, a central London hotel, should proceed with “all practicable speed and no party should have reason to delay it”.

Ms Newman did not set out the relationship between the parties, or the origin of the dispute, but at an earlier hearing in 2014, Mr Justice Nugee explained that the petitioner, Dilip, was a brother of respondents Prakash and Kiranchandra.

Nugee J said the other respondents were the brothers’ wives, their mother and the family company Guidezone Limited, which ran a hotel business. Dilip was formerly managing director of the company and ran the hotel but “in the light of differences between him and his brothers” resigned in 2010.

Dilip issued an unfair prejudice petition in 2013 on the grounds, among others, that he had an entitlement to further shares in the company which he had not received, and had been denied dividends on existing shares and excluded from the management of the company.

Delivering her judgment in Kaneria v Kaneria and others [2016] EWHC 2823 (Ch), Ms Newman said the petition was rejected by Martin Mann QC, sitting as a deputy High Court judge, who also held a costs hearing took place in July 2015.

He ordered Dilip to pay the costs of his petition and granted interim costs orders in favour of various respondents worth over £1.5m.

Ms Newman said Dilip had paid some of it, but £666,478 was outstanding, and that the only way he could afford to pay was through the sale of his shares.

“It is now clear, though previously it was only likely, that there is no doubt that the proceeds of sale will be more than adequate to meet his obligations”.

Ms Newman said the parties had agreed that separate hotel asset valuers should be appointed, with Dilip seeking a valuation of £6.6m and the respondents £4.4m.

She said the dispute, “between family members who have fallen out with one another”, had been described by the respondents in their skeleton argument “as being ‘at war’”.

Ms Newman said: “The modern court will not be used to be a weapon of senseless war”.

She said that whoever was at fault for the fact that, more than a year after the interim costs orders were made, the valuation and buy-out had still not concluded, it was “more to the disadvantage of the petitioner”.

The judge accused the respondents of “exploiting that advantage by refusing to make any payment on account to the petitioner which could wipe out his debt to them”.

She said it was “clear beyond doubt” that was going to be a set-off, “which will have a net result in favour of the petitioner”.

Ms Newman declined to make the order sought by the respondents that unless Dilip paid the outstanding amounts from the interim costs orders within a month, he should be debarred from the assessment procedure, and instead made the order for a stay of execution requested by Dilip.

By Nick Hilborne


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