Halabi v Gaymer: Non-Party Costs Against a Director [2026] EWHC 2269 (Ch)

Detailed Assessment — 2026-09-02

The High Court upheld a non-party costs order against a director who controlled company litigation for personal and family purposes. The required personal benefit need not be financial, but control or funding alone remains insufficient.

Overview

Date: 2 September 2026

Judge: Mr Justice Thompsell

Court: High Court of Justice, Chancery Division

Citation: [2026] EWHC 2269 (Ch)

Nature of Proceedings: Appeal against a non-party costs order made against the director and controller of an unsuccessful corporate litigant

Key Issues:

When a director who controls company litigation can be treated as the real party for costs purposes
Whether the personal benefit required under Goknur v Aytacli must be financial
Whether unchallenged witness evidence had to be accepted without cross-examination
The limited role of an appellate court when reviewing a discretionary costs order

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In Simon Halabi v Michael Gaymer [2026] EWHC 2269 (Ch), the High Court dismissed an appeal against a non-party costs order made under section 51 of the Senior Courts Act 1981 and CPR 46.2. Mr Justice Thompsell held that a director's personal benefit from company litigation need not be financial. Personal and family interests may be enough where the evidence shows that the director controlled the proceedings and used the company to gain access to justice for his own purposes.

The Facts

The underlying dispute concerned two golf courses, a clubhouse and ancillary buildings next to Mentmore Towers. Michael Gaymer owned the freehold. A long lease of the golf courses had moved through a succession of companies ultimately associated with trusts for Simon Halabi's family.

The land had particular personal importance to Mr Halabi and his family. He had lived at Mentmore Towers and his eldest son was buried there. In an earlier witness statement, Mr Halabi explained that a family tragedy had led to a decision to preserve the estate, including the golf courses, and keep Mentmore Towers as a family home. He also said that he would not allow the lease to be forfeited if the company holding it could not meet its financial obligations.

Four sets of proceedings followed, including proceedings about disrepair, forfeiture and relief from forfeiture. Mentmore Greenland Limited, the eventual tenant, was unsuccessful and costs orders remained unpaid. HHJ Murch, sitting in the County Court at Luton, concluded that Mr Halabi was the real party to the litigation, or at least a party in very important and critical respects, and ordered him to pay Mr Gaymer's costs as a non-party.

Mr Halabi appealed. He argued that the judge had wrongly treated him as having a financial interest in the company or its success, despite his evidence that he was not a beneficiary of the relevant trust. He also argued that the judge should not have rejected his unchallenged witness evidence that he had no personal interest in the litigation and did not stand to benefit from it.

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The Legal Framework

Section 51 gives the court a broad discretion to decide by whom litigation costs should be paid. CPR 46.2 supplies the procedural framework for an application against a non-party. The power is exceptional in the sense that it is exercised against someone who is not formally a party, but the central question remains whether it is just to make the order in the circumstances.

For directors and shareholders, control or funding of company litigation is not enough by itself. Drawing on Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Ticaret ve Sanayi AS v Aytacli [2021] 4 WLR 101, the court identified the usual gateway: the director must have sought a personal benefit from the company's conduct of the litigation, or have been guilty of serious impropriety or bad faith. A director who acts only to preserve the company or advance its legitimate interests will not ordinarily become personally liable for its costs.

The appeal also engaged the restraint required of an appellate court. Applying Re Sprintroom Ltd [2019] EWCA Civ 932, Thompsell J asked whether HHJ Murch's evaluation contained an identifiable legal or logical flaw, omitted a material factor, or reached a factual conclusion that was not reasonably open to him. The appeal was not an opportunity to conduct the balancing exercise afresh.

Key Holdings

1. Personal Benefit Is Not Confined to Financial Gain

The principal issue was whether Mr Halabi could be treated as the real party when he was not shown to hold a beneficial interest in Mentmore Greenland or the trust that owned it. The High Court held that the question was framed too narrowly.

At [66], Thompsell J returned to the language of Goknur. A company's position may be dictated by a benefit to its director:

> "whether financial, reputational or otherwise"

That formulation was consistent with Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17, which refers to a person controlling and supporting litigation with a view to obtaining a "personal benefit of some kind". It was also consistent with Re North West Holdings plc (in liquidation) [2001] EWCA Civ 441, where interests in preserving reputation, avoiding criminal proceedings and pursuing a political career were sufficient to show that the director was acting in his own interests.

The court therefore rejected the argument that only a collateral financial gain could qualify. A director's non-financial objective may open the section 51 gateway if, viewed realistically, it explains why the company adopted its stance and shows that the director was pursuing the litigation for personal purposes.

2. The Evidence Supported the Finding That Mr Halabi Was the Real Party

The High Court found ample evidence for HHJ Murch's conclusion. Mr Halabi was the common thread through the litigation. He was the only director who had played an active part, signed the relevant witness statements, made some payments personally, arranged payments through companies and appeared able to obtain funds from family trusts when required.

The significance of the land was also central. Mr Halabi's own earlier evidence connected the golf courses to the preservation of the wider family estate. His statement that he would not allow the lease to be forfeited was made before the non-party costs application and was therefore a particularly telling indication of his personal commitment to the outcome.

At [70] to [72], Thompsell J considered the evidence cumulatively. It included the succession of special purpose companies holding the lease, transactions that were difficult to explain as arm's length decisions in the interests of those companies, and Mr Halabi's personal and family reasons for delaying or preventing loss of the lease. Those matters justified treating him as someone who was:

> "not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes"

The fact that the formal corporate benefit belonged to Mentmore Greenland did not answer the broader factual question. The first instance judge was entitled to conclude that Mr Halabi was pursuing personal and family objectives through the corporate litigation.

3. A Bare Denial of Personal Interest Did Not Bind the Court

Mr Halabi relied on Griffiths v TUI (UK) Ltd [2025] AC 374. He argued that his evidence denying any personal interest or benefit had not been challenged in cross-examination and therefore should have been accepted.

The High Court rejected that argument. An application under section 51 is a request for the court to exercise a statutory discretion about the costs of proceedings, not the trial of a cause of action. Relying on Sebastian Holdings, Thompsell J noted that the ordinary rules of evidence do not apply in the same way when the court determines a non-party costs application at the conclusion of litigation.

That did not make fairness irrelevant. Cross-examination may be needed where a disputed issue is so important that it would be unjust or disproportionate to reject the evidence without testing it. This was not such a case. The assertion that Mr Halabi had no personal interest did not address the different ways in which the extensive evidence suggested that he did have such an interest.

At [60], the court treated the denial as analogous to an unsupported assertion of opinion:

> "These are circumstances where the Judge is entitled and indeed required to rely on his own evaluation of all of the evidence and is not bound by a bare assertion to the contrary in a witness statement, even if that witness statement has not been challenged in cross examination."

Mr Halabi knew the case he had to meet and had an opportunity to provide evidence supporting his denial. The judge was entitled to evaluate the whole record rather than allow a general statement to determine the application.

4. Appellate Restraint Was Decisive

HHJ Murch had dealt with numerous hearings across the linked proceedings. He had seen Mr Halabi's involvement over time and was much better placed than an appellate court to assess the practical reality of control, funding and purpose.

Thompsell J reviewed the reasoning closely but found no error of law, break in logic or unsustainable factual conclusion. The judge had correctly identified the special protection afforded to directors, correctly applied Goknur, and supported his conclusion by reference to the evidence. The appeal therefore failed at [73] and [76].

Mr Gaymer had also advanced a respondent's notice alleging abusive or improper conduct by Mr Halabi. The High Court did not decide those allegations. As the appeal already failed on the personal benefit ground, and the impropriety issues had received limited argument, the judge considered that they should not be determined without fuller attention. The decision should therefore not be presented as a finding of bad faith or serious impropriety.

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Practical Implications

For Costs Lawyers

1. Investigate non-financial benefit. A section 51 application against a director is not confined to proof of direct profit or beneficial ownership. Evidence of reputational, family or other personal objectives may establish that the director was the real party.

2. Build the evidential picture cumulatively. Control, funding and direct participation may not be enough separately. Their combined effect, together with contemporaneous statements and the commercial reality of connected transactions, can support the required inference.

3. Distinguish personal benefit from impropriety. They are alternative routes under the usual Goknur analysis. An applicant who proves that the director pursued a personal objective does not also have to prove bad faith. Equally, the article should not attribute impropriety where the court did not decide it.

4. Expect appellate restraint. A challenge to a non-party costs order must identify a genuine error in the exercise of discretion. Re-arguing the weight given to individual facts is unlikely to succeed where the first instance judge considered the evidence in the round.

5. Treat general denials with care. An untested statement that a director had no personal interest may carry little weight if it does not engage with the facts relied upon by the applicant. The evidence should explain the purpose of the litigation and the director's relationship to it in concrete terms.

For Litigation Practitioners

1. Corporate control is not automatic personal liability. Directors remain protected where they fund and control litigation for the company's legitimate purposes. The risk arises when the evidence shows that the company is being used to pursue the director's own objective.

2. Contemporaneous witness statements may become costs evidence. Statements made during the underlying litigation about personal commitment, funding or the importance of an asset can later be decisive on a non-party costs application.

3. Explain connected-company payments. Payments by a director, related companies or family trusts should have a clear commercial basis. A pattern of funds being made available whenever required may support an inference that the director, rather than the nominal corporate party, is driving the litigation.

4. Put forward the full answer at the application stage. A director opposing an order should address each alleged source of personal benefit and provide coherent evidence about ownership, funding, control and purpose. A bare denial may not require cross-examination before it is rejected.

5. Keep satellite litigation proportionate. The court recognised that cross-examination may sometimes be necessary, but it also stressed that section 51 applications should not become disproportionate satellite trials.

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Conclusion

Halabi v Gaymer confirms that the personal benefit relevant to a non-party costs order against a director is not limited to money. The court may look beyond formal ownership and ask why the company pursued the litigation, who controlled it, how it was funded and whose purposes it served.

The decision does not make directors personally liable merely because they control or support an unsuccessful company claim. Its importance lies in the distinction between legitimate corporate litigation and litigation pursued through a company for a director's personal, family, reputational or other non-financial objectives. On the evidence before HHJ Murch, that line had been crossed.

For costs practitioners, the case provides a practical evidential framework for both making and resisting section 51 applications. This analysis is published by Mackenzie Costs for practitioners dealing with non-party costs and corporate litigation.

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Citation: Simon Halabi v Michael Gaymer [2026] EWHC 2269 (Ch)

Full judgment available at: The National Archives

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