As we previously posted in July, 2007, a UK court assessed costs against insurance broker Horace Holman & Co. (“Horace”) in an action Horace brought against Equitas Ltd. (“Equitas”) which the Court found to be “largely fruitless.” The matter was recently brought back before the Court by Equitas, which sought post-judgment enforcement of the order, insofar as Horace has not made ordered payments. Horace responded that it was in liquidation proceedings, and Equitas responded by asserting that Horace’s liability is recoverable from Mr. Arwyn Powell, who was added as a party to the proceeding. Mr. Powell was Holman’s sole shareholder and managing director, and also shareholder and director of related companies, including Camomile Management Consulting Ltd. (“Camomile”), which was a creditor of Horace in the liquidation proceedings.
The Court rejected the enforcement orders sought by Equitas. First, the Court rejected the allegation that Horace’s liquidation was a previously devised plan to avoid any judgment in the event one was obtained against it, and that Equitas thus had no further rights against Horace than as creditor in the liquidation proceedings. The court rejected claims directly against Mr. Powell as sole shareholder of Horace, finding no ground for “piercing the corporate veil.” The Court also rejected the claim that Powell, as Camomile’s shareholder, stood to benefit from liquidation, and Camomile’s position as creditor in that proceeding. Finally, the Court found it dispositive that Equitas failed to warn Powell that it would seek to recover directly against him, prior to making its application for such recovery. Equitas Ltd. v. Horace Holman & Co., Ltd.  EWHC 2287 (Comm) (Oct. 3, 2008).