This article by Benjamin Williams was originally published in Chambers Client Report in March 2006.
“Complex corporate structures and the doctrine of limited liability and the corporate veil have long led to problems in recovering costs in some commercial cases. An insolvent company, for example, might defend proceedings which were in fact funded by distinctly solvent directors (the problem is less severe, although still real, with corporate claimants thanks to the availability of security for costs). In general, however, the courts’ respect for the principle in Salamon v Salamon & Co Ltd insulated such directors from any adverse award of costs.
Recent cases, however, show a much greater willingness to make orders against non-parties who fund litigation, even if this necessitates some lifting of the corporate veil…”