Ms Farheen Qureshi (in her capacity as Liquidator of Edgware Constitutional Club Ltd) v Association of Conservative Clubs Ltd
| Jurisdiction | England & Wales |
| Judge | Sarah Worthington |
| Judgment Date | 09 May 2019 |
| Neutral Citation | [2019] EWHC 2194 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2017-002846 |
| Date | 09 May 2019 |
[2019] EWHC 2194 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building,
7 Rolls Building, Fetter Lane, London,
EC4A 1NL
Sarah Worthington, QC(Hon) sitting as a Deputy High Court Judge of the Chancery Division
Case No: HC-2017-002846
Mr M Bowmer (instructed by Kennedys Law LLP) appeared on behalf of the Claimant
Mr M Hubbard (instructed by Thomson Snell & Passmore LLP) appeared on behalf of the Defendant
APPROVED JUDGMENT
(ON COSTS)
Sarah Worthington QC(Hon) sitting as a Deputy High Court Judge:
On 9 May 2019, at the end of oral hearings to deal with the consequential matters raised by my judgment in the substantive case, I ordered that the Defendant pay the Claimant her costs of the claim on the standard basis, such costs to be the subject to a detailed assessment if not agreed, and further that the Defendant pay the Claimant by 4.00pm on 30 May 2019 the sum of £60,000 on account of those costs.
I reached that conclusion after reading written submissions from both the Claimant and the Defendant, and considering their elaboration in extended argument before me. Given the lateness of the hour, I asked the parties if they wished me simply to state my conclusions on costs or if they wished to have a written judgment setting out the reasons for those conclusions. They indicated their preference for the former, and that is what I did. By implication, it is clear I had been persuaded for the most part by the arguments of counsel for the Claimant and his responses to my questions in court, and less by counsel for the Defendant.
Some time later I was sent a transcript of my brief oral statement of my conclusions on costs by way of draft judgment for approval. In the circumstances, it seems more useful and appropriate to set out in summary form the key reasons underpinning my conclusion, rather than simply restate the order I made as to costs, the details of which already appear clearly in the sealed copy of the Order of 10 May 2019.
The context is straightforward, and I repeat it here by way of essential background. The Claimant Liquidator had sought declarations as to the legality of certain past and proposed distributions of the assets of the Edgware Constitutional Club Limited (the Club) on a members' voluntary winding up, and in particular sought confirmation that those assets should be paid to the members subject to payment of the liquidator's proper expenses.
This was contested by the Defendant Association of Conservative Clubs Limited (the Defendant) on the basis that the Club was not properly in liquidation, so no assets could lawfully have been paid to the Club's members under the Club's own Rules, or, alternatively, that even if the Club was in liquidation, its surplus assets should have been paid to the Association under the Club's Rules.
In a judgment handed down on 9 May 2019 I rejected both limbs of the Defendant's arguments and granted the orders sought by the Claimant on the basis that:
(i) the Insolvency Act 1986 s 107 was applicable on this winding up, so any surplus should be distributed to members “unless the articles otherwise provide”. The Club's Rules did not “otherwise provide”, since in this respect Rule 74 only provided that “ except on the dissolution or winding up” (emphasis added), no surplus should be distributed to members: see in particular Re Merchant Navy Supply Assoc [1947] 1 All ER 894.
(ii) The Club was in liquidation, despite any procedural irregularities in entering into that process, applying Browne v La Trinidad (1887) 37 ChD 1.
The general rule is that costs follow the event. If that rule is to apply in this context, it is plain that the Claimant has won and should be entitled to her costs from the Defendant. This is what I ordered.
By contrast, the Defendant argued that the costs of both parties (i.e. including the costs of the Defendant as losing party) should be regarded as proper costs in the liquidation, and so paid out of the Club's funds as an expense of the liquidation....
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