Nihal Mohammed Kamal Brake v Simon Lowes
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 26 May 2020 |
| Neutral Citation | [2020] EWHC 1324 (Ch) |
| Date | 26 May 2020 |
| Docket Number | Case No: 21 of 2019 and 166 and 167 of 2015 |
| Court | Chancery Division |
[2020] EWHC 1324 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY & COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: 21 of 2019 and 166 and 167 of 2015
1. In the Liquidation Application
In the Matter of Stay in Style (In Liquidation)
And in the Matter of the Insolvency Act 1986
2. In the Bankruptcy Application
In the Matter of Nihal Mohammed Kamal Brake
And in the Matter of Andrew Young Brake
And in the Matter of the Insolvency Act 1986
3. In the Cottage Application
In the Matter of Nihal Mohammed Kamal Brake
And in the Matter of Andrew Young Brake
And in the Matter of the Insolvency Act 1986
Stephen Davies QC and Daisy Brown (instructed by Seddons LLP) for Mr and Mrs Brake
Anna Lintner (instructed by Porter Dodson LLP) for the Liquidation Creditors
Andrew Sutcliffe QC and William Day (instructed by Stewarts Law LLP) for the Chedington Court Estate Ltd
Messrs Lowes, Toon and Swift and Mrs Brehme did not appear and were not represented at the original hearings, and did not participate in these paper applications
Applications dealt with on paper
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This judgment concerns paper applications made in respect of costs in three different but related insolvency proceedings, and dealt with on two separate occasions. The first occasion was on 3 March 2020, when after extempore judgments I made costs orders in principle, but left over some matters of detail to be dealt with on paper. The second occasion was on 23 March 2020 when I handed down a written judgment dealing with applications which arose out of my decisions on 3 March 2020. On that occasion, I invited submissions on the costs of the application so dealt with. I will deal with the applications in respect of each occasion separately.
THE ORDERS OF 3 MARCH 2020
On 3 March 2020, after dealing with a number of different interlocutory matters over that day and the previous one, I made various costs orders. Those that I am currently concerned with arise out of (1) the strike-out applications by Chedington of 30 January 2020 relating to the Liquidation Application and the Bankruptcy Application, and an alternative application for security for costs in the Liquidation Application (2) the application dated 4 February 2020 by the Brakes for summary judgment on the Bankruptcy Application, (3) the application dated 30 January 2020 by Chedington for disclosure against the Brakes, and (4) the application by the Brakes to strike out an application by Mr Swift called the Cottage Application.
As to (1) I ordered that (i) the Brakes and the Liquidation Creditors jointly and severally pay Chedington's costs of the application to strike out the Liquidation Application, and that the Liquidation creditors jointly and severally pay Chedington's costs of its alternative security for costs application, and that (ii) the Brakes pay Chedington's costs of the application to strike out (most of) the Bankruptcy Application. As to (2) I ordered that the Brakes pay Chedington's costs of the summary judgment application. As to (3) I ordered that Chedington pay the Brakes' costs of the disclosure application. As to (4) I ordered that Chedington pay 60% of the Brakes' costs of the application to strike out the Cottage Application. I gave directions for written submissions to be filed, and received them in accordance with the timetable (as extended), concluding on 26 March 2020. I was then very busy with other matters (including in particular urgent matters in this very litigation) which have prevented me from dealing with the costs until now. I am sorry for this delay.
In relation to the strike-out applications and the summary judgment application (nos (1) and (2) above), Chedington seeks a detailed assessment of its costs, coupled with a payment on account under CPR rule 44.2(8). This provides that:
“Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”
In relation to the costs awarded to them on the disclosure application and the Cottage Application (nos (3) and (4) above), the Brakes' primary case is that there should simply be a detailed assessment ordered. However, if I were against them on this, then they too seek a payment on account of their costs, and an order for such sum to be set off against the amount due to Chedington. I will come back to the position in relation to their costs in due course.
Payment on account – Chedington
The Brakes
The Brakes and the Liquidation Creditors resist the application for a payment on account to Chedington in principle. The Brakes do so for five reasons. First, they say that the strikeout applications were brought late. The Liquidation Application and the Bankruptcy Application were issued in February 2019. The application to strike out was issued only on 30 January 2020, so that significant costs were incurred in the meantime. In itself, in my judgment, that is not a good reason to refuse an interim payment on account, though it might affect the quantum. They are right that the application was made late. But, as is clear from the chronology, it followed the evidence of Mr Gostelow of 11 December 2019, which persuaded Chedington that the Brakes were using the liquidation creditors to protect their position on standing. Before then, there would have been little point in Chedington's challenging the Brakes' standing, as the Liquidation Creditors otherwise clearly had such standing. So I do not think it should even affect quantum.
The Brakes make a separate sub-point arising out of the fact that, in relation to an entirely different application concerning legal professional privilege, where they were successful against Chedington, the judge reserved the costs of that application pending final determination of another claim (the so-called “Documents Claim”) for which a trial has not yet been listed. They say that Chedington should not be permitted in these proceedings to claim an interim payment on account whilst in other proceedings no adverse costs order should be made pending final determination of other substantive issues. This is amplified in their written submission dated 26 March 2020, in reply to Chedington's submission of 19 March 2020.
In that submission they say that
“it is wrong now to direct any payments on account because the court has not yet had the opportunity to consider the alleged corruption and other wrongs caused to the Brakes. If they are correct, the court will then appreciate that Chedington's only function in this litigation (as the Court of Appeal found of the defendants in Motion v Moojen) is to cause delay and that a payment on account in such circumstances would not be appropriate. The Brakes' claim for payment of their own very substantial costs (c. £122,000) of successfully defending Chedington's LPP Application over a seven-day hearing within these proceedings (as defined by the order of Mr Jarvis QC dated 28 November 2019) were reserved by that order in recognition of the need to wait and see. The detailed assessment at the end of these proceedings will be conducted in respect of all such costs and it is the settled practice of the court that, in directing a payment on account, the court should take care not to order payment exceeding what the receiving party could reasonably hope to recover on the detailed assessment: and the benefit of any area of doubt about that was to be given to the paying party (see the reasoning of Rimer J in Gwembe Valley Developments Co Ltd v Koshy [2004] EWHC 2202 (Ch) at [43–44]).”
Motion v Moojen (1872) LR 14 Eq 202, referred to in the Brakes' submission, was a decision of Vice Chancellor Bacon (rather than, as suggested, the Court of Appeal) in a case where the plaintiff, an undischarged bankrupt, filed a bill alleging that he had been the victim of a fraudulent conspiracy between various persons, including his own solicitor, his assignee in bankruptcy, and his former partners in a distillery in Albany St, London NW, to deprive him of his interest in that business. This was a bill brought in the Court of Chancery before the Judicature Act, and therefore open to the old procedure of demurrer. In fact, none of the defendants actually demurred to the suit,...
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