Nihal Mohammed Kamal Brake v Duncan Kenric Swift (as trustee of the estates of Nihal Brake and Andrew Brake)
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 21 July 2020 |
| Neutral Citation | [2020] EWHC 1959 (Ch) |
| Date | 21 July 2020 |
| Court | Chancery Division |
| Docket Number | Case No: 166 and 167 of 2015 |
[2020] EWHC 1959 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND 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: 166 and 167 of 2015
Stephen Davies QC and Daisy Brown (instructed by Seddons LLP) for the Applicants
Andrew Sutcliffe QC and William Day (instructed by Stewarts Law LLP) for the Second Respondent
The First Respondent was not present or represented
Consequential matters 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
On 13 July 2020 I handed down judgment ( [2020] EWHC 1810 (Ch)) after the trial of the so-called “revesting issue” under section 283A of the Insolvency Act 1986, being the remaining part of what was called the Bankruptcy Application issued on 12 February 2019. Given the current circumstances, I invited written submissions on consequential matters, and have duly received and considered these. I set out my conclusions on the submissions below.
Costs
I deal first with the question of costs. Chedington seeks its costs (on the standard basis) on the basis that it was the successful party at trial and on the basis of the general rule in CPR rule 44.2(2)(a) that the unsuccessful party should pay the costs of the successful party. It asks for those costs to be the subject of detailed assessment, but seeks a reasonable payment on account of costs, in accordance with CPR rule 44.2(8). There was no costs budgeting in the present case, but Chedington has submitted a statement of costs in the sum of £548,268.95, and seeks £330,000 by way of interim payment, approximately 60% of the total.
Principle
The Brakes accept that, if it is established that Chedington has a legitimate interest in the cottage, Chedington was the successful party at the trial of the revesting issue and that the general rule applies. They also accept that in that case the costs should be assessed on the standard basis. But they object to an immediate payment on account. They also object to any quantification of such a payment on account on the basis of written submissions alone. I shall have to come back to these latter submissions.
Prematurity
However, the primary points taken by the Brakes are that the question of the costs of the trial should not be dealt with until (1) the costs of (a) the so-called “cottage application” brought by Mr Swift and dismissed on 3 March 2020 and (b) the costs of Chedington's application to amend dated 12 May 2020 but abandoned on the morning of the trial, are dealt with, and (2) the issue of Chedington's standing to contest the revesting issue is resolved, by awaiting the outcome of the appeal against the order dated 2 March 2020 (currently fixed for 13–14 October 2020).
As to (1)(a), the solicitors for Mr Swift wrote to the court on 28 May 2020 seeking a telephone hearing to deal with Mr Swift's liability for these costs. For some reason, this appears to have been overlooked by the court, for which I am sorry. It will be dealt with as soon as possible. This is an entirely extraneous matter, arising out of a separate application, and does not concern Chedington. I cannot treat it as a good reason for not dealing yet with the costs of the revesting trial. (In passing, I note that the Brakes appear not to have chased the court for a listing.) As to (1)(b), this is a relatively minor matter, and there is no issue as to liability between the parties. It is a question of quantification. But, as I understand it, the Brakes have not yet served a statement of costs. If they do, and the matter cannot be agreed, I can deal with the matter on paper, I hope expeditiously.
As to (2), the issue of Chedington's standing to contest the revesting issue was dealt with in my judgment given on 4 May 2020 ( [2020] EWHC 1071 (Ch)). Permission to appeal was refused by me on 7 May 2020 and then by Patten LJ in the Court of Appeal on 12 May 2020. That matter is therefore concluded, in favour of Chedington. I therefore cannot see the relevance of the appeal against the orders of 2 and 3 March 2020, due to be heard in October. If that appeal were successful, there would have to be a trial on the questions whether the disputed transactions should be set aside. But no such appeal can affect the decision at the revesting trial. Only an appeal against that decision can do that. And the fact that the Brakes seek to appeal against the revesting decision is not a good reason for postponing a decision on the costs of the trial.
The Brakes go on to say that
“If the Court is not minded to leave the issue of the costs of the Trial until after the conclusion of the appeal, it is submitted that the court should make an order to stay any detailed assessment Ordered, pursuant to CPR 47.2.
[…]
The costs of the detailed assessment proceedings and the Court time engaged will not be insignificant and could all be potentially wasted should the appeal be successful.”
For the reasons already given, I do not agree the costs of detailed assessment proceedings and court time engaged would be wasted if the appeal were allowed. Subject to any successful appeal of my decision, the section 283A issue is settled. The costs of a detailed assessment pursuant to any costs order that I make in relation to the trial of that issue will not be affected by a successful appeal against my order of 3 March 2020.
Accordingly, I can see no valid objection to my proceeding to deal with the costs of the trial at this stage, without waiting for future events. I turn therefore to the question of making an order in principle, and of ordering a payment on account of costs. As I have said, the Brakes accept in principle that the general costs rule applies, and that there should be an order that the Brakes pay Chedington's costs on the standard basis, to be subject to detailed assessment if not agreed.
Payment on account
But they do object to any order for a payment on account of costs. They say that the proceedings are not yet concluded within the meaning of CPR rule 47.1. Therefore, subject to any order of the court, the costs of the trial are not to be assessed yet. As to that, it seems to me that the proceedings known as the “Bankruptcy Application”, of which the revesting issue trial formed part, are now in substance concluded.
One part of the relief sought in the Bankruptcy Application ((h)) was dealt with by consent. Some parts were struck out by my order of 3 March 2020 (and the fact that there is currently an appeal on foot against the strike-out is irrelevant to the present question). Some were determined in the section 283A trial. The only outstanding head of relief (paragraph (g), relating to documents) was stayed by the order of 3 March 2020, on the basis that the relevant parties would deal with it between themselves. In my judgment, the court should treat these proceedings as concluded for the purposes of CPR rule 47.1.
The Brakes also say that the court has a discretion to have regard to future set-off rights when deciding whether to direct an assessment and/or a payment on account, and refer to the decision of Morgan J in Rawlinson & Hunter Trustees SA v ITG Ltd [2015] EWHC 1924 (Ch). That was a case where the judge had to decide whether to order an immediate detailed assessment of the costs of a particular application (in which the defendants had been successful) or to leave them to be dealt with at the conclusion of the whole proceedings (which was some way off). In the present case, however, the proceedings are or should be treated as concluded, and so that case is not of much assistance.
However, in case I am wrong, I will say this. In Rawlinson & Hunter there was evidence that the defendants were insolvent, and so the paying party (the claimant) argued that the costs should be dealt with at the conclusion of the whole proceedings because, if the...
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