England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MR REGISTRAR JONES
IN BANKRUPTCY
RE: JONATHAN CHIAM ELICHAOFF
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
AND IN THE MATTER OF THE MATRIMONIAL CAUSES ACT 1973

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		7 March 2017

Robin Dicker QC :

1. This judgment deals with costs and other consequential issues following the judgment which I handed down on 25 November 2016.
2. The effect of my judgment was that I dismissed both the Trustee's renewed application for permission to appeal against the order of Mr Registrar Jones striking out his claim for a lump sum or a property adjustment order under ss.23 and 24 of the Matrimonial Causes Act 1973 (the "1973 Act") and Ms Woodall's cross-application to set aside Morgan J's order in so far as it gave the Trustee permission to appeal against the decision striking out his claim that the payments were transactions at an undervalue pursuant to s.399 of the Insolvency Act 1986 (the "1986 Act") and against the order for costs.
3. At the same time as handing down judgment I adjourned the issue of costs and any other consequential issues to a date to be arranged and directed that an agreed draft minute of order be lodged or skeleton arguments be exchanged and filed on such issues by 9 December 2016, the parties sensibly indicating that, to avoid having to incur yet further costs, any decision could be made on paper. Both parties subsequently served skeleton arguments in accordance with my directions and, neither party having sought to serve a reply skeleton argument or requested a further oral hearing, this judgment contains my ruling on such issues.

Trustee's renewed application for permission to appeal

4. The first issue concerns the costs of the Trustee's renewed application for permission to appeal.
5. The Trustee submits that there should be no order as to costs in relation to his renewed application for permission to appeal. He refers to paragraph 8.1 of CPR PD 52B, submitting that the general rule is that a respondent need not attend an application for permission to appeal and, if they do so, they will not be awarded their costs. He submits that there is no reason why the general rule should not apply in this case.
6. Ms Woodall accepts that it is unusual for a successful respondent to be awarded their costs of attending such a hearing. She submits, however, that the costs nevertheless remain at the discretion of the court and that, in accordance with paragraph 8.1(d), such an order can be made if "the court considers it just, in all the circumstances" to do so.
7. She also refers, by way of broad analogy, to CPR PD 54A at paragraph 8.6, in the slightly different context of an oral hearing for permission for judicial review, where the court will not generally make an order for costs against the claimant, but may do so in exceptional circumstances. In Mount Cook Land Ltd v Westminster City Council [2003] EWCA Civ 1346 Auld LJ at [76] gave examples of features which may amount to such circumstances, including the hopelessness of the claim, the persistence in it by the claimant after having been alerted to the facts and/or law demonstrating its hopelessness and whether, as a result of the deployment of full argument, the unsuccessful claimant has had, in effect, the advantage of an early substantive hearing of the claim.
8. The question therefore is whether, although a successful respondent need not attend an application for permission to appeal and, if they do so, will generally not be awarded their costs, nevertheless in this case it would be just in all the circumstances to make a different order.
9. I consider that it would be just in the present case to make a different order. It is correct that the Trustee's claim had already been struck out by Mr Registrar Jones and that permission to appeal had been refused by Morgan J on paper. Nevertheless, I do not consider that, in the particular circumstances and bearing in mind the history of this case, it was unreasonable of Ms Woodall to appear on the renewed application or that it would be just to require her to have done so at her own expense.
10. In reaching this conclusion I would emphasise, in particular, the following factors which I have taken into account:

(1) As I said in paragraph 12 of my judgment, it was, in my view, a surprising suggestion that a trustee in bankruptcy was entitled, after the death of the bankrupt, to apply for an order for financial relief against the surviving party to the marriage, for the benefit of the bankrupt's creditors.

(2) The potential difficulties with such a claim were clearly identified to the Trustee, by those acting for Ms Woodall, from a very early stage of the proceedings, including reference to the relevant authorities. They were not, as far as I can see, ever adequately answered by the Trustee, those advising him indicating to Ms Woodall that, in their view, there was no benefit litigating the claim in correspondence. Ms Woodall can, in my view, be excused if, prior to the hearing, she remained unclear how the Trustee proposed to meet the difficulties that he faced.

(3) The effect of Ms Woodall's involvement was that I heard full argument and the Trustee had, in effect, the benefit of an early substantive hearing of this part of his claim. In this context, Ms Woodall's submissions were of assistance in ensuring that, although dealing with an application in the bankruptcy proceedings, the court was aware of the full extent of the potential issues which might arise, so far as a claim by a trustee under ss.23 and 24 of the 1973 Act was concerned, and the authorities which were relevant to those issues.

11. Ms Woodall asks for her costs of appearing on the Trustee's renewed application for permission to be assessed in the sum of up to £5,000, on the basis that this was the fixed fee for attendance, skeleton argument and preparation for the entire hearing.
12. It would not, in my view, be appropriate to award Ms Woodall the entire £5,000. Part of that sum was incurred in respect of her cross-application which I consider separately below. In the absence of any suggested apportionment, in my view the sum of £3,750 would more accurately reflect her costs of appearing on the Trustee's application and I summarily assess such costs in that amount.

Ms Woodall's cross-application

13. The second issue concerns the costs of Ms Woodall's cross-application to set aside Morgan J's order in so far as it gave the Trustee permission to appeal against the decision striking out his claim that the payments were transactions at an undervalue pursuant to s.399 of the 1986 Act and against the order for costs.
14. The Trustee contends that Ms Woodall should pay his costs referable to Ms Woodall's cross-application, on the basis that the cross-application failed.
15. Ms Woodall submits that, although the application failed, there should be no order as to costs in this respect or that costs should be in the appeal. She submits, amongst other things, that the cross-application would not have been made had the Trustee not renewed his application for permission, that the application was justified in the light of the shortcomings in the information provided to Morgan J and that in any event the additional costs to the Trustee of the cross-application are likely to have been minimal.
16. I referred to the authorities dealing with applications for reconsideration of an order giving permission to appeal in my earlier judgment. Those authorities stress that practitioners should think twice before launching such applications, which are likely to result in a misuse of the court's resources and a waste of costs.
17. Ms Woodall's cross-application having failed, in my view the appropriate order is that she pays the Trustee's costs of that application. Although I referred in my judgment to certain aspects of the Trustee's application which I regarded as unfortunate, such matters are not such as would, in my view, justify either of the orders suggested by Ms Woodall in the present case and the need to discourage parties from making such applications provides an additional reason why such orders would not be appropriate.
18. The Trustee has not sought to suggest a figure for his costs of the cross-application in his skeleton argument. The skeleton argument does, however, attach a statement of costs, which shows solicitors' costs of £5,265.00 and counsel's fees of £1,750.00, making a total of £8,418.00. That statement is, however, described simply as being a statement of costs for the hearing in the period 2 to 4 November 2016 and does not state that it is limited solely to the costs of the cross-application nor, even if that was the case, does it explain the basis upon which such costs have been apportioned.
19. In my view, it would be appropriate, in all the circumstances, to order Ms Woodall to pay the Trustee £1,250 in respect of the costs of her cross-application. That sum corresponds to the amount deducted from Ms Woodall's total costs in the context of the costs of the Trustee's renewed application for permission, reflects the extent to which the cross-application occupied the court and, whatever may be the effect of the schedule of costs, is a fair sum to order to be paid, and I summarily assess such costs in that amount.

One further matter

20. There is one potentially connected matter that I should briefly mention. It appears that Trustee has commenced and pursued these proceedings with the benefit of a conditional fee agreement and after the event insurance. Ms Woodall contends that such agreements are contrary to s.58A of the Courts and Legal Services Act 1990 on the basis that they relate to proceedings under the 1973 Act. I have not been provided with copies of either agreement. In my view this is not a matter that it is necessary or appropriate for me to deal with in this judgment. The effect of my decision is that the Trustee's claims under ss.23 and 24 of the 1973 Act remain struck out and that the Trustee is personally liable to pay Ms Woodall £2,500 in respect of her costs of the hearing. The Trustee's potentially surviving substantive claims, which Ms Woodall still needs to face, are claims in the bankruptcy for declarations that the payments made by the bankrupt to Ms Woodall totalling some £40,000 were transactions at an undervalue pursuant to s.339 of the 1986 Act alternatively voidable preferences pursuant to s.340 of that Act.

Conclusions and orders

21. Accordingly, I order that:

(1) The Trustee's renewed application for permission to appeal against the decision of Mr Registrar Jones is dismissed.

(2) Ms Woodall's cross-application is dismissed.

(3) The Trustee do pay Ms Woodall £2,500 in respect of the costs of and incidental to the hearing, which sum is to be paid within 14 days of the date of this judgment.

22. I will ask the parties to draw up a minute of order.