New guidance on personal costs liability of office-holders: Re Tariq Halal Meat (Ilford) Ltd [2020] EWHC 734 (Ch)

Chief Insolvency and Companies Court Judge Briggs handed down judgment on Friday addressing the circumstances where an insolvency practitioner should be made personally liable for the costs of a challenge to their adjudication on a proof of debt.

Having assessed authorities from Re Silver Valley Mines (1882) LR 21 Ch D 381 to Fielding and another v Hunt [2017] EWHC 406, Chief Judge Briggs stated that although the cases did not “speak with one voice when it comes to nomenclature”, nonetheless a principled approach emerged:

1. The starting point is Insolvency Rule 14.9(2), providing that an order should not ordinarily be made against an office holder personally.
2. Something more is required, which “relates to the conduct of the office holder”.
3. The degree of conduct deserving of a personal costs order will depend on the circumstances of each case. A mere mistake is unlikely to be sufficient. Acting in a neutral manner, on an appeal from a rejection of proof, is unlikely to be sufficient. Acting for a personal advantage in resisting an appeal is very likely to lead to a personal costs order. Such conduct would present a “special case” and a “good reason”, and may be characterised as “irrational conduct”, or “unreasonable conduct”.
4. Where the conduct complained of relates to a decision made on a proof of debt, the court will take account of the duties imposed upon an office holder to investigate the proof (i.e. to examine every proof, to consider the validity of the debt which is sought to be proved, and to require satisfactory evidence that the debt on which the proof is founded is a real debt, even where the proof is based on a judgment).

On the facts of the case, a personal costs order was not warranted. Thomas Robinson acted for the successful administrator, instructed by Pinsent Masons LLP.

The full judgment can be read here.