Carl Stuart Jackson, Greig Mitchell, Simon Bonney and Andrew Hosking (as Joint Liquidators of the Companies)

• Jurisdiction: British Virgin Islands
• Judge: Jack, J
• Judgment Date: 15 July 2020
• Judgment citation (vLex): [2020] ECSC J0715-2
• Docket Number: CLAIM NO. BVIHC (COM) No 120 of 2017
• Court: High Court (British Virgin Islands)
• Date: 15 July 2020

[2020] ECSC J0715-2

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(COMMERCIAL DIVISION)

CLAIM NO. BVIHC (COM) No 120 of 2017

In the Matter of Unicorn Worldwide Holdings Ltd (In Liquidation)

And in the Matter of Ballaugh Holdings Ltd (In Liquidation)

And in the Matter of Glen Moar Properties Ltd (In Liquidation)

And in the Matter of Sulby Investment Holidngs Ltd (In Liquidation)

And in the Matter of the Insolvency Act 2003

Between:

Carl Stuart Jackson, Greig Mitchell, Simon Bonney and Andrew Hosking (As Joint Liquidators of the Companies)

Applicants

Appearances:

Mr. Martin Pascoe QC, Ms. Blair Leahy QC and Mr. Andrew Willins of Appleby for the applicants

Mr. David Lord QC, Mr. Sebastian Kokelaar and Mr. Iain Tucker of Walkers for Phoenix Group Foundation and Minardi Investments Ltd

Dr. Gerard Smith in person

1 Jack, J [Ag.]: On 22 ^nd June 2020 I delivered an oral judgment in this matter whereby I sanctioned the entering by the joint liquidators into a settlement agreement with some, but not all, of the parties to a heavy action in the English Commercial Court due to be tried early next year. I gave directions for the exchange of skeleton arguments on costs and consequential matters.

2 Although the joint liquidators applied for sanction of the compromise agreement, they did not need to do so. It fell within their powers to enter the compromise agreement without sanction. However, because of the significant nature of the settlement they thought it appropriate to seek the Court's sanction. Two interested parties (one, a potential creditor), Phoenix Group Foundation (“Phoenix”) and Minardi Investments Ltd (“Minardi”), opposed the granting of sanction. Another interested party, Dr. Gerard Smith, appeared but played little rôle in the hearing. There are no applications for costs either by or against him, so I shall not consider his position further.

3 Phoenix and Minardi were unsuccessful in opposing the sanction of the settlement, but they did achieve some clarification of the order sought, so that it was clear their alleged proprietary interest in what has been called the “Arena Surplus” was not prejudicially affected.

4 I start by considering what the correct approach in considering costs should be. The liquidators' position is that this was contentious litigation between them on the one hand and Phoenix and Minardi on the other. Phoenix and Minardi should therefore pay the liquidators' costs, at least insofar as they were increased by Phoenix' and Minardi's appearance. Phoenix and Minardi by contrast submitted that the application before me was very similar to an application by trustees for directions as to how they should exercise their powers. On such applications the starting point was that the costs of all parties should come from the fund. Thus Phoenix' and Minardi's costs should be paid as an expense of the liquidations of the companies provided Phoenix and Minardi establish their right to the Arena Surplus or Minardi's proof of debts admitted in the liquidation of the Unicorn. (Phoenix and Minardi also seek costs on the indemnity basis, but that basis of assessment does not exist in the Eastern Caribbean.)

5 The CPR 64.6 provides:

“(1) Where the court, including the Court of Appeal, decides to make an order about the costs of any proceedings, the general rule is that it must order the unsuccessful party to pay the costs of the successful party.

(2) The court may however order a successful party to pay all or part of the costs of an unsuccessful party or may make no order as to costs.

(3) This rule gives the court power in particular to order a person to pay –

(a) costs from or up to a certain date only;

(b) costs relating only to a certain distinct part of the proceedings; or

(c) only a specified proportion of another person's costs.

(4) The court may not make an order under paragraph 3(a) or 3(b) unless it is satisfied that an order under paragraph 3(c) would not be more practicable.

(5) In deciding who should be liable to pay costs the court must have regard to all the circumstances

(6) In particular it must have regard to –

(a) the conduct of the parties both before and during the proceedings;

(b) the manner in which a party has pursued –

(i) a particular allegation;

(ii) a particular issue; or

(iii) the case;

(c) whether a party has succeeded on particular issues, even if the party has not been successful in the whole of the proceedings;

(d) whether it was reasonable for a party to –

(i) pursue a particular allegation; and/or

(ii) raise a particular issue; and

(e) whether the claimant gave reasonable notice of intention to issue a claim.”

6 Counsel for the liquidators put particular emphasis on Re Lehman Brothers International (Europe) 1 where Briggs J (as he then was) was dealing with an application in respect of which of various Lehman group companies were entitled to ownership of some securities. He summarised the parties' contentions on costs and the competing considerations as follows:

“3. For the Administrators, Mr Milligan QC described it as, in substance, commercial litigation between rival claimants to beneficial ownership of specific property (i.e. the Rascalled securities), in relation to which costs should follow the event, as in any other commercial litigation. Counsel for the affiliates all described it as being, in substance, a joint application by the various office-holders of insolvent companies within a common group to the appropriate forum for the resolution of difficult issues...