The High Court ordered the liquidator of USIT Limited and USIT World plc to pay costs to respondents who had successfully resisted applications to restrict them as directors. The costs judgment did not revisit the refusal of restriction orders; it decided who should bear the costs of those applications.
Mr Justice Michael Peart said costs should generally follow the outcome under Order 99, rule 1 of the Rules of the Superior Courts. He found no reason to depart from that approach for the respondents who had applied for costs, despite the financial losses already suffered by creditors and the liquidator’s affidavit raising serious concerns.
Mairin Colleary had asked for her costs to be capped at €10,000 plus VAT, mindful of the effect on creditors. The judge awarded costs in that amount, plus VAT, against the liquidator.
Gerard Connolly was a financial director for a few months, from January to July 2001, and resigned on health grounds, the judgment said. The judge found that by April 2003 it was not obvious that an application should have been brought against him. He also noted that Connolly’s relatively brief involvement could have led the liquidator to conclude, after completing investigations, that Connolly had acted honestly and responsibly. Connolly was awarded costs against the liquidator.
The STA directors were also awarded their costs. Their directorships began after STA acquired the company amid financial difficulties and lasted until 15 February 2002, according to the judgment.
Gordon Colleary, although successful in the application against him, did not seek costs, citing the further burden on creditors. Angel Olivares, Lynn Millington-Wallace and Xavier Moreels were not legally represented at the hearing and made no costs applications. The judge made no costs order in their favour.
The judgment discussed earlier decisions on the interaction between the Companies Act and the court’s general costs discretion. It concluded that the court could award costs to a successful respondent against a liquidator who brought an unsuccessful restriction application. The liquidator was the applicant, and the costs would become part of the liquidation’s expenses, ultimately reducing funds otherwise available to creditors.