The High Court made no order as to costs after an examiner’s application to recover company assets was struck out when the examinership ended following an investor’s withdrawal.
Mr Justice Quinn’s judgment, delivered on 6 August 2021, concerned only who should pay the costs of the proceedings. It did not decide whether the transactions challenged by examiner Dessie Morrow were improper or amounted to fraud.
Morrow had applied under section 557 of the Companies Act 2014, seeking the return of assets or money connected with transactions carried out in August 2019. The respondents disputed his claims and argued the case could require cross-examination or a full hearing, making it difficult to conclude within the examinership’s statutory timeframe.
The application was issued on 14 February 2020. On 4 March, a prospective investor unexpectedly withdrew from negotiations to fund a proposed scheme of arrangement. Morrow then told the court he could not formulate proposals in time. On 6 March, the court lifted the companies’ protection, discharged him as examiner and ordered the companies wound up. A liquidator was appointed. Because Morrow was no longer examiner, the section 557 application was struck out.
The respondents sought their legal costs from Morrow personally. They said the application had been ambitious, began late in the examinership and exposed them to significant costs under tight deadlines. Morrow argued that the case had not been decided on its merits and that the investor’s withdrawal had made it impossible to continue. He maintained that any recovery would have benefited creditors.
Quinn J said no party had been entirely successful in the proceedings, as required for the usual costs rule under section 169 of the Legal Services Regulation Act 2015. He also said the case had not become moot in the strict sense: the underlying dispute remained unresolved, and the liquidator could decide whether to pursue a separate application under section 608.
In considering costs by analogy with cases about moot proceedings, the judge found that the investor’s withdrawal had led to the examinership’s termination and Morrow’s discharge. Although his decision to end the examinership was unilateral as between the parties, he had been compelled to act after the investor withdrew. Quinn J found no allegation that Morrow had breached his duties as examiner and said it would be inequitable to make him bear the respondents’ costs.
The court therefore made no order as to costs between Morrow and the respondents. It did not decide whether any costs incurred by an examiner could later qualify for indemnity under section 554.