The High Court has declared that a liquidator will be personally liable for any costs orders made against him in proceedings he brought over the affairs of two companies in creditors’ voluntary liquidation.
Mr Justice Dignam’s ruling on 16 May 2023 concerned a motion by seven respondents, referred to in the judgment as the moving parties. They sought a declaration about the liquidator’s liability for costs in his separate application concerning Ballylea Developments Limited and Dexbury Limited.
The underlying application, issued in March 2022, seeks relief under the Companies Act 2014 arising from the sale of Marine House, Clanwilliam Court, Clanwilliam Place, Dublin 2, and payments made to respondents. The liquidator’s affidavit alleged improper transfers and misfeasance, breach of duty and breach of trust. Those allegations were not determined by this judgment.
The moving parties had asked the liquidator to confirm that he would be personally responsible if costs were awarded against him. He declined to accept personal liability. Their motion asked for a declaration, not an order for security for costs.
The judge said the declaration would not decide whether costs should be awarded, or their amount. That remains for the judge hearing the underlying application, who may refuse costs or make a partial award. But because the liquidator brought the application in his own name, any costs order against him could only be made against him personally, rather than against the companies, the judgment said.
The court found a real and substantial issue requiring determination and said certainty about potential costs liability would help the parties make decisions about the litigation. It considered concerns that the declaration could hinder liquidators, operate as security for costs by stealth, or be unfair because of delay. The judge concluded that the declaration would not change the existing risk of personal liability, would not stay the proceedings, and would not determine whether costs should be awarded. He also found the delay less significant than it would be in a security-for-costs application.
The court therefore granted the declaration sought: the liquidator is personally liable for any costs orders made against him in the proceedings. The underlying claims and any eventual decision on costs remained unresolved by this judgment.