The High Court has ruled that the Investor Compensation Company DAC (ICCL) must bear the costs of two representatives appointed in its dispute over potential claims to Custom House Capital client assets. The court’s decision concerned costs only; the underlying subrogation application remains to be heard.
In a judgment delivered on 30 April 2020, Ms Justice Pilkington considered whether the costs of Michael Nugent and Roger Day, appointed as *legitimi contradictores* to represent opposing interests, should be paid by ICCL or treated as costs of the liquidation of Custom House Capital Limited.
ICCL argued that the dispute belonged within the liquidation because it could affect how client assets are distributed. The official liquidator, Kieran Wallace, argued that ICCL had chosen to pursue the claim and that it was essentially a dispute between ICCL and clients whose assets might be affected. The liquidator did not wish to be a party to the subrogation application.
The judge said the costs issue was a discrete application and stressed that it was not a hearing of the subrogation claim itself. That claim concerns ICCL’s asserted right, under the Investor Compensation Act 1998, to take over certain rights of investors it has compensated. The court made no finding on whether ICCL is entitled to those rights or how any client assets should ultimately be distributed.
Ms Justice Pilkington acknowledged that the outcome of the future application could be relevant to the liquidation and the distribution of certain sums. But she said the initial dispute was between ICCL and the clients whose assets it sought to claim against. ICCL had decided to pursue the application with notice of the liquidator’s position, so she found it difficult to make a non-party bear the representatives’ costs through the liquidation.
The judge therefore directed that ICCL bear the costs of the two representatives. She said she would hear the parties on any consequential or other orders. The judgment does not specify what further orders, if any, were subsequently made.