The Supreme Court has affirmed an order requiring the liquidator of Eteams International (in liquidation) to pay the costs of his appeal personally, and has clarified that he cannot use company assets to meet costs from either the Court of Appeal or Supreme Court appeal.
The ruling on costs, dated 18 February 2021, followed the Supreme Court’s dismissal in May 2020 of the liquidator’s appeal. That appeal was limited to the Court of Appeal’s direction that he personally pay the costs of the appeal to that court. The Supreme Court had upheld that direction and barred recourse to company assets for the Supreme Court appeal costs. The current ruling adds the same restriction in respect of the Court of Appeal costs.
The underlying proceedings concerned an agreement under which the bank acquired company debts. In June 2017, the High Court directed that the agreement was a valid purchase and did not constitute a registrable charge under section 99 of the Companies Act 1963. It also directed the liquidator to pay the bank proceeds collected on the debts and provide relevant documentation and information. The High Court awarded the bank its application costs. The Court of Appeal dismissed the liquidator’s appeal in May 2019 and ordered him personally to pay the appeal costs.
The Supreme Court said the costs dispute concerned section 280(1) of the 1963 Act and whether the proceedings should have been brought in the liquidator’s name rather than the company’s. It said the law required the proceedings to be brought in the liquidator’s name. The liquidator argued that the Court of Appeal had erred in making him personally liable for costs.
The Court accepted that it had not found the appeal frivolous, vexatious, or brought in bad faith or unreasonably. However, it had concluded that the liquidator’s argument on section 280(1) had no merit. The appeal proceeded despite clear contrary authorities and without convincing argument that they were wrong or distinguishable. The Court also said the liquidator had been on notice from the High Court stage that the bank intended to seek costs against him personally, so he was not prejudiced by not having been joined in that capacity.
The Court concluded that the general rule that costs follow the event applied. It affirmed the Court of Appeal’s order, added the restriction on using company assets to pay those costs, and removed any earlier stays or orders made to stay directions.