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In The Matter Of Capitol Films Ltd v Capitol Films Ltd (2010)

Summary

A petitioner by substitution in an unsuccessful winding-up petition against a company was entitled to an order that its costs of the winding-up petition would be paid as an expense in the subsequent administration of the company, but there was no good or sufficient reason for its costs to be paid in priority to the administrators' expenses and the cost of any security provided by the administrators.

Facts

The applicant petitioner (R) applied for two orders following an administration order in relation to the respondent company (C). R had become a petitioner by substitution in a winding-up petition against C, which was dismissed. C later successfully applied for an administration order in relation to itself. R applied for an order that (i) its costs of the winding-up petition be paid as an expense in the administration, and that (ii) pursuant to the Insolvency Rules 1986 r.2.67(3) its costs should be paid out of C's assets in priority to the administrators' expenses and the cost of any security provided by the administrators. C submitted that the court had no jurisdiction to make either of the orders.

Held

(1) One of the purposes for which rule 2.12(1)(e) permitted any person who had presented a petition for the winding-up of a company to appear at the hearing of an administration application was to enable that person to seek an order for the costs of that petition, which would ordinarily be dismissed at the hearing of the administration application, if an administration order was made. It followed that the phrase "the costs... of any person whose costs are allowed by the court" in r.2.12(3) comprehended not merely that person's costs of appearing at the hearing of an administration application, but that person's costs of any petition that was dismissed at the same time, where the court saw fit to make such an order. The remaining words of r.2.12(3) then automatically provided for such costs to be payable as an expense by the administration, and fell within the words "the costs of... any person appearing on the hearing of the application" in r.2.67(1)(c). It followed that as a matter of discretion, R's costs of prosecuting the petition after being substituted as petitioner ought to be payable as an expense of the administration. It was not necessary to set out the reasons for that conclusion since C's objection was purely in relation to jurisdiction, and it was concluded that the court did have the jurisdiction. (2) There was no good or sufficient reason to vary the priority in which the costs were to be paid, in what appeared to be the extremely unlikely event that the assets would otherwise be insufficient to satisfy that liability applying the priority afforded by r.2.67(1)(c).

Applications granted

Chancery Division
Briggs J
Judgment date
10 February 2010
References

LTL 16/2/2010 : [2010] EWHC 180 (Ch)