Vickery, Trustee Of The Property Of Christopher Vickery (A Bankrupt) v Modern Security Systems Limited

A trustee in bankruptcy who elects to adopt an action vested in him may waive the procedural irregularity caused by the absence of a formal order substituting or joining him. By reviving or progressing the action, he places himself in the same position as a party and assumes liability for the whole costs of the failed action, including costs incurred before formal adoption. The jurisdiction does not depend on section 51 of the Supreme Court Act 1981. A trustee in bankruptcy is the true litigant in an adopted action, unlike a genuine non-party. Where an alleged lack of authority by solicitors is unfounded, the trustee may also be ordered to pay their costs.

The appellant trustee in bankruptcy continued an action brought by the bankrupt against the respondent company. The action had been commenced to recover payment for work and damages for repudiation. The trustee authorised solicitors to take procedural steps, including serving a notice to proceed, providing documents and issuing a summons for directions, but no formal order was obtained under Order 15, rule 7.

His Honour Judge Lloyd QC treated the action as carried on by the trustee, dismissed the claim for failure to comply with an unless order, and ordered the trustee to pay the respondent’s costs from 20 May 1993. He also ordered the trustee to pay the costs of the solicitors who had been joined to address an allegation that they acted without authority. The appeal concerned the jurisdiction to make those costs orders.

The appeal was dismissed with costs. Sir John Vinelott gave the first judgment, with whom Ward LJ agreed. Gibson LJ agreed in the result and gave additional reasons.

1. Adoption and costs liability. A trustee in bankruptcy may become liable for the costs of an action without a formal order making him a party. The trustee’s conduct in reviving and progressing the action, including serving a notice to proceed, providing a list of documents and issuing a summons for directions, amounted to an election to adopt the proceedings. That conduct waived the irregularity and placed the trustee in the same position as a party.
2. Extent and source of jurisdiction. School Board for London v Wall Brothers (1891) 8 Morrell 202 applied. It established that a bankruptcy trustee who adopted litigation could be liable for costs despite the absence of a formal order. The liability extended to the whole costs of the action, not merely costs incurred after adoption, following Borneman v Wilson L.R. 28 Ch. Div. 53. The court did not need to rely on Order 15, rule 7(2), or section 51 of the Supreme Court Act 1981. The earlier authority was not founded on section 5 of the Supreme Court of Judicature Act 1890.
3. Non-party costs principles. Gibson LJ additionally explained that the guidelines developed after Aiden Shipping Ltd v Interbulk Ltd [1986] 1 A.C. 965 concerned genuine non-parties. A trustee in bankruptcy is different because the cause of action vests in him and, after adoption, he is the true litigant. The trustee therefore had no special immunity from costs.
4. Solicitors’ costs. The finding that the solicitors had acted with the trustee’s authority was supported by the evidence. The order requiring the trustee to pay their costs of the respondent’s unsuccessful application was therefore within the judge’s discretion.

• Court of Appeal (Civil Division): Dismissed the appeal with costs and upheld the costs orders against the trustee.
• Official Referee, His Honour Judge Humphrey Lloyd QC: Treated the action as carried on by the trustee under Order 15, rule 7, dismissed the claim from 14 June 1994 for failure to comply with an unless order, and ordered the trustee to pay the respondent’s costs from 20 May 1993 and the solicitors’ costs of the related application.