Coulter v Dorset Police

A second statutory demand concerning the same debt does not ordinarily justify repeating arguments which have already failed, or advancing arguments which could and should have been raised earlier. That case-management principle is not an estoppel or res judicata rule. Its purpose is to prevent unnecessary expense and duplication, while requiring the court to ask why genuinely new arguments were not previously advanced.

Where events make a substantive appeal unnecessary, an appellate court should not decide an academic point merely to determine costs. Costs incurred because both parties failed to invite an obvious adjournment may properly be disallowed.

The appellant applied under rule 6.4 of the Insolvency Rules 1986 to set aside a second statutory demand for costs owed to the Chief Constable. A first demand for the same debt had already been upheld, following a valid assignment of the debt to the then Chief Constable.

District Judge Field dismissed the second application, treating the appellant as unable to raise arguments and evidence which had been, or could have been, raised on the first application. Evans-Lombe J dismissed the appellant’s appeal, characterising the matter as res judicata. By the time of the present appeal, the first demand had been upheld and a bankruptcy petition was pending. The central issue was whether the court should decide the substantive point and whether the adverse costs orders should stand.

1. Disposition. The court made no order on the substantive issues. It set aside the costs orders made by District Judge Field and Evans-Lombe J, substituted no order as to the costs of those hearings, and made no order as to the costs of this appeal.

2. Chadwick LJ stated that the principle derived from the earlier bankruptcy authorities was not an estoppel, whether of the Henderson v Henderson type or res judicata. It was a procedural principle: it is wasteful to rehearse arguments already made and rejected; and, where a debtor seeks to advance a new argument, the court should ask why it was not advanced when it could and should have been.

3. The court did not determine how that principle applied to the second demand. The earlier first demand had already been upheld and the outstanding bankruptcy petition would require the judge hearing it to determine the extent to which new arguments or evidence could be raised. The court also expressed no view on whether the relevant considerations differed between a second-demand application and a bankruptcy-petition hearing.

4. It was therefore unnecessary, inappropriate and potentially dangerous to decide an abstract substantive question solely to alter costs. The sensible course before District Judge Field had been to adjourn the second-demand application pending the imminent appeal concerning the first demand. Neither party proposed that course. By the hearing before Evans-Lombe J, the first demand had been upheld and there was likewise no sensible reason to continue the substantive appeal. The costs had consequently been incurred unnecessarily.

• Court of Appeal (Civil Division): made no order on the substantive appeal, but set aside the costs orders below.
• High Court, Chancery Division (Evans-Lombe J): dismissed the appeal from the district judge’s order, treating the challenge to the second demand as barred by res judicata: [2005] BPIR 76.
• St Albans County Court (District Judge Field): dismissed the application to set aside the second statutory demand and awarded costs against the appellant.