Bank of India v Morris & Ors

After dismissing an appeal and cross-appeal, the Court of Appeal may make a percentage costs order reflecting unsuccessful issues, settled issues and unsuccessful procedural applications. Here, it ordered payment of 80 per cent of the liquidators’ appeal costs.

A proposed appeal may raise an interesting or potentially important question, including attribution of knowledge under section 213 of the Insolvency Act 1986, yet remain unsuitable for permission from the Court of Appeal. The higher appellate court may decide whether to entertain it. The court may also order an interim payment on account of costs while allowing written submissions on the amount.

The judgment followed the Court of Appeal’s earlier judgment dismissing the Bank of India’s appeal and the liquidators’ cross-appeal from the High Court, Chancery Division, before Mr Justice Patten. The court was required to determine the appropriate costs order, including the effect of unsuccessful or abandoned issues and an unsuccessful amendment application.

The Bank also sought permission to appeal to the House of Lords, relying on the alleged public importance of questions concerning attribution of knowledge under section 213 of the Insolvency Act 1986 and the application of the principle in Meridian Global Funds Management Asia Limited v Securities Commission.

The appeal and cross-appeal had been dismissed. The court then determined consequential costs, permission to appeal and an interim payment.

1. Costs. The court considered it appropriate to make a percentage order rather than require payment of the liquidators’ full costs. It took account of three matters: the parties’ settled appeal and cross-appeal concerning quantum, the liquidators’ unsuccessful points concerning the knowledge of Mr Shukla and Mr Vaghul, and the liquidators’ unsuccessful application to amend the pleadings by introducing vicarious liability. The Bank was ordered to pay 80 per cent of the liquidators’ costs of the appeal.
2. Permission to appeal. The Bank argued that the case raised a question of public importance concerning attribution of knowledge to companies under section 213 of the Insolvency Act 1986. It also alleged that the Court of Appeal had misapplied the general principle attributed to Lord Hoffmann in Meridian Global Funds Management Asia Limited v Securities Commission. The court accepted that the point was interesting and potentially important, but concluded that this was not an appropriate case in which the Court of Appeal should grant permission. The Bank had failed at first instance and unanimously on the appeal. The court considered that the House of Lords should decide whether to entertain any further appeal. Permission was refused.
3. Interim payment. The Bank was ordered to pay £100,000 within 28 days on account of the liquidators’ appeal costs. During that period, the Bank could make written submissions challenging the amount, and the court reserved power to substitute a different figure if fair.

1. Court of Appeal (Civil Division): the appeal and cross-appeal were dismissed. The Bank was ordered to pay 80 per cent of the liquidators’ appeal costs, permission to appeal to the House of Lords was refused, and an interim payment of £100,000 was ordered.
2. High Court, Chancery Division: appeal from the judgment of Mr Justice Patten. The citation and precise order are not stated in the judgment.