Hayes v Hayes

A costs order remains effective and enforceable unless it has been set aside or otherwise discharged. Later amendment of the pleadings does not retrospectively invalidate an order, particularly where the order arose from interlocutory conduct rather than the underlying merits. A settlement with a trustee in bankruptcy affects only property or claims within its terms. Where costs orders did not vest in, or were not claimed by, the trustee under Insolvency Act 1986, the settlement does not transfer or release the judgment creditor’s entitlement to enforce them.

The appellant challenged the dismissal of her application to set aside a statutory demand served by her former husband. The demand relied on several unpaid costs orders made in earlier proceedings. Permission to appeal was limited to whether a settlement involving the trustee in bankruptcy of the respondent affected the costs orders, and whether the fact that some orders preceded amendments to the pleadings altered their enforceability. The court also considered whether the appeal should be dismissed for procedural default, but elected to determine the permitted grounds on their merits.

1. Appeal dismissed. The court relieved the appellant from sanctions and treated the appeal as effective, but found no merit in the permitted grounds.
2. The settlement between the appellant and the respondent’s trustee in bankruptcy did not affect the costs orders. The respondent was not a party to the settlement. The agreement concerned claims and damages dealt with by the trustee, including damages held on trust for the respondent, but did not include the benefit of the costs orders.
3. Under section 307 of the Insolvency Act 1986, the trustee’s notice claimed specified after-acquired property. It did not claim the benefit of the costs orders, which had not vested in the trustee. The costs orders therefore remained vested in the respondent and continued to be enforceable.
4. The later settlement and its implementation did not transfer, release or otherwise impair the respondent’s entitlement to enforce those orders. The court proceeded on the basis that the orders remained unpaid and had not been set aside.
5. The amendment of the pleadings in 2011 did not undermine the earlier orders. An order that has been made and remains outstanding continues to have effect. This was especially so because the relevant costs orders arose from interlocutory applications and procedural steps, rather than depending on the ultimate merits of the underlying claims.
6. The court noted that the permission order appeared principally to concern costs orders in the harassment proceedings, although the statutory demand also included other sums. Those other matters had not been argued independently. The appeal was nevertheless dismissed on the issues within the grant of permission.

• High Court (Chancery Division): Appeal from the dismissal by Deputy District Judge Wright of the application to set aside the statutory demand. Appeal dismissed on the permitted grounds.
• County Court at Luton: On 17 January 2017, Deputy District Judge Wright dismissed the application to set aside the statutory demand.
• Permission stage: Mr Justice Birss granted permission to appeal on the specified settlement and pleading-amendment issues and refused permission on the remaining grounds.