Paragon Offshore Plc, Re (Costs)

Costs ordinarily follow the event, but the court retains a discretion as to liability, the paying party and the basis of assessment. A party who unsuccessfully contests an application may be ordered to pay the successful party’s costs even where the estate could otherwise bear costs, or the successful party budgeted for opposition. A pending application under Insolvency Rules rule 12.59 does not justify delaying costs where no application has been issued and no sufficient basis for delay is shown. Substantial costs may properly be directed to detailed assessment, with an interim payment on account.

The former administrators of Paragon Offshore plc applied for their discharge. The respondent, Michael R. Hammersley, opposed the application and was joined as a respondent on 12 March 2020, after being warned that an unsuccessful opposition could lead to a costs order.

The court’s separate discharge judgment rejected all his objections and granted the discharge application. The present judgment concerned the applicants’ costs. Mr Hammersley opposed any order, alternatively seeking an adjournment pending a possible application under Insolvency Rules rule 12.59.

1. The court refused to adjourn the costs application. Rule 12.59 permits an application to review, vary or rescind an order, but there was no jurisdiction to review, vary or rescind a draft judgment. The order would be made when judgment was handed down. No application had been issued, and a possible future application provided no sufficient reason to delay costs.

2. Costs followed the event. The applicants had succeeded in obtaining the discharge, while Mr Hammersley had lost on every ground advanced. His proposed settlement terms, allegations that the applicants’ claims were frivolous, complaints concerning the Loan Note Instrument, costs budgeting, and alleged conflicts of interest did not justify departing from the usual order. The alleged conflicts were unsubstantiated.

3. The court retained discretion to direct that costs, or part of them, be paid out of an insolvent estate. That discretion did not prevent the court from making a particular party liable for the costs. Mr Hammersley’s opposition had caused a straightforward application to occupy the court for a considerable period.

4. The applicants’ costs were ordered to be paid by Mr Hammersley from 12 March 2020, assessed on the standard basis. The court declined to summarily assess substantial costs and directed detailed assessment. Mr Hammersley was ordered to pay £116,008.14 plus VAT of £23,201.63 on account, representing 60 per cent of the overall costs schedule. Costs irrecoverable from him were ordered to be paid as an expense out of property formerly in the applicants’ custody and control.