Importers Service Corporation & Anor v Mario Aliotta & Ors

A bankrupt may continue a pre-bankruptcy claim under the Insolvency Act 1986 where relief is sought against third-party transferees and transferred assets. The automatic stay does not prevent that conduct, but the bankrupt cannot make costs submissions where any award would benefit the bankrupt estate. Costs may reflect success in substance and party conduct. Concealing fabricated evidence can justify indemnity costs. Interest may run from when costs were billed and paid, and payment on account should reflect the likely recovery on detailed assessment, with appropriate discounts for uncertainty.

This consequential judgment followed a substantive trial concerning applications under section 423 of the Insolvency Act 1986 to reverse asset transfers. The claimants succeeded in challenging one set of transactions but failed in relation to another because the transactions were treated as a single economic transaction without an undervalue.

The court determined Mr Aliotta’s standing after bankruptcy, representation of other defendants, costs entitlement and allocation, indemnity costs, interest, payment on account, permission to appeal, an extension of time, and the continuing effect of a preservation order. The central questions concerned the effect of the bankruptcy stay and the appropriate consequential orders after substantial success on the claim.

1. Standing and representation. The automatic stay under section 285(3) of the Insolvency Act 1986 did not prevent Mr Aliotta from participating in the existing section 423 proceedings because the relief sought was directed against third-party recipients and transferred assets, not against his property. However, any costs award would benefit his bankrupt estate. Applying Heath v Tang [1993] 1 WLR 1421, he had no standing to make costs submissions. As an undischarged bankrupt, he could not represent the corporate defendant without leave of the bankruptcy court.
2. Costs entitlement and allocation. Although the claimants failed in relation to one set of transactions, they were successful in substance in defeating the defendants’ primary case and were entitled to their costs without a discount. The Fourth to Sixth Defendants had made common cause with Mr Aliotta and were jointly and severally liable in costs with him. No order for costs was made between Mrs Aliotta and the claimants, given her minimal participation and the absence of relief against her. Mr Aliotta was solely liable for the costs of his late application. The claimants recovered the standard-basis costs of their preservation application.
3. Indemnity costs and interest. The test identified in Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879, as clarified in Esure Services Limited v Quarcoo [2009] EWCA Civ 595, was satisfied. Fabricating evidence and concealing the fabrication in an attempt to mislead the court was outside ordinary and reasonable conduct and justified indemnity costs against Mr Aliotta, Aliotta Holdings Limited and the Fourth to Sixth Defendants. Interest was awarded at 1% above Bank of England base rate from when costs were billed and paid, applying Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363.
4. Payment on account. Applying the guidance in Excalibur Ventures [2015] EWHC 566 (Comm) and the costs-budgeting authorities, the claimants were awarded 90% of budgeted costs and 60% of other incurred costs, totalling £608,755.64.
5. Permission to appeal and interim order. The court applied CPR 52.6(1) and refused permission to appeal to the claimants and Mr Aliotta. It maintained that simultaneous transactions could be considered together as a single economic transaction, applying Invest Bank, and rejected the remaining grounds, including the joint-account argument. The claimants received an extension to 10 August 2026 to file an Appellant’s Notice. The consent preservation order remained in force until the final order because the consequentials hearing was a continuation of the trial.

This was a consequential first-instance judgment following the court’s substantive judgment handed down on 9 March 2026. Applications for permission to appeal that substantive judgment were refused. The claimants were granted an extension until 10 August 2026 to file an Appellant’s Notice.