Assessing who pays the costs of a wrongful trading claim—Brooks v Armstrong; Re Robin Hood Centre plc (in liquidation)

Assessing who pays the costs of a wrongful trading claim—Brooks v Armstrong; Re Robin Hood Centre plc (in liquidation)

What order for costs will the court make where an applicant is only partially successful in its claim? Chloe Poskitt, a solicitor, and Dominic Offord, a partner and head of commercial litigation and insolvency, at Browne Jacobson LLP, discuss the implications of the costs decision in Re Robin Hood Centre plc (in liquidation).

Original news

Brooks and another v Armstrong and another; Re Robin Hood Centre plc (in liquidation) (in the matter of costs) [2015] EWHC 2289 (Ch)_2, [2015] All ER (D) 69 (Oct)

Following the judgment in the case of Brooks and another v Armstrong and another [2015] EWHC 2289 (Ch), [2015] All ER (D) 45 (Aug) (see blog post: Establishing the requirements of a wrongful trading claim) the Companies Court considered the issue of costs. The case had concerned allegations of wrongful trading. The position was complicated by the fact that, while the applicants had succeeded, their success was very substantially less than the claim made. They had not succeeded on a number of important issues, and the case they had won on would have looked very different to the case brought and would have incurred considerably less costs. The Registrar decided to make no order as to costs.

What was the background to this costs judgment?

The applicants issued an application seeking the sum of £701,000 from the respondent directors of the company for misfeasance and wrongful trading.

In their original application, the applicants had alleged that there were a number of events which the meant that the directors knew or ought to have concluded that there was no reasonable prospect of the company avoiding insolvent liquidation. The events on which their conclusions were based were:

  • the year-end accounts for 2005 and 2006 (31 January 2005 and 31 January 2006)
  • the receipt of professional advice in October 2006 about a large VAT liability (in respect of which

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.