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Chief Insolvency and Companies Court (ICC) Judge Briggs has refused to order that an administrator should be personally liable to pay the costs of a creditor’s successful application against the rejection of its proof of debt under Rule 14.8 of the Insolvency Rules 2016 (IR 2016), SI 2016/1024. Given the limited caselaw to date, the judgment now provides valuable guidance as to the circumstances in which the court should depart from the default rule in IR 2016, r 14.9 that the office holder is not liable to pay costs unless the court ‘orders otherwise’. Insolvency practitioners will be reassured by the court’s affirmation that since the office holder is acting in a neutral, quasi-judicial capacity, her or she will not be deprived of the ability to recoup their costs from the insolvent estate without ‘special circumstances’ or ‘good reason’. Creditors should also be aware that even where their appeal is successful, the costs are likely to come out of the insolvent estate and reduce the assets available for distribution. Written by Zoe O’Sullivan QC, barrister at Serle Court Chambers.
Nimat Halal Food Ltd v Nimish Patel (as administrator of Tariq Halal (Wholesale) Ltd (in administration)  EWHC 734 (Ch)
Under IR 2016, SI 2016/1024, r 14.8, a creditor has the right to appeal to the court against the administrator’s rejection of its proof of debt. The hearing is a hearing de novo, in which the court is entitled to consider further evidence and reach its own view: see Buckley J in Kentwood Constructions Ltd, Re  2 All ER 655n.
It is well established that in deciding whether to admit or reject a creditor’s proof, the administrator is acting in a quasi-judicial capacity: see Etherton J in Menastar Finance Ltd (in liq), Re, Menastar Ltd v Simon  EWHC 2610 (Ch),  All ER (D) 26 (Nov). For this reason, IR
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