Seeking costs for examinees at a private examination (Re Saad Investments)

Seeking costs for examinees at a private examination (Re Saad Investments)

Katherine Hallett, a barrister at Three Stone, considers the decision in Re Saad Investments which concerned the circumstances in which the court will award an examinee their costs of representation at a private examination.

Original news

Re Saad Investments Company Ltd and another (in liquidation); Akers and others v Hayley [2016] Lexis Citation 69, [2016] All ER (D) 103 (Jun)

The Companies Court held that it had an unfettered discretion, under rule 9.6(4) of the Insolvency Rules 1986, SI 1986/1925 (IR 1986), to award legal costs to an examinee examined on the application of joint liquidators, under section 236 of the Insolvency Act 1986 (IA 1986), as part of an inquiry into the dealings of two companies in liquidation. An order was made providing for the reasonable costs of the respondent's representation at the examination. However, given the narrow scope of rule 9.6(4), no order was be made requiring the joint liquidators to pay the respondent's pre-application costs, save to the extent that they could be said to be of, and incidental to, the examination in the strictest sense.

What practical lessons can those advising take away from this case?

While it should not be thought that examinees will never get their costs of representation at a private examination, it is likely in practice that such cases will be rare—costs will be payable by the estate in only the most exceptional cases.

However, liquidators should note the factors which persuaded the Chief Registrar to order payment of the examinee’s costs of counsel in this case. These included the delay by the liquidators in contact the examinee and the manner in which a pre-examination interview had been conducted.

What was the background to the hearing?

Mr Hayley had been privately examined pursuant to IA 1986, s 236 upon application by the liquidators of two companies. Due to the complexity of the case, Mr Hayley was represented by counsel at the private examination. There was no suggestion that Mr Hayley was implicated in the fraud which was alleged to have been perpetrated.

The Chief Registrar had already ordered that Mr Hayley should pay the liquidators’ costs of and incidental to the hearing. However, he had reserved judgment on whether Mr Hayley’s costs of representation at the examination should be paid from the estates. This was that judgment.

What were the legal issues the Chief Registrar had to decide?

The Chief R

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