Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
Check out our straightforward definitions of common legal terms.
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Access our unrivalled global news content, business information and analytics solutions
Insurance, risk and compliance intelligence using big data, proprietary linking and advanced analytics.
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
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.
Re Saad Investments Company Ltd and another (in liquidation); Akers and others v Hayley  Lexis Citation 69,  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.
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.
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.
The Chief Registrar had to decide on the ambit of the discretion to award costs to an examinee and whether that discretion should be exercised in this case.
The liquidators accepted that IR 1986, r 9.6(4) gave the court such a power, but they argued that the provision of information to a liquidator was a public duty in aid of the administration of justice and so the court would not generally award an examinee his costs.
The liquidators relied on case law from the nineteenth and early twentieth centuries for the proposition that examinees or mere witnesses were free to retain counsel but that would be at their own expense (see Re, ex p Waddell, Lutscher (1877) 6 Ch D 328 and Re Appleton, French and Scrafton Limited  1 Ch 749, [1904-7] All ER Rep Ext 1343).
However, Mr Hayley argued that there were a number of reasons why the court should exercise its discretion to award him his costs of being examined in this case.
The Chief Registrar concluded that the court had a discretion to award legal costs to an examinee—authority pre-dating the modern IR 1986, r 9.6(4) should not be taken as amounting to anything more than a statement of what the practice was when such cases were decided. That was in line with the approach taken by Mr Registrar Jones in Re Harvest Finance Ltd (In Liquidation)  2 BCLC 240,  All ER (D) 216 (Dec).
Mr Hayley was awarded his reasonable costs of his representation at the examination. This was for several reasons:
These matters took the case ‘out of the mainstream of private examinations’.
In addition, firstly, the liquidators had ‘ample funds’ at their disposal. The Chief Registrar concluded that the availability of assets or funding was a factor to which the court may have regard in such circumstances. Secondly, there may well have been a benefit to all parties in Mr Hayley being represented by counsel during the examination. The examination was ‘no ordinary one’.
It should also be noted that the Chief Registrar held that he had no jurisdiction to order payment of Mr Hayley’s ‘pre-application costs’—ie costs incurred in cooperating with the liquidators, attending for interview and providing a written statement. IR 1986, r 9.6(4) is ‘narrow in its scope’ and limited to dealing with costs arising out of an examination, not costs attributable to an alternative method of gathering information.
The case is helpful in confirming the modern existence of the jurisdiction to award the examinee their costs of a private examination and in clarifying when a court may exercise that discretion, listing specific factors (some or all of which may apply in other cases).
However, the Chief Registrar also makes it clear that his judgment was ‘not intended to set any precedent’—it was made in circumstances which he regarded as exceptional.
Interviewed by Diana Bentley.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
If you are a LexisPSL subscriber, click the links below for further information:
Inquiry into a company's dealings (including by way of private examination) under section 236 of the Insolvency Act 1986
Checklist and time-line for evidence and property collection—checklist
Not a subscriber? Find out more about how LexisPSL can help you and click here for a free trial of LexisPSL Restructuring and Insolvency.
First published on LexisPSL Restructuring and Insolvency
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234