Who bears the cost of an unsuccessful appeal of a bankruptcy order? (Cooke v Dunbar Assets plc)

Who bears the cost of an unsuccessful appeal of a bankruptcy order? (Cooke v Dunbar Assets plc)

How will the costs judgment in Cooke v Dunbar Assets Plc shape the laws around bankruptcy orders? Faith Julian of 9 Stone Buildings explores the judgment, which is the first case to consider the issue of costs on an appeal against a bankruptcy order, and looks at the impact it may have on future disputes.

Original news

Cooke v Dunbar Assets Plc [2016] EWHC 1888 (Ch), [2016] All ER (D) 07 (Aug)

The Chancery Division ruled that it was permissible to order that the claimant debtor (Mr Cooke), who had unsuccessfully appealed against a bankruptcy order, had to pay the defendant petitioning creditor's (Dunbar) costs. Rule 12.2 of the Insolvency Rules 1986, SI 1986/1925 (IR 1986) did not provide that recovery in accordance with that rule should be the only means by which costs should be recovered. Dunbar had invited the court to make an order within its power under IR 1986, r 7.51A and Part 44 of the Civil Procedure Rules (CPR) that costs of the appeal should fall on the Mr Cooke. Mr Cooke had made himself subject to that regime by appealing. The costs of the appeal did not constitute an expense of the bankruptcy or a provable debt. Accordingly, Mr Cooke was ordered to pay the costs of his unsuccessful appeal. The court held that, to the extent that the costs were not paid by Mr Cooke, they might be treated as an expense of the bankruptcy.

What was the background to the case?

Mr Cooke was made bankrupt on 18 December 2014 on Dunbar’s petition. He appealed against that decision, and was unsuccessful (see Cooke v Dunbar Assets plc [2016] EWHC 579 (Ch), [2016] All ER (D) 49 (Apr)). The parties could not agree how the court ought to deal with the costs of that unsuccessful appeal.

What were the issues before the court?

It was agreed that

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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.