Bank of India v Morris & Ors

J U D G M E N T

1. LORD JUSTICE MUMMERY: Following the handing down of the judgment dismissing the appeal and the cross-appeal, we have considered the detailed skeleton arguments submitted by each side on two points. The first is the appropriate order for costs and the second is whether this court should grant permission to the Bank of India to appeal our decision on the appeal. We have also heard some detailed oral submissions additional to those that are set out in the skeletons.

2. First, costs. Mr Moss, for the Bank of India, accepted that in principle the liquidators were entitled to the costs of the appeal, having succeeded, but he advanced submissions on three aspects of the appeal, which he said should be reflected in an order giving the liquidators less than their full costs of the appeal. He pointed out first that the appeal and cross-appeal by the parties on the question of quantum had been settled with no orders as to costs. Secondly, the points raised by the liquidators regarding the knowledge of Mr Shukla and Mr Vaghul had failed and, thirdly and probably most important of all, an application had been made by the liquidators during the course of the hearing for permission to amend by introducing a plea of vicarious liability. We had rejected that application. The cost of that ought to be the paid by the liquidators.

3. In brief, he put forward submissions as to why we should make some order as to costs which reflected the points on which the liquidators had not been successful or had not pursued matters which they were originally going to pursue but had required a substantial amount of preparation.

4. This was opposed by Mr Purle. We heard detailed arguments from the parties, on invitation from us, about the possibility of making a percentage, which we are encouraged to do in the CPR rules. On that particular aspect, Mr Moss said that his client should only be ordered to pay 60 per cent of the liquidators' costs. He said that on the question of quantum there should be a 10 per cent deduction; on the question of the cross-appeal, concerning the knowledge of the two directors, another 10 per cent deduction; and in relation to what he said was a substantial amount of work done during the course of the appeal on the amendment application, a 20 per cent deduction, making a total of 40 per cent deducted from the costs payable by his clients to the liquidators. Mr Purle suggested that the appropriate order was that his clients should only have to pay £10,000 in relation to their unsuccessful application for permission to amend and that the deductions in relation to the other matter should be no more than 7.5 per cent under each of the two heads.

5. The conclusion we have come to is that it is appropriate in this case to make an order that the Bank of India pays a percentage of the liquidators' cost of this appeal and, taking into account the matters that have been argued before us under the three particular heads, we think that the reasonable order to make is that the Bank of India should pay 80 per cent of the liquidators' costs of this appeal.

6. The other matter on which we heard argument is the question of permission to appeal to the House of Lords. Detailed submissions have been set out by Mr Moss in his skeleton argument. He made two general points. First, there is a general question of public importance on the question of attribution of knowledge to companies under Section 213 of the Insolvency Act 1986. That would qualify the point for a hearing in the House of Lords. As to the flaws in our judgment, they were listed by him, with particular emphasis on what he submits is a misapplication by us of the general principle laid down by Lord Hoffmann in Meridian Global Funds Management Asia Limited v Securities Commission. Mr Moss's point was that, as we he had accepted that there was a vicarious liability route available under section 213, this was not a case in which the court would be justified in fashioning a special rule of attribution, as we have actually done in our judgment.

7. That is obviously an interesting and possibly important point about the power of the courts to fashion rules of attribution in relation to statutory provisions under which companies are sought to be made liable. In our view, however, this is not an appropriate case for this court to grant permission to appeal. The position is that the Bank of India had failed at the first instance and unanimously on this appeal. This is really one of those cases in which their Lordships should decide whether they take it on appeal, rather than us making a decision. We refuse permission to appeal.

8. In addition to the order that I have already indicated, dismissing the appeal and the cross-appeal and making the order that the Bank of India pays 80 per cent of the liquidators' costs, we heard an application for interim payment by the liquidators, suggesting that we order payment by the Bank of India of £100,000 within 14 days on account of the costs of the appeal. Mr Moss says that, because of the lateness of the application, he has not had an opportunity to take full instructions on this from his clients. He asks for 28 days rather than the 14 days sought by Mr Purle.

9. What we propose to do is to make the order that the Bank of India pays £100,000 within 28 days on account of the liquidators' costs of the appeal which the Bank has been ordered to pay, but that, within that period, the Bank of India is entitled to make written submissions to us as to why that should not be the figure. If no such application is made, then the order will stand. If an application is made, we will consider it and we will be able to substitute a different figure, if we think that that is fair.

Order: Appellant ordered to pay 80 per cent of the liquidators' costs of the appeal. Permission to appeal to the House of Lords refused. Interim payment of £100,000 within 28 days.