The Facts

The applicants, who had successfully appealed the rejection of their proof of debt by the liquidator of Burnden Group Limited, sought an order that the liquidator pay their costs of the appeal personally in circumstances where the relevant company had no assets and their costs exceeded £290,000 (including VAT).

The Decision

  • On the facts, the liquidator was justified in rejecting the applicants’ initial proof of debt, which was flawed for want of detail and advanced on a different basis to that which was ultimately successful
  • The liquidator was obliged to make a decision on the proof of debt and, as there were good grounds for doing so, contest any appeal against its rejection. The liquidator, therefore, had not acted unreasonably
  • Further, the conduct of the liquidator in the proof of debt process was not so linked to contemplated misfeasance actions against the applicants and establishing quantum. It was proper to contest the appeal and, therefore, the applicants’ costs were to be paid as an expense of the liquidation.

Comment

This case is a useful clarification for officeholders that, unless there are exceptional circumstances such as improper or unreasonable conduct, the costs of a successful appeal against a rejected proof of debt will be borne by the estate.

Fielding and another v Hunt (acting as Liquidator of the Burnden Group Ltd) [2017] EWHC 406 (Ch)