Dolfin Financial UK Ltd, Re
Neutral Citation Number: [2026] EWHC 957 (Ch)
Case No:
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Date: Friday 24 April 2026
Before :
Sitting as a deputy judge of the High Court
- - - - - - - - - - - - - - - - - - - - -
AND IN THE MATTER OF THE INVESTMENT BANK SPECIAL ADMINISTRATION REGULATIONS 2011
Between :
|
(1)
Adam Henry Stephens
(2)
Kevin Ley (as joint special administrators of Dolfin Financial (UK) Limited) |
Applicants |
|
|
- and – |
||
|
(1)
Firestone Financial Assets Limited
(2)
Investors Europe (Malta) Limited |
Respondents |
- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -
Glen Davis KC and Clara Johnson (instructed by DWF Law LLP) for the Applicants
William Willson KC and Rabin Kok (instructed by Withers LLP) for Firestone Financial Assets Limited
Robert Amey (instructed by Stewarts Law) for Investors Europe (Malta) Limited
Hearing dates: 20 March 2026
- - - - - - - - - - - - - - - - - - - - -
JUDGMENT
Christopher Pymont KC :
On 12 January 2026, I gave judgment ([2026] EWHC 41 (Ch)) on the two applications before me which I described in my judgment at [2]. I will refer to them here as the JSAs’ application and Firestone’s application respectively. I now deal with the costs of those applications and certain other issues which arise for determination. I shall use the same abbreviations as I used in my earlier judgment.
The parties’ representation is as before, save that the FSCS has not appeared on this hearing: it is neither facing nor making any application for costs and has no other interest to pursue at this stage.
An additional application (by DASL against the JSAs) was listed before me for this hearing but the parties to it have reached agreement for its disposal by way of a consent order which I have already approved. I say no more about it.
The JSAs’ Application
Firestone and DASL both apply, first, for their costs of the JSAs’ application to be paid by the JSAs. This is principally on the basis that they are the successful parties. They further submit, second, that the JSAs should not be allowed to recoup their costs (whether the costs they should pay Firestone and DASL or the JSAs’ own costs) out of the assets they are holding in the special administration. This is partly on the basis that the JSAs’ application was unnecessary and misconceived so that such costs were not properly incurred. It is also partly on the basis that Firestone and DASL are between them the beneficial owners of some 66% of the assets under special administration; it follows that allowing the JSAs to recoup their costs from the assets would unfairly reduce the assets available for them on distribution and, indeed, would unfairly result in Firestone and DASL indirectly paying 66% of the costs the JSAs should be paying them. Firestone and DASL further submit, third, that their costs should be assessed on the indemnity basis. This is partly on the basis that this is a case “out of the norm” (see Excelsior Commercial and Industrial Holdings Limited [2002] EWCA Civ 879 at [31]-[32] per Lord Woolf LCJ and [39] per Waller LJ). It is also partly on the basis of an analogy with trustees’ applications for directions, where beneficiaries joined as parties to applications for directions are commonly awarded their costs out of the trust fund on the indemnity basis.
The JSAs’ position is complex. They accept that Firestone is entitled to its costs of the JSAs’ application; and they accept that DASL should also be paid its costs if the Court is satisfied that DASL assisted the Court. They oppose the suggestion that they should not be able to recoup those costs from the assets under their control and they oppose the further suggestion that costs should be assessed on the indemnity basis, submitting that they acted properly and reasonably in making and pursuing the application2, and that the Court’s judgment has helped to clarify how they are to proceed.
As regards their own costs, the JSAs accept the criticisms the Court has made of the Protocol and, according to their skeleton argument for this hearing at [23], they “do not seek to recover on this occasion the costs specifically occasioned by the Protocol”. However, as is indicated by that form of words, the JSAs are seeking to leave open the possibility of making a claim for some of those costs at a later stage, if they should be able to establish in due course that such costs were incurred in relation to the formulation of the distribution plan as a separate work-stream from the formulation of the Protocol and the pursuit of the JSAs’ application. For the present, the JSAs have set out in a solicitors’ letter of 18 March 2026 that they are prepared (a) not to charge to client assets a sum of £213,630.63, said to be incurred in developing the Protocol, and (b) to discount 30% of the remaining legal costs chargeable to the assets (and to discount a smaller amount to reflect the points on which the JSAs lost on Firestone’s application), the total discount being said to be £222,562.57. The figures given in the letter relate only to the JSAs’ own costs and their solicitors’ costs: the letter made it clear that Counsel had already been paid and no offer was made for any adjustment in relation to Counsel’s fees. (An issue has now arisen as to the source from which Counsel’s fees were paid but I do not need to resolve that issue for the purposes of this judgment).
So far as legal considerations are concerned, the following points and principles seem to me to be worth noting:
The general rule as to the incidence of costs is that the unsuccessful party will be ordered to pay the costs of the successful party (CPR 44.2(2)(a)). That general rule applies as much to applications for directions (such as the JSAs’ application) as to other forms of proceeding.
A trustee may have a right of recourse to the trust assets for recoupment of costs which have been incurred in the administration of the trust under section 31(1) of the Trustee Act 2000 (see Price v Saundry [2019] EWCA Civ 2261 at [19]-[22] per Asplin LJ). A liquidator or administrator does not have a statutory right of recoupment but may apply to the Court for an order permitting it (see In re MC Bacon Ltd [1990] Ch 127 at p140E, per Millett J). In the case (as here) of a special administrator subject to the IBSA Rules, again there is no statutory right of recoupment but the special administrator may apply for an order permitting it.
Further to (b) above, it has been suggested to me that a special administrator under the IBSA Rules has a right of recoupment under IBSA Rule 135 (and no doubt Rule 134 too, where that applies). This is not so. IBSA Rules 134 and 135 provide that “expenses properly incurred by the administrator” are to be given priority of payment out of relevant assets but these rules do not confer a right of recoupment: the intent of these rules is to order priorities in the event that such expenses have in fact become payable. I apply here, by analogy, the reasoning of Millett J in In re MC Bacon, above, at p 140 A to E. That was in relation to a similar provision as to priorities at section 115 of the Insolvency Act 1986 (read in conjunction with rule 4.218(1) of the Insolvency Rules 1986 – for which now refer to rules 3.51 (administration) and 7.108 (liquidation) of the Insolvency Rules 2016). I note that the statutory trust imposed by CASS 7.17.2R over client money includes a separate provision which requires costs “properly attributable” to the distribution of client money to be paid from client money; but that too does not provide for how any item of cost is to become payable (or properly payable) before it can be properly attributable to the client money; so that provision cannot be read as a right of recoupment either, on the approach of Millett J. A similar observation can be made as to rule 262 of the IBSA Rules. Accordingly (as concluded by Millett J in relation to a liquidator’s position under section 115 of the Insolvency Act 1986) I conclude that it is for the special administrator to apply to the Court for recoupment of costs and expenses.
Whatever the source of the right to seek recoupment from relevant assets, the basic test for recoupment is whether the costs or expenses were “properly incurred” by the trustee or office-holder. For costs or expenses to be “properly” incurred they must be “reasonably as well as honestly” incurred (see Re Beddoe [1893] 1 Ch 547 at 562 per Bowen LJ). Doubts are resolved in favour of the trustee so that the right of recoupment is sometimes expressed as a right to recover costs and expenses “not improperly” incurred (see Price v Saundry, above, at [29] per Asplin LJ). But if misconduct is established against the trustee or office-holder, recoupment may be refused. Misconduct here is to be read widely, to include conduct which is unreasonable in all the circumstances (ibid. at [31] per Asplin LJ).
Bringing unnecessary legal proceedings may be unreasonable conduct, in which case the associated costs will not be reasonable nor therefore recoverable (see generally Lewin, Trusts, 20th ed, para 48-007 and McCallum v McCallum [2021] NZCA 237 at [31]). The trustee (or office-holder) bringing unnecessary legal proceedings will not be able to rely on having followed the advice of his solicitor: the issue on recoupment appears to be more the reasonableness of the cost or expense in all the circumstances than the reasonableness of the trustee in incurring it. “Costs, charges, and expenses which have in fact been unreasonably incurred, do not assume in the eye of the law the character of reasonableness simply because the solicitor is the person who is in fault” (Re Beddoe, above, p562, per Bowen LJ ).
The Court may deprive a trustee (or office-holder) of his costs “even if he had only made a mistake, and a fortiori if he had made a blunder” (see In re Silver Valley Mines (1882) Ch Div 381, at p385, per Jessel MR). In considering the recoupment of costs incurred as the result of an innocent mistake, a certain indulgence may be granted to “an ordinary gratuitous trustee” which may not be extended to a paid liquidator (or administrator) (ibid. p 386).
The Court has a discretion to deprive an office-holder of a right of recoupment in the context of a liquidation or administration (see In re MC Bacon Ltd above, Mond v Hammond Suddards [2000] Ch 40 and Re Capitol Films Ltd [2010] EWHC 3223 (Ch)). In Re Capitol Films, the deputy judge, Richard Snowden QC, noted some of the authorities at [100]-[101], specifically in the case of liquidations, which he then applied equally to administrations. I would similarly apply them to special administrations under IBSA. As Mr Snowden QC observed at [101], liquidators have been refused the right to recoup expenses in the case of “misconduct”, a “‘blunder’ or serious mistake”, or where it would be “unjust” to allow recoupment. He noted that an injustice could include the situation where a liquidator sought to recover his costs of an unsuccessful challenge to the validity of a floating charge in priority to the holder of the charge, which was the position in Re MC Bacon Ltd (No 2) [1990] BCLC 607.
In Re Capitol Films itself, the administrators had incurred cost in making and pursuing an application against secured creditors on an irrational and misconceived basis. Mr Snowden QC found the administrators to have been guilty of the equivalent of a ‘blunder’ or serious error [102]; he also found [103] that it would be unjust to allow them to recoup themselves their expenses ahead of floating charge holders and unsecured creditors: “Ido not see why any assets that might come into the hands of the administrators, and which are destined for the holder of the floating charge or unsecured creditors, should be diminished by the costs of an application which does not appear to have been at all likely to serve their interests”.
Two further cases cited to me have noted the unfairness of ordering costs against an office-holder (in each case, a trustee in bankruptcy) which would end up being indirectly paid by the party in whose favour the costs were awarded. On that basis the court refused to allow the office-holder to recoup his costs from the relevant estate: see Howard v Savage [2007] BPIR 1097 (at [20]-[23] per Lewison J) and Patley Wood Farm LLP v Kicks [2023] Costs LR 171 (at [51]-[54], per HHJ Paul Matthews).
Mr Davis KC has cited to me the Privy Council decision in A-G of Trinidad and Tobago v CL Financial Ltd [2025] UKPC 41 in support of a submission that the public interest is served by experienced office-holders being able to recoup their remuneration where incurred in unsuccessful attempts to get in more assets for creditors; and that the Court should not do anything to discourage experienced professionals from accepting appointments and exercising their powers. But the Privy Council was clear that remuneration was only recoverable “[p]rovided it was reasonable to carry out the work and the amount charged for it is reasonable” ([82], per Lord Richards) so I do not think the Privy Council was intending to extend the categories of recoverable costs and remuneration by reference to this public interest.
The JSAs cite two other cases as to the standard to be expected of an office-holder in discharging his duties. These both arose where the office-holder had rejected a proof of debt and a creditor sought to appeal against his decision; see Nimat Halal Food Ltd v Patel [2020] EWHC 734 (Ch) and Re Saville Foley LLP [2025] EWHC 1071 (Ch). These cases arose in a rather specific context, however, where the office-holder was acting in a quasi-judicial role to decide on proofs of debt, which is not his usual position (or the JSAs position here). The starting-point, in that context, for the consideration of whether the office-holder should bear costs personally is an express rule which specifically provides that “an office-holder is not personally liable for costs incurred by any person in respect of an application under rule 14.8 [i.e. an appeal from his decision] unless the court orders otherwise” (see rule 14.9 of the Insolvency Rules 2016). There is no equivalent statutory starting-point here. I do not therefore find these cases quite in point. Nor, in any case, do I find that they qualify the approach as to proper costs apparent from the cases I have referred to above.
The relevant standard of conduct for an office-holder was expressed in Nutting v Khaliq [2013] BPIR 340 as that of “a reasonable insolvency practitioner acting reasonably” (at [32], per Etherton LJ). It is not clear to me that that formulation was intended to change rather than re-state the relevant principle but if there is any substantive difference between the approach of the CA in Nutting v Khaliq and the approach of the CA in Price v Saundry, then the latter appears to me to be closer to the circumstances with which I am concerned.
As noted above, indemnity costs can be ordered where there is something in the conduct of the proceedings or the circumstance of the case which takes it “out of the norm” (to use the language of the Excelsior case). In a case like the present, the reasonableness (or unreasonableness) of the JSAs’ conduct in bringing and pursuing the JSAs’ application will be relevant both to the question of indemnity costs and their claim to recoupment, though it does not follow that the denial of recoupment will automatically resolve the issue of whether costs should be paid on the indemnity basis.
It is right, as Mr Amey submitted, that beneficiaries who are joined to trust proceedings, brought to resolve legal issues or to obtain directions for the proper administration of the trust, are commonly awarded their costs on an indemnity basis: see Lewin, Trusts, 20th ed, para 48-041. However, this does not seem to me to assist Firestone or DASL to seek an award of costs on the indemnity basis against the JSAs here. The common practice referred to is for payment of costs out of the trust fund, not against another party: the focus in such cases is thus on the value of the relevant beneficiaries’ contribution to the proper administration of the trust, rather than the conduct of the parties and the circumstances of the case, which is a secondary consideration. What is more, Firestone and DASL are not seeking an order for payment out of the fund; indeed their whole purpose is to keep the client assets as free of cost and expense as they can. It is not for them therefore to invoke a general practice which would have the effect of diminishing the trust fund. There is no real analogy here.
Applying these considerations, I turn first to the incidence of costs between the parties. The JSAs’ accept the inevitable and do not oppose an order that they pay the costs of the JSAs’ application. For the avoidance of doubt, I should say that, in DASL’s case, I have found its participation in the proceedings to have been of assistance. I also regard DASL as having a sufficiently different interest from Firestone to justify its attendance by separate solicitors and Counsel so that it is appropriate for the JSAs to pay both DASL’s and Firestone’s costs.
As to the issue of recoupment, I would first summarise the terms of my earlier judgment as follows. There was no practical utility in the application [26]; the application was outside the statutory procedure and it was inappropriate for the Court to be entertaining the issues raised by it [28]-[29]; it could never have achieved a saving of time or cost [30] and had delayed progress in the special administration [30]; it failed to meet the Court’s expectations for applications of this kind by being too diffuse and unfocussed [30]-[31]; it was unnecessary to seek the Court’s protection given the JSAs’ own experience, powers and duties, and the repeated judicial warnings that (i) it is for administrators to exercise their own judgment as to how to proceed and (ii) that the Court is not there to act as a sort of bomb shelter or sanctuary for an administrator’s decisions [32]-[34]; in any case, the statutory procedure meant that the Court’s decision at this stage could not provide the JSAs any meaningful protection against challenge [35]; the three particular areas of concern did not justify the approval of the whole Protocol [38] and on two of them the JSAs had chosen to proceed on the strength of information which they did not feel able to share with the Court, which made it inappropriate for the Court to approve any course of conduct in relation to them [39]; any approval by the Court would in any case have to be so circumscribed as to have no real practical consequences for the JSAs’ protection [40]-[43]; on the illegality issues, the JSAs seemed to be seeking something like a Benjamin order [44]-[46] but they had not asked for that and such an order could not or should not be made at this stage or on this evidence [47]; so far as the three particular arears of concern are concerned (i) as to the illegality issue, it was unclear how far this was still an issue [50], it was unclear how the JSAs could be practically affected by any illegality [51]-[54], it was quite impossible to attempt any sensible analysis of how the illegality principle (summarised at[58]) might affect any claim against the Company [59]-[61] and the apparent decision of the JSAs to proceed without further investigation was a matter for them which did not need the approval of the Court [57] and [62] (ii) the claim by Trowers’ clients had not raised anything to hold up distribution of client assets or money [64]-[71] and (iii) the correct allocation of costs, expenses and remuneration raised no immediate issue because (i) there were sufficient assets to meet the projected costs [76]-[79] and (ii) the issue was in any case one for the approval of the distribution plan at the end of the statutory procedure, not now [82]; other points raised by the Protocol (the costs of the Britannia transfer, the availability of interest to pay expenses, client communications and the JSAs’ status) were not explored before the Court [83] and should abide the application for the approval of the distribution plan at the end of the statutory procedure [84]-[86].
Mr Davis KC emphasized that this has been a difficult special administration, conducted against the background of possible criminal activity by the Company during its operation and perhaps some of its clients, and he submitted that the Court should be slow to conclude that it was wrong to make an application for the Court’s assistance, even if the Court should ultimately have reached the conclusion that it was appropriate to make no order; the jurisdiction to disallow recoupment is exceptional and should not be exercised against a special administrator seeking conscientiously to discharge his duties, with the benefit of legal advice. Mr Davis KC also contended that the judgment, though rejecting the JSAs’ proposed way forward, had helped to resolve some issues causing concern to the JSAs, such as how to proceed on the Trowers issue and even the illegality issue; to that extent the JSAs’ application had value. He also emphasized that the Court had found nothing improper in the JSAs’ personal conduct and found nothing to question their bona fides: nothing, for example, as to their acting for personal benefit or other corrupt purpose.
I accept that denying administrators a claim to recoupment is an exceptional jurisdiction and I also accept the JSAs’ bona fides. I also bear in mind that the JSAs are entitled to the benefit of any doubt (consistent with Price v Saundry, above). But in my judgment Mr Davis KC’s submissions fail to grapple with the reality of what has happened on this application. As summarised above, my judgment has severally found the JSAs’ application to be procedurally inept, contrary to authority, of no practical utility (in particular for the JSAs’ protection) and thus, in essence, quite unnecessary. Any alleged comfort it may have given for the further conduct of the special administration is marginal and oblique to what the JSAs were applying for and cannot justify what I characterised (at [30]) as the “expansive” form of application before me. The application has also been extremely expensive and has delayed progress in the discharge of the JSAs’ duties to achieve distributions of client money and assets.
Looking at the matter from the point of view of the Company’s remaining clients rather than the JSAs, an ill-conceived and unnecessary application has been pursued at substantial cost, though it does not appear to have been at all likely to serve their interests (to adopt the language of Mr Snowden QC in Re Capitol Films, above). The application was wholly unreasonable and is not made reasonable, or less unreasonable, by the fact of having been pursued on legal advice.
In my judgment, it would be quite unfair to allow any of the costs associated with the JSAs’ application to diminish the assets available to the Company’s remaining clients (or, for that matter, any other persons interested as creditors of the Company). As I see it, making and pursuing this unnecessary application was the kind of conduct which could be characterised (i) as sufficiently unreasonable to amount to misconduct within the meaning explained in Price v Saundry above, or (ii) as a sufficiently serious error, in either case to warrant denial of the right of recoupment.
I also accept the submission of Firestone and DASL that it would be particularly unfair – and unjust - in their case to allow the JSAs a right of recoupment. They are the successful parties to the JSAs’ application; yet, if recoupment is allowed from client assets, they are the principal remaining clients who will ultimately bear most of the economic burden of recoupment, including most of the costs that the JSAs should be paying them. I reject such a conclusion.
For the avoidance of doubt, I draw no distinction here between the active participants in this application, Firestone and DASL, and other clients and creditors who may be affected by the costs of the JSAs’ application if recoupment is allowed from moneys or assets to which they may be entitled. The JSAs’ application was unnecessary for all purposes and not just as against Firestone and DASL so that no-one other than the JSAs themselves should bear the costs associated with it.
Mr Amey has taken me through some of the correspondence which led up to the commencement of the application to show how DASL remonstrated with the JSAs not to waste time on it, while repeatedly calling for an interim distribution. (I refer to the letters or emails from DASL’s solicitors to the JSAs and their solicitors dated 14 and 23 November and 22 December 2023; 5 December 2024; 24 March, 14 and 25 April 2025). It cannot come as any surprise to the JSAs that the Court has taken a similar view.
As for the application for indemnity costs, I have rejected the submission that the status of Firestone and DASL as clients of the Company and beneficiaries of its assets gives them a particular basis for seeking indemnity costs on a directions application like this: the costs are not coming out of the fund. So Firestone and DASL must be able to show something unusual in the conduct of the proceedings or the circumstances of the case to justify assessment on the indemnity basis.
Here, it is fair to start with the observation that I do not find the JSAs at fault in their general conduct of this application, nor do I question their honesty or bona fides. Some criticisms have emerged during the course of the hearings before me as to their conduct (mostly changes of position or failure to engage with Firestone or DASL on particular points) but these seem to me to be within the usual give-and-take of litigation and I have not identified anything which can be said to have, say, materially increased the costs of the proceedings, or unnecessarily increased the difficulties of resolving the issues, or materially delayed their resolution.
So the real basis for the claim to indemnity costs is that the whole application was fundamentally flawed at the outset and was never going to achieve anything of value to this special administration, whether for the JSAs or the persons interested in its outcome, such as Firestone and DASL. I refer again to my summary above of my earlier judgment. For present purposes, I think it is important to note that the JSAs were undertaking something outside the prescribed statutory procedure, at far greater length and with less focus than the Court would expect on a directions hearing, in the teeth of repeated judicial exhortations to trustees and office-holders not to attempt to use the Court as a bomb shelter or sanctuary for what should be the exercise of their own discretion, without any prospect of the Court conferring any meaningful protection on the JSAs (particular in the absence of a full explanation of the JSAs’ own thinking), and where the three areas of concern said to arise either could not or should not be resolved at this stage (the allocation of costs etc) or did not raise any issue (Trowers’ clients’ claim) or could not be resolved by the Court’s approval to the Protocol (illegality). While I have some sympathy for the JSAs in having to deal with a challenging special administration, I think it is only fair to Firestone and DASL to relieve them as far as possible from the costs consequences of such an ill-conceived application by ordering the JSAs to pay costs on the indemnity basis.
That leaves the issue of whether the JSAs can keep open the right to recover some of their costs “specifically occasioned by the Protocol” at a later date notwithstanding the orders for costs I will be making on the basis of this judgment. The JSAs’ contention is that they should still be entitled to seek costs “[t]o the extent that the work has been incurred for the purposes of formulating the imminent Distribution Plan and does not involve duplication” (JSAs’ skeleton at [23]).
I do not intend to make any direction in relation to this contention nor do I intend to qualify the orders for costs I intend to make in any way by reference to it. I do not have any claim for any particular item or items of cost before me to be able to draw any detailed conclusions on what lies behind the JSAs’ contention. I would simply repeat that the JSAs will be ordered to pay Firestone and DASL’s costs of, occasioned by and incidental to the JSAs’ application, to be assessed on the indemnity basis, which costs will not be the subject of any recoupment from the Company’s assets (including client assets). The JSAs’ own costs of, occasioned by and incidental to the JSAs’ application (including the JSAs’ remuneration) will likewise not be the subject of any recoupment from the Company’s assets (including client assets). If any item of cost falls within the description of those costs denied recoupment, it will not be recoverable. I need say no more than that.
Firestone’s Application
As I explained in my earlier judgment, Firestone’s application covered two matters (i) a claim for declaratory relief under para 74(2) of Schedule B1 to the Insolvency Act 1986 (as applied to investment bank special administrations by the IBSA Regulations) and (ii) a claim for an interim distribution.
Firestone was wholly successful on the claim for an interim distribution. By the time the matter came before me, the JSAs were not opposing the principle of an interim distribution (and indeed, as I recorded at [108], were intending to make an interim distribution themselves in weeks rather than months) so the only issues were as to timing and amount, as to which I found in favour of Firestone. The JSAs will therefore be ordered to pay Firestone its costs of this part of Firestone’s application.
The JSAs oppose any order for DASL’s costs of this part of Firestone’s application. This is not realistic. DASL was invited to appear on the JSAs’ application and did so; as I have decided above, they are entitled to their costs of that application. Part of DASL’s stance on the JSAs’ application was that the Court should order the JSAs to make an interim distribution rather than approve the Protocol. That was an entirely permissible stance, given that this was an application for directions. Of course, Firestone had issued its own application for an interim distribution by the time DASL was formally invited to participate and so DASL was able to support it; but, on this point, the two applications overlapped and DASL’s stance was, in this respect, the same on both. I take the view that it would be absurd to attempt to identify a slice of DASL’s costs which are only attributable to this part of Firestone’s application and then deny DASL an order for costs in respect of that slice. My judgment is that DASL are entitled to its costs of this part of Firestone’s application as part of its costs of the JSAs’ application (and therefore payable on the indemnity basis).
I also order Firestone’s costs of this part of its application to be paid on the indemnity basis. Firestone issued its application in order to achieve some progress in the special administration and in the light of the time it was taking for the JSAs to draft and issue their own application (which became the JSAs’ application). The JSAs answer to Firestone’s application for an interim distribution was the JSAs’ application. In truth, the JSAs did not need to be pursuing their own application, for the reasons I have explained, and Firestone should not have needed to make its own application. The circumstances which have led me to conclude that an order for costs on the indemnity basis was appropriate on the JSAs’ application therefore to my mind apply with equal force on this part of Firestone’s application and justify an award of costs on the indemnity basis here too. It is inappropriate to draw a distinction between the two.
In the same vein, I do not think there is any good reason to treat the costs of this part of Firestone’s application differently from the costs of the JSAs’ application when it comes to consider the JSAs’ claim to recoupment. The two applications reflect their respective applicants’ different approaches to the same circumstances, and the reasons for my rejection of the JSAs’ approach underpin my approval of Firestone’s. Without repeating the details, the JSAs’ approach was so ill-conceived as to amount to misconduct or serious mistake and this precludes recoupment. Furthermore, for the same reasons as I have already explained, it would be unjust to allow Firestone (or any other client or creditor of the Company) to bear the economic burden of the costs incurred by the JSAs on this part of Firestone’s application, whether the JSAs’ own costs or the costs I am ordering them to pay to Firestone. The JSAs must bear the costs of, occasioned by and incidental to this part of Firestone’s application themselves without recourse to the Company’s assets. (As I have said, DASL’s costs are to be dealt with as part of its costs of the JSAs’ application).
The other part of Firestone’s application was for declarations as to the JSAs’ alleged delay in their conduct of this special administration. This part of the application was between Firestone and the JSAs only: DASL took a neutral stance on it and is not to be visited with any orders for costs in respect of it.
My earlier judgment was essentially that this part of the application was not in a triable state at this stage and required some further directions and procedures to make it so.
Mr Davis KC characterises this conclusion as tantamount to dismissal of the claim, or at least dismissal of it in its current form, and therefore asks for Firestone to be ordered to pay the JSAs their costs of this part of its application. He contends that substantial costs have been wasted in dealing with it. The JSAs have been the successful party. Their position at the earlier hearing before me had been partly that paragraph 74 was the wrong gateway for the claim (which I did not rule on) but partly also that Firestone’s application was anyway the wrong vehicle for a claim of this kind, lacking (at this stage) pleadings, disclosure or oral evidence (see, for example, paragraphs 146-7 of the JSAs’ skeleton argument for that hearing).
Broadly, I accepted that latter argument but without prejudice to Firestone’s right to seek directions to put the proceedings on a proper footing. I do not, however regard the outcome as tantamount to a dismissal, even of the claim in its current form. As I see it, the result is inconclusive: the substance of the issue remains to be addressed upon a proper procedure (and Mr Willson tells me that Firestone does intend to pursue a claim for compensation arising from the JSAs’ alleged delay). Moreover, it is difficult to identify, and remains to be seen, to what extent the costs incurred to date will prove to have been either wasted or of use and value in or towards the substantive resolution of the claim.
Mr Willson invites me to reserve the costs of this part of Firestone’s application on the basis that nothing has really yet been resolved. That is a possible order, but I do not think it quite does justice to the JSAs’ success on the procedural issue. To reflect that success, I therefore order (a) that Firestone will pay the JSAs their costs of the actual hearing before me on this part of Firestone’s application (that is, to include a proper proportion of the overall cost of skeleton arguments, brief fees, travelling and attendance incurred on the hearing before me which is attributable to this part of Firestone’s application) on the standard basis but (b) that all other costs of, occasioned by or incidental to this part of Firestone’s application be reserved to the trial judge hearing Firestone’s claim. That preserves the right of both sides to argue any specific points as to the costs already incurred (other than those I have specifically provided for) in the light of the ultimate outcome of the claim.
Other Points
Mr Willson has asked for my order to include a direction for the JSAs to submit their distribution plan to the Court by 15 May 2026. I do not think that is appropriate, not least because I am unclear what sanction is intended to apply should the JSAs fail to meet the date specified. Mr Davis KC has indicated, however, that he will accept a recital to the order to record the intended date which is the date the JSAs are working towards. That seems to me to be sufficient for the moment. I would be prepared to consider something more stringent if there are any further delays in the finalisation of the distribution plan.
In view of the imminence of the date for a distribution plan, Mr Willson has not put forward a set of proposed directions to advance his claim against the JSAs for relief in respect of their alleged delay. He is concerned that advancing that claim at this stage will divert attention away from the immediate priority, which is the completion (and approval) of the distribution plan. Instead, he asks me to stay further proceedings on that part of Firestone’s application. The JSAs do not oppose a stay as I understand it. I will therefore order a stay with liberty to restore after the Court’s approval of the distribution plan or after three months from the date of this order, whichever is the sooner.
There are two Rule 202 applications before the Court now for directions (and Mr Willson tells me that there will be one more shortly). Again, Mr Willson has suggested these be stayed for the moment to avoid delay to the principal goal of achieving a distribution plan as soon as possible. Again, I understand the JSAs do not oppose this so I will order a stay with liberty to restore as above.
There is scope for ordering payments on account in favour of Firestone on both applications, DASL on the JSAs’ application and the JSAs on the relevant part of Firestone’s application. At the end of this hearing, I left open the possibility of the parties making such applications once I had given my judgment on where costs should lie. So I hereby direct that any party wishing to do so should lodge with the Court the cost schedules on which they rely, appropriately verified, and a short statement of the amount or amounts they are claiming and why, by 5pm on Tuesday 28 April 2026, with responsive comments (as brief as possible please) if any by 5pm on Thursday 30 April 2026. I will then decide any applicable figures without a further hearing.
The parties should also try to agree a form of order to give effect to this judgment (subject to my decision on payments on account). If they cannot reach agreement before Thursday 30 April 2026 they should lodge their respective forms of order and any comments they wish me to consider by 5pm that day and I will decide the final form of order.