Obtaining costs of a private examination

A trustee in bankruptcy had discovered that a company had made a loan to the bankrupt. The company and its sole director failed to adequately respond to requests for information about the loan. The trustee applied to court under s.366 for an order summoning the company to attend court to provide information. The sole director was later joined into the application. The company and the director provided certain information, but the trustee considered it was inadequate and obtained an order that the director provide further information, following which trustee decided not to pursue the s.366 application any further.

The trustee sought an order for his costs of the s.366 application. The respondents sought an order that the trustee pay their costs, on the basis that the trustee was not the successful party, because he had not obtained an order for examination.

In determining costs, the court had to take into account that in many s.366 applications, the respondent would give some or all of the outstanding information and documentation in response to the application. Therefore “success” involved more than considering whether an order for private examination was ultimately granted.

In this case the application had resulted in significant information being disclosed. The trustee had reasonably concluded that the respondents would not cooperate without him applying for a court order. The application had achieved its purpose and the trustee was entitled to his costs.

Horton v Eurobeam Services Ltd [2023] EWHC 173 (Ch)