A creditor against whom the receivers of Dolphin Quays lost a 2006 lawsuit has appealed an order that enables them to avoid paying his legal costs.
The Court of Appeal is considering Peter Mills’ appeal against the decision by the Chancellor of the High Court to refuse his application for costs against the receivers after they lost their claim for damages regarding an uncompleted flat purchase within a mixed-use scheme at Poole Quay, Dorset.
In April 2006, Deputy Judge Peter Leaver QC upheld Mills’ defence that the £650,000 flat had been intended to settle part of a £1.85m debt that was owed to him by Orb Estates, from which Dolphin Quays Developments bought the scheme in 2002.
He ruled that the receivers, who were seeking £155,000 from Mills after reselling the flat for only £495,000, were not entitled to damages.
However, despite Mills success, the Chancellor refused to order in May 2007, the receivers to pay Mills’ legal costs, saying: “Given the absence of any exceptional features or of any impropriety or unreasonableness on the part of the receivers… I do not consider that justice requires that an order in [Mills’] favour should now be made against the receivers.”
On appeal, Mills’ counsel, Gabriel Moss QC told the court that the Chancellor had “wrongly exercised” his discretion and had caused “manifest injustice” to his client.
He added that the case was “the first in which an English court has had to consider the circumstances in which a non-party costs order should be made against the receivers of a company who have brought and conducted proceedings prior to liquidation in the name of the company exclusively for the debenture holder that appointed them; have not been guilty of any impropriety or unreasonableness in initiating and prosecuting the claim; but have a full right of indemnity from realisations in the receivership so that in no event will they be left out of pocket”.
William Trower QC, counsel for the receiver, said: “In deciding that it was not, in all the circumstances, in the interests of justice to impose any personal liability on the receivers, the Chancellor acted well within the broad discretion available to him.”
The case continues.
