Trustee will not be personally liable as to costs incurred in earlier proceedings

Supreme Court of United Kingdom- Giving directions in the pending appeal concerning a claim in
negligence by the appellant against the respondent wherein the Trustee so
appointed sought the extent of his potential liability (personal liability) for
costs if the appeal fails, the Court unanimously held that if the Trustee
adopts the appeal to the Supreme Court he will not be held personally liable be
held personally liable for costs of the hearings before the trial judge and the
Court of Appeal, by virtue only of the fact of his office as Trustee of the
appellant’s estate in bankruptcy or of his adoption of the appeal. The Court
considered the decision in Borneman v Wilson (1884) 28 Ch D
53, wherein it was held that the trustee cannot adopt part of the action and
leave out the rest. The Court declared it to be no longer a good law.

The facts state
that the appellant lent £200,000 to a company called Whiteshore Associates Ltd.
The courts below have found that his solicitors-respondents were negligent in
their handling of the transaction. The Trial Court awarded full amount to the
appellant while the Court of Appeal held that this loss was not within the
scope of the solicitors’ duty, hence, reduced the award and ordered the
appellant to pay the respondents costs of the proceedings up to and including
the appeal. Later the appellant became bankrupt and a Trustee was accordingly
appointed. As a result, the right to pursue the appeal vests in the trustee
which he is yet to decide owing to his potential liability.

With regard to
the lack of jurisdiction issue raised by the respondents, Lord Sumption stated
that the Supreme Court has jurisdiction to deal with this application under
Section 40(5) of the Constitutional Reform Act 2005. The Court further held
that a trial and the successive appeals from the order made at trial are
distinct proceedings in the same action and a distinct order for costs is made
in respect of each stage and any liability as to costs in the earlier
proceedings would merely give the respondents an unwarranted priority for their
claim under the Court of Appeal’s costs order. [BPE Solicitors v. Gabriel, [2015] UKSC 39, decided on 17.06.2015]


Source: Legal news India

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