Court of Appeal: Bula Mines co-founder must pay costs



Andrew McKeown BL
Andrew McKeown BL

The Court of Appeal has ruled that the co-founder of Bula Mine, who failed in his bankruptcy appeal, must pay costs.

Background

In July 2020, Michael Wymes lost his appeal challenging a decision adjudicating him bankrupt over the non-payment of a €4.8 million in legal costs.

The State was a shareholder in the company and protracted litigation followed the collapse of Bula Mines. The Minister for Communications, Energy and Natural Resources sought the recovering of that money and issued bankruptcy proceedings against Mr Wymes and Mr Wood. Further litigation followed over the bankruptcy summonses.

The High Court granted a petition in March 2018 adjudicating Mr Wymes and another co-founder of Bula, Richard Wood, bankrupt.

Judgment was delivered by the Court of Appeal on 7 July 2020. The appeal was dismissed on all grounds. In that judgment, the judges indicated a provisional view that costs should be awarded to the successful party in the appeal unless either party applied to request that the Court should otherwise order.

Mr Wymes duly filed submissions, as did the Minister and the other petitioner, Michael O’Connell. Mr Wymes argued that there should be no costs award in their favour.

He submitted that this should be so having regard to the unique and extraordinary circumstances, “individual and in the round”, described in his written submission furnished in advance of the appeal hearing.

He said their failure to consent to a late filing of an appeal from Mr Justice Charles Meenan’s judgment and order adjudicating Mr Wymes a bankrupt was against a backdrop where he had made numerous requests to the Examiner’s office seeking an attested copy of the Adjudication Order made in March 2018.

He said that the Minister and Mr Connell’s participation in the bankruptcy proceedings was a surrogate/front for others. He claimed that there was a “clutter of prevarication, obfuscation and incorrect averments” as to whether any or any enforceable Adjudication Order was made against Mr Wood. He complained of an alleged participation by Mr Wood and others in “a grotesque fraud” to defeat his rights as a secured creditor in respect of certain lands in Cork, alleged actions by the State, Mr Wood and others in concert to his detriment and towards securing Mr Wood’s lands “at a collusive, grossest of undervalues”.

By way of alternative to a no costs order, Mr Wymes asked for a stay on any costs awarded in favour of the Minister and Mr O’Connell in the event that he receives leave to appeal the decision to the Supreme Court.

The Minister and Mr O’Connell submitted that they should get their costs in the normal way with respect to the dismissal of Mr Wymes’s application to show cause pursuant to, inter alia, the Bankruptcy Act 1988 s.16.

They submitted that there were no unique or extraordinary circumstances such that might warrant no order as to costs. They contended that the most extraordinary aspect of the matter has been Mr Wymes’ willingness to relitigate matters which have already been determined against him.

It was further submitted that no unique circumstances were found to preclude the costs order made against Mr Wymes in 1997. There had been no payment on foot of that 1997 costs order, which has resulted in the Minister and Mr O’Connell being put to very significant additional cost as the petitioning creditor in trying to recover the costs of the Bula Ltd. (In Receivership) v Tara Mines Ltd. proceedings.

Mr Wymes had contested every step of his bankruptcy and had not succeeded. This has caused additional cost to the creditors in the bankruptcy including the Minister and Mr O’Connell as the petitioning creditors.

It was further submitted that there was no basis, nor any necessity, for a stay to be put on the costs order pending the determination of Mr Wymes’ application for leave to appeal to the Supreme Court, in circumstances where he had been adjudicated a bankrupt.

The said that they seek their costs as the costs of the petitioning creditor out of the bankruptcy estate in the normal way and in the manner of the High Court costs order made in 1997. Accordingly, any costs order will come out of the bankruptcy estate on distribution.

Ms Justice Mary Faherty considered the new costs regime in the Legal Services Regulation Act 2015 ss.168 and 169, with the Ord. 99 RSC, and she noted the judgment of Mr Justice Brian Murray in Chubb European Group SE v The Health Insurance Authority [2020] IECA 183, where he set out the principles to be applied by the Court in determining costs issues post December 2019.

Section 169(1) provides that where the party seeking costs has been “entirely successful” in the proceedings, such party “is entitled to an award of costs unless the court orders otherwise.” In determining whether to order otherwise, the court should have regard to the “nature and circumstances of the case” and “the conduct of the proceedings by the parties”. This includes conduct both before and during the proceedings and whether it was reasonable for a party to raise, pursue and contest one or more issues.

The principle that costs should follow the event was confirmed by In Veolia Water UK Plc. v Fingal County Council (No. 2) [2007] 2 IR 81, where Mr Justice Frank Clarke said that “parties who are required to bring a case to court in order to secure their rights are, prima facie, entitled to the reasonable costs of maintaining the proceedings”.

Conclusion

She said that while Mr Wymes cited a list of factors which he said should persuade the Court to make no order as to costs, in reality the arguments advanced were an attempt to re-litigate matters aired in the High Court and Court of Appeal which were conclusively determined Mr Wymes. The State and Mr O’Connell were entirely successful in the appeal. All issues considered by the Court to be material were determined against Mr Wymes: “Having regard to s.169(a) and (b) of the 2015 Act, I perceive no basis upon which the Court should decide otherwise.”

Ms Justice Faherty saw no merit in Mr Wymes’ submission that costs should be stayed. The court found that it would not be in the interests of justice, having regard to the protracted history of this case.

“Furthermore, any costs order will ultimately come out of the appellant’s bankruptcy estate on distribution. As such they are not recoverable in the immediate future.”

© Irish Legal News Ltd 2020

Tags: Bankruptcy



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