Costs - Insolvency - Local government - Bankruptcy petitions

Banfield v Harrow London Borough Council: ChD (Mr Justice Lewison): 6 October 2010

The appellant (B) appealed against a costs decision arising out of an abortive bankruptcy petition launched by the respondent local authority.

The local authority had brought a bankruptcy petition against B in relation to an unpaid liability for council tax. At the hearing it emerged that B had not been living in the property that was the subject of the liability. A recorder adjourned the hearing and ordered B to pay the local authority’s costs. B appealed against that decision. The judge, who granted permission, suggested that the parties attempt to negotiate the extant issue of costs. In the meantime the local authority confirmed that it would no longer be pursuing its petition. Both sides tried, unsuccessfully, to settle the issue of costs. The petition was formally dismissed and the local authority was ordered to pay B’s costs of the adjournment and the appeal on an indemnity basis. Costs in relation to the petition were not included. B submitted that if the local authority had followed judicial advice in relation to costs then the issue of the costs of the petition would have been dealt with in the same way as the costs of the adjournment and appeal on an indemnity basis and that he was entitled to that order.

Held: The issue was whether B was entitled to his costs arising out of the petition proceedings on the standard or indemnity basis. The local authority’s conduct was not such as to justify the invocation of the indemnity principle in relation to those costs. B was entitled to his costs of the petition on the standard basis.

Appeal allowed.

In person for the appellant; S Markandya (instructed by Clarke Willmott) for the respondent.