Judgment delivered by Deputy
Deemster Corlett in the respect of the application made by members
of the KSFIOM Depositors' Action Group in respect of the costs of
the Scheme of Arrangement ("the Scheme").
Deputy Deemster Corlett has delivered his judgment on 30 June
2009, in respect of the application made by members of the KSFIOM
Depositors' Action Group in respect of costs of the Scheme.
The judgment amongst other matters indicates that :-
- That the application was considered by Deputy Deemster Corlett
in the light of precedent in respect of civil litigation and that
the awarding of costs was at the discretion of the Court.
- That there is a particular rule in litigation involving winding
up petitions and schemes of arrangements that there should be one
set of costs for any successful group of creditors.
- That those who present or promote a scheme will not normally be
subject to an adverse order for costs unless they have been guilty
of "frivolous or careless conduct" in presenting the Scheme.
- That there was no misconduct in relation to the promotion of
- That it was difficult to see how it could be claimed that the
Scheme was devoid of any substantial support from the general body
of KSFIOM's creditors, as a majority in number (not in value) voted
in favour of the Scheme.
- That the DAG's costs in respect of the Scheme and the Winding
Up Petition should be paid out of the assets of KSFIOM as a pre
preferential debt, to be agreed by a costs assessor.
- That in the Deemster's view the Joint Liquidators Provisional
adopted a proper approach to the work which they had done in
relation to the Scheme and there was no merit in the suggestion
that their costs should be disallowed.
- The costs of the Joint Liquidators Provisional in relation to
both the Scheme and the Winding Up Petition will be paid out of the
assets of KSFIOM, as a pre preferential debt.
The judgment refers to the decision of the Joint Liquidators
Provisional not to make a similar claim as that made by the
Depositors Action Group against the Treasury for payment of their
costs in relation to the Scheme and the Winding Up Petition.
The Joint Liquidators Provisional wish to make clear that their
decision in this regard was based solely on the extensive legal
advice that they obtained as to the prospect of any such
application being successful. In particular advice was sought from
leading Queens Counsel. In the absence of any legal advice that
there was a reasonable prospect of being successful in such an
application, the Joint Provisional Liquidator considered that they
would have been derelict in their duty to creditors if they had
chosen to disregard the legal advice they had received and had
pursued such an application. Indeed the judgment makes clear that
as the Depositors Action Group's application for its costs to be
met by the Treasury had been rejected, it follows that an
application for the Joint Liquidators Provisional costs to be met
by the Treasury would be rejected.
The full judgment is below and can also be found on this
Judgment 30 June
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Joint Liquidator Provisionally