Secretary Of State For Trade & Industry v Aurum Marketing Ltd & Anor [2000] EWCA Civ 224 (20 July 2000)

Secretary Of State For Trade & Industry v Aurum Marketing Ltd & Anor [2000] EWCA Civ 224 (20 July 2000)

It is just to order Mr Richards, as the sole director and shareholder who operated a swindle through the Company and controlled its opposition to the winding up, to pay personally both the Secretary of State's and the Company's costs of the proceedings. Company assets should not be used to pay costs until unsecured creditors are paid. The judge erred by not asking whether it was just to make the order and by treating the winding up as a default order rather than a decision on the merits.

Citation
[2000] EWCA Civ 224
Parties
Petitioner: Secretary of State for Trade and Industry; Respondent Company: Aurum Marketing Limited; Respondent (sole Director and Shareholder): Mr Michael Richards
Jurisdiction
England and Wales
Judgment Date
20 July 2000
Procedural Posture
Public Interest Winding Up Petition (insolvency) / Appeal From High Court Order on Costs
Outcome
Appeal allowed
Legal Topics
Winding Up on Public Interest Grounds, Costs Orders Against Non Parties, Director Liability for Company Costs, Priority of Creditor Claims
Insolvency Law Company Law Civil Procedure Winding Up on Public Interest Grounds Costs Orders Against Non Parties Director Liability for Company Costs Priority of Creditor Claims

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Parties

Secretary of State for Trade and Industry

Petitioner

Aurum Marketing Limited

Respondent Company

Mr Michael Richards

Respondent (sole Director and Shareholder)

Procedural Posture

Public Interest Winding Up Petition (insolvency) / Appeal From High Court Order on Costs

Legal Issues

  1. 1 Whether a director can be personally liable for costs of winding up proceedings brought in the public interest
  2. 2 Whether company assets can be used to pay costs before unsecured creditors are paid
  3. 3 Proper exercise of discretion in awarding costs against non-parties

Ratio Decidendi

It is just to order Mr Richards, as the sole director and shareholder who operated a swindle through the Company and controlled its opposition to the winding up, to pay personally both the Secretary of State's and the Company's costs of the proceedings. Company assets should not be used to pay costs until unsecured creditors are paid. The judge erred by not asking whether it was just to make the order and by treating the winding up as a default order rather than a decision on the merits.

Court Disposition

Appeal allowed

Orders

  • Mr Richards to pay personally both the Secretary of State's and the Company's costs of the winding up proceedings.
  • No company assets to be used to pay costs until after unsecured creditors are paid in full.