BDO refused appeal in bid to recover cash from former Halliwells partner
BDO partners acting as liquidators for Halliwells were yesterday refused leave to appeal a High Court judgment that prevented them from chasing one of the failed firm’s former partners for cash.
Lawyers for Halliwells’ liquidators, BDO partners Shay Bannon and Dermot Power, were in the Chancery Division of the High Court seeking leave to appeal a summary judgment given by Mr Justice Warren in the same court in April (24 April 2012).
At the hearing in April, Warren J held that former junior equity partner Michael Burns’ retirement deed from Halliwells, which stipulated a clean break, was valid and meant that he could not be pursued by liquidators for cash owed to the firm.
Representing Bannon and Power Lexa Hilliard QC of 11 Stone Buildings yesterday argued that Warren J had got the law wrong and that it was a point of public interest to appeal the case. Warren J, however, denied them leave to appeal and ordered indemnity costs of around £30,000 against them. BDO now has 21 days from the date of judgment to decide whether to go direct to the Court of Appeal with its case.
“Indemnity costs are exceptionally rare these days,” said Burns’ lawyer, Irwin Mitchell partner John Lord. “They’re only really made in circumstances where the court takes a dim view of certain conduct.
“[…] We were disappointed by the liquidator’s decision to further deplete realisations by seeking to appeal the very comprehensive judgment of Mr Justice Warren. We shall continue to defend all of our clients against the claims intimated by the liquidators and we’d hope that the significant cost incurred by the liquidators in this case will lead BDO to review their litigation strategy and not appeal this decision further.”
Irwin Mitchell partner Chris Jones is acting for 14 former Halliwells fixed-share partners on litigation stemming from the firm’s collapse (17 October 2011).
Lord instructed James Potts of Erskine Chamber to represent Burns, who is now a partner at DLA Piper, in court.
Hilliard was instructed by Addleshaw Goddard partner Alison Goldthorp for Bannon and Power.
BDO declined to comment.
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Readers' comments (12)
Reckless Spender | 26-Jun-2012 4:35 pm
Expensive punt especially as the standard costs will be on top of the indemnity costs.
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Nobby | 26-Jun-2012 5:03 pm
Is Burns now advising Knowles and his pals on their extra-curricular investments?
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Anonymous | 26-Jun-2012 8:57 pm
How kind of the AG partner to allow her associate to take all the glory.... now that's what I call leadership.
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Rhamnousia | 27-Jun-2012 9:20 am
On reflection, this looks like a case where both sides have lost.
BDO have said, through leading counsel, that they have evidence to justify an allegation of fraud against Burns. They appear to have lost because they didn't plead this properly and raised the allegation late and in an inadmissible way, which probably says more about Addleshaws' litigation strategy than anything else.
Warren J's judgment allows them to amend their pleading to allege fraud, but he points out that Burns was not uniquely culpable, and so if BDO plead fraud against him, they will have to against the others in his position.
So BDO have a difficult choice if they don't succeed in appealing this decision. Either they plead fraud against all the Spinningfields defendants, or they let Burns go free. Lexa Hilliard was very confident that she had enough material to amend to plead fraud. Can BDO justify not pleading it and letting Burns get away? Lots of questions will be asked about their independence and integrity if they don't follow through with their threat to amend, particularly after spending so much of the creditors' money on this application.
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To boldly go | 27-Jun-2012 11:02 am
"We were disappointed by the liquidator’s decision to further deplete realisations by seeking to appeal the very comprehensive judgment of Mr Justice Warren."
"Liquidators'....", not "liquidator's..."
and
"To deplete further...."
Not "To further deplete....."
I'm appalled.
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Anonymous | 27-Jun-2012 12:24 pm
This doesn't seem right if the clean break was agreed with the former Halliwells partners before the administration. Sounds ripe for an appeal.
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Aha! | 27-Jun-2012 11:28 pm
I see the partner concerned has now 'fessed up! :)
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Indemnity Costs!! | 28-Jun-2012 7:14 am
How can it be right that the creditors get stung for indemnity costs (depletion of realisations) because the Liquidators messed up? If you look at some of the commentary around BDO's fees on the Farepack matter you cannot help but feel that their industry needs better regulation and some legislative control over the fees which are charged. Why are the Liquidators not paying the indemnity costs personally if their strategy led to such an order? Why does it have to come out of the sums collected for the benefit of creditors?
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Noakes | 28-Jun-2012 7:17 pm
I bet the pedant has some exposure lol
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Pot-costs=less | 29-Jun-2012 11:52 am
They are depleting the money already collected by having to dip into the creditors pot. If they appeal they will need to dip into it a bit more. When will it end?
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