Wasted Costs And Disclosure Orders

Key Points

Costs incurred in preparing to comply with disclosure orders not payable by liquidators Protection for wasted costs should have been sought earlier in the proceedings The Facts

The liquidators of two companies wound up in the Cayman Islands (SICL and SHL) sought disclosure of documents relating to those companies from PwC in Bermuda. Orders were made at first instance and then set aside, in the case of SICL by the Court of Appeal of Bermuda and in the case of SHL by the Privy Council. This judgment deals with the costs incurred by PwC in preparing to provide documentation prior to the orders being set aside.

Decision

The Privy Council (Lord Clarke dissenting) held that the costs which had been sought (but not obtained) by PwC during the course of proceedings were only the costs of compliance and not the costs of preparatory work which later proved to be unnecessary due to the disclosure orders being set aside. Protection in relation to such wasted costs could have been achieved (if at all): "by appealing, seeking an extension of time for compliance or a stay of execution pending determination of the appeal and, if this is resisted insisting, as a condition of the...