In this recent case, the High Court dismissed a petition for the winding up of the respondent Company whilst confirming that CPR 46.7, which governs costs orders in respect of pro bono representation, also applies in insolvency proceedings.
The respondent Company had instructed their solicitors for reward, but Counsel had provided their services free of charge. The question arose over whether the unsuccessful petitioner, following the dismissal, should be required to make a payment to the Access to Justice Foundation under section 194(3) of the Legal Services Act 2007, in view of Counsel's pro bono services in representing the Company. (Section 194 of the Legal Services Act 2007 prescribes that when a court makes a pro bono costs order, the payment must be made to the Access to Justice Foundation, which is the recipient charity for all pro bono costs orders, not to the successful party. This avoids giving a financial windfall to a litigant who did not actually incur legal fees.)
The Court had to determine whether CPR 46.7 (regarding pro bono costs orders) applies to insolvency proceedings.
Rule 12.1 of the Insolvency (England & Wales) Rules 2016 (IR) provides that the provisions of the CPR apply for the purposes of insolvency proceedings, except where disapplied or inconsistent with the IR. Rule 12.41 confirms the relevant costs provisions of the CPR also apply to insolvency proceedings. With no inconsistent provisions and no reason as to why CPR 46.7 should not apply to insolvency proceedings, the Court applied CPR 46.7 to the section 194(3) payment which was ordered to be made.
The implications of this are that it is now clear that pro bono costs orders can, and will be, made in insolvency proceedings following the same framework as found in other areas of civil litigation.
