Smurthwaite v Simpson-Smith & Anor [2006] EWCA Civ 1183

B5/2005/0033, B5/2005/0541,B5/2005/1878, B5/2005/1878 (A)[2006] EWCA Civ 1183
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT, CHANCERY DIVISION
(MR RECORDER NICHOLAS WARREN QC - B5/2005/0033
MR JUSTICE LADDIE - B5/2005/0541
HIS HONOUR JUDGE RICH QC - B5/2005/1878)
Venue Royal Courts of JusticeDate Tuesday, 25 th July 2006
Strand
London, WC2
B E F O R E:
LORD JUSTICE CHADWICK
LORD JUSTICE LONGMORE
LORD JUSTICE JACOB
JOLYON SMURTHWAITE CLAIMANT/APPELLANT (B5/20050033, B5/20050541)- v -(1) ROBIN SIMPSON-SMITH (2) DAVID EMMANUEL MERTON MOND DEFENDANTS/RESPONDENTS (B5/20050033, B5/20050541) And DAVID EMMANUEL MERTON MOND CLAIMANT/APPELLANT (1878)- v -(1) JOLYON SMURTHWAITE (2) ROBIN SIMPSON-SMITH DEFENDANTS/RESPONDENTS (B5/20051878)
(DAR Transcript of
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR C WOLMAN (instructed by Messrs Ellis Taylor & Co, London WC2A 1JE) appeared on behalf of Mr Smurthwaite.
Venue MR L DOYLE (instructed by Messrs Halliwells LLP, St James’s Court, Brown Street, Manchester M2 2JF) appeared on behalf of Mr Mond.
Mr Simpson-Smith did not appear and was not represented.
J U D G M E N T
Between
SmurthwaiteAppellantSimpson-Smith & AnorRespondent

LORD JUSTICE CHADWICK:

[1]There are before us three appeals. The first, under Court of Appeal reference A2/2005/0033, is an appeal by Mr Jolyon Smurthwaite from an order made on 13 December 2004 by Mr Nicholas Warren QC, as he then was, sitting as a Deputy Judge of the High Court in the Chancery Division in bankruptcy in proceedings brought by Mr Smurthwaite under section 262(2)(a) and (b) of the Insolvency Act 1986.[2]The object of those proceedings was to set aside an individual voluntary arrangement proposed, and subsequently effected, by Mr Robin Simpson-Smith as debtor, of which Mr David Mond, a licensed insolvency practitioner, was formerly nominee and latterly the supervisor. The hearing on 13 December 2004 was not the hearing of the substantive proceedings; but of an interim application in those proceedings made by notice given by Mr Smurthwaite and dated 12 November 2004 for specific disclosure of documents. Upon undertakings given by the respondents, Mr Simpson-Smith and Mr Mond, to make and file affidavits confirming that none of the documents in the schedule to the applicant’s notice (other than those already disclosed) were in their possession, custody, or power the judge dismissed the application for specific disclosure. He went on to give directions as to the filing and service of points of claim and points of defence and other case management directions; and he awarded costs against Mr Smurthwaite, which he assessed summarily in the sum of £6,000. He refused permission to appeal.[3]The second of the appeals, under Court of Appeal reference A2/2005/0541, is an appeal by Mr Smurthwaite from an order made on 25 February 2005 by Laddie J, on the hearing of an application by Mr Smurthwaite under Section 375(1) of the Insolvency Act 1986 for a review of the order made by Mr Warren QC on 13 December 2004. Laddie J thought that it was at least arguable that it was an abuse of the process of the court to seek, at the same time, a review of an order under Section 375(1) of the 1986 Act, and to seek to appeal from that order; a view with which I have some sympathy. But that point was not taken before Laddie J by the respondents, and he did not decide it. But he did decide that the application for review was misconceived on other grounds. He dismissed it. He ordered that Mr Smurthwaite pay the respondent’s costs of that application, which he assessed at £10,600. He, too, refused permission to appeal. He gave further directions intended to bring the underlying section 262 application to trial.[4]The third appeal, under reference A2/2005/1878, is an appeal by Mr Mond from part of an order made on 23 April 2005 by HHJ Rich QC, sitting as a judge of the High Court in the Chancery Division, on the substantive hearing of the section 262 application. HHJ Rich set aside the individual voluntary arrangement. So far as material in the present context, he ordered that Mr Mond be personally responsible for 50 per cent of Mr Smurthwaite’s costs of the issues upon which he, Mr Smurthwaite, had succeeded; and also to be responsible for the whole of the costs of the adjourned hearing of Mr Smurthwaite’s application for costs.[5]The three appeals are brought with the permission of this court (Mummery LJ), granted on 8 April 2005 and 13 March 2006. I should add, for completeness, that since the setting aside of the individual voluntary arrangement, Mr Simpson-Smith has been adjudged bankrupt. He takes no part in this appeal; nor does his trustee in bankruptcy.[6]The factual background to this litigation may be summarised shortly. On 2 October 2003, Mr Smurthwaite obtained judgment against Mr Simpson-Smith (“the debtor”) in the Colchester County Court for rescission, damages, interest and costs in relation to the contract for the sale by the debtor to Mr Smurthwaite of a classic motor vehicle. On 22 April 2004, Mr Smurthwaite presented a petition in the Gwent County Court seeking the bankruptcy of the debtor. The amount of the petition debt was £30,154.[7]In the meantime, the debtor had consulted Mr Mond with a view to proposing an individual voluntary arrangement. Mr Mond became the nominee, and subsequently the supervisor, of the individual voluntary arrangement. The proposal for the IVA was considered and approved at a creditors’ meeting on 27 April 2004. Mr Mond was chairman of that meeting. Mr Smurthwaite was admitted to vote in an amount of £47,827. He voted against the proposal. Approval to the proposal was secured by the vote of Miss Dianne Williams, with whom the debtor was then living at a property known as The Old Mill in Gloucestershire. She was admitted to vote in an amount of £124,734; of which £120,401 was said to be a debt owed to her in consideration for her giving up a claim to beneficial ownership of one half share in The Old Mill. The effect of Miss Williams’ vote, with those of the votes of the other creditors supporting the proposal, was that the proposal received just over the 75 per cent support required by the insolvency rules.[8]On 21 May 2004 Mr Smurthwaite commenced proceedings in the Gwent County Court to set aside the IVA under Section 262 of the 1986 Act. Those proceedings were subsequently transferred to the High Court.[9]On 12 November 2004, Mr Smurthwaite issued an application for specific disclosure in those Section 262 proceedings. It was that application which came before Mr Warren QC on 13 December 2004. It is clear that the judge was told, in the course of that hearing, that the debtor and Mr Mond had already disclosed all relevant documents in their possession, custody and power. That appears from the transcript of the proceedings, which have been provided to us; and it is reflected in the order which the judge made. The application for specific disclosure was dismissed upon the debtor and Mr Mond giving the undertaking in the terms to which I have already referred. As I have said, the judge went on to give case management directions, but those are not now material.[10]At paragraph 8 of his order of 13 December 2004, the judge ordered that the costs in respect of the application for specific disclosure be awarded to the respondents on the standard basis. He assessed those costs summarily at £6,000; and he directed that they be paid within fourteen days. He made that order for the reasons which are set out at paragraph 32 in a note which the judge approved. We have not been provided with an approved transcript of his judgment: “As to costs, I made an order that the applicant pay the costs of this application. In substance, the applicant failed in his claim for specific discovery. Although the matter has been dealt with by a rather different approach (i.e. points of claim, etc.), I would not have considered it appropriate to allow the applicant to obtain specific disclosure in relation to issues raised for the first time (and only shortly before the hearing initially to come before Evans-Lombe J in November). Without the introduction of the new issues, it is not easy to see how the applicant would be entitled to any of the documents in Categories 4 to 6; and as to categories 1 to 3, the respondents had already complied with their obligations, and are willing to swear a confirmatory affidavit to that effect. In substance, the applicant has lost this application.[11]Affidavits were then sworn by the debtor and Mr Mond within the time limited by the order of 13 December 2004. But those affidavits did not simply confirm, as the judge had been led to expect, that there were no documents in the possession of the respondents other than those already disclosed. Each contained a paragraph in these terms: “I confirm to the Court that, to the best of my knowledge and belief, and following compliance by me with the search and disclosure obligations imposed on me by Part 31 of the Civil Procedure Rules, that other than those documents attached to Schedule 1 hereof and the letter referred to in 2 above I do not have in my possession, custody or control, any document within the terms and scope of Parts 1 and 2 of the Schedule to the Applicant’s interim application for specific disclosure issued on 11 November 2004”.[12]Attached to each of the two affidavits was a schedule of further documents. Mr Mond’s schedule contained two documents which were of particular importance: the first document (number 1) was a letter from the Halifax Bank to the debtor in connection with the further advance of £40,000 dated 6 August 2003, showing a movement of assets from the bank to the debtor. The second (document 9) was a file note recording a meeting between Mr Mond, the debtor and Miss Williams on 30 March 2004. The purpose of the meeting was to discuss and finalise the proposal to creditors which comprised the individual voluntary arrangement. Paragraph 4 of the note records that Mr Mond explained to Miss Williams his discussions with her solicitor, Gillian Smith. Following those discussions he suggested that her claim to a beneficial interest in the house be treated for the purpose of the voluntary arrangement as a creditor claim; but, nevertheless, her claim to a beneficial interest in the property would be reserved. At paragraph 5 of the note, he recorded that he explained the wording in his nominee’s report, and in the proposal, as suggested by Gillian Smith. Miss Williams confirmed that she was happy to go along with that.[13]The importance of that file note, in the context of the claim in the Section 262 proceedings that Miss Williams should not have been admitted to vote in an amount of £124,000, is self evident. The note discloses that Miss Williams was to be admitted to vote as a creditor in respect of a debt arising from a supposed compromise of her claim to a share in the beneficial interest in The Old Mill property, while (at the same time) reserving her right to maintain against the creditors a claim that she was part beneficial owner of what would be an asset in the arrangement. That she did, indeed, reserve her right to maintain a claim to a beneficial interest appears from a letter from Mr Mond’s office to Barlow Lyde & Gilbert dated 2 July 2004 – item 23 in the list attached to his affidavit. That letter shows that Mr Mond was maintaining that, upon the sale of The Old Mill, at a price then agreed at £460,000, the charge asserted by clients of Barlow Lyde & Gilbert would be enforceable only against Mr Simpson-Smith’s half share and not against Miss Williams’ half share. The effect was that Miss Williams procured that the arrangement was approved by claiming as a creditor – so appearing to surrender her claim in the property; but, once the arrangement was approved, she reverted to asserting her claim against the property to the prejudice of the other creditors. That is not a position that a reasonable insolvency practitioner, acting reasonably, could have regarded as acceptable.[14]Mr Smurthwaite’s response to those affidavits was, first, to apply to the High Court under section 375 of the Insolvency Act for a review of the order of 13 December 2004; and second, to file an appellant’s notice seeking permission to appeal that order. The section 375 application notice is dated 22 December 2004: the appellant’s notice was filed on 29 December 2004.[15]The skeleton argument prepared on behalf of Mr Smurthwaite for the hearing of the Section 375 application included these paragraphs:
“19. In all the circumstances the hearing before the Deputy Judge proceeded on a false basis, entirely the fault of the Respondents. The Court is therefore entitled and invited as a matter of justice, in order to restore the position to what it would have been had there been no misrepresentation, to ‘review, rescind or vary’ the Disputed Order under the jurisdiction of Insolvency Act section 375, i.e. without the necessity of proceeding with a full appeal to the Court of Appeal, and to rule afresh upon the Applicant’s Application to the Deputy Judge … by putting in place a new specific disclosure Order as originally asked, reversing the costs Order which the Deputy Judge made in the Respondents’ favour in the sum of £6,000 and instead ordering the Respondents to pay the Applicant’s own costs thrown away by the misrepresentations upon the indemnity basis. 20. These are substantive complaints by the Applicant. Not only has he had a costs order made against him when the position ought to have been the reverse, but he has also lost the substantive benefits of having a positive specific disclosure Order made against the Respondents, with all the usual remedies for breach of such an Order in the absence of full compliance”
. The “false basis” alleged in those paragraphs was the basis upon which the Deputy Judge was led to make the order which he made on 13 December 2004: that is to say the assurances that he was given that all documents in the possession, custody or control of the respondents had been disclosed, and that that would be confirmed by an affidavit.[16]The application under section 375 of the 1986 Act came before Laddie J on 25 February 2005. He took the view that the attempt to reopen the question of specific disclosure was misconceived. He took that view because the affidavits made on 15 and 20 December 2004 gave, as he thought, all the relief which could have been obtained on a specific disclosure application. The respondents had confirmed on oath that no documents, other than those already produced and those listed in the schedules to those affidavits, were in their possession. The judge thought, also, that most of the additional material disclosed in the two affidavits was, itself, irrelevant. At paragraphs 25 to 27 of his judgment he said this:
“25. The respondent’s explanation for disclosing additional documents is set out clearly in the second respondent’s third witness statement as follows: ‘11. Following the hearing, and, I believe, out of an abundance of caution, Halliwells [the respondents’ solicitors] impressed on myself and, I believe, Mr Simpson-Smith, the importance of confirming the disclosure position, notwithstanding the provision of our undertakings to the Court. In response to that advice I instructed a member of my staff to undertake yet another search of the files within my possession. I understand that Mr Simpson-Smith undertook a similar exercise. What I wish to make absolutely clear to the Court is that, given the circumstances, this is an exercise which I would have undertaken in any case. Following those searches a number of documents were produced to me by my assistant, which, without further immediate consideration on my part, I considered in conjunction with Halliwells. Mr Simpson-Smith also produced a number of documents. Whilst the view was taken that most of those documents, if not all of them, are unlikely to fall within the scope of standard disclosure under Categories 1 and 2, I took the view that, particularly given the degree of zeal with which the Applicant is inclined to mount procedural assault after procedural assault, the better course was to give disclosure of those documents in any case since I wished to avoid any criticism or suggestion that anything had been withheld which might have a relevance to the proceedings. My understanding is that Halliwells advised Mr Simpson-Smith of the position who himself decided to adopt a similar approach’. 26. Similar evidence was given on behalf of the first respondent. Having read quite a lot of the applicant’s evidence, I can well understand the second respondent’s sensitivity. 27. There does not appear to be much dispute between the two parties as to the irrelevance of most of the additional documents which the respondents have disclosed. The applicant himself, in his ninth witness statement, said this at paragraph 132: ‘Having left court at 1700 hours on Monday 13 December 2004, it took the respondent until Wednesday 15 December 2004, just one clear day later, and the first respondent only seven days, to extract, photocopy and produce between them 102 classes or groups of documents on 826 separate pages to the solicitor acting for both of them. The second respondent describes this process as ‘an abundance of caution’, whereas I believe it to be properly described as the production of an abundance of paper. The majority of the material produced is not relevant and I believe that the volume of the material produced has been designed to obscure’”
. The significance of the file note of 30 March 2004, to which I have referred, does not seem to have been brought to the attention of Laddie J. ‘11. Following the hearing, and, I believe, out of an abundance of caution, Halliwells [the respondents’ solicitors] impressed on myself and, I believe, Mr Simpson-Smith, the importance of confirming the disclosure position, notwithstanding the provision of our undertakings to the Court. In response to that advice I instructed a member of my staff to undertake yet another search of the files within my possession. I understand that Mr Simpson-Smith undertook a similar exercise. What I wish to make absolutely clear to the Court is that, given the circumstances, this is an exercise which I would have undertaken in any case. Following those searches a number of documents were produced to me by my assistant, which, without further immediate consideration on my part, I considered in conjunction with Halliwells. Mr Simpson-Smith also produced a number of documents. Whilst the view was taken that most of those documents, if not all of them, are unlikely to fall within the scope of standard disclosure under Categories 1 and 2, I took the view that, particularly given the degree of zeal with which the Applicant is inclined to mount procedural assault after procedural assault, the better course was to give disclosure of those documents in any case since I wished to avoid any criticism or suggestion that anything had been withheld which might have a relevance to the proceedings. My understanding is that Halliwells advised Mr Simpson-Smith of the position who himself decided to adopt a similar approach’. ‘Having left court at 1700 hours on Monday 13 December 2004, it took the respondent until Wednesday 15 December 2004, just one clear day later, and the first respondent only seven days, to extract, photocopy and produce between them 102 classes or groups of documents on 826 separate pages to the solicitor acting for both of them. The second respondent describes this process as ‘an abundance of caution’, whereas I believe it to be properly described as the production of an abundance of paper. The majority of the material produced is not relevant and I believe that the volume of the material produced has been designed to obscure’”.[17]At paragraph 28 Laddie J said this: “28. In my view, this application is misconceived. The undertaking given to the court by the respondents required them to serve affidavits. Inherent in that was a requirement that the affidavits be truthful. It appears that, according to [counsel], the only affidavits which the respondents could serve which did not breach the undertaking were ones which did not refer to the additional documents which they had found. To avoid contempt they would have had to have sworn and served an untruthful affidavit. That would be bizarre. There is no material which undermines the honesty of the second respondent’s explanation for the discovery and production of the additional documents. Furthermore, to make an order for specific disclosure now in relation to class 1 and class 2 documents would be pointless. There is no reason to believe the respondents have any further documents in those categories. In my view, there are no circumstances, let alone exceptional circumstances, for rescinding the judge’s order. This application accordingly fails”.[18]Laddie J did not address, in that passage, the distinct question whether paragraph 8 of the order of 13 December 2004 – directing Mr Smurthwaite to pay the costs of the application – should stand in the light of the further disclosure actually made. That is to say, Laddie J did not address the question whether the order for costs mad eon 13 December 2004 had been made on a false basis – as had been demonstrated by the subsequent affidavits – and so should be set aside. Although the point was identified in the skeleton argument to which I have referred, it seems to have been overlooked when Laddie J came to give judgment.[19]The substantive section 262 application came before HHJ Rich QC. He gave a judgment, on 20 April 2005, in which he set aside the IVA. At paragraph 30 of that judgment he dealt with the debt in respect of which Miss Williams had been admitted to vote:
“Accordingly, in my judgment Miss Williams was not a creditor in respect of £120,401.25 on the basis asserted by the second respondent. He was [treating] what was clearly a claim to a beneficial interest in the property as if it had been converted by an arrangement made after the interim order for the purpose of a creditors’ meeting into a debt. This was, in my judgment, a material irregularity in the second respondent’s conduct at the meeting, and again means this appeal must succeed”
. The other ground upon which the application succeeded was the Chairman’s treatment of the amount of Mr Smurthwaite’s own debt.[20]The costs of that hearing on 20 April were stood over to be considered at a later date. That matter came back before HHJ Rich on 26 April 2005. In his judgment of 26 April he said this: “3. It appears to me to be inevitable that at least on the two issues upon which the applicant has succeeded costs should follow the event as against the first respondent. I do not think that the first respondent is disadvantaged by not being represented or appearing upon this application. 4. As regards the third issue, namely as to the meaning of ‘reputed wife’, I do not think that the applicant should recover his costs of the unsuccessful argument. The first respondent is entitled to the cost of preparing his evidence on that issue. It came to be argued, however, and to occupy the court’s time, only after counsel, then acting for both respondents, had recognised that the application must succeed at least on one or other, if not both, of the other two issues upon which, in effect, the applicant has now succeeded. 5. Nevertheless, on instructions, counsel made no concessions in respect to those other issues. Accordingly, the applicant felt constrained to complete his argument in case the order setting the IVA aside was the subject of an appeal. That conduct on behalf of the respondents in such circumstances makes it appropriate to me not to make any order in either respondent’s favour in respect of the costs incurred in successfully resisting this third issue”.[21]The judge then went on to consider the separate position of Mr Mond in relation to the first two issues. He reminded himself that, as against the chairman of the creditors’ meeting, the costs of a successful application under section 262 did not necessarily follow the event. An order should be made against the nominee personally only if his conduct fell below that of a reasonable licensed insolvency practitioner, acting reasonably. The judge said this: “9. … In his calculation of the debt owed to the applicant himself, I have come to the conclusion that the second respondent did not fall below that standard. 10. It appears to me, however, that in admitting Miss Williams to vote in respect of the £120,000-odd, which he was treating as an assessment of her beneficial interest in the house having been converted into a debt, I take a different view”.[22]The judge explained, by reference to the documents, why he took the view that to treat Miss Williams’ claim to a beneficial interest in the property as if it were a debt – and so admitting her to vote – was below the standard of conduct that could be expected from a professional insolvency practitioner. I need read only the following paragraphs:
“16. The second respondent, however, wrote in his nominee’s report, at paragraph 2.4, in slightly different terms. He said: ‘I have had a brief discussion with Ms Williams, the partner of the debtor. I believe she will co-operate in the sale of the house. She is in the process of seeking independent legal advice. However, I have been advised that she may be entitled to a beneficial interest in the property subject to evidence, although she is prepared to rely upon her creditor claim for present purposes and she reserves her position in other respects’. This indicated that Miss Williams was still seeking advice; thus that she had not reached any conclusion. It fails to identify that the reservation of position was in respect of her beneficial interest but saying it was in respect of other matters. If she had not reached agreement, as is indicated by reference to her still seeking advice, it was clearly her beneficial interest in respect of which she was reserving her position. In writing in that way, I think that the second respondent was showing that he was not keeping the point as to which he needed to be satisfied (namely that the beneficial interest had been converted into a claim) clearly in his mind. 17. It appears to me (and this is apparent in the course of negotiations with Miss Smith which we have seen in the exchanges of emails) that the second respondent was assisting the negotiation with Miss Williams and in so doing was seeking to serve the interests of the first respondent, although, no doubt, he thought that Miss Williams shared his interest in procuring an IVA and thus avoiding bankruptcy. 18. In adopting that stance of seeking to negotiate with them terms by which he could admit her to a vote in the IVA, I do not think that he was keeping clearly in his own mind that he had a duty not only to the debtor, or even primarily to the debtor, but also a duty to the creditors including particularly the applicant. They were entitled to vote on the IVA in accordance with their shares. I do not think that an arrangement to admit Miss Williams to vote on terms that she would reduce her interest in the property to a claim against the first respondent, only if she was successful in getting the IVA approval, was having proper regard to that duty. In any case, I do not think he could reasonably have thought (if he had thought about it) that a conditional agreement of that kind, without any formality for the disposition of her interest being met, has successfully converted her beneficial interest into the claim”
. I would add, for my part, that reference to the letter of 2 July 2004, which I have read, makes it clear that Mr Mond did not think that Miss Williams had converted her beneficial interest into a claim in debt. ‘I have had a brief discussion with Ms Williams, the partner of the debtor. I believe she will co-operate in the sale of the house. She is in the process of seeking independent legal advice. However, I have been advised that she may be entitled to a beneficial interest in the property subject to evidence, although she is prepared to rely upon her creditor claim for present purposes and she reserves her position in other respects’.[23]The judge acquitted Mr Mond of dishonesty or disregard of propriety, but he thought that, in not thinking about the matter fully, Mr Mond had failed to exercise the professional skill and judgment that could reasonably be expected of a professional insolvency practitioner. In short, he had taken sides in this dispute; rather than recognising that it was plainly wrong to admit Miss Williams to vote in respect of a debt which was not, at that time, owed to her and in relation to which there was no binding obligation.[24]The judge thought that the first two issues could be taken together, because the other point on which the applicant had succeeded (namely the amount of his own debt) only arose from the approval of the IVA; and the IVA was approved only because Miss Williams’ claim had been admitted. And so, in dealing with the costs of those two issues, he thought that Mr Mond should be required to bear those costs personally; although he decided that his view of Mr Mond’s conduct could properly be marked by a proportionate order limited to 50 per cent of the costs.[25]With that explanation of the circumstances in which the three appeals come before this court, it is convenient to address, first, Mr Mond’s appeal against HHJ Rich’s order of 23 April 2005. That appeal is put under four main headings, the first and fourth of which fall together. First, it is said that the judge was not entitled to take the view that he did of the way in which Mr Mond had treated Miss Williams’ claim to be a debtor. It was said that, although that treatment was held to be wrong, it was not so wrong that it should have seemed obviously unacceptable to an insolvency practitioner who was not a lawyer. To my mind, that submission cannot be supported. What was obviously wrong, as it seems to me, was to admit Miss Williams to vote – in an amount which Mr Mond knew would or might well cause the IVA to be approved – in circumstances in which, when approved, she could continue to assert her beneficial interest over the property to the detriment of the creditors. She was allowed to put herself in a position in which she procured the approval of the IVA against the wishes of Mr Smurthwaite, who was a creditor, in circumstances in which, once approved, she could assert ownership in respect of a share in the principal asset in the IVA. That, as it seems to me, was so obviously wrong that the judge was entitled to take the view that Mr Mond’s conduct fell below the standard to be expected of a reasonable insolvency practitioner acting reasonably. As it was, the judge reflected that view in an order for 50 per cent, rather in an order for the whole, of the costs of those issues. So, I would dismiss the appeal insofar as it relates to that part of the order of 23 April 2005.[26]The second and third points go together. It is said that the judge should have recognised that Mr Mond had won on the “reputed wife” issue and that the applicant, Mr Smurthwaite, had not pursued other issues which had been raised in the points of claim. But the judge dealt with that submission in the paragraphs to which I have already referred – paragraphs 3 and 4. The view which the judge took was that once it had become clear – as obviously it had in the course of the hearing – that the applicant was going to succeed on one or both of the first two issues, there was no longer any need to argue the reputed wife issue; and there would have been no need to argue any of the other issues raised by the points of claim. In those circumstances, the argument took place only because the respondents – and, in particular, Mr Mond – did not recognise the inevitable and did not make the concession which they could have made to avoid further argument. The debtor was awarded the costs of preparing the evidence on the reputed wife issue, on which he succeeded. Mr Mond was not awarded the costs of preparing evidence; because, no doubt, he had had no part in preparing the evidence. But Mr Mond and the debtor were treated alike in relation to the other costs of that issue – and the costs of the issues which were not pursued – because, as the judge thought, to require those issues to be argued had been a waste of time.[27]It is accepted, I think, that if Mr Mond fails on those three substantive matters, then he cannot pursue an appeal against the separate costs of the costs hearing. That adjourned hearing took place only to enable Mr Mond to put in evidence to support his case in the other issues. For those reasons, I would dismiss the appeal against the order of HHJ Rich of 23 April 2005.[28]As to the other two appeals – taking them together and broadly – the position seems to me to be this. Mr Smurthwaite was required to pay the costs of the application before Mr Warren QC in December 2004 because, as that judge said in the passage of his judgment which I have read, he was thought to have failed in his application for specific disclosure. He was thought to have failed because the undertakings which the judge obtained from Mr Mond and Mr Simpson gave Mr Smurthwaite nothing which he had not already got: namely, confirmation that there were no other documents. Had the judge appreciated that there were other documents – as appeared when the affidavits were sworn – he could not have come to the conclusion that Mr Smurthwaite had failed in his application. Had the judge appreciated that, the application would then have been seen to have produced some benefit – in the form of disclosure of additional documents some of which at least were of relevance. I have mentioned the file note of 30 March 2004.[29]So the order for costs made by Mr Warren QC was, as matters turned out, made on a false basis – although the judge could not have known that at the time when he made the order. Accordingly, as it seems to me, the order for costs requiring payment of £6,000 by Mr Smurthwaite should be set aside. I would not, however, go as far as Mr Smurthwaite would with requiring the respondents to pay Mr Smurthwaite’s costs of that application. It is clear, from what the judge said in the final paragraph of his judgment, that Mr Smurthwaite had come before him looking for very many more classes of document than he actually obtained and that the judge would not have made an order for specific disclosure of at least three categories of documents which were being sought. The proper outcome of that hearing of 13 December 2004 – which led, among other things, to necessary and sensible directions for trial – seems to me that there should be no order for costs.[30]If that is the proper order to make in relation to 13 December 2004, then there is no need to disturb the order which Laddie J made in February 2005. It may be said that Laddie J ought to have picked up the point that I have just mentioned; but it is fairly clear that the point was not advanced before him in the way that it has been advanced before us. Essentially, the application before Laddie J was an application to reopen the whole question of specific disclosure. That was an application which was misconceived for the reasons which Laddie J explained in his judgment. Mr Smurthwaite already had the affidavits which had been sworn in December 2004. If, on the basis of those affidavits, he wanted further disclosure of specific categories, then he could have made an application for that purpose. What he was seeking to do was to re-open the whole question of specific disclosure; and, as Laddie J said, there was no basis for that application.[31]So, for my part, I would allow the appeal from the order of 13 December 2004 to the extent of setting aside the order for costs in paragraph 8. I would dismiss the appeal from the order of 25 February 2005.

LORD JUSTICE LONGMORE: I agree.

LORD JUSTICE JACOB:

[33]I also agree. I would add only this. One of the difficulties in this case stems from the fact that Mr Mond, the insolvency practitioner, made common cause with the debtor. There is inherent danger in adopting any such stance. Insolvency practitioners should be much more careful to preserve their utter independence from any party, either the debtor or any creditor. 34. Appeals on B5/2005/054 and B5/2005/1878 dismissed.